Munya orders audit of tea auction systems as farmers’ incomes plummet

Market News

Munya orders audit of tea auction systems as farmers’ incomes plummet


Cabinet Secretary for Agriculture Peter Munya. FILE PHOTO | NMG

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Summary

  • Mr Munya issued a two-week ultimatum to the Tea Board of Kenya (TBK) to appoint an auditor to review the system run by the East African Tea Trade Association.
  • For a long time, the government accused the auction of colluding with players to fix tea prices, a move it said deprived farmers of a good income from their produce.
  • As part of reforms to ensure price transparency, the Ministry of Agriculture last year ordered the Mombasa tea auction to switch from a manual to an electronic system.

Cabinet Secretary for Agriculture (CS) Peter Munya has ordered the tea sector regulator to audit the Mombasa auction to establish what is preventing farmers from getting better incomes.

Mr. Munya issued a two-week ultimatum to the Tea Board of Kenya (TBK) to appoint an auditor to review the system run by the East African Tea Trade Association (Eatta) to determine whether the discovery mechanism price is reached during the auction.

For a long time, the government accused the auction of colluding with players to fix tea prices, a move it said deprived farmers of a good income from their produce.

“To further improve the price discovery mechanisms during the auction, there is a need to audit the electronic auction trading platform to ensure that it is foolproof and not prone to inefficiencies and lack of responsibility in determining the prices that characterize the ‘open outcry’ system,” says Mr. Munya.

As part of reforms to ensure price transparency, the Ministry of Agriculture last year ordered the Mombasa Tea Auction to switch from a manual system to an electronic system considered foolproof.

TBK Managing Director Perris Mudida said they have already started the process of identifying an auditor to undertake the task.

“We are currently developing terms of reference that will guide the auditor in carrying out this task, so the process is ongoing,” Ms. Mudida said.

Mr. Munya said the reforms aim to ensure farmers have good incomes after years of exploitation by cartels.

Improved automation

To increase plant productivity and processing profitability, a working group formed by Mr. Munya recommended optimizing the plant’s processing capacity, rationalizing energy costs, improving automation, value addition and aggressive market promotion targeting both domestic and external markets.

“The ministry, through the newly established Kenya Tea Board, will launch a program over the next three months to implement the recommendations of the recently concluded study on the National Processing Capacity Survey” , said CS.

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