Tea industry bonus payout jumps 148%
The Tea Association of Malawi (Taml) has paid out a record bonus of K13.26 (about $0.03) per kilogramme (kg) of green leaf tea sold by its almost 1 500 smallholder famers to estates.
This represents a 148 percent jump from the K5.34 per kg bonus paid out last year, resulting in smallholder farmers smiling all the way to the banks.
Effectively, this puts the leaf price at almost K56.56 per kg against the prevailing farm gate price of K43.30 per kg in the first half of this year, according to Taml chief executive officer Clement Thindwa.
“The bonus payout system awards smallholder farmers over and above the normal prevailing green leaf tea prices [currently at K43.30 per kg] as a result of movements in the processed black made tea prices on the Limbe Tea Auction market every six months,” he explained.
Thindwa said the calculation of bonuses is based on the average price at Limbe Tea Auction, located at Kidney Crescent in Blantyre, by balancing the surplus in dollars over the cost of production (CoP) components and the premium obtained is split and shared between the smallholder tea farmers and estates on a 50-50 basis.
The record bonus is mainly a result of relatively favourable tea prices on the Limbe Tea Auction coupled with continued devaluation of the kwacha against major trading currencies particularly the dollar.
Taml has a formal agreement with the National Smallholder Tea Development Committee (NSTDC), a representative group of smallholder tea growers.
The agreement, among other provisions, stipulates the need to create and promote a transparent and stable production and trading environment, the need to have green leaf tea transaction systems that are realistic [reflective of and congruent with situations on the ground] and above all, sustainable and safeguarding operational viability of the value chain from smallholder upwards,
Additionally, the agreement compels estates to support smallholder operations and to buy all smallholder green leaf whose prices are to be negotiated for and set in dollars through the Green Leaf Tea Pricing Committee comprising a balanced membership by smallholders and estates with the Ministry of Agriculture and Food Security as observers at all times.
Thindwa said the agreement has provision for review from time to time in response to normal business environment dynamics.
Industry experts say tea production prospects for 2013 look good with output for the year to date surpassing previous year’s (2012) production levels.
