• KTDA managed factories currently sell between 180,000 and 200,000 million kilogrammes of tea from over 600,000 small-holder growers annually.
• In spite of the economic and social challenges due to Covid-19 pandemic, tea production and trading have continued unabated.
Image: /EUTYCAS MUCHIRI
Reforms in the tea sector will ensure accountability at the Kenya Tea Development Agency, Nyeri Senator Ephraim Maina has said.
On Thursday, Agriculture CS Peter Munya announced new policy, regulatory and administrative changes in the tea sector, which if enacted into law could cripple KTDA.
Munya said the major problem facing the tea value chain was a dysfunctional and inefficient auction system.
“This is characterised by lack of transparency, accountability and competition making it prone to manipulation, capture, insider trading and cartelization by value chain players. This has led to ineffective price discovery, low prices and poor earnings to tea farmers,” he said.
The CS said there was a serious conflict of interest at the tea auction in Mombasa which predisposes the process to vested interests, insider trading, price-fixing and other malpractices.
To address this, Munya proposed that all the tea produced in Kenya for the export market shall within two months be sold exclusively through the auction.
“This means sale by a private treaty commonly known as Direct Sales Overseas is outlawed,” he said.
Maina said the issue of direct sale should be abolished and that all tea should be sold through open auction.
The government had also proposed that remuneration for any management service shall not exceed two per cent of the value of tea sold per year but the senator said this should be reduced from the current 2.5 per cent to 0.5 per cent of the total earnings.
At an average price of about $3.5 per kg, teas belonging to smallholder growers handled by KTDA under the management agreement generate a value of between Sh60 billion and Sh70 billion annually.
The tea regulation report shows that at a management fee of 2.5 per cent of the value of tea sales for management services, KTDA holdings and its subsidiaries gobble between Sh1.6 billion and Sh2 billion every year as fees.
“Registration of companies in the tea sector should be made easier. The setting up of cooperatives has been cumbersome and frustrating to farmers. KTDA should stop buying fertiliser for farmers using the model it has been using," Maina said.
"Instead, this purchasing should be through open tendering following all government procurement procedures, the way it is done when the government is buying fertiliser for other sectors.”
The tea regulation also recommends carrying out a study to evaluate the impact of KTDA commercial behaviour on the entire value chain.
“In particular, the study would undertake a historic audit and tracing of deductions of money that belong to smallholder tea growers over the last 10 years,” the regulation reads.
Maina said the government should follow, investigate and prosecute people behind loss of money at KTDA.
The study will further evaluate the risks associated with the sale of tea by private treaty by KTDA and losses that farmers have incurred due to this arrangement among other issues.
Maina said tea farmers are frustrated, weakened economically and are facing a very difficult situation.
“The tea sector is taking the route the coffee sector took. The issue of voting should be addressed immediately. The voting system where the power of share is controlled by a given factory should be abolished immediately. It should be a one-man, one-vote system,” the senator said.
Munya said the regulations will be submitted for public consultation for a period of 14 days before it is forwarded to the National Assembly and later gazetted.
Edited by A.N