The Kenya tea industry stakeholders must take charge of their own destiny

Wednesday December 29 2010

By DUNSTAN NGUMO

On December 7, an “advertiser’s announcement” by the East African Tea Trade Association made reference to a few recommendations by the Task Force Report on Kenya’s tea industry in 2007.

The announcement concluded: “EATTA wishes to request a stakeholders-driven approach by the government . . . to ensure a vibrant tea industry in Kenya”.

It is gratifying to see the association making a case for fast-tracking the implementation of the taskforce’s recommendations, particularly in reference to the introduction of an ad valorem levy to be charged at the point of import and export.

It is now over three years since the government accepted the report. However, little has been done to implement it. Who is to blame for this situation?
For a long time, tea stakeholders had been imploring the government to address the challenges facing the industry. Finally, it responded and appointed the taskforce, and accepted its report.

Someone once said: “If you want to know the source of the problems bedevilling you, take a moment and look at the mirror”. The tea industry, comprising the whole fraternity of producers, management agents, brokers and packers, is squarely to blame for all the woes facing it.

To give just one example, the taskforce report recommended the establishment of a Kenya Tea Council as an advocacy and self-regulation body, but the stakeholders have done little to establish this important lobby group.

Similarly, the taskforce recommended the establishment of a national tea growers association to articulate issues of common interest and to also lobby for policy changes. Why haven’t the producers exploited this recommendation?

Kenya’s main competitors, India and Sri Lanka, have a number of industry-driven lobby groups that lobby for their tea industries. Kenya’s tea industry should take a cue from these two countries and strengthen their lobbying capacity.

The report made a far-reaching recommendation to establish a tea development and value-addition fund to: (i) fast-track value-addition and product diversification, (ii) provide incentives for value-addition, (iii) supplement Tea Board funding, and (iv) strengthen promotion and market development activities.

Now, we have EATTA telling us about the benefits of value-addition. Everybody knows them. The association would have done better to lead the others in lobbying the government to implement this and other recommendations.

There are two other indicators that the tea industry is fast asleep. First, there has been the long-running battle between Cotu and the Kenya Tea Growers Association on the use of tea-plucking machines. Nobody has explained that the use of the machines is dictated purely by the need to reduce the ever-rising costs of production.

Labour costs have killed the tea industry in some countries like South Africa. Do we wait until this happens in Kenya?

Secondly, two Bills on the tea sector, one a government Bill and the other a private members’ Bill have been proposed in Parliament. This is an opportunity for stakeholders to debate the Bills and guide the government on the way forward. But who will bring the stakeholders together?

In the absence of a national lobby, the Tea Board of Kenya should do it.

The tea industry suffers from twin maladies which, for lack of a better term, I call the “lazy ostrich” syndrome. When the going is good, the ostrich buries its head in the sand and when the going is bad, it takes flight.

The individual Kenyan tea stakeholders are usually inward-looking and only worried about their small sectoral interests. Synergy seems to be a foreign word in the industry. Yet, it is the only way forward for any competition.

As part of the malady, when the prices are good and stable (as was the case in 2009/2010), everybody in the industry goes quiet. But when the prices slump (as was the case in 2007/2008) everybody cries to the government for help.

Globally, tea production continues to grow faster than consumption, which means the prices will keep falling for some time to come.

Lest we celebrate one year of good prices only to suffer lower prices in other years, there is need for the tea industry to institute an industry-wide “think tank” to plan ahead and hedge against the vicissitudes of the global market. This function could best be discharged by the proposed Kenya Tea Council.

Mr Ngumo is a former chairman of the Tea Board of Kenya and founding chairman of the International Tea Producers Forum.

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