Uhuru Kenyatta orders conflict of interest probe on KTDA bosses

President Uhuru Kenyatta has directed the competition watchdog to look into the activities of Kenya Tea Development Agency (KTDA) to break the cartels that have been running the show at the agency and subjecting farmers to misery.

In a far-reaching directive that will see a review of KTDA governance structure, Mr Kenyatta wants the Competition Authority of Kenya (CAK) to investigate conflict of interest among the agency’s directors, whom for the first time have openly been accused by the head of State.

The President said the low prices that farmers have been earning are a result from governance issues and ordered for the restructuring of the largest State agency that controls more than 60 percent of the total tea produced in the country.

“There are some of the operational and governance challenges that have emerged in the last few years. Key among these are conflict of interest by directors,” said Mr Kenyatta in a televised address from Mombasa on Tuesday.

He said farmers who could be earning about Sh91 per kilogramme for their tea, are currently earning about Sh41 per kilo with the rest going to brokers and middlemen.

“These middlemen, variously known as “soko-huru” or “mukohoro”, purchase tea from the farmers on a cash-on-delivery basis, and then sell it to KTDA in their own names,” he said.

The President ordered the Ministry of Agriculture to ensure that the Tea Regulations 2019 incorporate appropriate mechanisms lock out unregistered tea grower from selling the leaves.

He also directed that farmers be paid 50 percent of their earnings on a monthly basis with the balance being paid at the end of financial year as second payment, popularly referred to as bonus.

Small-scale tea earnings dropped by 22 percent in the financial year ended June 2019, marking the lowest returns for growers in the last six years.

Farmers affiliated to KTDA earned Sh69.7 billion in the review period compared with Sh85.7 billion that they got in 2018.

KTDA attributed the decline to low international prices during the review period resulting from a glut in the market and increased cost of production.

The President further directed the gazettement of the newly developed Tea Regulations 2019 in two weeks time. The regulations include the establishment of the Green Leaf Pricing Formula Committee to determine the formula for pricing of green leaf, the establishment of a self-sustaining stabilisation fund to cushion farmers against price fluctuations and ensure implementation of guaranteed minimum returns, establishment of Kenya Tea Council, and regulation of the volume of teas sold through the Auction and through Direct Sales/ Direct Contracts to be set at 80 percent Auction and 20 percent Direct Sales window.