KTDA managing director, Mr Lerionka Tiampati. PHOTO/COURTESY
By KARIUKI MUIRI
The Kenya Tea Development Agency (KTDA) is stealing billions of shillings from tea farmers through an opaque and corrupt tea auction system called “Price discovery.”KTDA handles between 160 million and 200 million kilogrammes of processed tea annually and about 60 percent of that processed tea is sold at Mombasa Tea Auction on Tuesdays all year round, where crooked, opaque and corrupt “price discovery” is done.
The other 40 percent is handled through private arrangement by the KTDA marketing department where certain players in the tea sector are given wealth on a silver platter.
Through this arrangement, tea is given to a Mombasa subsidiary of KTDA called Chai Trading Limited and some international tea buyers like Lipton which buys around 100 million kilogrammes annually from KTDA is allowed to buy tea that was not sold through the auction at below market rates.
During the tea auction multinationals and Chai Trading Ltd suppress the auction prices by bidding rock bottom prices as this result in tea brokers being unable to sell them the tea below reserve prices.
Thereafter the multinationals and Chai Trading go to KTDA Department on Wednesdays where they are offered the tea at rock bottom prices for premium tea.
KTDA directors in court after they were charged with contempt of court following a case filed by Kiru Tea Factory directors. PHOTO/FILE
Sri Lanka had a similar problem akin to what is happening at the Mombasa Tea Auction but they sorted out this mess by decreeing that all tea must pass through the auction.
Tea farming in Kenya is today on its death bed because the farmer is not benefiting from his sweat and some of them have resorted to uprooting the crop. This is a consequence of corruption at KTDA. Most factories do not even do proper audits and lose a lot of money from Chai Trading Limited fraudulent activities.
To address the mess in the tea sector the government should consider the following measures; disband KTDA and let both the national and county governments have control of a new restructured, re-organized and transparent KTDA.
Ensure KTDA subsidiaries have clear mandate that are not overlapping or duplicated and sell all assets belonging to a company called KTDA Holdings and distribute the money among all farmers on pro rata basis. Assets include real estate in Nairobi and Mombasa and land.
All tea grown in Kenya must go through the Mombasa tea auction, including that from private tea factories in Kericho where Kenya Revenue Authority (KRA) must be losing billions of shillings in transfer pricing by some of the players.
All tea factory boards should be overhauled for acting against the wishes of farmers and KTDA opened up for competition by allowing at the least, three companies to act on behalf of farmers so that prices can go up.
There is need to abolish Chai Trading Limited initiate investigations over allegations of corruption and reduce the period of paying farmers for their tea deliveries because tea at the auction is paid for after nine days.
The 2.5 percent management fees that KTDA charges farmers is too high and it should be reduced to one percent and investigations should be launched into Sh 4 billion of farmers money that has been lost in collapsed banks.
The Cabinet Secretary for Agriculture should be compelled to implement the Tea Task Force report that made far-reaching recommendations on how to reform the tea sector.
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