Protesting tea farmers

Farmers affiliated to Gathuthi Tea Factory in Nyeri protest in Kahigaini village on September 24, 2020.

| Joseph Kanyi | Nation Media Group 

Lawmakers inch closer to taming KTDA cartels 

What you need to know:

  • Farmers will be guaranteed at least 50 per cent of the auction price of their produce.
  • Factories will pay 50 per cent of receipt the sales to farmers every month.

Kenya Tea Development Agency (KTDA) will lose control of the billions of shillings it has been amassing from farmers every year once the much-awaited Tea Bill goes through the few remaining stages in Parliament.

A few minutes to 11pm on Tuesday, the National Assembly passed the bill in the clearest signal that the cartel-soaked industry will soon be led differently. 

Once the bill goes through the third reading, where no amendments take place, it will be sent back to the Senate for concurrence and to the President for signing into law.

KTDA used to put all the money received from tea sales in a pool account. But now, brokers will no longer send money to KTDA but to factory accounts.

The Tea Bill was sponsored by Kericho Senator Aaron Cheruiyot and followed some ground breaking investigation by the Nation and uproar by farmers over low pay.

Farmers will be guaranteed at least 50 per cent of the auction price of their produce and the balance at the end of the year, less management fees.

According to the approved bill, brokers, buyers and auction organisers must ensure the proceeds from the sale is paid within 14 days.

Factories will pay 50 per cent of receipt the sales to farmers every month. This will mean KTDA, which has been holding onto a huge chunk of the proceeds for a year, will no longer have access to the billions since the money will be controlled at the factory level. 

According to Agriculture CS Peter Munya, KTDA takes away more than Sh2 billion from farmers as management fee every year.

Proposed regulations

Some of this cash is used by the litigation-loving agency to pay lawyers and PR firms into silencing farmers and promote pro-KTDA narratives on social media.

Last night, Laikipia Woman Representative Catherine Waruguru accused KTDA of wasting farmers’ money in unnecessary court battles.

KTDA and the tea auction house, East African Tea Trade Association, have taken the government to court to stop the implementation of the proposed regulations. The case will be mentioned at the High Court today (Thursday).

Ironically, most of the regulations that made KTDA and EATTA go to court have been made part of the bill passed in the National Assembly. 

The rules were championed by Mr Munya after he was asked by President Uhuru Kenyatta to end cartels in the tea value chain.

The bill outlaws the sale of tea by private treaties, apart from orthodox tea, and which will see farmers get value for their produce. 

Insiders say private treaties have been used by brokers and buyers to exploit farmers. The new proposal is that tea shall be sold through auction and “the buyer shall pay the full price before collecting or taking custody of the tea.”

Some factories in the past lost tea to traders who vanished without paying.

Of importance is the return of the Tea Board of Kenya, and the Tea Research Foundation which will take their previous assets.

In another radical move, KTDA and other management agencies, will no longer sign contracts with factories without scrutiny by the Tea Board. It will also be filing annual returns to the board and county governments. 

Such contracts will last five years – renewable at the discretion of the tea factory.

If the bill becomes law, KTDA will no longer provide company secretarial services to factories. 

At the moment, KTDA company secretary John Omanga has been the sole company secretary of KTDA-run factories.

The bill says a factory shall recruit its in-house company secretary or outsource the service.

“A director of a factory shall not serve as director in another company having direct or indirect commercial relationship within the tea factory where the person is serving as a director,” it says. 

Auction organiser

The bill has given the CS powers to regulate any auction organiser.

An attempt this week to have management agents such as KTDA sit at the Tea Board was dropped and the crucial one-man one-vote in the election of directors was reinstated and passed.

The law will give the minister powers to prescribe regulations for the registration of management agents and the appeal process. 

Farmers will monitor their tea through the value chain. The auction organiser will establish an electronic trading platform that is accessible to players in the value chain. That will remove the practice in which farmers hardly know how their produce was sold.

The Kenya Tea Sector lobby hailed the passing of the bill as “significant and a triumph to farmers”.

“This is a step towards making sure that we save the farmer from exploitation. We shall keep our eyes on the ball until the bill is signed into law and then we embark on streamlining the value chain,” lobby chairman Irungu Nyakera said.

In order to minimise the number of board members at a factory, the bill now caps it at five,elected in a one-gorwer one-vote system.

It also regulates the importation of tea, which is normally done by blenders. The importer will have provide evidence that the tea is not available locally.

Brokers’ earnings have been slashed. It will not exceed 0.75 per cent of the gross sales.
With the passing of the bill, the National Assembly will compile a report and send it to the Senate for approval and concurrence. 

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