19 Sep

What you need to know:

With current secrecy, farmers fear that KTDA might have been borrowing money to pay much-awaited bonus or manipulating factory accounts.

As Kenya Tea Development Agency (KTDA) prepares to pay tea bonus, farmers in Murang’a County are now demanding information on how the second payment is calculated — since the agency has been putting all the money into a pool account.

With the calculation of end-year second-payment shrouded in secrecy, the farmers fear that KTDA might have been borrowing money to pay much-awaited bonus or by manipulating factory accounts.

This was one of the six resolutions reached by farmers from the Makomboki zone when they also unanimously supported the ongoing reforms in the sector.
The sector reforms have been challenged in court by both KTDA and the East Africa Tea Trade Association — the tea auction house in Mombasa.

The resolutions read out by former PS Irungu Nyakera, who is also a member of the Tea Task Force Implementation Committee, are part of a push by farmers to counter the tea behemoth which has been resisting any change to what Agriculture CS Peter Munya has called “cartel behaviour”.

With Kenyan tea fetching more than Sh140 billion in the market, Mr Nyakera dismissed as peanuts the 47 percent which is paid to farmers.

“We are demanding a situation where farmers will earn upward of 50 percent of the monthly sales and the balance is paid at the end of the year, less the reduced KTDA and brokers’ commission,” said Mr Nyakera.

In the proposed changes, the KTDA fees charged to the farmer has been reduced from 2.5 percent of the farmers’ earnings to 1.5 percent. The brokerage fees has also been reduced from 0.75 per cent to 0.2 per cent.

During the Makomboki meeting, the farmers resolved to hold their own elections to pick directors without involving KTDA. Already, they have called a special general meeting — the first called to resist KTDA’s running of the elections.

“The directors’ elections will be held using one man one vote formula, and KTDA will be locked out from facilitating the electoral process,” said Mr Samuel Njunu, a tea activist.

The farmers also supported the abolition of direct sales, which was used in the past to sell tea at throw-away price through what KTDA marketing department calls splitting of invoice. “We will hound out of office all the elements in the sector who have by acts of commission and omission transformed the sector into their personal enterprise,” said Mr Nyakera.

He said the government was aware that KTDA intends to hold election of factory directors “in the bushes instead of at the 69 factories”, dismissing the move as “an exercise in futility”.

KTDA has been pressing factory directors to deduct Sh3 per kilo from each farmers’ payment to cover some loans. The matter has elicited debate in the tea zones since most of the factories are directly financed by farmers and have no loans.

“When our tea is sold below cost of production after being offloaded to Chai Trading Company, run by KTDA, the end result is that it fetches prices below the cost of production and you can only finance that gap by borrowing. When you do that, you end up with debts and you are headed to closing shop,” said Mr Moffat Kamau, an auditor.

The meeting praised the Nation for exposing the tea cartels and lauded its writer John Kamau who is a member of the National Steering Committee on Tea Reforms.

Source: Nation Media