By PSCU and MKT Reporter
The National Assembly Committee on Agriculture and Livestock yesterday held a stakeholders’ engagement on the Tea (Amendment) Bill, 2023.
In a meeting chaired by the Committee Vice-Chairperson and Konoin constituency MP Brighton Yegon, different stakeholders gave their submission on the Senate Bill which seeks to amend the Tea Act to provide for direct sales of tea, the payment of tea proceeds and for connected purposes.
Kenya Tea Development Agency (KTDA) Holdings led by the national chairperson, Mr. Chege Kirundi, was the first entity to make their submission before the committee.
They disagreed with Section 22(1) of the Bill that seeks to provide for a maximum of five members of the board of directors for every factory.
“We seek for deletion of Section 22 (1) of the proposed Bill. The number of directors was already provided for by the Act and it was capped at nine. What usually happens is we elect six and leave three positions open which are filled in adherence to the governance framework in issues such as gender representation. Tampering with this will lead to under representation of tea farmers across the factories,” Mr. Kirundi argued.
The Agency was also against Section 36 (8) of the principal Act which states that the Cabinet Secretary shall in consultation with the county governments prescribe regulations for the procedure for sale of tea and for the establishment of auction centers in tea growing counties.
On opposing the establishment of other auction centers, Yegon wondered why KTDA was against a move that he observed would make it easier for them to sell the tea.
“You are aware that tea from West Rift has been performing poorly in the Mombasa Tea Auction, selling at a really low price even lower than the production cost. So why oppose establishment of other tea auctions that would give farmers from this region a chance,” Yegon asked.
In response, the KTDA officials said, establishing multiple auction centers in tea-growing counties risks segmenting the tea market leading to difference in pricing. They added that this could dilute Kenya’s competitive edge in the global tea market that benefits from a centralized pricing system.
“The benefits of having a consolidated auction that accommodates all the teas from the country provides economies of scale that translate to lower auction selling costs for the producer as well as convenience to the buyer who when blending different origin teas will need the teas to be easily accessible. Therefore, delete this provision and retain the Mombasa Tea Auction as the sole auction center,” the KTDA chairperson who is also a lawyer by profession told the committee.
Reacting to the presentation, Nominated MP Sabina Chege asked KTDA why they were against the number of directors being regulated yet tea farmers have complained on the burden they have to shoulder with the current nine directors in office.
“Having looked at your presentation, it is like the directors are questioning themselves. Tell us why you don’t want to be regulated because if we leave it open, are you not thinking about the burden that goes to the tea farmers,” Sabina asked.
Mr. Kirundi argued that the justification for leaving the number of directors open to the Article is because of the turnover of the Tea Factory Company, the shareholding of the Tea Factory Company and the flexibility in the management of a tea factory.
For Kenya Tea Growers’ Association (KTGA) led by the CEO, Ms Linda Oluoch they had an issue with Clause 13 amending Section 53 on Tea Levy “(2A) Specialty tea and value-added tea packed into packets or containers holding not more than ten kilograms” shall be exempted from tea levy.
The issue, according to Ms. Oluoch, is the exemption of specialty or value-added teas from tea levy restricted to 10kgs packaging disregards needed incentives for all value-added teas such as instant teas, special manufacture teas unique to Kenya’s geographical location and tea character which some are not packaged in 10kilograms
“Our proposal is deletion of the phrase packed into packets or containers holding not more than ten kilograms in the proposed sub-clause (2A) as per justifications above so that the exemption is applicable to all value-added teas. This will overall, incentivize value addition ventures,” Ms. Olouch said.
Other entities who gave their submission were East Africa Tea Trade Association (EATTA), Kenya Tea Brokers Association (KTBA), Tea Board Kenya (TBK) and KALRO- Tea Research Institute.
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