The government is planning to establish a tea fund in order to cushion farmers against adverse price shocks.
This is according to the recommendation from the Tea Industry Price Stabilization Framework report which stipulates critical reforms to vibrate the multibillion tea industry as envisaged under the Tea Act, 2020.
The report authored by the Price Stabilization Committee led by former Planning PS, Irungu Nyakera proposed the establishment of Sh19.5 billion Tea Fund.
Agriculture CS Peter Munya said the tea fund will be under the Tea Board of Kenya and will start being operationalized in the 2022/23 financial year.
He said this is part of key interventions proposed to help stabilize the tea sector which had been marred by a myriad of challenges largely low returns to the farmers.
Speaking during the launch of the tea industry price stabilization framework, the CS said this is part of key interventions proposed to help stabilize the tea sector, which had been marred by a myriad of challenges largely low returns to the farmers.
Munya said the seeks to cushion tea farmers against adverse price shocks and as well enhance input subsidy to smallholder tea farmers.
“The Fund shall consist of monies appropriated by the National Assembly, tea levy, a source approved by the Board and through grants and donations made to the Board. The fund shall be administered in accordance with the Tea Price Stabilization Fund Regulations, 2021,” he said.
Munya explained that the board will earn Sh800 million from the tea levy in 2022/2023 production years and Sh6 billion will be drawn from the National Treasury in 2022/23 and 2023/2024 financial years.
The Tea Act, 2020 provides for a Tea Levy to be levied on exports and imports of tea.
Part of this levy will be utilized towards income or price stabilization for the tea growers.
“The funds will be invested in appropriate instruments with an anticipated return of investments of approximately Sh400 million,” Munya said.
He said part of the investment of the tea fund will involve a tea planting programme at an estimated cost of Sh12.3 billion.
In 2016, the University of Nairobi Enterprises and Services (UNES) carried out a study on tea planting which indicated the need for replanting old tea bushes at an estimated cost of Sh12.3 billion for a period of over six years.
