Smallholder tea factories in Kirinyaga County on Thursday agreed to retain current factory management agreements with KTDA Management Services (KTDA MS) until critical issues in the Tea Act 2020 are addressed.

In a meeting with the KTDA MS board, factory directors drawn from Kirinyaga county said there are contested clauses in the Tea Act which, if adopted, will disadvantage the farmers.

The directors noted that the provision to levy farmers a 1 per cent more on net sales value of tea sold, as provided in Section 53 (1) (2) of the Tea Act, will adversely affect farmers’ income.

They want the proposal be revised to match the Government's bottom-up economic model that seeks to empower low-income-earners and urged the State to find alternative means to fund its agencies.

The factory bosses further appealed to the government to review the provisions on governance and direct sales, as contained in the Tea Act, among others.

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John Mithamo, KTDA board member for the zone who spoke at the meeting, noted that if one per cent of their sales goes to other parties, farmers will lose in the arrangement and may be subjected to unnecessary procedural management of their earnings.

According to Mithamo, farmers who are dealing in other crops are not subjected to such levies.

And KTDA National Chairman David Ichoho said KTDA Holdings last year paid farmers Sh585 million in dividends generated by KTDA subsidiaries, key among them KTDA management services.

The directors tasked a select team from Kirinyaga to revisit the current management deal within a week and forwarded to KTDA MS for further engagement and consideration.

The reviewed management agreement is expected to repair the relationship between the two parties and enhance the management of tea factories to better benefit tea farmers.

40 tea factories have thus far signed management agreements with KTDA MS with significant changes in the reviewed agreement including:

• Reduction of management fee from the current 2.5% to 1.5%.

• Introduction of key performance indicators to monitor the performance of the management agency on a continuous basis.

• Reduction of the term of the agreement from the current 10 years to 5 years which is expected to enhance accountability of the management agency.

• Clear demarcation spelling out the role of the management agency and the board to improve their services to tea factories and farmers.

New KTDA MS chairman Solomon Maina noted that, whilst the agency is committed to implementing the new management agreement, the impact of reduced management fee is sizeable and will adversely affect the KTDA MS structure and service delivery to the farmers.

The reviewed management agreements by the various tea factories with KTDA MS will be submitted to the Tea Board of Kenya (TBK) for review and approval before implementation.