KTDA lobbies for Sh10b from Hustlers Fund for its farmers

The Kenya Tea Development Agency (KTDA) wants President William Ruto to channel Sh10 billion of the proposed Sh50 billion Hustlers Fund through its farmers.

Small-scale tea farmers were struggling and needed a chunk of the money, KTDA chairman David Ichoho told Inooro TV on Wednesday night.

"We have engaged the President on the same and he is excited about the idea. We will lobby more at the Cabinet level after the nominees are sworn in,” he said. 

“We will engage the Trade, Investment and Industry CS Moses Kuria and Cooperatives CS Simon Chelugui to help us win the allocation."

He said the money will be channelled to farmers as loans with low interest rates, now standing at eight percent.

"We are the lowest interest rate lender in the market exclusively for our farmers,” he said. 

“We can go further down were it not for the legal provision that bars us from setting a lower rate than one applying for Central Bank ... But with the Hustler Fund, we can manoeuvre and do wonders for our farmers."

He also said they will lobby the government on tariff and non-tariff barriers in bilateral trade. 

"The President has also promised to support our rising global demand for our orthodox tea, which is only processed in 10 of our 71 factories. Dr Ruto has promised to help us increase the number of factories processing this tea to 18 in the next six months," he said.

Besides starting a value addition plant in the coastal region, Mr Ichoho said Dr Ruto promised to help raise domestic consumption of tea to 10 percent from the current five percent.  

Export earnings

The President was happy that the tea export earnings for 2021 rose from Sh120 billion in 2020 to Sh136 billion in 2022.

Mr Ichoho lamented that even with the ongoing sectoral reforms, "cartels that we have been fighting hard to defeat are still alive and poisoning the market through incitement".

He said the cartels include former managers deposed last year when the government insisted on democratising the election of factory leaders.

Mr Ichoho said the cartels had tried to depose current managers.

"Somebody had lied to them that they could take advantage of the transition from the Uhuru Kenyatta regime to that of Dr Ruto,” he said. 

“They thought the transition would be hostile to us and soft on them. Their attempted takeover was well choreographed where they raided the headquarters and factories."

Mr Ichoho added that "there was a security breach that enabled the deposed directors to carry out the raids where they accessed our core operation structures and even took selfies while in our offices".

He said the government had ordered that security be beefed up at all KTDA installations.

"If the raiders attempt another coup attempt, they will be treated like thieves. They are rejects out to regain control of KTDA so as to resume the corruption that was their mainstay before implementation of the reforms," Mr Ichoho said.

Takeover bid

He claimed that workers who colluded with the group in the takeover bid were sacked.

He added that forensic audits and auditor-general reports incriminate many of the former directors in financial improprieties during their reign and they were supposed to be arrested and charged in court. 

He revealed that the disgraced directors used court cases to steal from farmers through legal fees.

"They would pay 50 percent of the fees in advance and whether they lost or won the cases, they would end up earning obscene amounts and billing the farmer. They were sucking the earnings of farmers," he said.

In July last year, in an interview with the same TV station, Mr Ichoho said cartels were sucking at least Sh19 billion per year.

Last week, Deputy President Rigathi Gachagua said the government would not tolerate attempts to destabilise the tea sector, which earned Kenya Sh12.6 billion by January 2022

"The government is not ready to play around with agents of anarchy in the industry," Mr Gachagua said.

Guaranteed accountability

Mr Ichoho said tea farmers want to be guaranteed accountability in budgets and procurement, as well as higher net income.

"The cartels have taken some of the reforms to court and are mobilising even our market buyers to resist some of the clauses ... especially the ones guaranteeing farmers lowered management fees from 2.5 percent to 1.5," he said.

He claimed cartels were inciting buyers to refuse imposed reserve price payouts, calculated currently on average at $2.3 per kilo and which informs fractional monthly payments. 

"By the fifth of every month, we pay a percentage of the anticipated market gross earnings. We are supposed to pay 50 percent of the estimated earnings, but owing to cash flow constraints where we advance pay when we have not sold all of the harvests, we are yet to hit the target," Mr Ichoho said.

But he said the sector reforms have seen monthly payouts go up, and bonuses have increased by as high as Sh20 per kilo, while the mini bonus has also gone up significantly.

The total bonus paid rose from Sh44 billion in 2021 to Sh63 billion in July, which was released for 12 months although only eight months of harvests had been sold.

Mr Ichoho acknowledged that KTDA had to borrow a commercial loan and top up with reserves to afford paying three months earlier.

This came as factory directors in the Central region met in Sagana on Wednesday and issued a statement in which they said they were pushing for lower cost of production for a kilo of green tea that currently stands at between Sh80 and Sh110.

They said a structured programme was needed to bring down production costs, post-harvest losses and stealing at the weighing scale.

They added that a fertiliser manufacturing plant should be established in Kenya, arguing that this would cut fertiliser costs by more than 70 percent from the current commercial rates.

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