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
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