KTDA to propose on changes to tea regulations before MPs
The Kenya Tea Development Agency (KTDA) is seeking to make amendments to the Tea Regulations 2020 that are before a National Assembly committee.
The regulations published by Agriculture CS Peter Munya, and which are yet to be gazetted, are awaiting approval of Parliamentary Committee on Delegated Legislation.
In an interview with The Standard yesterday, KTDA Chairman Peter Kanyago said the agency had proposed changes to Draft Crop (Tea Industry) regulations 2020.
He said prior to the formulation of the rules there was no wide consultation with stakeholders and KDTA is seeking to present proposed changes before the committee.
Kanyago said KTDA was proposing that at least 20 per cent of the tea be sold directly as opposed to the regulations that demand that all the produce be sold through the auction. “We are proposing that some of the tea be direct sales. If all the tea goes through the auction it is likely to flood the market, hence bringing down the prices, which are governed by demand and supply,” Kanyago explains.
He added that some buyers preferred to buy the commodity directly from some factories.
“They want us to manufacture their tea in a certain way. If we cannot, they will go to buy it from other countries... they pay us premium prices for direct sales,” he said.
KDTA is also proposing the removal of the performance bond for importers since tea in the auction is paid for before being released.
A bond is a certain amount of money that buyers will be expected to deposit (which will be 10 per cent the amount of tea they expect to buy) before they can be allowed to ship tea out of the country. “Demand for the bond is going to make Kenyan tea more expensive yet more than 10 countries in Africa use the Mombasa port to export their produce. Consumers will buy tea that is not expensive,” the chairman stated.
On value addition on locally produced tea, the agency is proposing that the requirement be met by the tea trader and not farmers as is the case with Sri Lanka where traders are expected to value add before they export the tea.
“Although it is good and noble, the government should encourage traders, not just farmers or producers, to value-add. It should put incentives for value addition by removing Value-added Tax on locally consumed tea,” Kanyago observed.
Kanyago urged the government to remove duty on tea machinery and packaging materials to encourage traders to do value addition as well as introduce export compensation for the same.
The agency further wants the government to stop interfering with companies’ affairs.
He said KTDA was a private firm, not a parastatal, and should be considered along with other private entities like Finlay and Unilever. “Interfering with the terms of office and tenure for directors does not auger well. KDTA feels the same is well covered by the Companies Act and Memorandum of Association,” the chairman stated. Kanyago said the government should not dictate voting for directors, as it was covered by the Companies Act.
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