Agriculture Cabinet Secretary Peter Munya says all tea buyers will submit a bank guarantee equivalent to 10 per cent of the estimated value to underwrite commercial risks. [Wilberforce Okwiri, Standard]
The government has proposed regulatory remedies to protect tea and coffee farmers from middle men who exploit the vulnerabilities of small-scale growers.
Agriculture Cabinet Secretary Peter Munya, while releasing the regulations yesterday, asked the various stakeholders to go through them and give their views.
He said the tea sector is undermined by the manipulation and predatory behaviour of some actors in the value chain.
Mr Munya also announced that the government plans to undertake a study to evaluate the impact of the Kenya Tea Development Agency's (KTDA) commercial behaviour, including on earnings to smallholders.
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“The study would undertake a historic audit and tracing of deductions of money belonging to smallholder tea growers over the last 10 years, and evaluate the management of the KTDA holding,” said Munya.
He said a major problem facing the tea value chain is a "dysfunctional and inefficient auction system" characterised by a lack of transparency, accountability and competition.
As part of the regulatory remedies, Munya proposed that all teas produced in Kenya for the export market be sold exclusively through the auction process. Sale by private treaty, commonly known as Direct Sales Overseas, will be outlawed.
“Any teas that are not sold during a particular auction shall be re-listed for sale during the subsequent auction,” said Munya.
All registered tea auction organisers will also be required to establish an electronic trading platform.
Tea is one of the leading foreign exchange earners, contributing about 23 per cent of the country's total export income. In 2019, the industry earned Kenya Sh117 billion from exports and Sh22 billion in local sales.
The sector also supports the livelihoods of more than five million Kenyans.
Last year, Kenya produced 458 million kilogrammes of black tea, accounting for approximately 7.6 per cent of global production. It exported 496 million kilogrammes, which represented 26 per cent of global tea exports.
Munya said despite the economic and social challenges posed to the global community by the Covid-19 pandemic, tea production and trading has continued unabated, with the commodity being shipped to about 40 destinations monthly since January 2020.
Kenya's tea value chain has, however, for a long time been constrained by structural challenges that have undermined the sector's ability to achieve its full potential on export earnings, job creation and better incomes.
