AGRICULTURE

Reforms in tea industry opportune

be addressed through value addition.These reforms are in no doubt the most radical since independence.

In Summary

• The current rules governing the election of directors of factory limited companies were drawn by the former Kenya Tea Development Authority. 

• With the then KTDA at the helm, these rules were designed to lock out directors who championed farmers' interests.

Farmers picking tea in Kangaita village
'TEA IS AN INVESTMENT': Farmers picking tea in Kangaita village
Image: FILE

Tea is indisputably one of the leading foreign exchange earners in Kenya.

Recent estimates show that tea exports contribute approximately 23 per cent of the country’s total foreign exchange earnings. In addition, the tea subsector maintains well over five million Kenyans in terms of livelihood.

Based on recent data from the Ministry of Agriculture, in 2019 the tea industry earned the country Sh117 billion in export earnings and Sh22 billion in domestic sales.

 

In terms of supplies, the value of local sales also increased from Sh15 billion in 2018 to Sh18 Billion in 2019.

In addition to the recent tea regulations announced by the Ministry of Agriculture, there is need to fine-tune the proposed reforms. This is primarily to buttress key concerns raised by small scale tea farmers over the years.

First is the critical issue of governance of tea factory companies.

The current rules governing the election of directors of factory limited companies were drawn by the former Kenya Tea Development Authority.

This was a gerrymandering exercise without farmers' input. With the then KTDA at the helm, these rules were designed to lock out directors who championed farmers' interests.

To address this key concern and chart the way forward, it is imperative to redraw all the boundaries to ensure there is an equitable and fair representation of farmer shareholder representatives based on shareholding, acreage and crop yield/production.

Minimum qualifications based on education should also be set due to the complexity of matters involved in tea governance.

The recommended qualification for those nominated for election as directors should be a university graduate from a recognised institution in addition to shareholding and acreage production.

Second, a forensic audit should be done to determine all payments to farmers over the last 20 years. Shares held by farmers in current and all former factory companies where they delivered their tea produce should be tracked and verified.

Third, to increase farmer earnings there is need to ensure that 70 per cent of exported tea is in value-added form.

In this regard, benchmark with among world-leading tea-producing companies locally and internationally, for instance, Sri-Lanka. This will involve among others examining how their tea brands find their way to supermarkets in western countries.

 

Fourth, establish an online auction where all teas shall be sold and explore the possibility of establishing tea trading in derivatives to mitigate fluctuations just like in oil. 

Fifth, launch a reserve fund for marketing Kenyan tea as a quality global brand. The fund shall receive 1.25 per cent of gross sales of all teas. The fund shall borrow the model from the tourism trust fund used to market Kenya as a tourism destination

Finally, to boost production, revert the farm extension services function to the relevant department of national / county government dealing with agriculture.

Further to address the perennial issue of labour shortage, introduce tea plucking machines. The often-cited quality compromise as a result of mechanisation shall be addressed through value addition.

These reforms are in no doubt the most radical since independence. To ensure they are implemented, only a legally mandated institution should oversee the process.

Towards achieving this, it would be feasible to establish the Tea Reforms Transition Authority (TRTA). The Authority shall, among other key functions, re-design a structure to replace the existing model of the present small scale tea sub-sector currently under the Kenya Tea Development Agency (KTDA).

In conclusion, there is need for active stakeholder involvement in these reforms to ensure a win-win outcome in the tea value chain, especially for the hard-working tea farmer.

Dr Njau Gitu is a policy and strategy adviser and is a registered Small Scale Tea Farmer shareholder

[email protected]