NAIROBI, Kenya, May 19 – Over 80 percent of smallholder tea factories in the country have signed a new management agreement with the Kenya Tea Development Agency Services Limited (KTDA-MS).
The farmers are from the West Rift Valley, Embu, Meru, and Kiambu counties.
As a result, the farmers have okayed KTDA to manage their affairs for at least the next five years.
Agreements between KTDA-MS and factories are part of the ongoing reforms in the tea sub-sector as contained in the Tea Act of 2020 and subsequent subsidiary legislation, which call for enhanced management agreements for factories in favour of the smallholder tea farmers.
The reviewed management agreements are a shift from the current arrangement and are expected to remedy the relationship between the parties and improve the management of tea factories for the benefit of tea farmers once implemented.
Among the key changes in the reviewed management agreements is a reduction of the management fees factories pay management agents from the current 2.5 percent to 1.5 percent of the net sales value of the tea sold per year.
Others include the introduction of key performance indicators to monitor the performance of the management agency on a continuous basis and the reduction of the term of the agreement from the current 10 years to 5 years, among others.
“We are pleased with the progress made by a vast majority of our factories in signing the new management agreements with KTDA-MS as part of the ongoing reforms in the tea sub-sector,” KTDA Holdings Chairman David Muni Ichoho said.
“As a board, we remain committed to the implementation of all reforms geared towards improving the performance of tea factories and the increasing returns to tea growers,” Ichoho added.
“The decision by the factories to enter into new agreements with KTDA-MS is confirmation of their confidence in the organization to continue delivering quality services and value for money for smallholder tea farmers in the country.”
The reviewed management agreements with KTDA MS Ltd. will be submitted to the Tea Board of Kenya for review and approval before implementation.
“Aware of the substantial impact the reduction in management fees will have on the business, fundamental changes in both the structure of KTDA MS Ltd as well as in mode of service delivery will have to be implemented by adoption of mechanization and automation.”
