The Kenya Tea Development Agency KTDA has rolled out an ambitious restructuring programme aimed at cutting down operation costs and improving efficiency.

Almost half of the agency's labour force spread across 54 tea factories countrywide are expected to lose opportunities that come with the peak season in the restructuring programme which involves automation of factory operations through use of new technologies.

According to the agency's operations manager Mr Arthur Rimberia, this move is expected to drastically reduce costs and enable its more than 400,000 small scale farmers to earn more.

"One factory takes about 120 to 200 workers in the high season. Reducing the workforce almost by half is inevitable because if we continue this way we will kill the industry," said Mr Rimberia.

With the factories absorbing at least 6,500 casualworkers at the peak period, the move means that over 3,000 seasonal workers will have to look for opportunities elsewhere.

He noted that high labour costs were bringing down the tea industry in South Africa. Labour costs in Kenya are said to be among the highest is the world. The costs have prompted experiments on machine use for picking tea by some private tea companies, sparking protests from trade unions.

Among the machines being adopted by KTDA include Continuous Fermentation Units which are automatic and require very little manpower to operate.

The restructuring programme follows increasing production costs incurred by the agency against declining international tea prices.

A kilogramme of tea is currently fetching an average of US$ 1.50 yet the cost of producing the tea stands at US$ 1.10 a kilogramme.

The increasing cost of production is further amplified by a tea the glut that is currently bringing down prices in the international market.

According to the agency, global production of tea has surpassed consumption by 2.35 per cent. This has led to a decline in tea prices over the last eight years.

The agency is also improving efficiency by merging some of its subsidiaries to take advantage of economies of sale.

Recently, KTDA merged two of its subsidiaries, Chai Warehousing Ltd and Chai trading Ltd to form Chai Trading Company Ltd.

Starting an engineering company as a subsidiary is also being planned to help KTDA to fabricate and maintain the vast machinery in its 54 factories.

The factories use a host of engineering machinery which include withering troughs, conveyor belts, monorails, driers, boilers and motors which are outsourced.

To reduce the farmers' expenses, the agency aims to start the subsidiary through buying into an already existing company, forming a joint venture or starting a new company.

The subsidiary company is aimed at reducing costs incurred in maintenance of machinery in the agency's factories scattered all over the country.

Another major part of the restructuring programme involves decentralising the agencies activities.

To achieve this, Mr Rimberia said the country's tea producing area has been divided into seven zones.

"Each region will have a regional office with an operations manager, ICT manager, accounts manager and regional engineer," he said.

Moving closer to farmers is expected to improve service delivery and reduce operational costs.

"We will know the farmers better and their problems and we will localize service delivery," said the operations manager.

Tea farmers who have for long been traveling to Nairobi to get services from the agency are expected to benefit most from the move. They will be able to get fast payments launch their queries through the regional offices.

Last year KTDA had a bumper harvest hitting a record 900 million kilograms of green tea which translated to 200 million kilogrammes of real tea.

Good rains and renewed efforts by farmers to improve production were seen as the reason behind the bumper harvest.