Kenya Tea Development Agency (KTDA) has commenced talks with smallholder tea factories to review agreements on management services it provides through the agency’s Management Services Ltd.
The agency led by its chairman David Ichoho held a three-day meeting in Nakuru County with directors of the factories from Kericho, Nandi, Bomet, Kisii, Nyamira, Trans Nzoia and Vihiga.
“We are finalising the review of the management agreement in line with the Tea Act, 2020 and the reforms being undertaken in the tea sub-sector. This will bring a paradigm shift,” said Ichoho.
According to Ichoho, the review will improve the relationship between KTDA and the factories through improved management of tea firms.
“We shall reduce management fee from 2.5 per cent to 1.5 per cent. We shall also introduce key indicators to monitor the performance of the management agency on a continuous basis,” said Ichoho. The KTDA boss said the reduction will have far-reaching benefits to factories and individual farmers for the tea supplied.
“These actions will bring costs of managing the factories down and take more money to the farmers. We want to make the sector a sustainable business model,” he said.
The stakeholders also agreed to reduce the term of the agreement from the current 10 years to five years in a bid to enhance the accountability of the management agency to the factories and the farmers.
“The impact of the reduced management fee is substantial. It will require changes in the structure of the management and mode of service delivery to mechanisation and automation,” said Ichoho.
He explained that the changes will enable the smallholder tea sub-sector in Kenya to thrive adding that they have adopted internationally recognised operational and financial standards.
Tea Board of Kenya (TBK) which regulates the sector, through its chairman Dr Kiarie Mburu, called on KTDA and directors of the factories to work together for the benefit of tea farmers.
Mburu said Kenya has over 650,000 farmers whose livelihoods depend on the tea sector and conflicts within the leadership of the factories would greatly impact them.