Writer of tea reforms article got it wrong

President William Ruto flagging off value-added tea to Accra, Ghana.

President William Ruto flagging off value-added tea to Accra, Ghana during the AFCFTA Guided Trade Initiative at KICC, Nairobi County. 

Photo credit: PSCU

The article “Tea farmers want better pay, not political rhetoric” by Raphael Mworia (DN, November 9) captured the desire of every tea farmer in the headline but failed to address many issues at best and was full of unsubstantiated facts at worst.

First, it cites the minimum price for teas from KTDA-managed factories as one of the benefits of the so-called reforms.

Part of the controversial tea reforms was to set a $2.43 (Sh296) base price for KTDA-managed smallholder teas, where all were of the same quality. Sadly, it’s not the case. Auction reports show much less have achieved the base price; hence tens of millions of kilogrammes remain unsold. 

Buyers are now buying alternative teas—from non-KTDA factories in Kenya and other countries that sell their teas through Mombasa Auction. Even some local tea players opposed a floor price.

Besides, KTDA had to borrow $150 million to make the second payment (bonus), which had never happened in its 59 years.

With stocks piling up in Mombasa warehouses, the teas continue to age yet old teas fetch lower prices, hence loss of revenue.

Supply, demand dynamics

The article was correct that tea prices have lately improved but failed to mention that this is the situation in all auction centres worldwide, driven by supply and demand dynamics. A dry season produces fewer volumes of tea, raising the prices, and vice versa.

Economists advise against a floor price for a freely traded commodity. No other auction centre in the world has it. So, were Kenyan smallholder farmers used as guinea pigs?

There are several court cases challenging 18 of the 81 sections of the Tea Act, 2020. Some involve the election of directors that were carried out in defiance of court orders. The issues of directors should, therefore, await the court ruling or parties to come to an amicable settlement.

The article also did not say that illegal leadership changes happened last year in KTDA and KTDA-managed factories and that, in the forthcoming factory annual general meetings (AGMs), the agenda to postpone elections to 2024 is an illegal way of defeating the one-third annual rotation requirement by the Companies Act, 2015. The effect is that some directors will remain in office for up to six years continuously.

Granted, KTDA has done a lot to diversify revenue streams, including power generation and orthodox lines. But these were initiated by the same old boards or directors that Mr Mworia disparages. The current office holders have neither initiated a project nor decommissioned an old one; they only launch old ones.

Lastly, it is laudable for the government to create new markets for our teas, commencing with the African Continental Free Trade Area (AfCFTA) and subsidising fertiliser with President William Ruto starting a value addition drive. That will boost the incomes of smallholder farmers.

Prof Johnson Kinyua, Kiambu

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