Peter Munya’s stormy fight to reform agriculture

CS Peter Munya. Just months in office, he has already introduced changes aimed at improving farmers’ fortunes and management of sector, and in the process stepped on numerous toes. [File, Standard]

With his signature trimmed mustache, the son of Muthaara village, Meru County, has been known to rock the status quo wherever he goes.

People close to the Agriculture Cabinet Secretary describe him as a go-getter who takes on issues head on, leaving behind him haters and admirers alike.

Insiders at the Ministry of Agriculture describe the University of Nairobi alumnus as a lone ranger, who is rarely followed by his principal secretaries to official events.

What is not in doubt is his hands-on style of management that has made him stand tall among his peers.

Munya has become a cornerstone in President Uhuru Kenyatta’s food security agenda, moving swiftly since his appointment in January to clean up the sector.

Not being one to shy away from a challenge, the former Meru governor has been talking tough, pushing for regulations to weed out cartels that he says have been exploiting farmers for ages.

In only a few months, he initiated a raft of far-reaching reforms that have attracted criticism and praise in equal measure.

He set his eyes on three commodities - tea, coffee and sugar - that he said needed deep changes.

But his reforms did not go as planned: some have been derailed by court injunctions while others have been rejected by Parliament.

What is not lost is the conversation about reforms that he started in the agriculture sector, with analysts lauding his efforts.

Timothy Njagi, a research fellow at Egerton University’s Tegemeo Institute of Agricultural Policy and Development, says Munya correctly chose the elephant to address in the Agriculture ministry.

“It was time someone brought a disruption in the ministry; at least now we all agree that these crops have an issue. The only bone of contention is on how to find ideal solutions for the issues,” he said.

For tea, agriculture experts and stakeholders have in the past questioned why the government used an arms-length approach.

Ironically, the crop contributes about 23 per cent of the country’s total foreign exchange, but despite numerous cries by farmers, it only found audience this year when President Kenyatta promised to reform the sector.

In 2019, tea earned Sh117 billion from exports and Sh22 billion in local sales. Farmers produced 458 million kilogrammes of black tea, which accounted for 7.6 per cent of global tea production.

In April this year, Munya revealed the government’s plan to intervene in a sector that has been in the hands of private companies.

In the Crops (Tea Industry) Regulations, 2020 the government proposed that tea farmers who market their products through the Kenya Tea Development Agency (KTDA) be paid 50 per cent of the value of their deliveries every month, with the rest paid as bonus annually.

Previously, farmers were being paid by KTDA factories Sh14 to Sh16 per kilogramme monthly, with the bulk of the money paid as a bonus in October.

“These regulations, shortly to be followed by a new Tea Act currently before Parliament, are only one of the many measures that the government will implement to reverse the fortunes of the tea sector,” explained Munya.

The reforms also allowed individual tea factories to sell their produce at the tea auction, outlawing direct sales overseas. The auction was to be automated in three months to enhance accountability.

Munya also proposed that buyers of the green leaf would have to pay 10 per cent of the value with the balance paid before export of the consignment, and farmers were to be paid by the factories within a month of receiving the auction proceedings.

All tea buyers, he said, would submit to the Agriculture and Food Authority a performance bond in the form of a bank guarantee equivalent to 10 per cent of the estimated value of the tea they intended to buy.

Conflict of interest

To reduce conflict of interest, a single broker would only represent 15 factories at the tea auction.

Industry stakeholders noted that most of the proposed regulations sought to lessen KTDA’s grip in the tea sub-sector while opening the market to new players.

But Munya found it hard to sell this revolutionary gospel, with the first setback coming from his former office, the Council of Governors (CoG), which he led as chairman for two terms.

The council claimed it was not involved in the drafting of the tea regulations, yet agriculture is a devolved function under the 2010 Constitution.

It also took issue with several sections of the proposed reforms, including the ban on direct sales, increased costs of obtaining licences and control of the tea sector by the national government.

According to CoG, the regulations contradicted the Companies Act provisions on how tea companies should conduct their affairs.

“These regulations are an affront to the principles of devolution and practices,” said Tharaka Nithi Governor and Chairman of CoG Agriculture Committee Muthomi Njuki.

“The process of development of the regulations is illegal and unconstitutional as it did not involve the county governments and the agriculture committee of the council.” 

Lawmakers later abandoned the Munya revolution and sided with the county chiefs. Two Senate committees rejected the tea regulations.

In a report tabled in Parliament mid November, the Sessional Committee on Delegated Legislation and the Standing Committee on Agriculture, Livestock and Fisheries resolved not to accede to the Crops (Tea Industry) Regulations, 2020.

The senators said Munya overlooked the county governments in drafting the reforms.

Njagi from the Tegemeo Institute says the CS rushed to treat a symptom instead of dealing with the disease.

“Munya will find hurdles because the consultations were not extensive enough. Second, allowing everyone at the auction is not treating the issue of corruption there, he needs to streamline the governance for issues to work,” he said.

“Reverting KTDA to government will not help anything if issues of management have not been resolved. If he succeeds in streamlining management, then farmers will benefit.”

But while tea has proved a headache for Munya, he has made headway towards changing the coffee market.

Once Kenya’s leading foreign exchange earner between 1960s and the late 1980s, coffee is now in the hands of a few firms, mainly subsidiaries of multinational companies.

The crop is now fourth in foreign exchange earnings after tourism, horticulture and tea. Prior to the reforms, farmers in some parts of the country had uprooted the crop due to its poor return on investment.

Munya introduced a couple of reforms that drew solid backing from farmers.

One was a Bill to establish the Nairobi Coffee Exchange, with the commodity to be offered for sale through both auction and direct sales.

Buyers will be required to remit money to marketing agents within seven days for all their bids.

Coffee milling costs will be capped at Sh4,000 per tonne and milling losses at 18 per cent, benchmarked against the rates of New Kenya Planters Co-operative Union (KPCU), a State agency in the sector.

This is aimed at protecting farmers from millers.

Munya also revamped the KPCU and brought in new directors under the New KPCU, dissolving the previous body. The firm has already started purchasing coffee from farmers and is seeking direct markets.

As at April, it had distributed farm inputs to farmers using part of a Sh3 billion fund set aside by the government. Some farmers opted to take fertiliser from New KPCU instead of getting the cash as part of the loan.

However, just like in the tea market, the changes have met stiff opposition.

A group of people moved to court shortly after the distribution started to stop New KPCU from using the Cherry Fund. They are challenging its mandate to handle the fund, mill and market farmers’ coffee.

The case is yet to be determined, but those rooting for the changes dismissed the applicants as enemies of progress.

Currently, farmers are receiving cherry advance loans to help meet their financial obligations. The government will then recover the funds, including a three per cent interest after farmers sell their produce.

Previously, farmers would harvest and sell their crop through cooperatives, but wait for over a month before getting paid.

The reforms are designed to boost production, reduce the cost of processing and milling as well as transaction costs at the auction market.

“(Munya) realised that the malpractices in the coffee sector were not by accident, they were meant to hurt the farmers. He did his assignment well and farmers were involved in the consultation,” said Njagi.

In the sugar sector, reforms that started at a fast pace stalled following a court case that seeks to block changes in the industry.

Earlier this year, the Agriculture ministry said it planned to lease five State-owned sugar factories for a period of 20 years to revive operations and offload some of the debts burdening the firms.

The five factories slated for leasing were Chemelil, Miwani, Muhoroni, Nzoia and South Nyanza. Two of them, Miwani and Muhoroni, are already in receivership.

But farmers from Nandi rushed to court to block the leasing, claiming they were not involved or consulted, halting the process.

Parliament also raised concerns on the hard line approach adopted by the government.

“If you ask our county assemblies, who are in the sugar belt regions, they will tell you that they have not even seen an iota of any proposal that has been put before the governors,” Nandi Senator Samson Cherargei said in the Senate last month.

Sugar consumption in Kenya is about one million tonnes per year while the country imports between 350 and 400 tonnes. The imports are mainly from the Common Market for East and Southern Africa.

AFA has additionally received requests to import a total of 586,000 tonnes, which is yet to be approved.

For Munya, whether his do-it-alone approach will yield fruits will be clear in the fullness of time.