Agriculture Cabinet Secretary Peter Munya has promised an audit of tea factories and measures to save the sector from collapse.
Mr Munya accused directors of factories under the Kenya Tea Development Agency (KTDA) of attempting to block the implementation of reforms.
“These issues are in court but once the cases are over, there will be an audit,” the Cabinet Secretary said at Mumias Sugar factory on Monday.
He later addressed Kakamega county leaders and residents, outlining measures the government has taken to revive the miller.
The reforms in the tea industry are meant to protect small-scale farmers from exploitation, he added.
The government accuses KTDA directors of protecting cartels and not having the interest of farmers at heart.
Farmers have been calling for an audit of the agency to establish its financial status.
They want the audit to be extended to the agency’s subsidiaries, including Green Fedha, Chai Trading, KTDA Machinery, KTDA Power and Majani Insurance.
“Small-scale tea growers are shareholders of the factories and have been asking legitimate questions on the financial status of KTDA. Why can’t the status of the subsidiary companies be made public too? Who are the directors of these firms?” Mr Cheruiyot Baliach, a tea farmer in Konoin, Bomet County, asked.
Mr Baliach said some factories in the South Rift bought hundreds of acres in Narok and Nakuru counties, where eucalyptus trees were planted as woodlots.
LAND IN MAU FOREST
“The managers of these factories have pieces of land in the Mau Forest water tower, which have been repossessed by the government and settlers evicted. Tea factories have lost land and money pumped into these illegal projects,” Mr Baliach added.
Despite the factories harvesting hundreds of acres of eucalyptus, it is never reflected in the expenditure presented during the annual general meetings, farmers say.
The call for an audit has also come from Kapsoit Ward Representative Paul Chirchir, who has been vocal defending farmers.
“Some factories have used hundreds of millions of shillings on hydro-electric projects, resulting in a sharp decline in earnings,” the Kericho County Assembly member told the Nation.
Mr Chirchir added that the core business of KTDA is to market tea for small growers.
“The agency and factories should not engage in ventures whose profits and losses are hidden from the public and shareholders,” the politician added.
The High Court on July 10 stopped the newly appointed committee on the implementation of tea reforms from starting its work, pending the hearing of a case filed by KTDA.
Justice Pauline Nyamweya said KTDA Holdings, through its lawyer Benson Millimo, met the threshold for an arguable case against Mr Munya.
The court added that the tenure of the team is four months but the implementation of the reforms is continuous.
According to Justice Nyamweya, unless the status quo is maintained, the case by KTDA may be rendered useless in light of the committee’s limited implementation period.
“The applicant...is therefore entitled to the leave sought to commence judicial review proceedings against the respondent,” the judge said.
In a June 25 gazette notice, the Cabinet Secretary named a 10-member team to look into reforms in the industry.
The mandate of the committee includes to manage and coordinate processes and implementing reforms, including changes in the role of KTDA in dealing with small-scale growers.
But in an affidavit, KTDA company secretary John Kennedy Omanga said the agency is a private company and that the Cabinet Secretary has no right to make changes to its operations.
Growers and other tea sector players accuse the agency’s directors of signing agreements without involving shareholders.
KTDA has signed deals to generate hydro-power, pumping vast sums of cash into the projects.
LOANS FROM BANKS
The factories, on the other hand, have taken loans from banks and other institutions to finance their operations.
The loans have also been used to buy land.
For a long time, brokers at the tea auction in Mombasa and KTDA have been making billions of shillings as producers and their families wallow in poverty.
Tea is the second leading foreign exchange earner for Kenya.
“There are very many underhand deals at KTDA that disadvantage small-scale growers, who are the main leaf suppliers,” the Mandera South MP said recently. “We demand an audit. Things must be done in the open.”
MPs Ronald Tonui (Bomet Central), Brighton Yegon (Konoin), Japeth Mutai (Bureti) and Bomet Woman Representative Joyce Korir said KTDA has no reason to underpay farmers.
“Where are the billions of shillings earned from the sale of tea in foreign markets? That money belongs to the farmer. KTDA management must be held to account,” Mr Tonui said.
Mr Mutai said the tribulations small-scale growers have been subjected to should no longer be tolerated.
He added that reforms need to be speeded up.
“It is obvious that KTDA has held farmers hostage for decades. This is the time to liberate the small grower from exploitation,” the Bureti lawmaker said.
Mrs Korir and Mr Yegon urged Mr Munya not to yield to pressure from the agency and cartels.
KTDA operations manager Moses Njagih said bonuses paid to farmers every year vary from one factory to another.
He said quality of the leaf delivered plays a big part in determining what farmers get.
“It is important to ensure only quality leaf is plucked. They should pluck two leaves and the bud per bush. Quality has always dictated the market price,” Mr Njagih told the Nation.
Reported by Benson Amadala, Vitalis Kimutai and Tom Matoke