TEA LOBBY PROPOSES FURTHER MEASURES TO SAFEGUARD THE KENYA’S TEA SECTOR

TEA LOBBY PROPOSES FURTHER MEASURES TO SAFEGUARD THE KENYA’S TEA SECTOR.

By African Times Special Correspondent

The Tea sector lobby has made further

proposals, touching on elections of directors,

fees charged by KTDA and marketing agents,

timely payments to farmers, guaranteed

minimum returns and the appointment of an

international auditor to carry out a forensic

audit of KTDA, its subsidiaries and factory

since the year 2000 to date.

Kenya Tea Sector Lobby, submitted to

The Cabinet Secretary, Ministry Of Agriculture,

Livestock, Fisheries, and Cooperatives, Hon.

Peter Munya, more measures to be included on

the draft “Crop (TEA INDUSTRY) REGULATIONS,

2020” .

Over the years, the tea sector in Kenya has

experienced dwindling fortunes as a result of

under-regulation that has allowed cartels within

the sector to benefit at the expense of tea

farmers.

The Kenya Tea Sector lobby has identified some

key areas that require strengthening to arrive at

the desired result of improved earnings to tea

farmers and streamlined management of the

tea sector.

In 2019, we witnessed nationwide shambolic

tea factories directors’ elections, an intentional

flaw within KTDA to ensure further “interest-

fuelled oversight” of tea factories by KTDA. We

are therefore proposing for the Memorandum

and Articles of the tea factories to provide that

every grower has one vote with elections being

conducted by an independent body/organ as

determined by the factory board.

For the Kenya Tea sector to be globally

competitive, we must match the global

standard in the management of tea.

The lobby has proposed that management fees

be brought down in line with global standards

of 1% as opposed to the 2.5% currently being

charged by KTDA.

Further, the maximum fees chargeable by

brokers should be capped at the global

benchmark rate of 0.25%, as opposed to the

current 1.25% being charged by brokers. Also,

we propose that the government through the

Finance Act, 2020, scrap lot charge, and VAT on

tea bought for local consumption.

This will allow the farmer to have enhanced

earnings while making the sector attractive for

the development of a cottage tea

manufacturing and packing industry.

The proposed regulation provides for funds

from the sale of tea being transmitted to the

factory within 14 days of purchase. We propose

that the regulation specify penalties that would

arise if the payment is made later than 14 days

prescribed in the Act, to ensure prompt

payment of farmers.

To remove any undue control of tea factories by

the management agent (KTDA), we further

propose that the role of making investment

decisions for the factory should also be

exempted from any management agent

agreement to ensure that grower funds are fully

controlled by the factory directors.

KTDA should further be required to sell off all

its non-tea-marketing related subsidiaries and

properties and subsequently distribute those

funds to the factories.

Considering that Agriculture is a devolved

function as per schedule 4 of the Constitution,

The Kenya Tea Sector Lobby is concerned that

there appears to be little involvement of the

County Governments in the sector save for

licensing of tea nurseries under regulation.

We propose that the county governments’

involvement in the implementation of these

regulations be mainstreamed.

To secure farmers’ incomes we propose that,

within a year of operationalization of these

regulations, the Cabinet Secretary shall issue

guidelines on the development of a framework

for a sustainable Minimum Guaranteed Return

(MGR) for tea farmers.

This price stabilization program should be

drawn up along global best practices and

ensure it does not create loopholes to enrich

the tea cartels.

Lastly, for a transparent transition into the new

regulations, it is incumbent on the Government

to appoint an accredited international audit firm

to carry out a forensic audit on KTDA Holdings,

its subsidiaries, and all its 68 factories since

the year 2000.

This will assist in bringing closure to

accusations of malpractice and set the tone for

the lawful implementation of the Regulations

and the prudent custody of public resources