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Commodities

Storm brews as tea auction joins KTDA fight against Munya regulations

Agriculture CS Peter Munya
Agriculture CS Peter Munya. FILE PHOTO | NMG 

The Mombasa auction has joined Kenya Tea Development Agency (KTDA) in opposing proposed tea regulations as it seeks to remain a major regional trading centre.

It reckons the new rules by Ministry of Agriculture could weaken its role.

East Africa Tea Traders Association (Eatta), which manages the auction, called for thorough review of the regulations to avoid hurting the local tea industry.

Eatta said it was particularly concerned that some of the regulations, especially on importers who use the auction to export to the world market, will impact negatively on traders and make Kenya lose on the trades.

“If the regulations are too rigid, other regional countries will set up their own auction centre and Kenya will largely lose the advantages that come with having the regional auction centre,” said Edward Mudibo, Eatta managing director.

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For instance, the new regulations require those importing tea from other countries for re-export to at least carry out value addition on 20 percent of their total stocks.

Eatta is also opposed to the requirement to have tea factories register and participate at the auction directly, saying the move will automatically lock out brokers and other service providers from dealing at the auction on behalf of the companies.

“It may be impractical for the factories to directly deal at the auction. Tea factories may not appreciate the sensitive dynamics of the trade and there are also more services offered by the brokers other than at the auction. This is over-legislation by government,” Mr Mudibo said.

The government is pushing the raft of measures to transform the tea sector and ensure that farmers benefit from their produce.

Agriculture secretary Peter Munya last month blamed the auction system for dysfunction and inefficient characterised by lack of transparency, accountability and competition.

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