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State owes KTDA Sh5b in subsidised fertiliser fees

Friday, December 8th, 2023 08:30 | By
State owes KTDA Sh5b in subsidised fertiliser fees
Fertiliser being offloaded at the Port of Mombasa. PHOTO Print

The government owes smallholder tea farmers Sh5 billion in fertiliser subsidy fees since September 2022, Kenya Tea Development Agency (KTDA) Holdings has said.

Enos Njeru, KTDA chairman said during the agency’s annual directors’ conference at a Nairobi hotel that the national government has since September 2022 only extended Sh1.4 billion to fund the fertiliser subsidy programme. He said the Kenya Kwanza government as soon as it took over the country’s leadership, promised to support small-scale tea farmers with subsidised fertiliser to boost production.

To tea farmers, Njeru added, the government promised Sh4.4 billion in 2022 for subsidised fertiliser and out of the same only Sh1.4 billion has been released while this year government pronounced itself to provide Sh1.8 billion for the same.

“But the same is yet to be released. So cumulatively we are seeking about Sh5billion from the government as fertiliser subsidy fees,” said Njeru during the conference.

The delay to release the money, Njeru claimed is straining tea factories accounts, a situation feared might also affect payment to the growers.  “Failure to release the cash in good time will automatically affect the tea factories cash flows leading to equally delay in execution of financial obligations,” he added.   

This year, Njeru stated there was a delay in supplying our tea farmers with fertilizer, a situation worsened by the dramatic rise in fertiliser costs.

“The cost of fertiliser has been steadily rising because of rising cost of natural gas which is a key component in the manufacture of NPK chemically compounded fertiliser, unfavourable exchange rates, global supply constraints, high crude oil costs and the cost of shipment among other factors,” he added.

Financial limitations

Agriculture Cabinet Secretary Mithika Linturi while responding to the claims by the KTDA management admitted that the government is facing financial limitations thus the delayed disbursement of the fertiliser subsidy cash.

“Yes, KK government promised to extend some money to tea farmers to finance subsidised fertiliser. To date we have paid Sh1.4 billion, a situation that has been aggravated by limited cash flows in the government,” he said.  Linturi stated that the country’s economy has faced headwinds this year leading to declining cash flow and high cost of living.  “The Kenya shilling has continued to depreciate against other foreign currencies contributing to high import bills.  The economy has further been affected by the El Nino rains among other challenges,” he added. To ensure the government fulfills the promises it made to the citizens, Linturi said various strategies are being fast-tracked, for example, adjusting budget spending including development expenditure.   

On value addition, Linturi said the government is in the process of rolling out incentives across the tea sub-sector to enhance value-addition initiatives aimed at unlocking the potential of Kenya’s tea across global markets.

Linturi said his ministry, through the Tea Board of Kenya (TBK), has developed a concept note to incentivise tea value addition by offering tax and other incentives necessary to make local value addition more attractive.

The CS said the concept note had received the approval of the National Treasury, paving way for the roll-out of the incentives to open-up more tea-value addition initiates across the sub-sector.

KTDA Holdings CEO Wilson Muthaura said the diversification agenda will help KTDA factories reduce their reliance on traditional black teas for the more lucrative speciality teas.

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