Over the last three years, KTDA has blamed several factors which it said had an impact on tea prices and general farmers’ incomes. These ranged from climate change, smallholder farmers opting for alternatives to tea, political turmoil in Egypt – an important market – an ad valorem tax of 1% charged on exported tea in addition to other taxes, and a glut in the local market, as reasons for lower prices.
Last year KTDA had tried to shift the blame to the government’s ad valorem tax imposed on all tea exports, saying that the levy was making Kenyan tea uncompetitive. However, the Agriculture Ministry has dismissed this as a sideshow by KTDA aimed at deflecting attention away from KTDA’s “mismanagement” woes.
Confusion all around
Adding to the confusion in the tea sector is the fact that many smallholder farmers are unaware how the tea auction operates and this has helped fuel the misunderstanding that permeates the Kenyan tea sector.
Ever since TBK released its damaging report, many expected KTDA to come out strongly in self-defence and even pursue legal channels in the face of damning allegations of impropriety. A feeble denial is all that KTDA has offered so far. A failure by KTDA to cushion farmers during low seasons has only helped erode its public image.
The squabbling over tea prices is still simmering, with politicians planning meetings with tea stakeholders to find solutions. In September KTDA announced that total tea earnings had reduced to Kshs52.9 bn ($590.3m) down from $772.6m in 2013. The agency further announced that the bonus payments would not be the same and farmers around the Mount Kenya regions would receive higher bonuses than those from the Rift Valley.
In mid October, tea farmers in several tea-growing counties in the Rift Valley threatened to uproot their trees owing to the low payments. Some 31,000 small-scale tea farmers are now considering alternative land uses such as timber and real estate at the expense of tea growing.
Previously, KTDA has managed to weather farmers’ complaints. This time around, however, the scenario is different and KTDA is increasingly being isolated. The agriculture cabinet secretary, Felix Kosgei, has also accused KTDA of mismanagement. Legislators from tea-growing regions in both parliament and senate have joined the farmers and demanded a complete makeover of KTDA.
But not only KTDA is facing a crisis of confidence; the East African Tea Trade Association (EATTA), which runs the Mombasa tea auction and sells tea from Uganda, Rwanda, Burundi, Malawi, Tanzania and Mozambique, is also accused of complicity in unfair tea prices. EATTA has been criticised for running an opaque auction. In September, the Ugandan Export Promotion Board said it was considering direct sales instead of the auction, whose profits are said to be 10 times lower than those of other emerging tea markets.