Lobby proposes further measures to safeguard Kenya’s tea sector – KBC

The Kenya Tea Sector Lobby, has submitted to the Cabinet Secretary, Ministry Of Agriculture, Livestock, Fisheries, and Cooperatives, Hon. Peter Munya, more measures to be included on the draft “Crop (Tea Industry) regulations, 2020.” 

The lobby says it has identified some key areas that require strengthening to arrive at the desired result of improved earnings to tea farmers and streamlined management of the tea sector.

In a statement Thursday, Kenya Tea Sector Lobby Group chairman Irungu Nyakera, says over the years, the tea sector in Kenya has experienced dwindling fortunes as a result of under-regulation that has allowed cartels within the sector to benefit at the expense of tea farmers.

“In 2019, we witnessed nationwide shambolic tea factories directors’ elections, an intentional flaw within KTDA to ensure further “interest-fuelled oversight” of tea factories by KTDA. We are therefore proposing for the Memorandum and Articles of the tea factories to provide that every grower has one vote with elections being conducted by an independent body/organ as determined by the factory board.” He said.

For the Kenya Tea sector to be globally competitive, he said they must match the global standard in the management of tea.

The lobby has proposed that management fees be brought down in line with global standards of 1% as opposed to the 2.5% currently being charged by KTDA.

Further, the maximum fees chargeable by brokers should be capped at the global benchmark rate of 0.25%,  as opposed to the current 1.25% being charged by brokers.

“Also, we propose that the government through the Finance Act, 2020, scrap lot charge, and VAT on tea bought for local consumption. This will allow the farmer to have enhanced earnings while making the sector attractive for the development of a cottage tea manufacturing and packing industry.” He added.

The proposed regulations he said provide for funds from the sale of tea being transmitted to the factory within 14 days of purchase.

Adding that: “We propose that the regulation specify penalties that would arise if the payment is made later than 14 days prescribed in the Act, to ensure prompt payment of farmers.”

To remove any undue control of tea factories by the management agent (KTDA), the lobby further proposes that the role of making investment decisions for the factory should also be exempted from any management agent agreement to ensure that grower funds are fully controlled by the factory directors.

” KTDA should further be required to sell off all its non-tea-marketing related subsidiaries and properties and subsequently distribute those funds to the factories.” Noted the lobby.

The lobby said it is concerned that there appears to be little involvement of the County Governments in the sector save for licensing of tea nurseries under regulation considering that agriculture is a devolved function as per schedule 4 of the Constitution. They propose that the county governments’ involvement in the implementation of these regulations be mainstreamed.

And to secure farmers’ incomes, the lobby proposes that within a year of operationalization of these regulations, the Cabinet Secretary shall issue guidelines on the development of a framework for a sustainable Minimum Guaranteed Return (MGR) for tea farmers. This price stabilization program they say should be drawn up along global best practices and ensure it does not create loopholes to enrich the tea cartels.

“Lastly, for a transparent transition into the new regulations, it is incumbent on the Government to appoint an accredited international audit firm to carry out a forensic audit on KTDA Holdings, its subsidiaries, and all its 68 factories since the year 2000. This will assist in bringing closure to accusations of malpractice and set the tone for the lawful implementation of the Regulations and the prudent custody of public resources.” Said Nyakera