Kenyan tea farmers could breathe a sigh of relief, following directives made by President Uhuru Kenya during his State of the Nation address in Mombasa on Tuesday, January 14, which aim to increase money in their pockets.
Citing a number of difficulties faced by the farmers, the President pointed out that anticorruption efforts will directed against those exploiting their positions in the agricultural sector “for illegal gain and trading in conflict of interest.”
He noted that while Kenya is the leading global exporter of black tea, the industry has been experiencing challenges, especially in diminished earnings for farmers, characterised by low prices, fluctuation in net incomes, delayed payments, and low initial payments by Kenya Tea Development Authority (KTDA).
“Empirical evidence shows that while farmers should be earning about Ksh91 per kilo of tea, they have been earning Ksh41, with the balance of Ksh50 per kilo going to tea brokers and middlemen,” he said.
“I have directed the Competition Authority at the National Treasury to bring these practices to an end,” he said, while also directing the ministry of Trade to ensure subsidiary tea companies have different governance structures, to ensure that the profit they get is reflected in farmers’ incomes
Uhuru pointed out that though KTDA has delivered value to farmers in the past, it has recently been plagued by operational and governance challenges including conflict of interest by directors and lack of clarity in declaration of dividends by subsidiary companies. As a solution, he directed that the agency and the entire marketing structure of the tea sector be restructured to ensure that farmers get more revenues from tea sales.
The president also faulted middlemen for taking advantage of the fact that farmers were at liberty to sell their tea to whomever they chose and exploited them by purchasing their tea at low prices, then reselling to KTDA under their own names at higher prices.
“Certain people have taken unfortunate advantage of this opportunity to exploit farmers,” he said.
To curb this, he asked the ministry of Agriculture to ensure that the regulations of 2019 incorporated mechanisms to ensure that only tea farmer sold to KTDA and to explore options of having the agency pay farmers 50 per cent of their tea deliveries monthly, with balances being paid as an annual bonus.
In terms of value addition, the President was peeved that Srilanka could fetch more from their tea exports that were 40 per cent less than Kenya’s exports in quantity and directed that the gazettement of the newly-developed Tea Regulations 2019 be completed within the next two weeks to ensure value was added to Kenyan tea.
“In 2018, Kenya exported 476 million kilos of tea earning Ksh140 billion, while Srilanka exported 288 million kilos. This was about 60 per cent of our exports, yet that country earned about Ksh150 billion; a higher earning for lesser tea. This is because they exported about 50 per cent of it in value added form; compared to ours in bulk format. We must add more value to our tea before exporting it,” he said.
The President also directed for the establishment of a self-sustaining stabilisation fund to cushion farmers against price fluctuations, and a tea council to regulate the volume of tea sold through auction and direct sales.
“Direct contracts should be set at 80 per cent and auction at 20 per cent,” he said.