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Lobby proposes more measures to safeguard tea sector

BUSINESS NEWS
By Fredrick Obura | May 4th 2020

The Kenya Tea Sector Lobby has submitted to The Cabinet Secretary, Ministry Of Agriculture, Livestock, Fisheries, and Cooperatives, Peter Munya, more measures to be included on the draft
“Crop (Tea Industry) regulations, 2020”.

Over the years, the tea sector in Kenya has experienced dwindling fortunes as a result of under-regulation that has allowed cartels within the sector to benefit at the expense of tea farmers.

The Kenya Tea Sector lobby has identified some key areas that require strengthening to arrive at the desired result of improved earnings to tea farmers and streamlined management of the tea sector.

The lobby group noted that last year, the sector witnessed nationwide shambolic tea factories directors’ elections, an intentional flaw within KTDA to ensure further “interest-fuelled oversight” of tea factories by KTDA.

“We are therefore proposing for the Memorandum and Articles of the tea factories to provide that every grower has one vote with elections being conducted by an independent body/organ as determined by the factory board,” says Irungu Nyakera, Chairman The Kenya Tea Sector Lobby.

“For the Kenya Tea sector to be globally competitive, we must match the global standard in the management of tea.”

The lobby has proposed that management fees be brought down in line with global standards of 1 per cent as opposed to the 2.5 per cent currently being charged by KTDA.

Further, it proposes that the maximum fees chargeable by brokers should be capped at the global benchmark rate of 0.25 per cent, as opposed to the current 1.25 per cent being charged by brokers.

Also, it proposes that the government through the Finance Act, 2020, scrap lot charge, and VAT on tea bought for local consumption. “This will allow the farmer to have enhanced earnings while making the sector attractive for the development of a cottage tea manufacturing and packing industry.”

And to remove any undue control of tea factories by the management agent (KTDA), the lobby further propose that the role of making investment decisions for the factory should also be exempted from any management agent agreement to ensure that grower funds are fully controlled by the factory directors.

“KTDA should further be required to sell off all its non-tea-marketing related subsidiaries and properties and subsequently distribute those funds to the factories.”

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