- On January 14, President Uhuru Kenyatta ordered tea reforms to help raise farmers' earnings and improve the tea value chain.
- Provide mechanisms to prevent market abuse practices.
Image: FILE
The Crops (Tea Industry) Regulations, 2020, came into force on May 22 this year.
The Agriculture and Food Authority says they are ready for implementation.
But the Kenya Tea Development Agency has opposed the implementation and threatened to take legal action against the Agriculture CS.
The agency accuses the CS of releasing an implementation timeline before Parliament gave its approval.
However, Agriculture CS Peter Munya says the ministry has gave all tea sector players sufficient time, two months, to familiarise with the new rules and to create their own internal implementation capacity.
He says the regulations will be followed by a new Tea Act; the Bill is before Parliament.
On January 14, President Uhuru Kenyatta ordered tea reforms to help raise farmers' earnings and improve the tea value chain.
The ministry was directed to address corruption and exploitation of farmers as well as conflict of interest in the management of the tea value chain. This was meant to help increase farmers' revenues as opposed to middlemen and brokers.
The tea value chain has been grappling with low prices and bonuses, delayed payments and fluctuating net earnings to farmers.
“There is also lack of transparency and opaqueness in the management of KTDA subsidiaries and non-declaration of dividends to farmers, as well as the challenge of inefficiencies at the tea auction among others issues,” the CS says.
Antony Muriithi, AFA interim director general, says the lengthy consultative process started in 2014 and was finalised in 2020.
This was followed by the Regulatory Impact Assessment that was conducted on the draft Tea Regulations in 2019.
The balance due to be paid within the financial/calendar year. The Board shall be elected through a democratic process of one man, one vote, and shall have a maximum of three members. The tenure of the Board members shall be a maximum of two terms of three years each,
HIGHLIGHTS OF THE TEA REGULATIONS
According to the regulations, a tea grower wishing to change the factory where they deliver green leaf shall inform their respective factory. This will be done by giving a minimum month's notice or in accordance with the notification period specified in the Green Leaf Supply Agreement.
Tea factories shall pay the tea growers at least 50 percent for the green leaf delivered every month within 30 days from receipt of the proceeds of the sale of tea.
“The balance due to be paid within the financial/calendar year. The Board shall be elected through a democratic process of one man, one vote, and shall have a maximum of three members. The tenure of the Board members shall be a maximum of two terms of three years each,” the regulations state.
In addition, management agents are required to sign contracts/agreements with the tea manufacturers under agreed terms. The agreement signed between a smallholder tea factory limited company and a management agent shall not exceed a period of five years.
It also states that the management fee for services rendered by a management agent to a tea factory shall not exceed 1.5 percent of the net sale value of tea sold at the auction per year.
A director/affiliate of a management agent shall not serve as a director or have any direct commercial relationship with a tea factory.
Muriithi adds that tea brokers, buyers and the auction organiSer shall ensure that the proceeds of sale of tea are remitted to the tea factory limited company accounts within 14 days from date of auction.
“Tea buyers/importers and exporters are required to value add, establish an electronic trading platform for the auction of tea. All tea manufactured for export market, except orthodox and purple tea, shall be offered for sale exclusively at the auction floor, and tea not sold at the auction shall be re-listed for sale in a subsequent auction,” he says.
Auction trading rules and regulations shall be submitted to the CS for approval before application, and any changes in trading rules of the auction organiSer made within the course of the year shall be approved by the Cabinet secretary.
Muriithi says the trading rules and regulations shall provide mechanisms to prevent market abuse practices, and access all registered members at the auction to ensure no conflict of interest.
“In addition, the auction organiser shall each month submit to the authority an auction report for tea sold at the auction in the previous month,” he says.
For quality assurance, county governments shall carry out inspections at the tea collection centres to monitor and ensure compliance with hygiene standards and relevant laws.
Mureithi explains that the tea regulations seek to guide the development, promotion, and regulation of the tea industry for the benefit of the tea growers and other stakeholders in the tea industry.