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Court stops tea report implementation

NEWS
By Kamau Muthoni | April 23rd 2015

Kenya: The High Court has temporarily barred the Competition Authority of Kenya (CAK) from implementing a report on the country’s tea sector.

Justice Weldon Korir in his ruling yesterday directed that the authority should not make any decision against the Kenya Tea Development Authority (KTDA) with regard to the audit report that allegedly unearthed flaws in tea auctions.

The Judge said the report; Benchmarking or Marketing Inquiry for Tea Sector, should be withheld until the case is heard and determined as it was likely to disrupt the tea industry.

“In the case, the parties agreed that there was a report and it is under validation. Any continued step to the report then will be to the detriment of KTDA. I thus allow prayer number three hoping that the case will not be delayed to the detriment of either party,” he ruled. At the same time, Justice Korir allowed 1,000 small-scale farmers to join the case as an interested party.

He ruled that the case affected the operations of the tea marketing agency, noting that any action that was to be taken against KTDA was also to affect tea farmers. The Judge also noted the case before him had a link to the one filed by the farmers in Kericho. The case was also transferred to Kericho High Court.

“The court orders that the stay of the report will stay in force until June 15. It will be mentioned before the court in Kericho on May 19,” he ruled. In the case, farmers allege their tea is sold at low prices with those of inferior grades at the weekly auctions and the intention by the marketing agency to have the report quashed was only meant to deny farmers key evidence in their petition in Kericho.

They told the court their hopes in the Kericho case was pegged on the authenticity of the report. “The determination of this suit will have a great impact on the determination of the applicant’s case in Kericho,” the farmers’ Lawyer Peter Wanyama said.

On the other hand, KTDA in its case wants the High Court to quash the findings of the report that highlighted its domination in the market, thus killing competition. The weekly auction is the main channel for Kenyan tea into the international markets. The report found that it was controlled by a few buyers.

Officials duped

The agency claims its officials were duped into giving close information and was not allowed to give its end of the story. Kenya’s tea marketing agency has denied accusations of colluding with a cartel to manipulate prices in a secretive practice that has allegedly cost small-scale farmers billions of shillings. In the case before the High Court in Kericho, it denied the allegations, saying it was bound by the law and thus could not shift prices.

KTDA says the predicament of small-scale farmers was as a result of loose trading and pricing and stunted growth in the local tea market.

“The domestic market has never improved, hence over-reliance on exports, which are affected by external factors, beyond KTDA’s control.”

KTDA argued that falling prices led to a corresponding dip in tea earnings. It also denied ‘dirty’ games in post-auction purchases, saying poor sales were as a result of late bids from overseas clients.

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