Overview of The Tea Act, 2020
AN ACT of Parliament to provide for the regulation, development and promotion of the tea industry, and for connected purposes.
- Section 3 of the Act, Establishes the Tea Board of Kenya as a body Corporate to develop, promote and regulate the tea industry;
- PART VI Section 55, Establishes Tea Research Foundation as a body corporate. The mandate of Tea Research is to promote coordinate and regulate research in tea.
Key Provisions of The Tea Act
- Under the Regulatory provisions of the Tea Act (Part III) small scale and medium scale tea growers are required to register with the tea factory where they deliver their green leaf while large scale tea growers shall register with the Board;
- Tea factories are further required to keep a register of its growers and the register shall be prima facie proof that a person is a registered tea grower;
- A tea grower is required to sell green leaf to the factory where they are registered only;
- A grower who wishes to change the tea factory where they deliver green leaf should give notice as provided in the Act.
Board of Directors of Smallholder Tea Factories Provided for in Section 22 of the Act
Tea factory directors to be elected by the tea growers directly;
Through a democratic process of one grower, one vote;
Mechanisms to be put to ensure that not more than two-thirds of the Directors elected are of the same gender;
Licensing of Tea manufacturers: Provided for in Section 25
A person shall not manufacture tea for sale without a manufacturing license issued by the Board;
A manufacturing License issued under this section shall authorize the holder to also undertake tea packing and blending of tea;
Registration of a Tea Broker: Provided for in Section 32
Every Tea Broker shall register with the Board;
The remuneration paid to a tea broker by a smallholder tea factory and a tea buyer /exporter shall not exceed 0.75%;
Tea Buyer - 0.55%
Tea factory - 0.2%
- NB: Currently the Brokers commission is at 1.25%
- Registration of a Management Agent: Provided for in Section 33.
- Every Management agent shall register with the Board;
- A tea factory may engage the services of a management agent upon such terms as may be agreed between them;
- A management agent shall sign a management agreement with each tea factory that they intend to offer management services to;
- A management agreement between a tea factory and agent shall be submitted to the Board for approval and be for a maximum period of 5 years;
- It may be renewed upon expiry at the discretion of the tea factory
- Remuneration paid/management fee for services rendered by a management agent to a tea factory shall not exceed 1.5% of the net sale value of teas sold per year;
- Company Secretarial Services shall be excluded from services to be offered by a Management.
- A tea factory shall recruit its own in-house Company Secretary or outsource the service;
- A tea may enter into an arrangement with one or more factories to have a joint in-house Company Secretary;
- Staff costs for personnel seconded by the management agent to a tea factory shall be borne by the management agent;
- A Director of a tea factory shall not serve as a Director in another company having a direct or indirect commercial relationship with the tea factory where the person is serving as a Director;
- Registration of tea Auction Organizer : Provided for in Section 35 of the Act.
- Every Tea Organizer shall register with the Board;
- All teas processed and manufactured in Kenya for export market with exception of orthodox and specialty teas shall be offered for sale exclusively at the auction floor;
- All tea factory limited companies shall register with the Board and the auction organizer to participate at the auction directly;
- An Auction Organizer shall establish an electronic trading platform for the auction of tea that will be accessible to all players of the value chain;
- A tea buyer shall pay in full the value of the tea bids they have won at the auction before collecting or taking custody of the tea;
- Tea brokers, buyers and the auction organizer shall ensure that the proceeds of sale of tea are remitted to the tea factory accounts within 14 days from date of auction;
- A tea factory shall within 30 days of receipt of the proceeds of sale of tea, pay the tea growers; at least 50% of payment due for green leaf delivered every month;
- The balance to be paid within 3 months from the end of the financial year;
- Section 37 provides for Registration of Commercial green leaf transporter: A person who intends to carry on the business of commercial green leaf transporter shall register with the Board;
- Section 38 provides for Registration of a Commercial tea nursey. A person who intends to establish a commercial tea nursery shall register with the County Government where they intend to establish;
- Section 42 provides for Revocation of a License or registration certificate
- The Board may revoke, alter or suspend a license issued If an offence under this Act, has been committed or conditions/terms contravened;
- The holder of a license which is revoked shall surrender the license to the Board;
- Section 45 provides for Approval of fees and charges. Any fees, commission or other dues charged by a tea broker, management agent or an auction organizer shall be subjected to approval by the Board;
- Section 54 provides for Establishment of Fund known as the Tea Fund:
- The fund shall apply the monies in
- Income or price stabilization;
- Research and development
- Section 74 gives the Cabinet Secretary powers to make regulations in consultation with the board for the better carrying out of the provisions of the Act.
- However, Section 74 is among the provisions that have been suspended by the Court and this has derailed implementation of the Tea Act 2020.