Multinationals challenge new tea law

Fifteen large-scale tea growers have challenged sections of the recently enacted tea law, saying they are discriminatory and will cause them losses.

In a petition filed under a certificate of urgency, the multi-nationals under the Kenya Tea Growers Association, argue that Sections 36, 48, and 53 of the law, were enacted in a manner inconsistent with the Constitution.

The tea estates including James Finlay, Kapchorua Tea Plc Ltd, Kipkebe Ltd, Nandi Tea Estates, Williamson Tea Plc and Sotik Highlands Tea Estates Ltd, said the sections will have catastrophic impact on tea producers and the industry as a whole, if left in their current form.

Tea Act 2020, they said, was enacted despite their filing a petition to the Senate and the National Assembly, seeking changes to some provisions of the Bill.

Section 36 of the Act provides that all teas processed in Kenya, for export with the exception of orthodox and specialty shall be offered at the tea auction floor.

The companies said the section is meant to curtail Kenya Tea Development Agency’s (KTDA) power to do direct tea sales.

“[A] thriving commercial plantation sector is key to the health of the tea sector and that measures to ensure a properly regulated and managed smallholder sector can be effectively achieved while maintaining direct sales provisions for the commercial private plantation sector,” they argue.

The association said the section ought to have been restricted to the small-holder-owned tea factories with an exception made in respect of large-scale private plantations, which also grow patented teas.

They said Parliament failed to appreciate that the section would have a negative effect on other tea players, particularly large-scale plantation companies with existing contracts for direct sales to overseas buyers.

The companies said that apart from tea buyers opting to trade with other international tea sellers, KTGA members will lose financial benefit of the direct contracts, which offer better and higher returns than the auction tea prices.

The multinationals said direct contracts are with specific buyers for specific quantities and qualities for between this year, up to 2023. The companies said many of the direct contracts are in respect of bespoke and customised categories of teas, which are not sold through auction and which have been certified by certifying bodies such as Rainforest, Fairtrade and Ethical Tea Partnerships.

They added that loses arising from loss of direct or forward contracts will have detrimental effect on the economy.

According to the association, large scale tea plantation companies account for 40 per cent of the sales in respect of exported tea and are the largest employer in the agricultural sector employing approximately 60,000 workers directly and contributing immensely to the rural economy where the estates are situated.