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Commodities

Uhuru orders competition agency to smash tea cartels

Tea picker. President Kenyatta has blamed
Tea picker. President Kenyatta has blamed governance issues for the poor earnings by tea farmers. FILE PHOTO | NMG 

President Uhuru Kenyatta has directed the competition watchdog to smoke out cartels in the tea sector in a move aimed at safeguarding Kenya’s top foreign exchange earner.

In a far-reaching directive, Mr Kenyatta ordered the Competition Authority of Kenya (CAK) to investigate cases of conflict of interest among Kenya Tea Development Agency (KTDA) directors, saying the low prices were resulting from governance issues.

The KTDA controls more than 60 percent of the total tea produced in the country.

“There are some of the operational and governance challenges that have emerged in the last few years. Key among these are conflict of interest by directors,” said Mr Kenyatta in a televised address from Mombasa on Tuesday.

The head of state said the governance of KTDA and entire marketing of tea will require to be restructured ensure tea farmers get more revenue from their tea sales.

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Mr Kenyatta said farmers who ideally could be earning about Sh91 per kilogramme for their tea current earn about Sh41 for the same quantity.

“The key concerns are on low tea prices, delayed payments, low initial payment by KTDA and fluctuations in net income of tea farmers,” he added.

The President also directed the Ministry of Agriculture to ensure farmers are paid 50 percent of their earnings every month with the balance paid at the end of the financial year as second payment, popularly referred to as bonus.

Small-scale tea earnings dropped by 22 percent in the financial year ended June 2019, marking the lowest returns for growers in the last six years.

Farmers affiliated to KTDA earned Sh69.7 billion in the review period compared to Sh85.7 billion that they received in 2018.

The tea agency attributed the decline to low international prices during the review period resulting from a glut in the market and increased cost of production.

Mr Kenyatta said the industry has been experiencing difficulties, particularly about diminished earnings for the farmers, pointing out that the directive that he has issued would remedy the concerns.

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