Monkey business as tea sector reforms hit home stretch

On Tuesday, the National Assembly was set to discuss the Tea Bill which was going into the third reading. Then a hawk-eyed MP noticed that some fundamental changes that would have reformed the tea industry had been deleted — or omitted.

As a result, the Agricultural Committee postponed the tabling of the Bill and on Wednesday, they held a meeting to discuss the matter.

Omitted was the “one-man one-vote”, which had been a major demand by the tea farmers who felt that they had lost control of the factories to a few shareholders.

Again, private sales, the main avenue where tea farmers lose money through back-door trading and away from auction, had been sneaked back. The Bill had now allowed about 20 per cent of the tea to be sold through direct sales as long as the direct sales were higher than the auction price.

“The fear is that if the cartel of buyers captures the auction house, they could collapse the auction prices to justify direct sales. They could also take tea with lower cup quality to the auction to get depressed prices and that will, again, justify the direct sales without breaking the law — but short-changing the farmers,” says Irungu Nyakera, the coordinator of the Kenya Tea Sector Lobby Group.

“Our position is that all tea should go through the auction.”

Conflict of interest

And in another twist, and a clear case of conflict of interest, a new clause to the management agents – such as Kenya Tea Development Agency – to sit at the new Tea Board of Kenya which was supposed to regulate the same agencies had also been introduced.

Previous experience in the coffee sector saw senior directors of Kenya Planters Co-operative Union (KPCU) sit at the Coffee Board of Kenya and from where an unregulated KPCU was turned into a cash cow.

KTDA, which has been fighting to preserve the status quo, has objected to the new rules proposed by Cabinet Secretary Peter Munya, arguing that the new regulations will interfere with tea trading. It has been backed by the East Africa Tea Traders Association which runs that auction house in Mombasa.

Also, while the number of factories to be served by one broker had been capped at a maximum of 15, the Bill had dropped that requirement.

And in another twist, the Bill has again been shifted back to Second Reading and it will now be debated on Tuesday.

Meanwhile, in Mombasa, the High Court allowed tea farmers to be enjoined in a suit brought by EATTA and which had stopped the regulations recommended by CS Munya from being implemented. The case will be mentioned on December 3.

But after farmers, through lawyer Patrick Ngunjiri, sought to be enjoined and had the judge, Justice Njoki Mwangi, stop KTDA from conducting nominations and elections of tea factory directors pending the hearing of the EATTA suit, EATTA has gone back to court to seek the exclusion of KTDA from the suit, arguing that they were enjoined by mistake. The import of that is that the High Court cannot make an order against an organisation that is not party to the suit.

Term expired

By in Mombasa, Justice Ogolla noted that the KTDA withdrawal was not part of the court papers and asked their lawyers to argue the matter in Nairobi where the case will be consolidated with another case filed by KTDA against CS Munya for forming a task force committee to evaluate the policy, regulatory and administrative reforms in the tea value chain among other tasks. The term of the committee has already expired.

Shortly after the High Court stopped the elections, KTDA also stopped the company AGMs, leaving many tea factories in limbo.

Already, a tea farmers from Makomboki in Murang’a have written to the Registrar of Companies requesting him to “compel KTDA to conduct the AGMs of all the factories with immediate effect”.

“KTDA has not indicated why the AGMs have been rescheduled or when they have been rescheduled, leaving room to speculation that it was for the benefit of individuals who have held ransom KTDA for ages and nothing to benefit the shareholders of these factories,” said the letter signed by Joseph Mbote, a well-known tea activist.

Farmers argue that AGMs cannot be postponed due to elections since that is only one item in the agenda.

How the tea industry navigates through various interests and how the battle shapes in coming weeks will determine the fate of the tea industry.

[email protected]