Kericho Governor Paul Chepkwony has moved to court seeking Sh87 billion compensation for nearly 400,000 farmers from the sector regulator and multi-national tea firms. In the precedent-setting suit filed yesterday, Prof Chepkwony asked the High Court to compel the Kenya Tea Development Agency to refund farmers in Bomet and Kericho counties, the double charges for management services. The governor also wants the court to declare as unconstitutional, the levying of the Agricultural Produce Cess on farmers’ tea by the Agriculture, Food and Fisheries Authority (Affa). “The petitioner contends that KTDA’s act in levying Agricultural Produce Cess has no legal basis and also violates the express provisions of the Constitution. The ad valorem duty has the effect of overpricing Kenyan tea and in the process scaring away foreign buyers,” reads the plaint. The ad valorem tax is charged on the value of the property at the time of transaction, in this case, the tea farms. Further, the governor accuses the KTDA of mismanaging the sector, a situation he claims has led to lower returns for smallholder tea farmers. Prof Chepkwony says that despite small-scale farmers accounting for up to 60 per cent of the total tea production, they have no control over institutions governing the tea sector. The suit filed by lawyer Peter Wanyama, names as respondents, KTDA and its subsidiaries: Chai Trading Company Limited, KTDA Management Services, Majani Insurance Brokers, Kenya Tea Packers Limited, Greenland Fedha Limited, and KTDA Power Company Limited. The other respondents are Unilever (Kenya) Limited, Lipton International, James Finlay (Kenya) Limited, Vanrees Kenya Limited, Juja Coffee Exporters Limited, Stansand (Africa Limited), East African Tea Trade Association and the Agriculture, Food and Fisheries Authority. The governor also accuses KTDA of organising secret meetings with tea brokers to decide on commissions to be paid to farmers without involving them. He says the KTDA has become inefficient and corrupt since its privatisation in the year 2001, leaving farmers reeling in abject poverty. “KTDA is now controlled by a small club of powerful elite businessmen who enjoy political patronage. “The inefficiency in KTDA has fostered corrupt and non-transparent practices culminating in a Bill being tabled in parliament seeking to revert it to statutory control,” he says. This is attributed to the high management fees charged by KTDA, the many taxes imposed on smallholder farmers, the high cost of production, the long and inefficient supply chain and general mismanagement, reads the application. In the case, some of the players are accused of manipulating tea prices by buying the commodity directly from factories at lower prices than those at the Mombasa Tea Auction. They are also accused of buying cheap, low-quality tea from Asia, which is then blended with Kenyan tea before re-exporting it under Kenyan brands. “This in itself, reduces the overall commodity price, creates a huge price difference and implies that there is excess tea in the market,” the governor argues. The petitioner also alleges that the Mombasa Tea Auction “has been hijacked and monopolised by local cartels of big estate owners and brokers.” With the registry having received the application, the file will be placed before a judge who will give directions on how the case will proceed. The respondents, once notified of the suit, are expected to file their responses, setting the stage for a duel with the governor over the litany of allegations and claims made in the application. Governor wants the High Court to compel Kenya Tea Development Agency to refund farmers in Bomet and Kericho, the double charges for management services. The governor also wants the court to declare as unconstitutional, the levying of the Agricultural Produce Cess given to tea farmers by the Agriculture, Food and Fisheries Authority (Affa). The petitioner also alleges that the Mombasa Tea Auction “has been hijacked and monopolised by local cartels of big estate owners and brokers.”
Posted on: Sun, 07 Dec 2014 03:44:57 +0000
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