Report: Farmers losing billions of shillings through a KTDA racket of selling tea outside the auction


Tea pickers at work in Kericho. PHOTO/COURTESY


Farmers are losing billions of shillings through a racket in which the Kenya Tea Development Agency (KTD) is selling tea outside the auction, a report compiled by the Tea Board of Kenya reveals.

The Tea Industry Status Report seen by this reporter shows that the post-auction sale referred to as private sale of withdrawn tea from the Mombasa auction is emerging as a big issue at KTDA.

The report says that tea buyers are now avoiding to buy tea at the Mombasa tea auction and wait it to be withdrawn by KTDA before they can buy it on the cheap later from the agency.

Related story: KTDA to face investigations over allegations of monopolistic tendencies

“Most actors do not participate during the action but wait for post auction private sales to buy cheap tea. The auction is on Tuesdays, but some organized prior private arrangements are made to buy high quality tea at below auction prices,” the report reveals.

KTDA chairman Peter Tirus Kanyago. He is on the spot over massive irregularities at KTDA. PHOTO/COURTESY

It adds that this creates a huge price differential making an impression that there is excess tea in the market.

The reports notes that some of the tea at the Mombasa auction is sold to KTDA’s subsidiary Chai Trading Ltd where the tea’s destination is not made clear.

Related story: Revealed: How KTDA is fleecing tea farmers billions through deceptive schemes

“The rest of the sales which are later sold as private sales, are bought at far lower prices than the auction price hence end up being cheap source of tea which compete in the same market as the auction tea,” it adds.

The Tea Industry Status Report notes that the cheap tea sold out of the tea auction is then exported to markets like United Arab Emirates (UAE) or Pakistan where other buyers from the auction have value addition interests.

“This denies the country income, employment and largely foreign exchange. Other companies also blend these teas with low quality tea of other origins and then re-export it as Kenyan tea,” the report adds.

Related story: Radical changes proposed for the tea industry by President Kenyatta’s task force

Gem MP Elisha Odhiambo who has taken a Bill in Parliament aimed at reforming the tea sector. PHOTO/FILE

The report also reveals that KTDA subsidiary Chai Trading Company Ltd is also buying tea directly from factories at lower prices that the auction prices, imports low quality tea from Asia, blends it with Kenyan tea and re-exports the same.

It adds that tea farmers are only paid from earnings accruing from the tea auction in Mombasa and does not benefit from other earnings by KTDA subsidiaries.

“KTDA holdings keeps the farmers money for close to one year in banks where some directors of KTDA are said to have interest and the interest earned is never disclosed to the farmer,” the report observes.

Tea farmers from across the country want President Uhuru Kenyatta to sack Cabinet Secretary for Agriculture Mwangi Kiunjuri, over the mismanagement of the sector by KTDA.

Agriculture CS Mwangi Kiunjuri is under pressure to deal with cartels exploiting tea farmers. PHOTO/COURTESY

The tea farmers from Mt Kenya Region, Rift Valley Nyanza and Western regions say Mr Kiunjuri has failed to live up to their expectations of addressing problems facing the tea sector and want him sacked and replaced by an agriculture technocrat.

Related story: Sack CS Agriculture: Tea farmers tell President Uhuru Kenyatta

In the recent past, President Kenyatta has expressed his reservations at the way the Agriculture CS is handling the agriculture docket.

During the Nairobi Agriculture Show of Kenya the president warned the CS that he risked being sacked if he did not address the problems facing maize farmers in Rift Valley after more than Sh 2.5billion set aside to pay them was misappropriated.

And during the Mashujaa Day celebrations in Kakamega County, President Kenyatta reiterated his warning to the Agriculture CS that unless he dealt with cartels exploiting sugar farmers in western and the country at large he risked being prosecuted as well.

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