Multinationals say they have lost Sh300 million following a
two-week industrial action that has spooked brokers under the East
African Tea Traders Association (EATTA) lobby.
The
Kenya Tea Growers Association (KTGA) said the losses arose from
overgrown tea that has not been plucked and stalled processing at the
factories.
The strike started on October 17 with
workers demanding a 30 per cent increase in salaries, which was awarded
by the courts in 2014.
However, KTGA successfully appealed the ruling of the Labour Court last year stalling the wage increase through a stay order.
“The
operations at the factories have stalled and the loss that we are
counting now is estimated at Sh300 million,” said Apollo Kiarii, chief
executive KTGA.
Statistics from Tea Directorate
indicate tea production from plantations, which mainly comprise
multinationals stood at 17 million kilos.
EATTA
managing director Edward Mudibo said the ongoing strike is directly
hurting the interests of the more than four million Kenyans and those
indirectly employed in the tea industry.
“With
the current demands, the cost of labour has overtaken inflation and
risen to unsustainable level that will likely not guarantee any
reasonable returns to sustain the workforce,” said Mr Mudibo.
“Kenya
still remains top in the world in terms of cost of labour and
production in the tea industry. We risk collapsing the tea industry as
was previously witnessed in the South African tea industry.”
He
said calculations done by EATTA indicate if the average price of tea
was to fall to $ 1.80 (Sh185) based on the prevailing cost of
production, most tea producers would have to close down due to
unsustainable costs.
The performance of the tea
industry is crucial to the Kenyan economy as it is the largest foreign
exchange earner, contributing over Sh114 billion in 2013, Sh101 billion
in 2014 Sh124 billion in 2015 and Sh120.6 billion in 2016.
Tea farmers affiliated to the Kenya Tea Development Agency are not affected by the strike.
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