The Kenya Tea Sector Lobby Group is pushing for reforms in the sector, a move that seeks to improve the earnings of the tea farmers.
The proposed reforms include:
- Management fees to be reduced per global standards of 1% as opposed to the 2.5% that KTDA currently charges
- Maximum fees chargeable by brokers be capped at the global benchmark rate of 0.25% as opposed to the current 1.25% charged by brokers
- Government to scrap charge and VAT on tea bought for local consumption
- Funds from the sale of tea to be transmitted to the factory within 14 days of purchase
- The role of making investment decisions for the factory to be exempted from any management agent agreement.
- KTDA be mandated to sell off all its non-tea marketing related subsidiaries and properties, and subsequently, distribute those funds to the factories.
- Price stabilization program be drawn up along global best practices
- Government to appoint an accredited international audit firm which will carry out a forensic audit on KTDA, its subsidiaries, and all its 68 factories
“We propose that the regulations spell out penalties that would be incurred if the payments are made later than 14 days prescribed in the Act to ensure prompt payment to farmers,” The Star quoted the lobby.
Furthermore, the lobby proposes that within a year of operationalization of the regulations, the Agriculture CS shall issue guidelines on the development of a framework for a sustainable MGR (Minimum Guaranteed Return) for tea farmers.
In the long run, the lobby seeks to ensure timely payment of farmers, as well as upholding international standards in the running of tea factories in the country.
Kenya is the world’s largest black tea exporter. The Standard reports that in 2019, the tea sector earned the country KSh117 billion from exports, and KSh22 billion in local sales.