Munya accuses KTDA, tea auction of fixing prices

Agriculture Cabinet Secretary Peter Munya has put Kenya Tea Development Agency (KTDA) and the Mombasa auction on the spot over price fixing even as the ministry prepares to release President Uhuru Kenyatta’s reform proposals.

Mr Munya alleged they abuse dominance by withdrawing tea for sale in a given trading session when prices are low and return when the value rises.

KTDA controls more than 60 percent of the total tea produced in the country, while the East African Tea Trade Association (Eatta) runs the Mombasa auction.

“We know what goes on at the auction. Huge volumes are withdrawn from the trading floor when KTDA and Eatta connive to negotiate a back deal price for the same tea, we are going to stop this,” said Mr Munya.

The CS said the auction is operating in an ‘opaque’ manner, making it difficult for price discovery to apply during the sale.

Mr Munya said the regulations, some developed following Mr Kenyatta’s directive on reforms, will address these malpractices.

“KTDA is a dominant player in the tea sector and these are some of the things that have led to malpractices in the sector as they abuse their dominance,” said Mr Munya.

Eatta did not respond to Business Daily queries.

The remarks come at a time tea prices have plummeted to a low of Sh190 a kilo with the auction witnessing one of the highest volumes to have been withdrawn from trading in the last one year.

About 4.4 million kilos, representing 28 percent of the total volumes offered for sale were withdrawn from the auction floor. Mr Kenyatta in January directed the competition watchdog to look into the activities of KTDA to break the cartels that subject farmers to misery.

The President said farmers who should be earning about Sh91 per kilo of tea were getting about Sh41.

In the directive, Mr Kenyatta wanted the Competition Authority of Kenya (CAK) to investigate conflict of interest among the agency’s directors leading to prices manipulation at the auction.

While the CAK probe is not out yet, Mr Munya said the ministry was conducting its own investigations by looking through the books of the agency.