Senate wants farmers bailed out

The Senate Agricultural Committee has appealed to the government to hasten efforts to raise earnings for tea and sugar farmers to save the sectors from collapse.

The committee at the same time challenged the government to aggressively market tea locally to avoid reliance on external markets.

Kenya exports 95 per cent of its tea with the rest being consumed locally.

The committee chairman Kiraitu Murungi (Meru, APK) said low prices were to blame for disillusionment among farmers, making some contemplate switching to other crops that promise better returns.

This year, farmers in tea growing areas protested over low bonus payments while the country has been forced to rely on imports to bridge a serious shortage of sugar in the market.

“The government has a duty to see areas where the market is leaking so that it can seal them to improve farmers’ earnings in future,” said Mr Murungi, in an interview with the Nation on Sunday.

He challenged the government to establish a fund that would cushion farmers from making losses due to world price fluctuations.

SPECIAL FUND

Mr Murungi said the team was waiting for establishment of a committee of experts as promised by Agriculture Cabinet Secretary Felix Koskei, which would review the impact of such special fund.

Mr Koskei told the committee recently that there was little the government could do to fix the current bonus rates but promised to come up with interventions that would change the situation, going forward.

He said part of the challenge the government was facing was that the bonus payments are determined by the Kenya Tea Development Agency (KTDA) based on individual performance of the tea factories.

However, Mr Koskei sought to assure farmers that the government was aware of the challenges the industry was facing and was in the process of auditing the entire value chain for the tea sector with a view to coming up with a long-lasting solution.

Some farmers want the government to review levies charged on tea and streamline operations at the Mombasa Tea Auction, saying they were to blame for the poor prices the cash crop fetches.

The committee admitted that high rate of levies imposed on tea farmers were hurting the sector and were unnecessarily eating into growers’ profits.

Kisii Senator Chris Obure said charging VAT on tea is to blame for low consumption rates of the commodity in the local market.

“The government should consider tea as a food item and exempt it from the 16 per cent VAT in order to promote local tea. We are the largest exporter of tea yet the third in terms of production because little is consumed locally,” said Mr Obure.