Kenya tea farmers harvest benefits of electronic trading

Tea farmers can now track their sales at the trading auction and determine their earnings at the touch of a button — thanks to a new electronic system at the public sales.

The board which tracks the tea trading auction has revolutionalised the industry, eliminating inefficiency associated with the previous open cry auction system.

“The new trading system has reduced the cost and duration of settlement between the various parties involved in the tea auction system, eliminated the need to provide guarantees to counter parties and the risk exposure to farmers”, said Kipkirui arap Lang’at, the managing director of the East African Tea Trade Association (EATTA).

EATTA brings together different parties in the tea industry such as farmers, tea factories, tea brokers, warehouses and buyers of tea.

According to Dr Lang’at, the need to put in place a centralised automated tea auction has eases trading by eliminating the previous tedious manual processes such as open cry bidding, allocation of lots, payment, and release of tea from warehouses to buyers for shipment.

However, the most important milestone is the elimination of physical payment processes which was fraught with the risk of default, with tea farmers on the receiving end.

“The system revolves around a centralised payment process where payment is made to a central pool, then other processes such as allocation of tea lots and release of tea from warehouses is authorised,” said Robert Masinde, the regional head of Transactional Products and Services at CFC Stanbic Bank.

The system will allow farmers at the factory level to access the auction trading billboard where they can easily track the status of their tea.

Mr Masinde said farmers will be in a position to check the auction process and when their tea is sold the system will confirm the sale transaction both in terms of volume and value.

Similarly, it will provide real time information on payment with tea buyers making payment at the bank and not through brokers as was the case previously.

Upon payment, the bank will load the information on the system hence farmers can confirm that their tea has been paid for even before the proceeds are transferred into their accounts.

CFC Stanbic Bank is the producer of the electronic billboard.

The bank has centralised payment system thereby eliminating the previous manual settlement process that was open to abuse.

Improved incomes

“The system has enabled us to resolve any dispute in real-time while crediting payment faster than before as all parties operate accounts within the bank and all it takes is electronic transfer,” said Dr Lang’at.