Tea farmers can uproot bushes under new Bill

Giving farmers the right to uproot their tea or deliver their green leaf to a factory of their choice are some of the radical changes that will be introduced in the country’s tea industry if a proposed bill becomes law.

Published on April 1, the Tea (Amendment) Bill 2010 proposes to repeal Section 12A of the Tea Act (Cap 343 of the Laws of Kenya) which bans the uprooting of the cash crop without written consent of the industry regulator, the Tea Board of Kenya.

“Like in all other enterprises, a tea grower shouldn’t be punished for changing his mind to pursue any other profitable business if he so wishes,” the Bill’s sponsor and Konoin MP Julius Kones, told Sunday Nation in an interview.

The Bill comes almost two years after a section of tea farmers in Central Province uprooted their crop over what they felt were poor earnings, forcing President Kibaki to direct Agriculture minister William Ruto to intervene.

Subsequently, Mr Ruto tried to introduce reforms in the industry by launching the Tea (Licensing, Registration and Trade) Regulations 2008, but some industry players went to court to challenge some of his proposals. The matter is pending.

Mr Kones, however, says such piecemeal measures are not enough, arguing that the current Act has been overtaken by events and does not conform to a liberalised environment.

“As it stands, the Tea Board of Kenya lacks the capacity to effectively regulate the industry, creating a vacuum in which some industry players are operating as producers, marketers and regulators all rolled into one,” the MP said of the country’s second largest foreign exchange earner - Sh69 billion last year - after horticulture, which earned Kenya Sh71.6 billion.

And in what promises to radically transform how the industry is managed, the Bill is proposing to give the board sweeping powers to regulate the cash crop from the farm to the cup.

Its enactment would, for instance, see tea farmers only registering with the board and not with individual factories as they currently do — thus be free to deliver their produce to a factory of their choice.

“Since this will fuel competition between the factories in a bid to attract and retain more farmers, it will lead to efficiency and better service to the farmers,” says the MP who is a former statistics lecturer at the University of Nairobi.

But some analysts are cautioning that such freedom may end up causing confusion in the sector and curtailing provision of support services, like credit to farmers, if experiences in other sectors of the economy like coffee and tea are anything to go by.

“That is a recipe for chaos that has, for instance, bogged down the formerly vibrant coffee sector since it was liberalised and more millers licensed,” warned a source in the Ministry of Agriculture who requested not be named because of government policy.

When contacted, the Kenya Tea Development Agency (KTDA), which manages over 50 factories serving the country’s smallholder tea farmers and is likely to be affected by the move, declined to comment.

“We have to go through the Bill so that we can make an informed comment,” said the company’s communication department.

But Mr Kones dismissed the sentiments as the usual tricks used to instil fear among farmers to maintain the status quo.

“Why doesn’t it happen, for instance, in the banking sector where a customer must not necessarily take a loan from the bank in which he has an account?” asked the MP.

Unlike the current Act, which speaks in general terms such as mandating the board “to act in such manner as appears to it best calculated to promote the tea industry in Kenya”, the proposed Bill explicitly mandates it (board) to license and regulate farmers, tea factories, management agents, brokers and packers.

“No person shall manufacture, pack or broker tea for sale except under and in accordance with a licence issued by the board,” its Section 13 reads.

It empowers the board to cancel, vary or suspend the licences of any factory, management agent, broker or packer for any breach of the Act or its regulations.

The Act also mandates the board to promote “value-addition of tea prior to export”, regulate import and export of tea and promote its consumption in the domestic and external markets.

Dr Kipkurui Langat, the managing director of the East African Tea Trade Association, admits the board does not regulate them under current Act.

“It seems Dr Kones is introducing some of the minister’s (Tea (Licensing, Registration and Trade) Regulations 2008) proposals through an Act. I cannot comment on them because some of them are the subject of the court matter concerning the regulations,” said Mr Langat whose organisation, among others, brings together tea exporters, brokers, packers and warehouses.

Directly involved

In addition to reviewing the functions of the board, the Bill also proposes changes to its size, composition and tenure in a move, Mr Kones said, will inject professionalism into the regulation of the industry.

Under the Bill, there will be only 11 directors, down from the current maximum 18. Tea trade organisations will not have a representative.

Apart from specifically reserving the board’s chair and deputy positions to five members not directly involved with the industry but processing demonstrated competence in agriculture, law, finance or marketing appointed through a competitive process, it limits the directors tenure to three years.

They have an option of re-appointment for only one further term of an equal duration.

Although it takes away the position of the director of agriculture/agriculture secretary, it enhances government representation on the board by welcoming the permanent secretaries of ministries of Trade and Finance to join their Agriculture counterpart.

To open up to public scrutiny of the board’s operations, the directors are expected to submit its (board’s) accounts to the auditor general and the Minister for Agriculture within three months after the end of a financial year before publishing them in at least two dailies.

However, some of the problems facing tea farmers will need more than regulation to address. For instance, about 70 per cent of small-scale farmers who grow their crop on less than an acre have to contend with dwindling earnings due to land subdivisions.

The Tea Industry Task Force report presented to former Agriculture Minister Kipruto arap Kirwa in August 2007, calls for consolidated group farming to discourage this practise.

“Small-scale farmers in the country have little chance of improving their productivity because of poor husbandry and retention of old tea clones, which is a factor of their small and uneconomical land holdings,” warned Dr John Omiti, a senior policy analyst at the Kenya Institute for Public Policy Research and Analysis, a public think tank.