Tea marketers plot to sue against CS Munya's rules

Farmers affiliated to Mungania Tea Factory in Embu spread green tea they delivered to a collection centre on May 20. [File, Standard]

Tea marketing chain players have protested new rules for the sector whose time frame of implementation was unveiled by Agriculture CS Peter Munya on Tuesday.

Tea value chain insiders said various players under the East African Tea Trade Association (EATTA) were preparing to challenge the rules in court.

The association comprises large-scale producers under the Kenya Tea Growers Association (KTGA), 700,000 small-holder producers under the Kenya Tea Development Agency (KTDA), processors, traders, brokers and buyers.

One insider said KTDA Chairman Peter Kanyago is expected to pronounce the agency's position on the proposed changes.

The firm has already instructed lawyers to challenge in court some of the unworkable proposals in the rules.

The Managing Director of EATTA, Edward Mudibo, said stakeholders in the value chain still stood by their previous statement that the reform process was still a work in progress as Parliament was yet to process the proposed changes.

"We still expect the CS will have forwarded the Regulatory Impact Assessment Statement to stakeholders and the National Assembly Committee on Delegated Legislation for the changes to be processed as required by the Statutory Instruments Act. It is due process and not a choice," said Mudibo.

According to the rules, the Mombasa Tea Auction will cease accepting private treaty sales known as Direct Overseas Sales (DSO) from November, cutting off a lifeline for some of the best quality producing factories under the Kenya Tea Development Agency (KTDA) stable.

KTDA insiders said they expect some of the premium buyers under the DSO to mainly shift to factories in Rwanda and Uganda since foreign tea trading at the auction were not covered by the rules.

The 69 KTDA factories are also required to drop two directors each to conform with the legal notice, which caps at three the number of directors in each factory.

This means some 138 directors will exit the small-holder factories management while the regional director of KTDA Holdings who also had a seat reserved in the boards of the respective factories, will cease sitting there.

Notably, small-scale farmers will by November expect to start receiving at least 50 per cent of the value of their deliveries, cutting off financial intermediaries that unfairly benefit from the sweat of producers.

This will be made possible through direct disbursement of proceeds from the Mombasa Tea Auction to tea factory accounts within 14 days of sale of tea by brokers.

Mudibo said EATTA approved any move by members who felt aggrieved to challenge the reforms in court.

"We would even do it for members who wanted us to represent them because we feel the CS is trying to fix what is not broken," he said.