ENDING INDUSTRY 'CAPTURE'

Tea farmers earn more under 'robust' new regulations

Management agency fees for smallholder tea factories reduced from 2.5% to 1.5% of value of tea sold

In Summary

• Brokerage fee reduced from 1.5 per cent of the value of tea sold to 0.75 per cent with the farmers paying 0.2 per cent and buyers paying 0.55 per cent, respectively.

• Farmers will have more money in their pockets and more power in the industry, reducing role of middlemen.

Agriculture CS Peter Munya.
TEA PRICES: Agriculture CS Peter Munya.
Image: DOUGLAS OKIDDY

New tea regulations to end the historical suffering of tea farmers and increase their prices and power are set to be gazetted into law.

“The tea industry now has a set of robust and progressive tea regulations that will steer the industry well into the future," Agriculture CS Peter Munya said on Thursday at Kilimo House.

He said they will ensure tea farmers have more money in their pockets and more control of the multi-million industry.

The regulations reduce management agency fees for smallholder tea factories from 2.5 per cent to 1.5 per cent of the value of tea sold.

Munya announced the final tea regulations, after public consultations on the draft regulations released two weeks ago.

In addition, brokerage fees will drop from 1.50 per cent of the value of tea sold to 0.75 per cent, with the farmers paying 0.2 per cent and buyers paying 0.55 per cent.

“The submission by tea stakeholders also wants a reduction of the number of directors for smallholder tea factory limited companies to three, and the tenure for directors serving tea factories to two terms of three years each,” he said.

Munya said the stakeholders also recommend outlawing of persons who are not tea growers, commonly known as ‘soko-huru’or ‘mukohoro’ from engaging in the business of buying and selling green leaf to tea factories.

Munya said in the new regulations, tea exporter traders will be required to ensure 40 per cent value addition to the total tea exported in eight years for buyers that are already in operation and five years for new buyers. Failure to do this, he said, can result in loss of licences.

The CS said this is in line with provisions of Section 40 of the Crops Act, 2013 and has been drawn from the Presidential Directives issued on January 14 on the necessary reforms in the tea value chain.

Issuing regulations follow an in-depth analysis of systemic problems facing the tea value chain and plausible regulatory remedies.

The CS said the regulations have particularly sought to rebalance power and influence wielded by value chain players, reduce unnecessary cost burdens on vulnerable tea farmers and guarantee better and decent returns on tea farmers’ labour.

He said the regulations will create transparency and accountability among various value chain actors including auction organisers. They also will improve the competitiveness of tea exports internationally and generate more export earnings.

Munya said the regulations will help end "capture" of the tea industry by a few players especially at the tea auction in Mombasa. He said he will appoint a task force to ensure implementation of the regulations. 

The regulations are at the Attorney General’s office after which they will be gazetted.

Edited by R.Wamochie