Economy

More firms join suit against new tea sector laws

tea

Workers pick tea at a farm in Kericho. FILE PHOTO | NMG

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Summary

  • Some 51 tea factories from central Kenya have joined a case seeking to quash sections of the Tea Act.
  • The tea companies under Mungania Tea Factory Company Limited were joined in the case after they filed the case before the High Court in Embu.
  • The tea factories are challenging Sections 5 (1) (e) & (I), 21 (2), 22, 25, 33, 34, 36, 37 (3), 39, 40, 41, 42, 45 and 74 of the Tea Act, which came into effect in January.

Some 51 tea factories from central Kenya have joined a case seeking to quash sections of the Tea Act.

The tea companies under Mungania Tea Factory Company Limited were joined in the case after they filed the case before the High Court in Embu.

The tea factories are challenging Sections 5 (1) (e) & (I), 21 (2), 22, 25, 33, 34, 36, 37 (3), 39, 40, 41, 42, 45 and 74 of the Tea Act, which came into effect in January.

Through lawyer Benson Millimo, they argue that the sections infringe on several laws including the Companies Act, the Law of Contract, the Crops Act and the Competition Act.

Sections 21 of the Act contains provisions to guide the registration of small and medium scale tea growers, while sections 22 and 25 provides for maximum number of board of directors for tea factory limited companies and the licensing of manufacturers, respectively.

Sections 33 and 34 contain provisions guiding the registration of tea management agents, as well as their agreements with tea factories, while Section 36 provides that all black tea must be sold at the auction.

Section 74 of the Act grants the Agriculture Cabinet Secretary powers to draft regulations which guide, among others, the tenure of tea factory companies board members; maximum fees charged by players along the value chain; and regulation of contracts among industry players.

The High Court has already suspended sections of the Tea Act after 15 companies under Kenya Tea Growers Association (KTGA) and East African Tea Trade Association challenged them arguing that they were unconstitutional.

Among the sections targeted by the EATTA is section 34(4), which it said is silent on the percentage of payments to be borne by the tea buyers and tea factories to pay the brokerage commission. The sections caps the brokerage fees but fails to indicate how the fees will be paid, according to EATTA.

KTGA argues that sections 36, 48, and 53 will negatively effect other tea players, particularly large scale plantations, which have existing contracts for direct sales with overseas buyers.

The case will be heard on February 22.