KTDA slashes management fee from 2.5% to 1.5% to boost farmer income 

KENYA – The Kenya Tea Development Agency (KTDA) has implemented a significant reduction in its management fee, lowering the charge from 2.5 percent to 1.5 percent of net tea sales at both the Mombasa auction and direct overseas markets. 

The move complies with provisions in the Tea Act 2020 and follows reforms approved by smallholder farmers through their factory companies.  

During the 2024/2025 financial year, the 71 KTDA-managed factories will apply the reduced rate, with some factories eliminating the fee entirely for the current period. 

Speaking at annual general meetings for Rukuriri, Mungania, and Kathangariri factories in Embu County, Zone Six board member Enos Njeru confirmed that the lower charges have directly translated into higher bonus payments for growers.  

At Rukuriri factory, the management fee dropped from Kes 59.6 million (US$461.34K) to Kes 28.2 million (US$218.22K) year-on-year, while Kathangariri saw its fee fall from Kes 39.7 million (US$307.2K) to Kes 20.2 million (US$156.3K). 

Gatunguru Factory Chairman Mwangi Kaguma welcomed the relief, noting that his factory paid Kes 23.8 million (US$184.17K) to KTDA last year compared to Kes 51.3 million (US$396.97K) previously. Total annual payments to the agency across factories also declined substantially, from Kes 1.6 billion (US$12.38M) to Kes 1 billion (US$7.74M) in some cases. 

Farmers and factory leaders voiced strong opposition to any attempt to raise the fee again. Kaguma warned that growers would resist provisions in the pending Tea Amendment Bill that reportedly propose increasing the management charge to two percent. 

Factory directors highlighted additional reforms that have placed financial and procurement control directly in the hands of individual factory companies, further reducing overheads and improving transparency. 

Despite climate-related challenges that reduced green leaf production in Embu County from 61.2 million kg to 54.6 million kg, total farmer earnings reached Kes 3.1 billion (US$23.99M) for the year ended June 30.  

Rukuriri factory achieved the highest national bonus payout of Kes 57.50 per kilogramme for the 18.75 million kg processed. 

To counter falling volumes and strengthen competitiveness, factories are investing heavily in value-addition equipment and cost-reduction measures. Upgrades at the three Embu factories aim to improve efficiency and product quality for premium markets. 

KTDA representatives announced plans to intensify domestic tea consumption campaigns to support better farm-gate prices. Factory management emphasised innovation in processing and marketing as essential for Kenya to maintain its position against rival producers. 

The combination of lower agency fees, decentralised management, and targeted investments has been credited with delivering the strongest grower returns in recent years across the KTDA network. 

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