Ten tea factories from Murang’a county have finally entered into a new agreement with KTDA that will see farmers save Sh2 billion annually for the next five years.
This follows intensive negotiations over seven months as both parties sought to strike a balance between their interests.
On Wednesday, directors from the factories met officials from KTDA Management Services Ltd, an affiliate company of KTDA Holdings, to sign a draft agreement that had been agreed upon previously.
But the meeting officiated by Kenya Tea Board chairperson Josphat Gathiru turned chaotic when both parties produced different copies of the agreement.
The parties then selected representatives who redrafted the agreement, an activity that took the better part of the day, forcing the meeting to restart at almost 9pm.
After being taken through the 30-page agreement, directors and KTDA-MS argued over the role of appointing a tea broker, with directors demanding that the role be retained with factories’ boards as opposed to KTDA.
The agency finally gave in, and the agreement was signed late into the night as the activity concluded at 11pm.
The agreement, according to Zone II KTDA board member James Githinji, will see farmers save Sh2 per kilogram of green leaf once it comes into effect in July this year as it has reduced management fee from 2.5 per cent of total tea sales to 1.5 per cent.
Each of the factories, he noted, has been paying an average of Sh14 million per month to the company for management services.
“This is a major leap for farmers as it will put more money in their pockets,” Githinji said.
Zone III KTDA board member Chege Kirundi on his part noted that the new agreement has bestowed more powers on factories’ directors especially in the running of factories’ bank accounts.
Previously, the accounts were run by KTDA which would sometimes move factories’ funds without their directors’ knowledge.
The agreement allows both factories and the agency to have signatories, ensuring both have visibility of the accounts’ activities.
“Factories’ boards will now have to give consent before funds are moved from their accounts. Procurement also has to be approved by the boards,” Kirundi said.
He lauded Kenya Tea Board for mediating the process, acknowledging that at some point, both parties had taken a hard stance, occasioning a stalemate.
At Kiru tea factory which Kirundi chairs, the agitation for a review of the management agreement started seven years ago and led to years of conflicts as the board of directors split.
KTDA-MS chairperson Solomon Maina said the new terms of agreement will have implications on the operations of the agency but added that it will readjust to ensure it continues to offer quality services.
“We started this process seven months ago but Murang’a factories have been very difficult. The directors wanted more power retained at the factories and I’m glad we have come to an agreement,” he said.
“I assure farmers that we will put up the necessary mechanisms to continue serving them the best way possible”.
KTDA Holdings chairperson Enos Njeru said the long-standing stalemate indicated both parties’ resolve to fight for farmers’ interests.
Njeru said the agreement will see services improved with Tea Board of Kenya as the regulator as it will help boost cashflow for the factories and reduce the amount of tea in warehouses.
Tea Board of Kenya chairperson Gathiru on his part noted that only three factories from Kirinyaga county are yet to sign new agreements with KTDA.
The factories have drafted the agreement document and are expected to sign it soon.
The new management agreement, he said, can be reviewed if it’s deemed necessary and underscored the need for farmers to take directors’ elections more keenly.
“With more powers bestowed on the boards, farmers need to elect good directors who will not misuse it,” he said, adding that the elections will be conducted later in the year.
