Root out cartels in the tea sector, urges Nyeri senator

The government has been challenged to crackdown on cartels blamed for the crisis facing the tea sector to prevent it from collapse.

Nyeri Senator Ephraim Maina has said the cartels have pushed the industry into huge losses through over-pricing of insurances, fertilizers and transportation of tea to auction houses.

He further says that the investment of farmers’ money into small ‘risky’ banks, contrary to the law, instead of secure government related instruments like security bonds further exposed the Kenya Tea Development Agency (KTDA) to losses.

WRONG CHOICES

He said it was also wrong for KTDA to venture into non-core business like power generation, which he said is over-priced through cartels.

“KTDA is also operating as an opaque organisation and has refused to be audited by the public auditor general. These are the issues that have brought the tea prices down and not the casual reason given by KTDA management of over-production. If it was over-production there would be an outcry from growers worldwide. Why is it that it is only Kenyan farmers who are suffering,” Mr Maina asked.

INSULT

In an interview in Nairobi, Mr Maina termed the statement by KTDA officials that tea farmers are free to venture into other crops as an insult.

“KTDA has rudely insulted, not just tea farmers, but Kenyans and shown no respect or regard to even the government by calling on farmers to switch to other businesses or uproot the tea. It is like a killer telling the parent of the child to go and look for other children from an orphanage,” Mr Maina said.

He added, “On Friday, KTDA told a blatant lie that there’s overproduction of tea. One wonders whether they woke up in the morning and discovered there is overproduction of tea. It depicts arrogance and utter carelessness, devoid of any sympathy to the suffering Kenyans.”

KENYANS TIRED

Kenyans, he said, are tired of failure by the government to act on the cartels blamed for the problems facing the tea sector, a thing he warned could result to its collapse like the sugarcane and coffee industries.

“The tea farmers have been put into most extreme desperate situation like maize, milk, sugarcane and coffee farmers. The government should move with speed and support its farmers even if it means providing subsidies and ensuring market for their produce,” Mr Maina said.

PRODUCTION COSTS

The government, he said, should address high cost of farm inputs, taxation and commercial funding.

He also urged the State to direct more resources to agriculture and support research and marketing of produce.

“The problem with farming is like a volcano waiting to erupt. The tea volcano has erupted following the paltry bonuses that KTDA paid,” Mr Maina said.

Tea farmers in the country have protested over low earnings paid to them.

GLOBAL DEMAND

Kenyan tea has traditionally enjoyed a healthy demand internationally on account of superior quality that has seen buyers seek it to blend other low quality beverages.

Tea rates at the Mombasa auction have been falling since the beginning of the year, pushing down the average price per kilo to Sh214 this year from Sh271 last year.

Small scale tea holders earned a record gross payment of Sh85.74 billion last year, riding on a bumper harvest in the past season that defied the fall in global market prices, marking the third year of improved earnings.

At Sh85.74 billion, Kenya’s tea earnings were up 9.4 percent compared to the previous season’s total income of Sh78.31 billion, according to KTDA.

High inflation and depreciation of up to 50 percent of the Pakistani currency has been a major contributor to the falling prices.

Pakistan is a key market for Kenyan tea, accounting for up to 38 percent of the total exports.

EXPORT MARKETS

Other key export destinations such as Egypt have seen high inflation and currency devaluations making import of the commodity expensive.

Sudan, which is another key market has lately faced political upheavals, coupled with the loss of oil revenue to South Sudan.

KTDA had earlier this year warned farmers of reduced earnings in the second payment of 2019 resulting from low auction prices.

Tea farmers normally receive half of their pay in monthly payments, with the remaining half distributed at the end of the financial year as the final payment.

Globally, tea prices at the other two key auction centres of Colombo in Sri Lanka and Kolkata in India have likewise declined.

Colombo prices for orthodox teas have declined from USD3.99 to USD3.26 a kilo, a drop of 22 percent.

Prices for Kolkata CTC teas have declined by 12 percent from USD2.46 to USD2.17, a kilo.