Tea regulations 2020; a good move for sector players
By Fredrick Obwanda | The government of Kenya has proposed and passed the Crops (Tea) amendment act of 2020 spelling a mix of good for the farmers since it spells out a very organised regulatory system, traceability mechanism for farmers and the larger market making sure no monies are lost in between transactions.
The main purpose of this Act is to allow for all players in the industry to be registered all across the value chain, collection of all tea-related data, authentication of all exports and imports, promotion of value addition and product diversification in a bid to target the export market, and lastly enforcement of tea standards for high-end quality assurance and safety.
Fact is the tea market and the country for a long time has lost lots of revenue due to exportation of raw tea, this means that the industry besides the menial picking of tea, which was at some point challenged with the introduction of automatic tea picking, the industry hasn’t for years added skilled upper deck jobs that are well paying and skilled based.
The tea industry itself was fetching one set of revenue stream which is monies going to farmers for the raw tea. These amounts are far-fetched from what their products fetch in the international markets once more value has been added. These amendments could have come at a better time because Kenya is working towards being a manufacturing hub.
The regulation revisits manufacturing by lining those who intend to carry on the business of tea buying or exporting to apply to the Authority for registration or renewal of their registration and must show the value add of at least forty percent (40%) of their annual tea exports. This is how the system intends to achieve verification of value add, all registered tea buyers/exports shall submit to the authority a return on quarterly basis indicating their level of compliance with provisions of regulation by showcasing an elaborate business plan demonstrating the viability of the business venture outlining each proposal to undertake value addition, creation of new market linkages creation of employment opportunities, technology transfer, evidence of suitable premises for value addition, and lastly evidenced availability of equipment for the tea buyer or exporter to undertake tea value addition;
The act further locks delivery of green tea to specified registered entities, which once agreed upon between the two is subject to the registered laws, cases where either party is not satisfied with the agreement a one month notice is issued on either side pending clearance of outstanding dues.
As for companies willing to do value addition of green tea in Kenya, certain preconditions need to be met which include, furnishing the authorities with a feasibility study of the proposed cottage tea manufacturing factory, certified copies of the growers’ register, be able to demonstrate adequate financial capacity to construct the cottage tea factory and commence operations. In cases where a cottage tea manufacturing factory intends to use wood as a source of energy, the applicant shall furnish the Authority with a wood fuel sustainability plan equivalent to the ratio of 4:1 tea planted to woodlots planted.
I am still trying to figure out why the emphasis on wood especially in these times of environmental degradation and global warming temperature changes which affect tea productivity directly.
Lastly on the registered persons shall only be issued with a manufacturing licence or cottage tea manufacturing licence for a new factory if the person has at least two hundred and fifty hectares of planted tea bushes or twenty hectares in the case of cottage manufacture.
I do hope with the strict payment timelines indicated in the regulations we will start to see the industry go back to being the giant that it was once to the Kenyan economy competing with Ethiopia, Pakistan in the international tea market, this is with the assumption that these new regulations will be implemented to the later to cut out all the middlemen who for a long time dominated the industry but with no verifiable farm or factory to their names.
Fredrick Obwanda is the CEO of Africa Development Foundation.