The tea sector expects to undergo a raft of changes following proposals by the growers in Murang’a County to conform with the reforms.
In the draft proposal from the ten tea factories ratified by the 60 directors, the management agent fee will be contracted at 1.5 per cent of the teas sold, but not exceeding Sh10 million annually.
The previous management agent fee was at 2.5 per cent, with the reduced percentage geared towards increasing returns to the growers presently paid at Sh21 per kilogramme of green leaf.
The duration of the management agent contract will be five years, reduced from the former eight, with a mid-term review at the end of the third year.
Other proposals include rules allowing the management agent to pay the employees seconded to the tea processing plants, as opposed to the past where the factories catered for their remunerations.
In the proposed draft, the management agent will second four managers - the operations manager, product manager, and production officer positions.
Murang’a has ten factories - Ngere, Njunu, Nduti Makomboki, Ikumbi, Gacharage, Githambo, Kanyenya-ini, Gatunguru and Kiru.
In the draft, there are set assignments.
Each of the players has a role to play under set guidelines, with the factory directors being in charge of the processing plants.
Mary Njambi, a farmer, said there is a need for the leadership in the tea sector to draft an agreement with respect to the wishes of the farmers.
“In 2000, KTDA leadership promised to use the opportunities bestowed on the agency to help the farmers. Instead, it turned out to be worse than the authority,” said Njambi, adding that the farmers are interested to know what became of the leadership at KTDA Power.
She noted that ten years ago, most farmers in parts of Murang’a and Nyeri uprooted tea bushes and replaced them with cabbages and napier grass.
Murang’a Tea Directors, led by KTDA board members Chege Kirundi and James Githinji, ratified the draft proposal submitted to the Tea Board of Kenya and KTDA.
They said the draft contains views of the tea growers collected by a consultant firm, where the factories' management was designed to facilitate the agent take over the functions assigned to them.
“This contract agreement may be renewed upon satisfactory performance by the management agent of its obligations,” read part of the draft seen by The Standard.
Termination of the contract can be effected prior to the expiry date due to breach of agreement, cessation of business, or failure to make payments.
Murang’a tea farmers have submitted a draft of the much-awaited review of the management contract to comply with tea reforms.
Annually, Murang’a farmers fetch Sh15 billion from the sale of green leaf, with the amount expected to rise with the implementation of reforms.
The move has been criticised by a section of the former directors saying the draft is in the Tea Act 2020, terming the action as an exercise in futility.
Kirundi, who started the battle to reform the tea sector six years ago, said the draft proposes that factories employ their company secretaries, general managers, and finance managers, among others, in the proposal.
“Now the powers to man the factories are bestowed on the interest of the growers,” said Kirundi.
Githinji said the draft agreement is crucial, as in the past, there were a lot of bottlenecks that sabotaged the sector, despite looking at the interest of the farmers. “We are working to ensure the farmers will get better returns,” said Githinji.
But former directors led by Francis Macharia rubbished the proposal saying the new regulations were not subjected to public participation.
The directors poured cold water on the draft, saying services on general management, finance, IT, agriculture, logistics, human resource, internal audit, technical services, treasury management, sales and marketing are missing.
They cite that the prices offered will force the tea sector to attract less qualified employees as the amount not exceeding 10 million needs to be evaluated against the scope of services. “ I was not consulted on the reform proposal,” said Macharia.
The parties have six months to go through the draft agreement before commencement, and should there be unforeseen issues, both parties can arrange for the termination of the contract.
Kangema MP Peter Kihungi, who has been campaigning for tea reforms, called on the Tea Board of Kenya (TBK) to approve the draft proposed by the farmers.
He said the savings made should be shared with the farmers and increase their earnings after decades of suffering.
In the current agreement that the farmers want to be terminated, KTDA gets 2.5 per cent of the sale, amounting to millions of shillings from the factories.
It has been a long struggle to win the battle against the KTDA, thus the need for the regulator to end the farmers' cry by approving the draft,” said Kihungi.