Smallholder tea farmers to receive Sh649m dividend boost

Smallholder tea farmers affiliated to KTDA managed factories will this month receive Sh649 million from their tea factories.

This is from dividends received from KTDA Holdings Ltd and its subsidiaries for the financial year ending 30th June 2019.

"In the recent past there have been allegations in sections of the media to the effect that there have been no dividends received by factories and tea farmers from their investments in KTDA Holdings and its subsidiaries," a statement released on Wednesday read.

KTDA’s annual audited accounts indicate that dividends have consistently been paid to its shareholders who are the factory companies.

The tea factories, through resolutions of their directors, have resolved to pass the dividends received from KTDA holdings directly to the farmers who are the shareholders of the tea factories that own KTDA (H) Ltd.

"In observance of corporate governance rules, the payslips farmers will receive from their respective factory companies will now show the actual dividend payments accrued from the subsidiaries, separate from normal monthly payments for the delivery of tea," the statement further read.

The subsidiaries are; KTDA Management Services that deals with the management of the tea factory companies in line with the recommendations made by the Tea Industry Taskforce of 2007; KTDA Power which is involved in power generation aimed at reducing the cost of energy for factories; Greenland Fedha which facilitates easy access to credit for farmers, and KETEPA, which is KTDA’s value addition arm that blends and packages tea for local consumption and export.

Others are Chai Trading Company Limited whose mandate is warehousing, blending, clearing and forwarding, value addition, export and general tea trading; Majani Insurance Brokers which was established to provide insurance brokerage services for tea factories and KTDA Group companies; Tea Machinery & Engineering Company Ltd – established to provide a modern workshop for fabrication and assembly of tea machinery for tea factories, and KTDA Foundation which focuses on corporate social investments.

These subsidiaries operate along the tea value chain by taking advantage of economies of scale to provide critical services to factories and farmers at competitive rates.

The generated dividends are enjoyed by the factories and their farmers and are reflected in the respective books of accounts.

Over the last five years, factory companies have received more than Sh3.7 billion in dividends from KTDA and its subsidiaries’ business activities, the amounts having been previously consolidated.

Based on the different sectors and regulatory regimes, the various subsidiary companies are governed by different regulatory institutions in the country.

The payment is over and above what farmers earn as monthly or initial payment.