KTDA denies claims of price manipulation with tea brokers

Kenya’s tea marketing agency has denied accusations of colluding with a cartel to manipulate prices in a secretive practice that has allegedly cost small scale farmers billions of shillings.

The Kenya Tea Development Agency (KTDA) says it has no powers to manipulate prices. It was responding in a suit filed by Kericho governor Paul Chepkwony on behalf of over 1,000 farmers in which Mr Chepkwony is seeking Sh93 billion as compensation, something that the authority feels is his attempt to stay political relevant.

Mr Chepkwony sued KTDA and 27 other organisations that include brokers and big tea marketers.

He wants them to pay the money to small holders to compensate for losses made from the alleged price manipulation and illegal tax collections.

The farmers claim KTDA and other market players have over the years taken advantage of their vulnerable position to exploit them.

READ: Tea farmers file Sh93bn suit against KTDA and brokers

KTDA, however, argues that the current plight of the small scale farmers is a result of unregulated trading and pricing as well as lack of growth in the local tea market

“The domestic market has never improved, hence over-reliance on exports which is affected by external factors, beyond KTDA’s control. Falling (international) prices have led to a corresponding decrease in the price of Kenyan tea,” the agency says in documents filed in the Kericho High Court.

Mr Chepkwony, through the law firm of Manyonge Wanyama and Associates has applied to have the farmers allegedly hurt by KTDA’s price manipulation replace him as the main petitioners.

KTDA has also denied deducting 40 per cent of small scale farmers’ annual sales, and has demanded that the allegation be put to strict proof at the hearing. It has however not declared the amount it deducts from small holders annually.

The farmers had also accused KTDA and other market players of buying their tea at extremely low prices outside the Mombasa tea auction, held in the coastal city every Monday and Tuesday. The agency has also been accused of fixing prices at the auction.

KTDA has denied any foul play in the post-auction purchases, which it says is a result of late bids from overseas clients. The small holders’ marketing agency insists that the post-auction sales are done using the highest price at the auction, and not the alleged low quotes.

Mr Chepkwony says that KTDA resells the tea bought from small scale farmers through its subsidiary-Chai Trading Company-after blending it with cheap, poor quality imports from around the world.

The Kericho governor’s accusations follow a Tea Directorate report published last year in which the same accusations were made against the agency and other market players.