Report: How multinationals are fleecing tea farmers

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President Uhuru Kenyatta has said the Government is committed to stamping out corruption in the public sector but needed the input of Judiciary to register successes. PHOTO/STANDARD MEDIA
By ABDULHAKIM SHERMAN

newsdesk@reporter.co.ke

Multinational companies operating in Kenya are fleecing tea farmers through underpaying and falsification of weight of tea sold to them a new report shows.

The Tea Industry Status Report shows that multinationals and private tea factories are involved in buying of green tea from outgrowers which amounts to them being involved in tea hawking.

“It is evident that during their collection of leaf from the registered growers, they also alongside that receive tea from hawkers who sell through proxies to them. They also contribute to the use of poorly calibrated weighing scales” the report notes.

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The report says tea farmers are losing millions of shillings to tea hawkers because of use of un-calibrated weighing scales that start from minus 10 kilogrammes.

A section of tea farmers have called for a forensic audit of all the 67 tea factories to establish how much they are losing due to underhand activities at Kenya Tea Development Agency (KTDA).

Kenya Tea Development Agency CEO Lerionka Tiampati. PHOTO/COURTESY

Currently, one tea factory has filed more than 15 cases against KTDA to question how some tea factories are being managed.

A study undertaken by the undertaken by the secretariat of Food and Agriculture Organisation of the United Nations (FAO) estimates that at least 100 million kilogrammes of green leaf are lost to hawking each year. This is equivalent to 23.5 million kilogrammes, or 10 percent, of made tea produced by KTDA in 2014/2015.

The FAO report adds that the price gap between the auction and retail is so large it strongly supports the establishment of a marketing agency for KTDA teas to fully realise the potential and the bargaining position of a company that controls more than 60 percent of total tea produced in Kenya.

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

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The report says tea growers received US$0.47 per kilogramme of green leaf, while retailers received US$ 5.56 per kilogramme of loose tea and US$ 11.22 per kg for tea bags.

The FAO report says a major problem in the KTDA supply chain is leaf hawking, which is undermining targeted throughputs at various tea factories.

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

The report adds automated records of KTDA members indicate a drop in green leaf deliveries for some growers.

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“For instance, six million kilogrammes or 30 percent of expected green leaf throughput at the Kiambaa tea factory is lost to hawkers every year,” the report says.

The Mombasa tea auction has also been infiltrated by “briefcase buyers.” These are buyers who approach producers directly to buy their tea, bypassing the auction system.

“Similar to green leaf hawkers, these buyers offer immediate cash for lots, but at lower prices. An estimated 40 percent of tea production, 25 percent of which are KTDA teas, are sold in this manner and does not reach the auction,” it adds.

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.

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.

Cabinet Secretary for Agriculture Mwangi Kiunjuri. He is under pressure to initiate reforms in the tea sector. PHOTO/COURTEST

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.

And 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.

The report explains that in a scenario where a broker gets more from the buyer than what comes from the producer, there is a likelihood of the same working against the farmer.

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