Reduced returns from tea auction worry farmers

Agriculture and livestock development CS, Mutahi Kagwe. [File Courtesy]

Anxiety has gripped the East of the Rift amid fears of a reduced tea bonus, following the impact of the tea levy imposed at the value of the auction at Sh2.28 (0.8 per cent) per kilo of made tea.

In the past three auctions, the volumes of tea traded from the factories in the Mt Kenya region have declined, with the directors of the tea factories noting that buyers have turned their attention to teas from the west of the Rift, Burundi, Rwanda, Tanzania and Uganda as alternatives.

Kenya Tea Development Agency (KTDA) Holdings’ leadership meets the Agriculture Committee on Tuesday for further deliberations on the challenges facing the tea industry, among them the tea levy and market diversions. 

In the past two weeks, the market has been locked, with fears that the majority of buyers have turned to the west of the rift, leaving only a few buyers interested in small packages from the east for blending. The tea directors from the Mt Kenya region plan a crisis meeting to chart the way forward as the industry faces myriad challenges.

Kirinyaga Senator Kamau Murango said the imposed tea levy was illegal, as it was implemented before it was passed by Parliament.

“Thus, the collection of the levy should be stopped forthwith,” he said.  Murango said the Tea Amendment Bill 2023 was declared null and void by Speaker Moses Wetangula on May 26, via a communication, following the discovery of faults caused by Gatundu South MP Gabriel Kagombe for failing to declare interests.

“With the taxation of 0.8 per cent of Kenya’s teas, buyers moved to cheaper alternatives and only buy teas from the Mountain to blend tonnes from other countries that are not taxed at Mombasa due to the East African Countries agreement,” said Murango. Murango said reports indicate that more than 9 million kg of tea from the east have piled up in warehouses after buyers migrated to other producers.

“Why are the premier teas in the warehouses, for the first time, declared unsold? TBK needs to drop the aspect of taxation of the teas at the auction,” said Kirinyaga Senator, also a farmer affiliated to Thumaita tea factory.

He added that Kenya had earlier lost the Sudan and Iran markets, with buyers moving to Rwanda teas, while the Pakistani market turned away due to taxation. Murango said the farmers could lose more than Sh5 billion as buyers opt to cross and access cheaper alternatives. 

“Kenya has already lost significant tea export markets, and any additional levy could worsen the situation,” said the Kirinyaga Senator.

In last week’s auction, Rukuriri factory sold only 40 packages, down from 1,800, as a huge consignment was pushed back to the warehouse. Kimunye sold only 120 packages, down from the weekly 2,020 packages.