Commodities

Tea factory, brokers fee reduction to save farmers Sh1bn yearly

Tea-nandi

Workers pluck tea in Nandi Hills, Nandi County. FILE PHOTO | NMG

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Summary

  • Agriculture Cabinet Secretary Peter Munya said that the money will be kept in a reserve account as they await the ruling of a case challenging the changes that are included in the Tea Act.
  • He also said that the reduction of management fee from 2.5 percent to 1.5 percent will be effected in November.

Kenya Tea Development Agency (KTDA) managed factories will cut the fee paid to brokers from 0.5 percent to 0.2 percent starting November despite a court case that stopped the changes.

Agriculture Cabinet Secretary Peter Munya said that the money will be kept in a reserve account as they await the ruling of a case challenging the changes that are included in the Tea Act.

He also said that the reduction of management fee from 2.5 percent to 1.5 percent will be effected in November.

The reduction of the brokerage and management agent fees is forecast to save smallholder tea factories over Sh1 billion annually, resulting in more money in the pockets of tea growers.

“With effect from November 2021, smallholder tea factories will reduce the brokerage fee payable to tea brokers from 0.5 percent to 0.2 percent of the net sales and the management Agent fee paid by factories from 2.5 percent to 1.5 percent,” said Mr Munya.

“The funds will be set aside in a reserve account awaiting determination of the court cases challenging the provisions of the Tea Act on brokerage and management agent fees,” he added.

To remove oppressive and exploitative provisions in the management agent agreements between KTDA and smallholder tea factories, Mr Munya said the agency is engaging with the smallholder tea factories to review the agreements and align them with the provisions of the Tea Act 2020.

The CS said the agreements shall further be reviewed and approved by Tea Board of Kenya before execution.

This is the second time that the government is trying to fix brokerage fee after the first attempt last year by a competition watchdog was thrown out by the court.

East African Tea Traders Association (Eatta) had in 2018 sought an exemption and wanted to be allowed to fix the brokerage fee despite opposition from the Competition Authority of Kenya (CAK) to stop price-fixing.