This archive report was first published on 8 August 2020.
On May 20, farmers affiliated with Mungania Tea Factory in Embu delivered green tea to a collection centre, amidst growing concerns over new rules for the tea sector. The rules, unveiled by Agriculture CS Peter Munya on Tuesday, have been met with resistance from tea marketing chain players.
The East African Tea Trade Association (EATTA), which comprises large-scale producers, small-holder producers, processors, traders, brokers, and buyers, is preparing to challenge the rules in court. According to insiders, the association's chairman, Peter Kanyago, is expected to pronounce the agency's position on the proposed changes.
Edward Mudibo, the Managing Director of EATTA, stated that stakeholders in the value chain still stand by their previous statement that the reform process is still a work in progress, as Parliament has yet to process the proposed changes. "We still expect the CS will have forwarded the Regulatory Impact Assessment Statement to stakeholders and the National Assembly Committee on Delegated Legislation for the changes to be processed as required by the Statutory Instruments Act. It is due process and not a choice," said Mudibo.
The new rules, set to be implemented by November, will see the Mombasa Tea Auction cease accepting private treaty sales known as Direct Overseas Sales (DSO). This move is expected to cut off a lifeline for some of the best quality producing factories under the Kenya Tea Development Agency (KTDA) stable.
KTDA insiders predict that some premium buyers under the DSO will shift to factories in Rwanda and Uganda, as foreign tea trading at the auction is not covered by the rules. The 69 KTDA factories are also required to drop two directors each to conform with the legal notice, which caps at three the number of directors in each factory.
Small-scale farmers will start receiving at least 50 per cent of the value of their deliveries by November, cutting off financial intermediaries that unfairly benefit from the sweat of producers. This will be made possible through direct disbursement of proceeds from the Mombasa Tea Auction to tea factory accounts within 14 days of sale of tea by brokers.
EATTA has approved any move by members who feel aggrieved to challenge the reforms in court. "We would even do it for members who wanted us to represent them because we feel the CS is trying to fix what is not broken," said Mudibo.
