KTDA reassures smallholder farmers of financial stability, dismisses claims of payment delays 

 KENYA – The Kenya Tea Development Agency (KTDA) has moved to reassure smallholder tea farmers that factories under its management remain financially stable, dismissing claims circulating on social media that suggest financial distress and delayed payments. 

In a statement, KTDA said all factories continue to meet their financial obligations to farmers and other stakeholders in a timely manner, despite operating in a challenging global tea market over recent years. The agency described reports alleging factory insolvency and auctioneer threats as false and misleading. 

KTDA stated that the claims were deliberately aimed at discrediting the smallholder tea sector and undermining confidence among farmers. According to the agency, there is no basis to assertions that factories are borrowing excessively in order to stay afloat. 

The agency clarified that where borrowing occurs, it is limited to short-term facilities that are part of normal financial management. Such borrowing is used to bridge timing gaps between payments made to farmers for green leaf deliveries and the eventual sale of processed tea. 

KTDA explained that farmers are paid almost immediately after delivering green leaf, while made tea can take several months to be sold, particularly during periods of high stock levels or subdued demand. This mismatch in cash flows can occasionally necessitate short-term financing to ensure uninterrupted payments to farmers. 

According to the agency, all borrowing is fully secured against properly valued tea stocks and is subject to approval by factory boards that are elected by farmers. KTDA said these boards represent farmers’ interests and ensure that all financial decisions adhere to prudent and auditable management practices. 

The agency also addressed recurring claims that deductions are made from farmers’ earnings to fund a stabilization scheme. KTDA stated that no such deductions have ever been made and that no funds from any other sources were allocated to such a scheme. 

While the concept of a stabilization fund had previously been discussed as a possible measure to support second payments during periods of low returns, KTDA clarified that the proposal was never implemented. As a result, farmers’ payments have not been affected by any such arrangements. 

KTDA further noted that the Tea Amendment Bill currently before the National Assembly includes proposed amendments submitted by the agency to safeguard the interests of smallholder farmers. The agency said it continues to engage with policymakers to ensure that reforms strengthen transparency, accountability, and sustainability in the sector. 

The agency urged farmers and other stakeholders to disregard what it described as misinformation intended to erode confidence in the tea industry. KTDA reaffirmed its commitment to sustainable value creation, sound financial management, and the long-term welfare of more than 650,000 smallholder tea farmers across the country. 

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