NAIROBI, KENYA: The government has opened the window for public comments on the draft tea (payment) regulations and tea (levy) regulations.
This follows coming into effect of the Tea Act 2020 on January 11. The drafting of the regulations is the culmination of reforms aimed at addressing the challenges currently facing the tea industry with a view to re-positioning towards sustainability and profitability.
The tea payment regulations provide for the regulation of brokerage fees, payments to tea growers, and management agreements between Tea factory companies and management agents.
According to the ministry, the object of the regulations is to ensure growth and sustainability of the tea industry, equity, and fairness in the distribution of the proceeds from the sale of tea to all players along the value chain, protecting the investment interest for both traders and tea growers and maximize returns to the tea grower.
The draft tea payment regulations state that the remuneration paid to a tea broker by a tea factory and a tea buyer or exporter for services rendered shall not exceed 0.75 per cent of the gross sales by the broker.
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A tea factory also shall pay tea growers at least fifty percent of payment due for the green leaf delivered to the factory every month within thirty days period.
"The main objective of the tea levy regulations is to impose and provide for the collection of the tea levy on exports and imports,” said CS Ministry of Agriculture, Livestock, Fisheries, and Cooperatives Peter Munya.
“The levy shall be utilized for the development of the tea subsector and in particular for income or price stabilization for tea growers, undertaking research, the furtherance of the functions of the Board and for infrastructure in the tea sub-sector.”
Early this year, the ministry gave the tea sector a month to get ready to start selling all local produce at the Mombasa auction as it starts implementing the Tea Act, 2020.
The Act that was enacted last month requires all Kenyan tea meant for export, except for specialty teas, to be sold at the auction to improve transparency and boost earnings for farmers.
Mr. Munya said the one-month window would give traders who currently have contracts for selling tea directly to foreign buyers time to review the agreements, noting that the new Act had avoided such deals.
This will also scuttle plans by various counties to secure buyers directly for tea grown in their localities, excluding orthodox or specialty teas.
“Once we set the date, all the tea will be sold at the auction. I have told the regulator to write to the stakeholders, giving them a one-month notice to be ready, especially the tea auction organiser in Mombasa,” Munya said.