A decade of tea sector reforms that left farmers with bitter taste

When the Tea Act 2020 was signed into law in December 2020, expectations were high that it would usher in a new era for the sector — one in which farmers, who had for years received the short end of the stick, would finally gain greater control over their produce.

The Act, which had been in the making for years, sought to give farmers greater control over the management of their factories, ensure faster payment of tea sale proceeds and make payments for green leaf more predictable. The new law reversed the consolidation of the tea sector and other agricultural subsectors under the Crops Act, restoring tea as a standalone sector. It was also expected to strengthen regulation across the value chain.

Nearly six years later, however, the tea industry appears to be resisting the changes intended to turn the tide in favour of farmers. Despite a series of initiatives, including reforms championed by former Deputy President Rigathi Gachagua and  attempts to amend the 2020 Act to smooth the process of empowering farmers, institutional resistance and legal bottlenecks appear to have left growers in the same position, if not worse off.

This was the sentiment expressed last week across tea-producing regions, where farmers argued that the tea bushes they tend throughout the year could not match the earnings from the few avocado trees or dairy cows they kept. These were initially intended to complement tea farming but have increasingly become more reliable sources of income.

“We are better off with dairy cows... there is more sense in uprooting the tea bushes and instead planting napier grass,” said a farmer from Murang’a County in an interview with KTN, reflecting on the bonus payments for the 2025/26 period announced last week.

The total payout to Kenya Tea Development Agency (KTDA) smallholder farmers — combining the initial payment for delivered tea and the second, or bonus, payment — fell from a historic high of Sh89.6 billion in 2023 to Sh69.8 billion in 2024/25. The Sh19.8 billion decline has fuelled perceptions among farmers that the reforms have largely failed. KTDA has not disclosed the total amount paid out this year.

Among the factors cited for the decline is the controversial 0.8 per cent tea export levy introduced this year, which is said to have eroded auction premiums. Global shipping bottlenecks have also increased logistical and storage costs. The closure of critical shipping routes, including the Strait of Hormuz, which has disrupted Kenya’s direct tea trade with key markets such as Iran, has also been cited as a contributing factor.

Additionally, a strengthening Kenyan shilling reduced the local-currency value of dollar-denominated tea auction sales, forcing factories to declare significantly lower second payments to small-scale growers nationwide.

While regulatory and global factors have been blamed for lower farmer earnings, concerns have persisted over cartel-like activities within the tea sector, which critics say have helped preserve a system that leaves farmers struggling to benefit from their produce.

Gachagua, who was tasked with leading tea sector reforms while serving as President William Ruto’s deputy, repeatedly spoke of powerful forces frustrating efforts to improve returns to smallholder farmers. In February 2024, the former Deputy President said influential middlemen and profiteers were fighting efforts to increase farmers’ earnings by obstructing the reform process.

The reforms also appear to have fallen short of addressing disparities in annual bonus payments across different tea-producing regions.

In Murang’a, for instance, farmers questioned why growers delivering tea to one factory received Sh30 per kilogramme while their counterparts at a neighbouring factory were paid Sh49 per kilogramme.

“We are asking the governor to form a taskforce to look into the matter. How is it that a farmer delivering tea to one factory is paid Sh30 in Githambo while another is paid Sh49 per kilo for tea delivered in Gacharage? What is the issue? We cannot trust KTDA anymore,” said another farmer.

The disparities are even more pronounced among tea producers west of the Rift Valley. Farmers in counties such as Nandi, Kericho, Bomet and Nakuru received bonuses ranging from Sh12.50 to Sh22 per kilogramme.

When combined with the initial payment of Sh26 per kilogramme offered by some factories, the total payment comes to about Sh45 per kilogramme — far below the Sh56 per kilogramme the government says farmers have been receiving. The figure also compares poorly with total payouts of between Sh70 and Sh80 per kilogramme at some factories in the Mount Kenya region.

The disparities have prompted small-scale tea farmers from Nyamira and Kisii to seek the High Court’s permission to initiate judicial review proceedings over bonus payments for the 2025/26 financial year. They cited significant differences between their earnings and those of farmers in other regions.

Farmers in counties west of the Rift Valley, including Nandi and Kericho, have also demanded explanations. Kaptumo-Chebut Tea Factory in Nandi County, for instance, threatened to boycott green-leaf deliveries unless it received an explanation.

“The bonus we have received this year has nothing good to write home about,” said Richard Rono, a farmer from Nandi County. He said that once the cost of fertiliser bought on credit and loan repayments were factored in, many farmers would be left with little or nothing.

“The money we have received is not something that can help us in any way. We have fertiliser that we took on credit... we have borrowed loans from financial institutions including subsidiaries of KTDA,” he said, questioning how farmers would service their debts while meeting household expenses and the costs of running their farms.

The sentiments expressed by farmers contrast sharply with the government’s position on tea sector reforms and their impact on farmers’ welfare.

President Ruto, speaking at a recent food systems summit in Nairobi, said the reforms had resulted in higher payments, with farmers now earning an average of Sh56 per kilogramme of tea, compared with Sh34 three years earlier.

“Three years ago, the average price of green leaf was Sh35, the average price today is Sh56 per kilogramme,” said President Ruto.

However, while some leading factories in the Mount Kenya region paid a total of between Sh70 and Sh80 per kilogramme, factories west of the Rift Valley paid between Sh35 and Sh45 per kilogramme.

Producers in the western region account for the bulk of tea supplied by smallholder farmers, delivering 70 per cent of the total green-leaf quantities received by KTDA factories nationwide.

This has meant that President Ruto’s assertion that farmers are earning upwards of Sh56 per kilogramme has failed to resonate with many growers.

KTDA attributed the differences in payments to several factors, including tea quality and factory management practices. It argued that efficiently managed factories were better positioned to pay farmers more.

“Teas from different factories fetch varying prices at the markets—either through the auction or direct sales. This difference is driven by consumer preference, with buyers willing to pay a higher price for teas from some factories due to factors such as type of soil, altitude, climate and rainfall quantity,” KTDA said in a previous statement explaining the disparities.

“The buyers are willing to pay a premium on the teas from these factories (regions), hence the farmers in these areas will often receive better returns for their produce compared to others.”

The disparity between payments to farmers east and west of the Rift Valley is not new. Last year, the National Assembly’s Departmental Committee on Agriculture and Livestock investigated the practice and found that farmers west of the Rift Valley received lower prices partly because their tea fetched less at auction.

The MPs also found that production costs were 31 per cent higher in the western region, largely due to higher transport, labour and energy costs. The committee further identified governance problems at some factories, including excessive board meetings, a lack of transparency in inter-factory lending and alleged manipulation of weighing scales, all of which it said eroded farmers’ earnings.

According to the committee’s report, tea from the eastern region fetched an average of $2.95 per kilogramme at auction in the 2024/25 financial year, compared with $1.78 per kilogramme for tea from the west.

The findings were presented to Parliament by committee chair John Mutunga in April this year.

Beyond differences in auction prices and factory operating costs, questions have also emerged over how some factories finance their operations and farmers’ payments. Some factories have reportedly accumulated heavy debts through loans obtained without adequate transparency.

A March 2026 audit report attributed to the Tea Board of Kenya raised concerns about borrowing by KTDA-managed factories. It cited Sh34.05 billion in outstanding loans across 69 factories as of December 2025 and an unexplained Sh5.18 billion difference between loans arranged and calculated financing needs. The report also alleged that some factories had overvalued unsold tea stocks used to secure loans, potentially leaving them with debts to repay from future earnings.

KTDA disputed the legitimacy of the audit and rejected claims that factories had borrowed specifically to pay farmers’ bonuses. In an August 2026 statement, the agency said the loans had also financed working capital, operations and investments, while weak auction prices and slow sales had created cash-flow pressures for some factories.

Kenya’s tea sector is critical to the economy, contributing about two per cent of gross domestic product (GDP) and accounting for approximately 23 per cent of total export earnings.

The sector supports the livelihoods of about 6.5 million people, directly and indirectly. In 2025, the country produced 550.4 million kilogrammes of tea, generating Sh187 billion in earnings.

Despite this significant economic contribution, farmers continue to face diminishing returns, largely due to rising production, processing and marketing costs, according to another report by the National Assembly’s Committee on Agriculture.

“These challenges have eroded farmers' income and reduced the sector's net contribution to national economic benefits, including foreign exchange earnings,” a parliamentary committee said in a report on the Tea Amendment Bill 2023, which is still under consideration by the National Assembly.

The Bill sought to introduce targeted changes to the Tea Act 2020. It also aimed to resolve disputes involving the Tea Board of Kenya (TBK), the Kenya Tea Growers Association (KTGA) and the East African Tea Trade Association (EATTA) over certain provisions of the Act. The two entities had agreed to withdraw court cases challenging its implementation after the government committed to amending the law to address their concerns.

The Amendment Bill sought to open up tea sales by allowing farmers, through their factories, to undertake direct sales. It also proposed improving transparency, speeding up payments to farmers, safeguarding tea revenues against mismanagement, and promoting value addition and diversification within the sector.

However, the Bill also had drawbacks, according to the parliamentary committee, which noted that it proposed increasing management agency fees from 1.5 per cent to two per cent of net sales — a move that could further burden farmers.

The Bill also proposed eliminating Tea Levy allocations for price stabilisation and infrastructure in the sector, instead reallocating the funds to the Tea Board of Kenya, which would receive 60 per cent, and the Tea Research Foundation, which would receive 40 per cent.

The committee further noted that the Bill failed to establish the long-awaited Tea Revolving Fund, similar to the Coffee Cherry Advance Revolving Fund, which could provide farmers with affordable financing.

Stakeholders also criticised the Bill for failing to address other issues considered critical to the sector, according to the committee. These included excessive taxation by national and county governments, unfair trade practices under the KTDA structure, high broker fees and governance challenges across factories.

Kenya is the world’s third-largest tea producer after China and India, accounting for 8.3 per cent of global production. Its tea remains globally recognised for its quality and flavour. Yet, despite farmers being central to the sector’s success, many continue to struggle with low returns, leaving them on the margins of an industry that remains vital to the country’s economy.