•KTDA chairman David Ichoho says board committed to implementation of reforms geared towards improving tea factories' perfomance, increase returns to tea growers.
•All smallholder tea factories located in the West of the Rift Valley, as well as those in Embu, Meru, and Kiambu counties, have signed new agreements .
Image: JOHN KAMAU
More than 80 per cent of smallholder tea factories across the country have signed new management agreements with the Kenya Tea Development Agency Management Services Limited (KTDA-MS).
This affirms confidence in the organisation’s proven track record by entrusting it to manage their affairs, KTDA said in a statement on Friday.
All smallholder tea factories located in the West of the Rift Valley, as well as those in Embu, Meru, and Kiambu counties, have signed new agreements with KTDA-MS, committing to continue using the organisation to manage their affairs, for at least the next five years.
The signing of new management agreements between KTDA-MS and factories is part of the ongoing reforms in the tea sub-sector as contained in the Tea Act of 2020, and subsequent subsidiary legislation, which call for enhanced management agreements for factories in favour of the smallholder tea farmers.
The reviewed management agreements are a shift from the current arrangement, which are expected to remedy the relationship between the parties and improve the management of tea factories for the benefit of tea farmers once implemented.
Key changes
Among key changes in the reviewed management agreements include reduction of management fees factories pay management agents, from the current 2.5 per cent to 1.5 per cent of net sales value of the tea sold per year.
They have also agreed to introduce key performance indicators to monitor the performance of the management agency on a continuous basis.
The term of the agreement will be reduced from the current 10 years to five years, which is expected to enhance accountability of the management agency.
An agreement has also been reached for a clear demarcation, spelling out the role of the management agency and the board to improve their services to tea factories and farmers.
“We are pleased with the progress made by a vast majority of our factories n signing the new management agreements with KTDA-MS as part of the ongoing reforms in the tea sub-sector," KTDA Holdings Chairman David Ichoho said.
He spoke after the conclusion of management agreement negotiations between Kiambu County tea factories and KTDA-MS in Ruiru on Thursday.
He said the board remains committed to the implementation of all reforms geared towards improving the performance of tea factories and increasing returns to tea growers.
“The decision by the factories to enter into new agreements with KTDA-MS is confirmation of their confidence in the organisation to continue delivering quality services and value for money for smallholder tea farmers in the country, ”Ichoho said.
Aware of the substantial impact the reduction in management fees will have on the business, fundamental changes in both the structure of KTDA MS Ltd as well as in mode of service delivery will have to be implemented by adoption of mechanisation and automation., he noted.
The reviewed management agreements with KTDA MS Ltd will be submitted to the Tea Board of Kenya for review and approval before implementation.