How KTDA grew to become farmers' major agony

In 1978, when I got a job in the engineering department of Brooke Bond Tea Estates in Kericho, I knew tea farming was a lucrative business.

Just over a decade later in 1990, I invested in my family land in Meru, hoping to make good money. To my surprise, this was not the case.

Payments from Kenya Tea Development Agency (KTDA) were well below expectations, which dampened my spirits. From then on, I started being inquisitive.

I soon discovered that KTDA viewed small-scale farmers as an ‘illiterate and a gullible lot’ that needed no explanations on anything.

In 1995, we started pushing KTDA for answers. Led by Njehu Gatabaki, who was the secretary-general of the Coffee and Tea Parliamentary Association (Cotepa), we stood firm.

After research, we established that a huge percentage of tea farmers’ money ended up in the pockets of middlemen.

These were well-connected KTDA officials and their ‘godfathers’, as well as tea brokers in cahoots with ‘big buyers’. The owners of these brokerage firms were powerful political figures.

BOYCOTT

These middlemen became more powerful after the demise of President Jomo Kenyatta, when tea ceased to be farmers’ property as KTDA took complete control.

Ever since, nobody has attempted to bring sanity into the industry. The so-called ‘task forces’ were all cosmetic. They treated the symptoms rather than the disease.

Our agitation as Kenya Union of Small-Scale Tea Owners (KUSSTO) took the form of memoranda. Unsurprisingly, they went unanswered.

In 1998, we called for a tea boycott which didn’t go down well with the Kanu government. But we didn’t give up; we pushed on.

When we finally got a hearing from Dr Richard Leakey, then-Head of Civil Service, he ordered an audit of KTDA.

The audit found that Sh8.3 billion was lost through mismanagement, but the government did nothing.

The KTDA believes in litigation as a way of silencing any voice. In 1999, I was arrested and arraigned for “inciting farmers” and “holding illegal meetings”.

On April 22, 2002, my home was destroyed in a brutal attack on my family.

DEVOLVE SECTOR

Since the government did nothing on the Leakey audit report — the moment when nobody wants to ‘bell the cat’ — KTDA's arrogance grew.

There has been debate on whether tea should be devolved to the county level. Murang’a passed a Tea Bill to that effect.

If farmers are not careful, they may end up with two cats to bell: County and KTDA.

The KTDA acquired the ‘bad manners’ from the colonial agrarian system where the farmer was the labourer and the agency the master. His land belonged to KTDA.

For many years, farmers could not even uproot the crop. Today, multinationals buy 30 per cent of small-scale farmers’ tea even.

Meanwhile, KTDA misleads all that tea produced by the smallholders is from its plantations. The reality is that the agency does not own a single tea farm; it’s just a manager employed by farmers.

Sadly, KTDA calculates what is due to the farmer — in a take-it-or-leave-it arrangement. The agency was designed to ensure effective control of smallholder farmers and, like a chameleon, changes its colours to suit its agenda. Let’s reflect on tea history.

MANAGEMENT

When Africans were first allowed to grow the crop, it was managed by the colonial Special Crops Development Authority (SCDA) before KTDA took over. The main purpose was to give London companies cheap quality tea.

In the beginning, multinational companies were the managing agents of KTDA, whose mandate until 1973 was to provide extension services.

Contrary to popular belief that tea factories became autonomous in 2000 after liberalisation and restructuring of KTDA, tea factories have been independent entities since 1963.

But before 1963, Chinga and Mataara tea factories were registered as a joint venture between KTDA and the Commonwealth Development Corporation.

The agency was empowered to establish, acquire and operate processing factories and subscribe to shares in any company under KTDA Order of 1963.

Farmers were to subscribe to shares when the loans to construct the factories were fully paid, and KTDA had to pull out.

However, it did so theoretically and held a firm grip on these companies. The shares were to be divided into founder, and grower shares, which gave smallholder farmers a chance to own the factories.

However, KTDA ensured that management of these factories was left to farmers and their directors but to the headquarters.

They treated the farmer as an extension of KTDA management.

KANU'S COMPLICITY

Factory directors were not consulted on major investment decisions concerning the factory — including procurement.

Farmers only had an illusion that they owned the factories. The liberalisation of the economy made KTDA even stronger as the body shielded itself from public scrutiny, aided by powerful Kanu politicians.

While tea buying centres in the villages were constructed by smallholders and managed by committees, KTDA involved itself in polls at this level to stop anyone opposed to them from being elected.

The KTDA would never give reasons why they barred people from vying as Banda Committee members since they managed the polls.

On marketing, it’s been problematic. Initially, tea was auctioned in London but the auction became weaker after India became independent in 1947, Sri Lanka in 1948 and Kenya in 1963.

The owners of various estates wanted to sell their tea faster — rather than ship it to London.

Since KTDA factories were until 1973 managed by multinationals, the decision to move from London to Mombasa had nothing to do with smallholders.

TEA AUCTION

The East African Tea Traders Association (EATTA), which runs the auction, is an outdated system.

The Mombasa auction should have been closed years ago. Farmers can sell their tea through the internet rather than the Mombasa auction.

Farmers are forced to incur huge expenses transporting tea to Mombasa when they could comfortably sell it at the county level.

Having said that, it is fair to note that tea auction is a very good system, only that it was infiltrated by dishonest wheeler-dealers.

The other problem is that KTDA is a monopoly and uses its administrative powers to compel farmers to deliver high-quality tea, but it is the final authority on which leaves end in the disposal pit.

Why KTDA is the only legal body allowed to market smallholder tea is not clear.

The other mystery person is the tea broker. To own a brokerage farm, one needs a tea taster, an accountant and a cleaner.

The work of the broker is to prepare a catalogue of producers’ tea. The broker does not handle tea physically.

BROKERS

The producer transports it to a godown, at farmers’ expense, where the buyer picks it. Today, we have a cartel of brokers who get 0.75 per cent for every penny.

He is the person involved in negotiating all the deals. As long as he gets his pay, he cares little about the farmer.

What stops this broker from cutting deals in golf courses? The regulatory body for these brokers is EATTA — an association of brokers, producers, packers and warehouse owners.

In May 2014, the government regulator, Tea Board of Kenya, accused brokers of working closely with KTDA and big buyers to fix auction prices.

The agency denied the allegations. Brokers are a bold lot. They have a very thick skin. No amount of noise rattles them.

After all, they are licensed by the government and KTDA sides with them. It is the agency that allots brokers consignments from different factories to sell.

At times, KTDA’s Chai Trading Company buys tea at prices lower than those at the auction.

It then imports cheap tea and blends it with good Kenyan quality leaves then sells it as blended tea to unknown markets.

ALLOWANCES

Kenya should not be an importer of tea. These imports create an erroneous picture that small farmers have overproduced tea. What Chai Trading is doing is akin to economic sabotage.

Buyers deposit all monies from tea auction for the crop bought into the producers’ collection account within 14 days after purchase.

Only after payment is the tea released by the producer. But KTDA does not release this money into each factory’s collection account.

Why then should KTDA keep these proceeds from tea auction for a whole year without paying interest on it?

Only the tea factory should hold that money on behalf of the farmer and not the appointed agent.

KTDA has perfected the art of taking factory directors to Nairobi to be shown computerised records. The idea is to hand over allowances to them.

The idea of dumping all the tea sales into one account creates a monumental problem.

KTDA’s Collection Account is a dollar account and there are no tags to indicate how much belongs to which factory. This is sorted out later. In 1998, we forced KTDA to pay a mini-bonus.

Mr Mputhia is the chairman, Kenya Union of Small-Scale Tea Owners.