When President Uhuru Kenyatta signed into law the Tea Bill, farmers could not wait to celebrate. The Tea Act is meant to provide for regulation, development and promotion of the tea industry, and for connected purposes. The law, which many describe as radical, has among other things, reintroduced Tea Board of Kenya, a powerful regulator.
Some directors and staff at the Kenya Tea Development Agency (KTDA) fear the regulations. Reading through the Act and the proposed regulations, which unfortunately were published ahead of the enactment of the Act, one finds that the law is simply reintroducing the old Tea Board of Kenya to overregulated cartel controlled tea sector.
The chair of this institution will be a presidential appointee while the majority of its 11-board membership is drawn from government departments. The small and medium scale tea farmer has only four slots. The President appoints chairpersons of the Kenya Meat Commission, Agricultural and Food Authority, Tea Research Foundation, Kenya Cooperative Creameries, Agricultural Finance Corporation and Agricultural Development Corporation among other moribund farmer-related institutions.
The drafters of the Act assume that a presidential appointee can be more benevolent to the farmer than the farmer elected person. The presidential appointee, it is presumed, can help the farmer realise more returns. Without casting aspersion on the law, its drafters want to put the farmer where Chemelil Sugar Ltd, Sony Sugar Ltd, Muhoroni Sugar Ltd and KMC are at the moment.
Apart from compelling them to register with the Tea Board in a prescribed manner and paying a requisite fee, the law also compels tea brokers, buyers, auctioneers and any other dealers to remit tea sales money within 14 days. They too must pay the farmers 50 per cent of the sales proceeds every month. But what happens if there is no sale due to unforeseen factors such as natural calamities, pandemics, catastrophes and other factors that affect sale or transportation of the goods from warehouse or auction to the loading bay?
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The law fails to appreciate that these brokers also operate under other different legal regimes that include Companies Act of 2015 and relevant county government laws. The law is therefore adding more costs and challenges.
The management of tea factories are not spared either. Apart from failing to recognise that that the factory is a different entity from the farmer, it is also imposing the two-thirds gender rule on the composition of the board of the factory. This provision ignores the general conditions prevailing in rural areas that the male person, being the head of many households, are the bona fide registered members. It also runs contrary to one grower one vote rule imposed by section 22 (3) on election of board of directors.
Since 2012, when Crops Act was enacted, tea farmers have had their own seedling nurseries with little regulations since the regulator, Tea Directorate under Agricultural and Food Authority, was in the process of setting up structures. But with the coming of the Tea Act, running a tea seedling nursery, a common activity among the young people in my county of Bomet among other tea growing zones, shall soon require a licence which comes with a fee. Anyone contravening the law risks sanctions.
Apart from prohibitive costs of licences, the law does not provide for proper forum for arbitration of disputes within the sector. Instead, it bestows such powers on the Tea Board and in case the matter is not resolved, the aggrieved party can move to court of competent jurisdiction. It is important, in a very overregulated sector, like tea, to have an independent tribunal to deal with disputes among players.
A tea insider laughs off at this law and the proposed regulations stating that tea auction and export are not like the Wakulima market at Karatina. “Tea business is not like the potato market at Karatina. Tea can’t be sold or bought anywhere or anytime. It must be available in one place and the buyer must sample. These are complex international trade transactions governed by several international commercial laws,” he opines.
Unfortunately, the law has opened up tea management agency market without providing for dissolution of KTDA. If the law is implemented as it is, farmers stand to lose their investment in insurance, warehouse, buildings, power generation and other subsidiaries of the ever-expanding KTDA.
The good side of the law is section 20 which makes county governments responsible for development of tea grown within their jurisdiction, disease control, markets, cooperative societies and soil and water conservation. These responsibilities flow from the Constitution and crop Act 2012.
Still, Agriculture Cabinet Secretary Peter Munya can salvage the sector by formulating and publishing an all-inclusive Tea Regulations document. He needs to separate independent tea factories from KTDA and plantation owned tea factories.
-The writer is a lawyer and a lecturer at Multimedia University of Kenya, Nairobi.
