Report On The Inquiry Into The Pricing Of Tea In Kenya

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025 THENATIONALASSEMBLY

DIRECTORATEOFDEPARTMENTALCOMMITTEES

DEPARTMENTALCOMMITTEEONAGRICULTUREAND LIVESTOCK

REPORT ON:

THE INQUIRY INTO THEPRICINGOF TEA INKENYA

CLERKS CHAMBERS DIRECTORATE OFDEPARTMENTALCOMMITTEES PARLIAMENTBUILDINGS NAIROBI

DECEMBER2025

TABLEOFCONTENTS

| LISTOFTABLES.. | | |---------------------------------------------------------|-----------| | LISTOFFIGURES | iV | | LISTOFABBREVIATIONSANDACRONYMS | V | | LISTOFANNEXURES | ..vii | | CHAIRPERSON'SFOREWORD | vili | | CHAPTERONE | .10 ...10 | | 1.0PREFACE | .10 | | 1.IESTABLISHMENTOFTHECOMMITTEE 1.2MANDATEOFTHECOMMITTEE | .10 | | | 11 | | 1.3COMMITTEEMEMBERSHIP | .12 | | 1.4CO-OPTEDMEMBERS. 1.5COMMITTEESECRETARIAT | 12 | | | 13 | | CHAPTERTWO.. | | | | 13 | | KENYA... 2.IBACKGROUNDOFTHEINQUIRY | 13 | | | .13 | | 2.2PURPOSEOFTHEINQUIRY.. | .13 | | 2.3OBJECTIVESOFTHEINQUIRY. | 14 | | 2.4SCOPEOFTHEINQUIRY. | 14 | | 2.5METHODOLOGYOFTHEINQUIRY 2.6DURATIONANDTIMELINE | .15 | | | .16 | | CHAPTERTHREE | ..16 | | 3.0STAKEHOLDERENGAGEMENTON THEPRICING OFTEAINKENYA | .16 | | 3.ITHETEABOARDOFKENYA | .31 | | 3.2THEKENYATEADEVELOPMENTAGENCY | .42 | | 3.3MR.JOSEPHRONOCHUMO | .43 | | 3.4KENYATEAGROWERS'ASSOCIATION(KTGA) | ..51 | | 3.5MR.DAVIDICHOHO 3.6TEAFARMERSFROMWESTOFRIFTVALLEY | .52 | | CHAPTERFOUR. | ..56 | | | ..56 | | 4.OFIELDVISITSCONDUCTEDBYTHECOMMITTEE | .56 | | 4.ITEAFACTORIESINTHEWESTOFTHERIFT | .66 | | 4.2TEAFACTORIESINTHEEASTOFTHERIFT. | .72 | | 4.3THETEARESEARCHINSTITUTE | .81 | | 4.4THEMOMBASATEAAUCTION | | | 4.5THETEABOARDOFKENYALABORATORY | .91 | | 4.6CHAITRADINGCOMPANYLIMITED | .94 | | CHAPTERFIVE.. | | | 5.0COMMITTEEFINDINGS/OBSERVATIONSFROMTHEINQUIRY | |

.89

94

| CHAPTERSIX | |----------------------------------| | ..96 6.0COMMITTEERECOMMENDATIONS | | ..96 REFERENCES.. |

..98

LISTOFTABLES

| TableI:Average tea auctionpricesperKgof made tea. | 16 .24 | |----------------------------------------------------------------------------------------------------|----------| | Table2:Comparativeanalysisofcostof production/Kgofmadetea. | .27 | | Table3: Loanbalancesas at30th June2025... | .32 | | Table4:TeapricesforfactoriesmanagedbyKTDA. | .36 | | Table5:Paymentstofarmersfrom2021to2025.. | .44 | | Table6:Change in teapricesover theyears.. | .45 | | Table7:Valuechaincostsin theteasector. | ..59 | | Table8:Value chainrelatedcostsatMotigo,Tegat andSanganyi TeaFactories | ..61 | | Table9:Greenleaf processingtrendforthe lastthreeyears.... | .62 | | Table l0:Cost of energy at MotigoTeaFactory.... Tablell:Cost of energy atKapkorosTeaFactory. | ...63 | | Table I2:RukuririTeaFactory green leaf production,cost of production and paymentto farmers......68 | | | | .91 | | Table13:Costofconstructingthelaboratory.. | |

LISTOFFIGURES

| Figure I:Auctionprice trendsperKgof made tea.. .17 | |----------------------------------------------------------------------------------------------------------------| | Figure 2:Operational costsincurredby teafactories.. ..25 | | Figure3:Total loanbalancesasat30June2025... .27 | | Figure4:KTDAteasupplyvaluechain.. .39 | | Figure5:OperationalcostsincurredbyKTDAinFY2024/25 ..41 | | Figure 6:Value chain cost atMotigoTea Factory..... .61 | | Figure7:Value of tea against the averageprice indollars... ..83 | | Figure 8:Production against absorption at the auction... ..83 | | Figure9:Tea marketing sales channels... ...83 | | Figure10:Kenyamarketshareof tea exportsin2024. .84 | | Figure1l:Pakistan2023teaexportdestinations... .84 | | FigureI2:Volumeandvalueof tea soldattheMombasaTeaAuction. ..84 FigureI3:Pricesinmajor tea auction centres..... | | .85 FigureI4:MombasaAuctionprices:KTDA,Non-KTDAvsRwanda | | .85 | | Figure15:MarketshareforFY2024/25... .92 | | Figure16:MarketshareforFY2025/26.. .93 |

LISTOFABBREVIATIONSANDACRONYMS

Amb

Ambassador

ACfTA

AfricanContinental Free TradeArea

ATGEA

AssociatedTeaGrowersofEastAfrica

BETA

Bottom-upEconomicTransformationAgenda

BoDs

BoardsofDirectors

BPI

BrokenPekoel

Cap.

Chapter

CBAs

CollectiveBargainingAgreements

CBS

ChiefoftheBurningSpear

CD

Convectional Driers

CDA

Cost-DriverAnalysis

CFUs

ContinuousFermentationUnits

CIS

Commonwealthof IndependentStates

CPA

CertifiedPublicAccountant

COVID

Corona VirusDisease

CTC

Crush,Tear,Curl

CTCL

ChaiTradingCompanyLimited

Cts

Cents

DMCC

Dubai MultipleCommoditiesCentre

Dr.

Doctor

DRC

DemocraticRepublicof Congo

DSL

DirectSalesLocal

DSO

DirectSalesOverseas

EATTA

EastAfricaTeaTradeAssociation

EBB

ElectronicBid Board

EoR

EastoftheRiftValley

EPRA

EnergyandPetroleumRegulatoryAuthority

Etc

EtCetera

EU

European Union

EUI

EnergyUseIntensity

FAO

Food andAgricultureOrganisation

FBD

FluidBedDriers

FORD

ForumfortheRestorationofDemocracy

Ft

Feet

FX

Foreign Exchange

FY

FinancialYear/FiscalYear

GBP

Great Britain Pound

GDP

Gross DomesticProduct

GJ

Gigajoule

GoK

Governmentof Kenya

GTI

GuidedTradeInitiative

Ha

Hectares

IAS

International AccountingStandards

ICT

Information,Communication andTechnology

IGG

Intergovernmental Group

JCC

JointCommissionforCooperation

Vs

| JTC | JointTechnical Committee | |---------|------------------------------------------------| | KEBS | KenyaBureauofStandards | | KFS | KenyaForestService | | Kg | Kilogram | | KPAWU | Kenya PlantationandAgricultural WorkersUnion | | KR | KenyaRailways | | KRA | Kenya RevenueAuthority | | Kshs | Kenya Shillings | | KTDA | KenyaTeaDevelopmentAgency | | KTDA-MS | Kenya TeaDevelopmentAuthorityManagementService | | KTGA | KenyaTeaGrowers'Association | | kWh | KilowattHour | | Ltd | Limited | | LTP | Laurie Tea Processor | | MP | MemberofParliament | | MRLS | MaximumResidueLimits/MaximumResidueLevels | | MS | ManagementServices | | NEMA | National Environmental ManagementAuthority | | NOPEU | National OrdinaryPeopleEmpowermentUnion | | ODM | OrangeDemocraticMovement | | PD | PekoeDust | | PF1 | PekoeFanningl | | PhD | DoctorofPhilosophy | | PPO | Polyphenol Oxidase | | RA | RainforestAlliance | | SACCO | Savings and CreditCooperative Organisation | | SCDA | Special CropDevelopmentAuthority | | SHPP | Small HydroPowerPlants | | Sq | Square | | TBK | Tea Board of Kenya | | TC | Total Colour | | TF | Theaflavins | | TR | Thearubigins | | TRI | Tea Research Institute | | UAE | UnitedArabEmirates | | UDA | United DemocraticAlliance | | UK | UnitedKingdom | | USA | UnitedStatesofAmerica | | USD | United States Dollar | | VFC | VolatileFlavourCompounds | | | Versus | | WoR | WestoftheRiftValley WilliamsonTeaKenya | | WTK | |

LISTOFANNEXURES

AnnexI:AdoptionSchedule Annex2:Minutes

CHAIRPERSON'SFOREWORD

Thisreportcontains proceedingsof theDepartmental Committee onAgricultureand Livestockon the InquiryintothepricingofteainKenya.

TheDepartmental Committee onAgriculture and Livestockresolved to conduct an Inquiryinto the pricingofteainKenyaasaresultofcomplaintsraisedbyMembersofParliamentfromfactoriesinthe werepayingfarmers lower bonusesincomparison to thosefrom theEastof theRiftValley(EoR). Additionally,farmersfrom theWoRheldprotests andsome uprootedtheir teaplantationscitinglow tea prices and bonuses.The issue of tea pricingin the country had also been a subjectof debate in the NationalAssemblyhencethedecisionby theCommitteetourgently lookintoit.

On5thNovember2025,theHonourableSpeakerof theNational Assembly directed theCommittee to conduct the Inquiry and table a comprehensivereport in the House within three weeks.He co-opted Hon.(Amb.)Francis Sigei,Hon.Marianne Kitany,Hon.RichardYegon and Hon.Dorice Donya into the membershipoftheCommitteetoparticipate intheInquiry.

Thepurpose of the Inquirywasto conducta comprehensivereviewof the system of teapricinginKenya and evaluateits effectiveness,fairnessand sustainability.The specificobjectives of the Inquirywere to: Identify howthepricingof tea inKenya is conducted;identify thevalue chain relatedcosts andhow they areminimisedinboth theEoR and theWoR;establish why teapricesfrom the EoRarehigher than thosefrom theWoR;determinewhy operational costsincurredbyfactoriesin theWoRare higher than those incurred by factories in the EoR;identify gaps in the institutional,logistical and regulatory frameworks in the tea sector that need plugging and mechanisms to achieve that;and establish inefficienciesleadingtolowreturnstofarmers.

IncarryingouttheInquiry,theCommitteerevieweddocuments,heldmeetingswithstakeholdersinthe teasector,conductedfieldvisitstofactoriesin theWoRandEoRtogetviewsoffactorymanagement andfarmersonteapricingandanyotherrelevantinformation,conductedfieldvisitstotheTRl,Mombasa TeaAuction,TBKQualityAnalysis andTeaTestingLaboratory and CTCLand theKTDA warehouse.

From the meetings andfieldvisits,theCommitteeestablished that:teasfrom theEoRgenerally fetch higherprices at theAuction in comparison to thosefrom theWoR;KenyamostlyexportsCTCteas whicharevalue added and importedbackinto the country;thesupplyof tea ishigher than its demand both locally andglobally;Kenya mostly depends on the export market forits teas;tea hawking,which is rampant in theWoR contributestolower quality of teasin theRegion;theTeaAct,2020 isyettobe fullyoperationalisedfiveyears afterits enactmentpartly due to courtcases that havehamperedputting inplaceRegulations andfinancial constraints that have preventedTBKfromfully dischargingitsmandate; andof thefifty-four(54) companies thathave sharesinKTDA,thirty-five(35)arefrom theEoRwhile nineteen (I9) are from theWoRhence thereason whymoreKTDA directors(7) are from theEoR in comparisontofive(5)fromtheWoR.

The Committeemadevariousrecommendations on the Inquiry including:Institution of an independent auditon thelevelofadherenceandcompliancetolegislationonthe licensingoffactoriesby theTea BoardofKenya;replacementof theolddilapidatedinefficientmachineswithnewonestoensurebetter performance,reduce costs and increase efficiency in thefactories;auditing of thehydropower plant projectsthatareongoingintheWoR;lifestyle auditofthe directors,clerksandotherinfluentialpersons in the factories;comingup with alternativeways ofquality assessment of tea to compliment the forKenyantea.

The Committeeisgrateful to the Officesof theSpeakerandClerkof theNational Assemblyfor the logistical andtechnical supportaccordedtoitwhileconducting theInquiry.TheCommitteefurther thanks the State Department for Agriculture,TBK,KTDA,tea factories and management of the MombasaTea Auction for making this Inquiry successful.Finally,Iwish to expressmy appreciation to Membersof theCommitteeand theCommitteeSecretariatwhomadeuseful contributionstowardsthe production andpreparationofthisreport.

OnbehalfoftheDepartmental CommitteeonAgricultureandLivestockandpursuanttoprovisionsof CommitteeontheInquiryintothePricingofTea inKenya.

Hon.(Dr.) John K.Mutunga,PhD,CBS,MP Chairperson, Departmental CommitteeonAgricultureand Livestock

I.0PREFACE

I.IESTABLISHMENTOFTHECOMMITTEE

• 1.The Departmental CommitteeonAgriculture and Livestock isoneof the twentyDepartmental Committeesof the National Assembly established underStandingOrder 2l6whose mandate underStandingOrder2i6(5)isasfollows:
• To investigate, inquire into,and report on all matters relating to the mandate, management,activities,administration,operations and estimates of the assigned ministries anddepartments;
• iii. Onaquarterlybasismonitorandreportontheimplementationof thenationalbudget inrespect ofitsmandate;
• ill. oftheirimplementation;
• iv. Tostudyandreviewall thelegislationreferredtoit;;
• vi. ToinvestigateandinquireintoallmattersrelatingtotheassignedMinistriesanddepartments as they may deemnecessary,and asmaybereferred to them by theHouse;
• V. Tostudy,assessandanalysetherelativesuccessof theMinistriesanddepartmentsasmeasured by theresultsobtainedascomparedwiththeirstatedobjectives;
• vii. TovetandreportonallappointmentswheretheConstitutionoranylawrequirestheNational Assemblyto approve,except those underStandingOrder204(Committee onAppointments);
• ix. Tomake reports and recommendations to the House as often as possible,including recommendationofproposedlegislation;
• viii. Toexamine treaties,agreements and conventions;
• X. ToconsiderreportsofCommissionsandIndependentOfficessubmittedto theHousepursuant totheprovisionsofArticle254oftheConstitution;and
• xi. Toexamine anyquestionsraisedbyMembersonamatterwithin itsmandate.

1.2MANDATEOFTHECOMMITTEE

• 2.In accordance with theSecondSchedule to the StandingOrders,the Committee ismandated to consider,agriculture,livestock,foodproduction andmarketing.
• 3.In executing its mandate,the Committee oversees the Ministry ofAgriculture andLivestock Development.

CHAPTERONE

I.3COMMITTEEMEMBERSHIP

• 4.TheDepartmental CommitteeonAgriculture and Livestockwasreconstituted by the Houseon5th March2025andcomprisesthefollowingMembers:

Chairperson

Hon.(Dr.)JohnKanyuithiaMutunga,PhD,MP TiganiaWestConstituency

UDA Party

Vice-Chairperson

Hon.Brighton Leonard Yegon,MP

Konoin Constituency

UDA Party

Members

Hon.Gabriel Gathuka Kagombe,MP GatunduSouth Constituency UDA Party

Hon.Monicah Muthoni Marubu,MP

Lamu County IndependentMember

Hon.PatrickKibagendi Osero,MP BorabuConstituency

ODM Party

Hon.YussufMohamed Farah,MP WajirWestConstituency ODMParty

Hon.John OkwisiaMakali,MP Kanduyi Constituency FORD KenyaParty

Hon.Ruth Adhiambo Busia Odinga,MP Kisumu County ODMParty

Hon.Sabina Wanjiru Chege,CBS,MP Nominated Member JubileeParty

Hon.Ferdinand Kevin Wanyonyi, MP Kwanza Constituency FORD Kenya Party

Hon. Geoffrey Makokha Odanga,MP MatayosConstituency ODM Party

Hon.Justice Kipsang Kemei,MP Sigowet/Soin Constituency

UDA Party

Hon.Jared Odoyo Okelo,MP NyandoConstituency

ODMParty

Hon.Lawrence Mpuru Aburi,MP Tigania East Constituency

NOPEUParty

Hon.David Kiplagat,MP

Soi Constituency UDA Party

1.4CO-OPTEDMEMBERS

• 5.In his directions on the Inquirygiven on5thNovember,2025,thehonourableSpeakerof theNational Assemblyco-opted thefollowingMembersofParliamentinto the membershipoftheDepartmental CommitteeonAgriculture andLivestocktoparticipateintheInquiry:

Hon.Marianne Kitany,MP

Hon.(Amb.)FrancisKipyegon Sigei,MP SotikConstituency

AldaiConstituency UDA Party

UDA Party

Hon.RichardKipkemoi Yegon,MP

Hon.Dorice Donya Aburi,MP Kisii County ODM Party

BometEastConstituency UDA Party

I.5COMMITTEESECRETARIAT

• 6.TheCommittee isfacilitatedbythefollowingSecretariat:

Ms.Laureen Omusa Wesonga

ClerkAssistantI/Head ofSecretariat

Mr.VictorKandaKilimo Clerk Assistant IlI

Mr.Shadrack Musyoki SeniorResearch Officer

CPA.Robert Ngetich Fiscal Analystl

Mr.Gerald Kadede

Legal Counsel ll

Ms.Edith Chepngeno Media Relations Officer Ill

Ms.Jacinta Maru Serjeant-at-Arms

CHAPTERTWO

2.0 TERMSOFREFERENCEFORTHEINQUIRYINTOTHEPRICINGOFTEAINKENYA

2.IBACKGROUNDOFTHEINQUIRY

7. TheDepartmental CommitteeonAgriculture andLivestockresolved to conduct an Inquiryinto the theWoR.The HonourableMembers alleged that tea factoriesfrom their Regionwerepaying farmers lower bonuses incomparisontothose from theEoR.Additionally,farmersfrom theWoR held protests and some uprooted their tea plantationscitinglow tea prices andbonuses.The issue of teapricing in thecountry hadalsobeena subjectofdebatein theNational Assemblyhence the decisionby the Committee tourgently lookintoit. 8. The tea sector is the third leading foreign exchange earner in Kenya supporting over 600,000 smallholderfarmersandseveral other institutions andpersons alongthevalue chain.The sector has howeverbeenfacedwithamyriadofchallengesamongthembeingdelayedpaymentstofarmers and low andunstableprices.The challengeshavebeen attributed tofluctuations inglobal teaprices, higherproduction costsandmarketaccess. 3. 9 ThisInquirysoughttolookintothepricingstructureanddynamicsofKenya'steaindustry,identify gaps in the sectorandproposepolicy,institutional andmarketreforms thatneeded to bemade in the industryforitssustainability.

2.2PURPOSEOFTHEINQUIRY

• 10.Thepurposeof theInquirywastocarryouta comprehensivereviewof thesystemof teapricingin recommendationsaimedatensuringthatallvaluechainplayersoperatewithinaframeworkthatwill maximisevalueforallstakeholders.

2.3OBJECTIVESOFTHEINQUIRY

• 11.The specific objectives of this Inquiry were to:
• a) Identifyhow thepricingof tea inKenya is conducted;
• b Identifythevaluechainrelatedcostsandhow theyareminimised inboth theEoRand the WoR;
• ? EstablishwhyteapricesfromtheEoRarehigher thanthosefrom theWoR;
• (P Determinewhyoperationalcosts incurredbyfactoriesin theWoRarehigher than those incurredbyfactoriesin theEoR;
• Identifygaps intheinstitutional,logistical andregulatoryframeworksintheteasector that need pluggingand mechanisms toachieve that;and
• Establishineficienciesleadingtolowreturnstofarmers.

2.4SCOPEOFTHEINQUIRY

• 12.Inconductingthe Inquiry,theCommittee:
• a)carriedout an analysisof the tea sector value chain by mapping out the entire tea value chain i.e.pre-production,production,harvesting,conveyancingpocessing,marketingauction,retail andexport.
• b)identified thepoints atwhichpricingof tea is done and the determinants,and assessed theflow ofinformation anddecisionmakinginrelationtosetting theprice of tea;
• reviewedtherolesofTBK,KTDAandotherplayersbyanalysingthelegalframeworksgoverning the marketing,auctionandexportoftea toidentify overlappingroles,policygapsorexcesses that hindereffectivepriceregulation andburden thefarmer;
• d examined the tea auctionprocess andalternative marketingchannels;
• e) examined the cost of inputs i.e.fertilizers,transport,labour e.t.c.and analysedfactory and exportprofitmarginsandidentifiedinefficienciesalongthevaluechain;
• investigatedfarmerpaymentstructures,thebonussystem and deductions;
• g) proposedways of improvingpricing transparency and accountability,and suggested value addition,diversification andinnovation strategies;and
• h examinedtea testingandclassification.

2.5METHODOLOGYOFTHEINQUIRY

• 13.The Committee used thefollowingmethods toget information on the Inquiry:
• a)Reviewed documents i.e.Acts of Parliament,policies,Regulations,reports from agencies and otherrelevantdocuments;
• b)Heldmeetingswith stakeholders in theteasector;
• c)Conductedfieldvisits tofactoriesin theWoR andEoRtogetviewsof factory management and farmers on tea pricing and any otherrelevant information;
• d)Conducteda fieldvisit to the TRl;
• e)Conducted fieldvisits to theMombasaTea Auction and theQualityAnalysis andTea Testing Laboratory;and
• f)ConductedfieldvisitstoCTCLandtheKTDAwarehouse.

2.6DURATIONANDTIMELINE

• 14.The Committeeconducted the Inquirywithin threeweeks as directedbytheHonourableSpeaker oftheNationalAssemblyon5thNovember2025.

CHAPTER THREE

3.0STAKEHOLDERENGAGEMENTONTHEPRICINGOFTEAINKENYA

• 15.Inabidtogetinformation on the pricingof tea inKenya,the Committee invited stakeholders for meetings via letters REF:NA/DDC/A&L/2025/040and REF:NA/DDC/A&L/2025/041.The Committeereceived anddiscussedsubmissionsfrom thefollowingstakeholders:
• i. TheTeaBoardofKenya
• iii. Mr.James Rono Chumo
• ii. TheKenyaTeaDevelopmentAgency
• iv. KenyaTeaGrowers'Association
• vi. TeaFarmersfromWestofRiftValley
• V. Mr.DavidIchoho

Thestakeholderssubmitted asfollows:

3.ITHETEABOARDOFKENYA

InameetingwiththeCommitteeheldonWednesday,3rdDecember2025,theChiefExecutiveOfficer, Mr.WillyMutai,informed theCommittee thattheroleofKTDA is to develop,promote and regulate the teasectorasmandatedbytheTeaAct,2020.Hesubmittedthat:

• 16.Analysisof auction prices for tea from all the factories in the country for the lastfive years:The price realised at theauctionisdetermined by theglobal market supply-demand situation,qualityof theteaproducedbyeachfactorywhichisdependentonmanyfactors including thequalityof green leaf (agronomical practices and plucking),post-harvest handling and manufacturingpractices at the tea factory.Inaddition,the price of tea is also influencedby historical buyers'preferencesforspecificteasfrom specifictea factories andqualityconsistency withinaspecificteafactory.
• 17.Traditional teamarketssuch asPakistan andEgyptwhich take35%and15%ofKenyan teas, respectively,have hadhigher preferencesfor teas from theEoR(30%ofnationalproduction) compared to theWoR(70%of national production).Consequently,the averagepricerealized by theteafactoriesfromdifferentzoneswithinthetwoBlocks aredifferentasdepictedin tableI.

Table I:Average tea auctionprices perKg of made tea

| Region/FY | 2024/25 | 2023/24 | 2022/23 | 2021/22 | |----------------|-----------|-----------|-----------|-----------| | East of Rift | 2.95 | 3.02 | 2.84 | 2.87 | | Westof Rift | 1.78 | 1.99 | 2.47 | 2.54 | | Overall KTDA | 2.41 | 2.54 | 2.67 | 2.71 | | OtherFactories | 1.59 | 1.46 | 1.67 | 2.05 |

• 18.Thefigurebelow showstheauctionpriceof teafrom20lIto2024.
• 19.The drop in prices of tea was due to challenges inkey export markets like Pakistan,Egypt,Sudan, andlran;thesemarketscollectivelyaccountforabout70%ofKenyatea exportbyquantity.WoR smallholderfactorieshadthelowestpricesatanaverageofUsD1.78perKgofmadetea.Thisis attributabletolowerqualitycomparedtowhatthemarketdiscerns.Otherfactoriesthatproduce lowerqualityteasincludeMichimikuruintheEoR,privatefactoriesandmulti-nationalteafactories,
• 20.Compared to theyears2022and2023,the averageauctionpricesin theyears2025and2024were
• 21.Analysisof payments at the factory level forbothregular and bonusesfor the lastfive years:Thepaymentmodel usedbysmallholderteafactoriestopayforgreenleafsuppliedby farmers is structured into a monthlypay(initial payment)and the secondpaymentwhich is popularlyreferredtoas the teabonus.The initialpayment isanadvancepayment againstfarmers' greenleafdeliveriesforthemonthasproceedsfrom thesaleofteahavenotyetbeenrealisedat the time.In thisregard,tea farmersarepaidon monthlybasis aninitial amountrangingbetween Kshs.23andKshs.25 as determinedby theBoardoftheir respective tea factories.The 2nd payment(tea bonus) is thebalance of the total sales minus the cost ofproduction(includingthe monthlypayment).However,the2ndpayment is dependenton threefactors:pricerealisedat the teaauction;the exchangerate to theUsD;andcostofproduction.
• for2025,whenthetrendwasaffectedbyacombinationoflowerpricesrealisedattheauction andthe exchangerate.Payments tothefarmersdeclined from an average ofKshs.64per Kilogrammeofgreen leaf in2024andKshs.59.02in2023to anAverageofKshs.56in2025.
• 23.Market structure,practices and auctioning processes carried out by KTDA as the smallholderteafactoriesonbehalfoftheteafarmers.Theirscopeofmanagementagreement betweena teafactory andKTDA(MS) Ltd includesgeneral managementandadministration; management of the farmers'register;field and extension services;weighing,collection and transportationofgreenleaf;manufactureof tea;transportation andwarehousingofmadetea,sales andmarketing of tea;managing proceeds of sale and deductions;payments to farmers;accounting

Figure l:Auctionprice trends

and financial reporting;humanresourcemanagement;procurementofgoods,works and services; disposal of assets;records management;capital and financial investments;legal services;and carriedoutbyKTDAasthemanagementagentinclude:

• a)Sales and marketingof all made tea byfactories atthebest prices andon the best terms to ensure teagrowersearnreasonablereturns;
• b)Identifying suitable market(s) for the factories'tea andundertakemarket development activities topromotemarketaccessof thefactories'garden markandvalue-addedbrands;
• Undertakingmarketresearchandintelligenceand adviseonmarketrequirements;
• (P Assessment of the quality of made tea,grading and assigning a minimum price of the tea at the factorylevel;
• e Facilitatingacquisitionofrelevantcertificationsto enhancemarketaccessfor thefactories'teas;
• f) Promotingandundertakingproductdiversificationandvalueaddition;
• g) Developing and promotingspecificfactory brands;and
• h Preparingandsubmittingto theBoard monthly tea sales andmarketingreports and conditions affectingtheCompany'sproductintheworldmarket.
• 24.Saleof factoryteasisusuallydonebytheteabrokerwhois appointedbytheboardofaparticular factory.Currently,most smallholder tea factories have two brokers who work with the managementagenttosell teasonbehalfof theteafactory.Globally,valuationofteastobeoffered forsaleattheteaauction is donebyteabrokersfollowingthesensorylorganoleptictastingto appearanceof theteaintermsof the degreeof blackness,evenness andblacknessof theparticles strength and flavour.Teas of a given leafand dustgrade(BPl,PFI,PDandDustl),dependingon the levels of the said quality parameters,is then placed into the six categories of:"Best","Good", "Good Medium","Medium","Lower Medium"and"Plainer".Following these categorisations,the gradedteas are thenvaluedtoprovidebiddingprice.
• 25.At the auction,eachgrade of teaproducedby a factoryis sold as an invoice,which is40packages. Priortoofferingeachinvoiceofeachgradeforsale,a4Kgteasampleisdrawnfrom theinvoice for tastingbythefactoryappointedbrokerwhowouldthencategorisethequality andascertain the valuationprice takingintoaccount theprevailingmarket conditions.The same tea invoice broker,thenpublishesandsharesthecatalogueofall the teas thathavebeenproduced and are readyforsaleintwoweeks'time throughabiddingprocess.Thecataloguecapturesthenameof thefactory/gardenmark,broker,grade,dateofmanufacture,invoicenumber,numberofpackages (40),asking/valuation price,quantity and certification.The auction sales processisguidedby the EATTARuleBook.The auction,whichisthesaleschannel accountingfor about75%of theteas,

actsas abarometer for thepricingof teas offered through the othermarketingchannels such as DSOandDSL.

• 26.General and specificrolesplayed by TBK in the managementof the tea marketing function and attendantimplications:TBK isa State Corporation established underSection3 of the Tea Act,2020,to regulate,develop and promote the tea industry.TBK's role in the managementof the teamarketingfunction asprescribedbytheTeaAct,2020,include:
• a) Development,implementationandcoordinationofthenational teamarketingstrategy:In this regard,TBKhas developeda global marketingstrategy for both existingand emergingtea markets to enhance market access ofKenyan tea.However,full lmplementation ofthe strategyhasbeenhamperedbylackofadequateresources;
• b) Promote demand andconsumptionof tealocallyandinternationally.TBKbasedonbudgetary availability undertakes various trade missions in countries like Pakistan,China,UK,USA promote Kenya tea.However,this has greatly been hampered by inadequate budgetary provisions;
• Collaboratewithnationaland international tradebodieson tearelatedmatters.Suchbodies includevarious tea councils and associations such as the International TeaCouncil,German Tea CouncilJapanTeaAssociation,UKTea Council,NorthAmericaTeaAssociationthrough bettermarketaccesspolicies;
• Promoteand adviseonstrategiesforvalue addition andproductdiversification.TBKthrough theMinistryofAgriculture and LivestockDevelopment,has developedaconceptpaperfor valueadditionofKenyan tea toprovidearoadmaptowardsenhancingvalueadditionof isawaitingfundingallocation;
• e Facilitatemarketinganddistribution of tea throughgathering anddisseminationofmarket information andmonitoringof thelocalandglobal supply-demandsituation.TBKsharesglobal marketintelligenceandinformationtostakeholdersto facilitatedecisionmakinginmarketing andsales;
• f Identifymarketneeds and trends andadvise theCabinetSecretaryon issuesrelated tonational and international tea trade.From timeto time,TBKbringsto theattention ofthe Cabinet Secretary,thechallengesfacingtheindustrytofacilitateformulationofrelevantpolicies that willspurgrowthofthevaluechain;and
• g TBKisresponsibleforregisteringteabrokerswhosellteaonbehalfofteafactoriesandthe Auction Organizerwho provides a platform for the sale of tea.TheBoard alsomonitors tea tradeandaddressesanytraderelatedmalpractices topromotefair trade.
• between the two institutions:TBKisaState Corporation establishedunderSection3of the Tea Act,2020toregulate,developandpromote thetea industry.Ontheotherhand,KTDAisa

privatecompany thatmanagesseventy-one(7l)smallholdertea factoriesownedbysmallholder tea farmersin Kenya.In thisregard,TBK licenses all tea factories(includingKTDA managed factories),management agents(includingKTDA)and other value chain players as prescribed in the Tea Act,2020.Therefore,TBK is the regulator of the entire tea industry including factories managedbyKTDAwhilethelatteronlydealswithsmallholderteasub-sector.

• 28.In thisregard,there is no conflictingrole between TBKandKTDA other than the relationship betweenalicensorandalicensee,wheretheformerensures thatthelattercomplieswith the terms and conditions of thelicense/registration certificate,just like any other licensed/registered player.
• 29.The cause of the discrepancy in the tea marketing function pricing in different regions: Thepricerealised at the auction is determinedby theglobal marketsupply anddemand,qualityof theteaproducedby eachfactory andconsumerpreferences.In thisregard,the differences inthe teamarketingfunctionpricingindifferentregionshasbeencausedbythefollowing:
• a Differencesinthequalityofteafromthetwomajorteablocks.Historically,theWoRisknown forproducinghighvolumesbutlowerqualitywhilsttheEoRisknownforlowervolumesbut high-quality teas.Inaddition,asurveydonebyTBKandtheMinistryin2024/2025revealed thatmostof theteafactoriesintheWoRreducedtheirqualityteaproductionin202latthe compromisegreenleafstandardsfromteafarmersonaccountoftheguaranteedreserve price.This not only negatively affected absorption of tea from the region leading to accumulatingstocksofunsoldteasbutalso,teafarmersgotusedtoproduction andsupplyof greenleafoflowerquality.Thisinturnaffectedthe attributesofmadeteadiscernedbythe marketsuch asbrightnessoftheliquor,tasteandblackness anduniformityof theparticles. The TBK hasalso validated the same byconducting surveillancefor greenleafquality standards,whichin mostinstanceshavebeenfoundtobelessthan50%forthefactoriesin theWoRasopposedto thedesiredminimumof atleast60%.The lowerqualityof greenleaf pluckedbyfarmersintheWoRexplainsthereasonswhymostoftheteasintheRegionfall within the category of"medium"to"plainer"category.Thishas alsobeen validated by the
• b Traditional teamarketssuchasPakistanandEgyptwhichtake35%and15%ofKenyanteas respectivelyhavehadhigherpreferencesforteasfromtheEoR(30%ofnationalproduction) comparedtotheWoR(7o%ofnationalproduction).
• 30.Measures that can be put in place to reduce/eliminate the possibility of regional biases inthepricingoftea:TheGovernmenthasputinplaceseveral measurestoreduceand eliminate regional biasesin the pricing oftea.Themeasures aim at ensuring the average paymentto smallholder teafarmersof Kshs.50.18perKgofgreenleaf in2022increases toKshs.100by2027. Thesemeasuresinclude:
• a) Developmentofgreen leafquality guidelines/standard:Cognizantof the factthat the qualityof tea ismajorlydeterminedbythequalityofgreenleaf,theMinistry andotherrelevant industryplayershavedevelopedaguideline/standardonthequalityofgreenleafplucked and deliveredforprocessingbyteafarmerstofactories.A Multi-AgencyCommitteecomprisingthe MinistryofAgricultureandLivestockDevelopment,TBK,TeaResearchFoundation,teafactories

and tradershasfinaliseddevelopinga draftguidelineon thequalityofgreenleaf tobe adopted by tea factoriesinKenya.Theguidelineprescribes theminimum standardongreenleafquality tobeprocessedbyall teafactories andonce implemented,itwill bridge thequalityandprice differencesbetween theWestandEastTeaBlocks.TBKincollaborationwiththecountieswas sensitisingteafarmersandfactoriesongreenleafqualitystandards.

• b)StrategicTeaQualityImprovementProgramme(STQIP):ThisProgramme isaimed at entails:Conductingblindtastingof teasfrom all licensed teafactoriesfor evaluation andranking then selectingfifteen(l5)lowest-ranked tea factoriesin qualityforinclusionin theQuality ImprovementProgramme;sensitising tea farmers and factory management on the standards of orthodoxteas.Theprogrammehasbeenrunningfor two(2)yearsanditisexpected thatby fetchbetterpricesashasbeen thecasewith theperformanceofsome teafactoriesin theWoR likeMomul inKerichoCounty,whosegreen leafquality is strictly adhered to asapluckingand handlingculture.
• Removalofreserveprice:Thereserveprice introduced inJuly202lwhichwasmeant to guaranteeteagrowersaminimumreturnwasremovedinOctober2024duetochallengesof thequality-reservepricemismatch thatcreatedfurtherchallengesofdepresseddemandand accumulationofunsoldstocks.Sinceremovalofthereserveprice,theabsorptionofteasatthe auctionhasincreasedandsignificantlyreducedtheaccumulatedstockstothenormalmarket absorption levels.This hasnotonly enhanced liquidityfor the tea factories,but alsoreduced on financialborrowingandforcedteafactoriestoreverttoqualityteaproduction.
• d)Modernisationoffactories:To addressinefficienciesinvarious teafactories,thegovernment Corporation to all smallholder tea factories to modernise equipment andmachineryin smallholderteafactoriesinKenya.Itisalsoexpectedthatthefactorieswillusethisfacilityto expandtheirproductionoforthodoxteas,whichfetchhigherpricesinnichemarkets,toreduce KTDAis alsoinvestinginfactorymodernisation andenergysolutionstocutcostsand improve competitiveness.
• Eliminationofhawkingofgreentealeafandfactoriescompliance:In thelastyear, collaborativeeffortsbetween theTBKandtheMinistryofInteriorhavebeefedupsurveillance operationstocurbgreenleafmalpracticesinteagrowingareas.Consequently,the tea industry addition,TBK has enhanced compliance inspections andmost tea factories/producers have shown considerableimprovementincomplyingwith theTeaIndustryCodeofPracticeKS:2128 andwith the termsand conditions oftheir manufacturinglicenses.This has enabled them andgoodmanufacturingpracticesinprocessingof tea.
• Financial andgovernance audits:Tomitigate against increasing costs ofproduction at tea factories,TBKhasinitiatedfinancialandgovernanceauditsinvariousteafactoriesaimedat

establishingthefollowing:ThelevelofcomplianceofthefactorieswiththeTeaAct,2020on governance and financial matters;thelevel of implementation of themanagement agreement and corporategovernancepracticeswithin the groupinrelation to goodcorporate governance managementorboard thatcouldnegatively affect theinterestsof teafarmersand thecountry accountforvarious malpractices that affect paymentto tea farmers.In the comingyear,these auditswill be intensified tocurb all malpracticesaffectingperformance andpaymentto tea farmers.

• g) Diplomacy and marketinginitiatives:Under theACfTA,the Government through the has spearheadedseveraleffortstopromoteKenyanteainAfrica,which isprimarilyforvalueadded teas.Such hasbeen done inEgyptwhere allocationof space at the Free Zone in Alexandria was negotiated tofacilitate distributionofvalue-addedKenyan teainArabMaghrebUnion and the offof initial orderforvalue addedteasundertheGTl.InterAfricanTradeFarewas alsoheld in Algeriatopromote trade amongstAfricanNations under theACfTA.Thiswasfollowedby the formationofaJCCbetweenKenya andAlgeria.InMorocco,a JCChas alsobeen formedwith value added teas as a flagship project to help opening up the market forKenyan green tea.The Governmenthasalso formedaJTC to unlock thestalemateonKenya teatradewith lran. Linkages of Kenya tea exporterswith majorretail outlets such asWalmart inNorthAmerica hasalsobeendone,

2. h)Sustainable funding of tea industry programmes:Since the abolishment of the Ad ValoremLevyin206,fundingof industryprogrammeslikeresearch,promotion,development, regulation and infrastructure has been reliant on exchequer funding. Consequently beenploughedbackinto the industryprogrammes thatare critical tomake theteaindustry sustainable.For example,the budgetforpromotion whichwasin excess of Kshs.I0o million in 2016over theyearsreducedtoKshs.30 million annuallywhich means that thetea industryhas stagnatedwithrespecttomarketdevelopment.Withitscurrentbudget,theBoardmaynotbe able toimplement theGlobal TeaIndustryMarketDevelopmentStrategywhich iskeyin countries such as Sri Lanka whichhasrecordedworld successin marketdevelopmentand brandingof tea.Asa tea producingand exportingcountry,Sri Lanka chargesa promotion levy of 1%(approximately twomillionUSD annually) for marketresearch and developmentand tea promotion.Thisgives competitors an addedadvantage in the same markets thatKenyais targeting.DevelopmentandgazettementoftheTeaLevyRegulations,2024tooperationalise Section53oftheTeaAct,2020,whichprovidesforalevythatwillbeusedtopromoteKenyan tea,research,developmentamongother programmes. 3. 一 Regulating and control of costs:To mitigate against higher costsofproduction,factories through decisions made in their AGMs should be encouraged to investin cost mitigation measures.Factorieshave also signednew management agreementswithKTDAwhich amongst other issues includereduction of the management agencyfee from2.5%to as low as 1.5%of the gross salesvalueand absorption of costs of secondedstaff by the managingagent.In addition,a

CDAshouldbeundertakenonthedifferencesbetween thecostofproductionforteafactories from theEastandWestTeaBlocksandactiontakentoaddressthegaps.

• D Governance challenges in smallholder tea factories:To address the governance factories,the draft Tea Industry Corporate Governance and Code of Practice will soon be gazettedtopavewayforimplementation.Inaddition,TBKwillenhancethescopeoftherandom auditsto all factoriesto helpin identifyingwastages andmalpracticesby the boards andcurb them.
• k)Finalisation oftea industry regulations:To addressa myriadof challenges negatively affectingtheperformanceoftheindustryandimpendingitfromrealizingitsfullpotential,the TBKincollaborationwiththeMinistryisfinalisingthefollowingsetofregulations:Registration and LicensingRegulations toprovide for theprocedure and terms and conditionsfor licensing andregistration of teavalue chain players;Tea Levy Regulations to provide for a sustainable modeloffundingtea industryprogrammes;TeaGeneral Regulationstoprovideforregulation ofalltheactivitiesbeingundertakenbyteavaluechainplayers;andTeaTradingRegulationsto ensureefficiencyandeffectivenessofteaauctionsandcompetitivenessofKenyatea.
• D Reviewofthesecondpaymentmodel:ResearchbyTBKhasrevealedthatmostsmallholder teafarmersarehighlydependenton loansandadvance fromSACCOsandother financial factories.Toaddress liquiditychallengesby teafamers,quarterlysecondpaymentmodei should
• 31.Reasonswhy thequalityof tea from theWestof theRiftis lowerincomparison to that fromtheEastoftheRift:TheWoRisknownforproducinghighvolumesbutlowerqualitywhilst theEoRisknownforlowervolumesbuthigh-quality teas.Inaddition,asurveydonebyTBKand theMinistryin2024/2025revealedthatmostoftheteafactoriesfromtheWoRrelaxedonquality teaproductionin202latthe adventof theteareserve price.Some of the directorsrequired factory managerstoacceptbadgreenleaffromteafarmersonaccountoftheguaranteedreserveprice. Thisnotonlynegatively affected absorption of tea from theregionbut also,teafarmersgotused to production andsupplyofbadgreenleaf.
• 32.Qualityattributesunderconsiderationandimplicationson thepricingofteafromthe Westand Eastof theRift,respectively:Once the organoleptictastingof the teas is done,the quality is grouped into six categories i.e."Best";"Good";"Medium Good";"Medium";"Lower Medium;and"Plainer"based on attributes such as its physical appearance(leafblackness and evenness) as well as the liquor and infusion appearance and taste (brightness, briskness,liquor strength,flavour and body).Other attributes ascertained through organoleptic tasting includes whether thesamplehasoff-flavoursortaintdue to thefiringconditionsin thedrier atthefactory. Notably,pricesofteafollowthequalityattributes,with"Best"teas(well/evenlysorted,blackcolour, brighter liquors and appearanceandwell fired/dried)fetchingrelativelyhigherpricescompared to other categories.Once thetea isnotboughtat the auction,it is thenmarkedwithinthe catalogue asareprintand isre-offeredforsalewithinaperiodofthreeweeks.However,reprintandsecondary gradesalsofetchedlowerprices.

• 33.Cost dynamics that affect tea prices in the West and East of the Rift,respectively:The costofproductionvaries from one factory to another dependingon thecostsofvarious cost centres within the factory such as energy,labour,transportation,and administrative expenses. Governance in individual factoriesgreatly influences administrative expenses which affects the production cost andultimatelyprofitabilityof thefactory andnetpayments to tea farmers.In addition,factorieswith efficient machinery andoperations are ableto realize lower costof productionandarelativelyhigherreturn tothefarmers.
• 34.Whereas some factoriesespeciallyin theEoR(Zones1,2,3,4,5,6and7)have faredwell in managing thecostsofproduction,theother factories mostofwhichare in theWoR(Zones8to WoR,whichrealise lower teapricesandhaverelativelyhigher costsofproductionendupwith lower netincome and thereforepaylessbonusto theirfarmers.Ananalysis of theCostof Productionby teafactoriesfrom differentzoneswithin thetwoBlocksaredifferentasdepicted table2.
• 35.Across all theregions,zones and factories,therewas an overall 7.65%average increase in thecost ofproduction attributable toan increase in the cost of energy,labour and administration as comparedtothepreviousyear.However,the increasevariedfromregion toregion andfactory to factory dependingon their managementof the cost centres.Thevarianceswereasfollows:

Table 2:Comparative analysisof cost ofproduction/Kg of made tea inKshs.

| REGION/ZONE | REGION/ZONE | 2025 | 2024 | 2023 | 2022 | 2021 | |------------------------|------------------------|--------------|--------------|--------------|--------------|--------------| | EASTBLOCK | EASTBLOCK | EASTBLOCK | EASTBLOCK | EASTBLOCK | EASTBLOCK | EASTBLOCK | | Zone1 | Kiambu | 102.89 | 111.21 | 104.73 | 87.73 | 79.46 | | Zone2 | Murang'a | 100.54 | 103.45 | 97.79 | 84.99 | 79.02 | | Zone3 | Murang'a | 111.08 | 107.73 | 101.55 | 89.43 | 84.02 | | Zone4 | Nyeri | 104.01 | 109.00 | 109.05 | 98.28 | 89.93 | | Zone5 | Kirinyaga | 104.61 | 99.93 | 93.62 | 86.79 | 82.33 | | Zone6 | Embu | 97.05 | 103.70 | 90.75 | 82.87 | 83.10 | | Zone7 | Meru | 95.69 | 103.32 | 92.72 | 80.54 | 79.78 | | East tea block average | East tea block average | 102.27 | 105.48 | 98.60 | 87.23 | 82.52 | | WESTTEABLOCK | WESTTEABLOCK | WESTTEABLOCK | WESTTEABLOCK | WESTTEABLOCK | WESTTEABLOCK | WESTTEABLOCK | | Zone8 | Kericho | 110.29 | 97.61 | 97.39 | 87.00 | 86.97 | | Zone9 | Bomet | 130.34 | 96.07 | 97.22 | 82.01 | 82.30 | | Zone10 | Nyamira | 136.12 | 128.51 | 113.14 | 96.15 | 77.55 | | Zonel1 | Kisii | 157.23 | 136.05 | 128.87 | 109.69 | 109.72 | | Zone12 | Nandi, Vihiga, Nzoia | 137.77 | 109.95 | 104.20 | 102.10 | 95.00 | | WestTeaBlockAverage | WestTeaBlockAverage | 134.35 | 113.64 | 108.16 | 95.39 | 90.31 | | Overall Average | Overall Average | 112.96 | 104.94 | 99.72 | 87.82 | 84.76 |

• a) During theyear,the cost of productionin theEoRdeclinedwith an averageof 3%toanaverage ofKshs.102.27perKgof madeteacomparedtothe previousyear.Inzones1,2,4,6and7the costofproductiondeclinedwhileinzones3and5,thecostincreasedbasedonthe abilityofa specificfactorytomanage theircosts;and
• b) During the year,the cost of production in all the zones fromWoR increasedwith an average of18.2%to an averageof Kshs.134.35perKgofmade tea as compared tothepreviousyear.

3. 36.From the above analysis,it is apparent that the cost of production in the WoR factories is 31% higher(Kshs.32.08perKgofmade tea)ascomparedtocostofproductionof tea factoriesfrom theEoR.Using the conversionratioof4.444,thisimplies thatonaverage,farmersin theEoRearned morecomparedtotheircounterpartsintheWoRbyKshs7.22perKgofgreenleafowingto efficiencyinmanagementofcostswithintheirfactoriesalone. 4. 37.Specific operational costs that are incurred by factories in the West and Eastof the Rift,respectively:Key factory operational costs consistof labour,whichaccountsfor about5% of thenetrealisablevalue andelectricity4%.Other significantcosts areadministrative(3%),wood fuel (3%),green leaf collection (2%) and packing expenses(2%). 5. 38.Global tradingconditionsaffectingthepriceofKenyan tea:Theprice ofKenyan teais impactedbythefollowingglobalconditions: 6. a)Kenya tea is exported to overninety(90)market destinationsglobally and thevolume of exportsineachof themarketsishighlydependentontheperformanceof theeconomy.Since thecommencementoftheCOVID-19Pandemicin2020,mostoftheglobalmarketshavebeen experiencing economicrecession,while othershavebeenrecordingminimal economicgrowth.

Figure2:Operationalcostsincurredbyteafactories

• b)This economicsituation hasalsobeenexacerbatedby the effectsoftheRussia-Ukraine crisis, whichcommencedin2022andfurtherdisruptedglobal trade.Owingtodifficulteconomic situations,the local currencies of the importing countries have depreciated against the USD leadingtohighinflationandlowpurchasingpower.
• Pakistan andEgypt,which arethetwobiggestmarketsforKenyantea accountingfor50%of the exportshave consistentlybeen suffering theshortage of forexreserves leadingtoreduced volumesof teaand otherimports.Russia and lran,which arealsosignificantmarketsforKenyan tea havebeen undereconomicsanctionsby theWestmakingtradingand importationof tea a challenge.
• d)Sincethearmed conflicterupted inSudaninApril 2023,exportsof tea toSudan,which isalso market access.Thisgreatly affected the absorption ofBPlteagradeleadingtolower auction prices.
• e ShipmenttoothermarketslikeEuropeandNorthAfricahasalsobeen affectedbycontinued attacksonvesselsalongtheRedSeabytheYemenTerroristGroupleadingtolongervoyage timesandhigher freightrates through the alternative shipmentroute aroundAfrica'sCape of GoodHope.
• 39.Plans by TBK and KTDA to improve the currentmethod of testing tea to enhance its
• a) Establishmentof aquality analysislaboratory:Over theyears,valuationof tea inMombasa has been based on the organoleptic tastingmethod adoptedby tea brokers and buyers/exporters. producers andbuyersglobally.Itisalsousedinotherbeveragessuch ascoffeeandalcoholic drinks.However,this method has been subject to suspicion from some quarters especially farmerswhohave been agitatingfor a moreobjective andverifiablemethodof teavaluation. TBKis in theprocess of establishinga qualityanalysis laboratory inMombasa tovalidate the tea qualityandsafetyinthreeaspects:
• Analytical testingoftheteasbasedon three setsofparameters,namely;physical-quality parameters,microbiological parameters,heavymetal contaminantsandpesticideresidues (MRLs)andEmergingcontaminants;
• ii. Scientificverificationofteasofferedforsale attheauctiontodeterminetheirvaluation based on qualitybycheckingNitrogen,Polyphenols andAsh content;and
• ili. Sensoryevaluation of tea:TBKwilleventually carry outsensory evaluation of teas aspart ofquality assurance activities tocomplement the scientifictesting of tea tobeused in determination ofprice.

Civil works for the Laboratory are complete and the Laboratory is awaitingnecessary equipmentandotherresourcesnecessaryforoperationalisation.

• b Establishmentonline tradingplatform (E-Commerce):TBK was establishing an alternative marketingchannel forKenyanteabycollaboratingwithpartnerstoimplementandpromotean online tradingplatform (E-Commerce) to enhance market access forKenyan tea and tea products.The objectiveoftheE-commerceplatform isto directly linkteaconsumerstotea producersresultingina short route to the marketchain,increase tea sales(bothvalue added andbulkteas)byprovidingconsumerswith avarietyof highvalueteastochoosefrom,offer conveniencetoconsumersandcreatebrandawarenessofKenyanteas.
• 40.Cost of finance isa major cost ofproduction.In addition,most tea factories are highly indebted; in thisregard,theMinistryofAgriculture and LivestockDevelopmentdirectedTeaBoardof Kenya tocarryoutacomprehensive auditofall loans obtained by KTDA-managed factories.The objectiveoftheauditwastoenabletheMinistryofAgricultureandLivestockDevelopmentto evaluatethefinancial sustainabilityofteafactoriesandformulateappropriatemeasures aimedat addressing the challenges currentlyfacingthe sub-sector.The scope of theauditwas toestablish: Thetotal amountofloansborrowedbyeachfactory;theutilisation oftheloanproceeds;the terms and conditions under which theloans wereacquired;and the currentoutstanding loan balancesforeachfactory.
• 41.Thetablebelowshowstheloansowedbyfactoriesinthetwoblocks.

Figure3:Total loanbalancesasat30thJune2025

Table3:Loanbalancesasat30thJune2025

| Type of Loan | WoR | EoR | Total | Percentage | |------------------|----------------|---------------|----------------|--------------| | Interfactoryloan | 8,570,906,235 | 1,791,014,245 | 10,361,920,480 | 40 | | Commodityloan | 11,770,810,990 | 1,041,878,337 | 12,812,689,327 | 49 |

| Type of Loan | Type of Loan | WoR | EoR | Total | Percentage | |------------------|----------------|----------------|---------------|----------------|--------------| | Asset financing | based | 975,037,785 | 1,612,082,946 | 2,587,120,731 | 10 | | Project balances | loan | 295,659,259 | 4,511,584 | 300,170,843 | | | TOTAL | | 21,612,414,269 | 4,449,487,116 | 26,061,901,385 | 100 | | Percentage | | 83% | 17% | 100% | |

42.From theauditon loans,TBKestablished that:

Inter-factoryLoans

• a)Theabove loanbalances asat30June2025,arehigherafterfactoringinthe accruedinterests andpenaltieswhere applicable;
• b)Therewere discrepanciesin theinter-factory borrowing and lending scheduleswhichhighlights potentialgapsinfinancialreconciliation;
• c)TherewerenoBoardResolutions approving thelending/borrowingfrom/tofactories as these arrangementsaredone attheKTDAheadoffice;
• d)Thereisnopolicyguidelineoninter-factoryfinancingwhich hasled to arbitrariness in issuance andrepaymentof thefacility;and
• e)Several factories are experiencingcash flow constraints,which hashindered their ability to repayinter-factory loanswithin thestipulatedone-yearperiod.

Commodity Loans

• a)Commodityloans thatwereacquiredtopayFY2024/25secondpaymentarenotfactoredin the analysis as the scheduleswerenotprovidedatthetimeofaudit;
• b)Abigproportion of thecommodity loanswereacquired to finance operations andnot second payment asindicated;
• c)There were discrepancies in the interest amountpaid on some loanscomparedto the actual computedinterest;
• d)Schedulesfordistributionof loansperfactorywerenotprovided and itwas thereforenotclear which tea factories received the loans totalingUSD 99,766,128.2 equivalent to Kshs. 12,869,830,527.1;
• e)Closingstocksasat30thJune2024whichKTDA-MSusedasaguaranteefor thecommodity loans tofinance the secondpaymentinOctober 2024was overvaluedespecially for the factoriesintheWoR;and

• f)Somefactorieshadcommodityloanbalancesasat30thJune2025butdidnothaveboard resolutionsthusputtingintoquestionwhethertheteafactorieshadsanctionedsuchloans.

AssetBasedFinancing

• a)Loanovershoots:Severalfactoriesborrowedamountsexceedingboard-approvedlimitsor actualequipmentcosts;
• b)Lackofrequisiteboard approvals:several factorieshadboardresolutions that didnot
• c)HighEquipmentCosts:EquipmentsuppliedtofactorieslikeKambaaandSanganyi were significantlymoreexpensive than similarunitssuppliedin otherfactories;
• d) Unverified Documentation:Capital job certificates and inspection certificates were internal documents without external or independentvalidation,raising concernsabout equipment performanceandcompliance;and
• e)Irregularalterationsofapproved loans.

TermLoans/ProjectFinancing

• a)Asat30th June 2025,term loans/project financing was Kshs.300,170,844 to3 factories; Kebirigo,Ragati and Chinga;
• b)Whereas term loans are meant to finance capital-intensive projects such as withering expansions,acquisitionofautomaticwitheringmachines,andinstallationoforthodoxlines,the reviewestablishedthatsomefactoriesspentthemoneyonotheritems;and
• c)TheKTDA-MSisresponsiblefor developingbusinesscases thatassess theviability of these projects,outline financing options,and estimate the associated costs.TBKis in the processof undertakingphysicalverificationoftheprojectsundertaken.

FertilizerFinancing

The facilityissecured tofacilitateimportationoffertilizeron annual basis asaresultof the timing differencebetweenthepaymenttothesupplier andrecoveryof themoniesfromfarmers.Thisis usuallyfloatedtovariousbanks andthebestquotedbank awarded.Theprocessisusuallythrough 4,675,404,937hadnotbeenrefundedtoKTDAfortheFY2021/2022(Kshs.2,559,810,266)and FY2022/2023(Kshs.2,115,594,671)forprocurementoffertilizer.

• 43.TBKmadethefollowingrecommendationsonloans:
• a)Togivethecorrectpictureoftheoutstandingloans,KTDA-MSshouldprovide themostrecent loanbalancesandinformation.

• b)Goingforward,secondpaymentofgreenleafshouldbebasedonactualperformanceandfunds availableratherthanborrowingsandoverstatedstockvaluationtoshowhigherperformance.
• c)Valuationof the closingstocks should beinlinewithInternational AccountingStandards2(IAS 2);themethodusedshould always consider theexpectednetrealizablevalue asprovidedfor bytheIAS2.
• d)Basedon thepreliminary findings of the auditof theKTDA managedfactories,a forensicaudit shouldbecarriedoutfromFY2021/22todatetogiveteafarmersconfidenceontheprobity of theloansundertakenbytheKTDA-MSonbehalfof thefactories.
• e)To address the cash flow challenges, the KTDA Group is facing the implementation ofa retentionpolicyshouldimmediatelycommence.
• f)Toverifyutilisation of the loanproceeds andvalueformoney,physical verificationof the assets shouldbedone.
• g)Thereisneed toestablishasustainablemodeloffunding theteaindustryprogrammeslike promotion,research anddevelopmentbyoperationalisingthetea levy.
• h)Equippingandoperationalisation of the quality analysis laboratory tobeprioritised to address concernsonteavaluationsbetweenthetwomajorteablocks.
• i)Enhanced market access of Kenya tea by providing adequate resources for market development.
• j)Gazettement of the tea industry corporate governance to address the inefficiencies,high operationalcosts andgovernancegapsinteafactories.
• k)Concessional loansformodernisationof teafactoriesto enhance quality and efficiency.
• 44.Challenges experienced by TBK and KTDA in the execution of their mandate:TBK experiences anumberofchallengesinthe executionof itsmandate.Someof thechallengesinclude:
• a)Lackofregulationstoimplement theTeaAct,2020:Since2021,theMinistryhadnotfinalised developmentof tea regulations to implement the Tea Act,2020 due toCourt casesagainst varioussectionsoftheActandlackofresourcestoundertake adequatepublicparticipation.
• b)Inadequate funding to undertake promotionandmarketing,enforce theTeaActandaddress variousmalpracticesaffecting thesub-sector:TBKisdependenton theexchequer tofund its programmes and thebudgetaryof Kshs.350millionthatis allocated totheBoard isinsufficient inspectionandsurveillance andeffectivelydischarge itsothermandates.
• Insufficientstaff:TBKwas operatingwith almosthalfofitsapproved staff establishment(56 againstIoo)makingitdifficulttoeffectivelyundertakevariousfunctionslikeinspectionand surveillance.

3.2THEKENYATEADEVELOPMENTAGENCY

Ina meetingwith the Committeeheldon Thursday,26h November2025,Mr.GeoffreyKirundi,the NationalChairmanofKTDA,informedtheCommitteethat:

EstablishmentofKTDA

• 45.TheKenya Tea Development Authority was privatised in June 2000 to establish the Kenya Tea Development Agency Limited under the Companies Act(Cap.486)asa private limited liability company.ltwaslaterrenamedastheKenyaTeaDevelopmentAgencyHoldings Limited in2009.
• 46.KTDAis owned by about six hundred thousand(600,000)smallholder tea farmers whoare shareholders of thefifty-four(54) tea producing factories and itsnine(9) subsidiary companies.The nine(9) subsidiarycompaniesownedbyKTDA addvalue to the teavalue chain and they are:Chai TradingCompanyLimited,Majani Insurance Brokers,Kenya Tea PackersLimited,GreenlandFedha CompanyLimited,KTDA-MSandChai LogisticsCentre.

FactoriesManaged byKTDA

• 47.Factoriesmanagedby KTDA are divided into tworegions,those in the EoR and those in theWoR. They are:

Factoriesin theEoR

• a) Embu County:Kathangariri,Rukuririand Mungania Tea Factories;
• b) KiambuCounty:Ndarugu,Theta,Mataara,Kagwe,Kambaa andGachege Tea Factories;

3. Kirinyaga County:Kangaita,Mununga,Thumaita,Kimunye andNdimaTea Factories; 4. (P Meru County:Githongo,Kinoro,Kionyo,lmenti,Igembe,Kiegoi and Michimikuru Tea Factories; 5. e)Murang'a County:Makomboki, Nduti,Gacharage,lkumbi,Ngere,Njunu,Gatunguru, Kanyenyaini,Kiru andGithamboTeaFactories; 6. Nyeri County:Ragati,Gathuthi,Gitugi,lriainiand Chinga TeaFactories;and 7. (B TharakaNithi County:WeruTeaFactory

Factoriesin theWoR

• a) Bomet County:Kapset, Mogogosiek,Kapkoros,Motigo,Kobel,Tirgaga and Rorok Tea Factories;
• b) KerichoCounty:Chelal,Toror,Tegat,Kapkatet,Momul andLiteinTeaFactories;

3. Kisii County:Rianyamwamu,Ogembo,Nyamache,Kiamokama,ltumbe and Eberege Tea Factories; 4. (P NakuruCounty:OlenguruoneTeaFactory;

• e) Nandi County:Kaptumo and ChebutTeaFactories;

6. f Nyamira County:Tombe,Sanganyi,Nyansiongo,Nyankoba,Kebirigo and Gianchore Tea Factories); 7. g TransNzoia County:KapsaraTea Factory;and 8. h)VihigaCounty:MudeteTeaFactory

• 48.Analysisofauctionpricesforteafrom allfactoriesin thecountryforthe lastfiveFYs.

Table 4:TeapricesforfactoriesmanagedbyKTDA

| TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | |----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------| | COUNTY | ZONE | FACTORY | FY 2020/21 | FY 2021/22 | FY 2022/23 | 2023/24 | 2024/25 | | | | Gachege | 2.19 | 2.84 | 2.71 | 2.83 | 2.78 | | | | Kagwe | 2.31 | 2.93 | 2.78 | 2.99 | 2.89 | | | | Kambaa | 2.31 | 2.93 | 2.74 | 2.94 | 2.93 | | | | Mataara | 2.25 | 2.86 | 2.70 | 2.84 | 2.85 | | | | Ndarugu | 2.21 | 2.87 | 2.73 | 2.88 | 2.77 | | Kiambu | | Theta | 2.25 | 2.86 | 2.74 | 2.92 | 2.89 | | | | Karirana Estates | 1.90 | 2.51 | 2.17 | 1.68 | 1.85 | | | | Maramba Estates | 1.86 | 2.40 | 2.06 | 1.67 | 2.05 | | | | Ngorongo Estates | 1.67 | 2.17 | 1.94 | 1.42 | 1.65 | | | | Rwaka Estates | 1.44 | 1.30 | 1.41 | 1.06 | 1.21 | | | | MabroukieEstates | 1.31 | 1.69 | 1.49 | 1.03 | 1.27 | | Murang'a | | Gacharage | 2.50 | 3.08 | 2.82 | 3.01 | 3.08 | | Murang'a | | lkumbi | 2.31 | 2.91 | 2.75 | 2.89 | 2.95 | | Murang'a | | Makomboki | 2.34 | 2.99 | 2.78 | 3.00 | 3.00 | | Murang'a | 2 | | 2.25 | 2.85 | 2.73 | 2.87 | 2.83 | | Murang'a | | Ngere | 2.36 | 2.92 | 2.78 | 3.00 | 3.06 | | Murang'a | | Njunu | 2.28 | 2.91 | 2.76 | 3.00 | 3.03 | | Murang'a | | Gatunguru | 2.29 | 2.90 | 2.73 | 2.86 | 2.78 | | Murang'a | | Githambo | 2.25 | 2.83 | 2.70 | 2.80 | 2.71 | | Murang'a | 3 | Kanyenyaini | 2.23 | 2.82 | 2.69 | 2.76 | 2.73 | | Murang'a | | Kiru | 2.26 | 2.86 | 2.72 | 2.83 | 2.87 | | Nyeri | | Chinga | 2.25 | 2.88 | 2.75 | 2.93 | 2.92 | | Nyeri | | Gathuthi | 2.50 | 3.15 | 2.92 | 3.17 | 3.28 | | Nyeri | 4 | Gitugi | 2.51 | 3.09 | 2.82 | 3.00 | 3.07 | | Nyeri | | lriaini | 2.24 | 2.88 | 2.73 | 2.83 | 2.81 | | Nyeri | | Ragati | 2.30 | 2.86 | 2.72 | 2.88 | 2.84 | | | | Kangaita | 2.29 | 2.91 | 2.76 | 2.93 | 2.99 | | | | Kimunye | 2.50 | 3.07 | 2.87 | 3.07 | 3.15 | | Kirinyaga | 5 | Mununga | 2.48 | 3.07 | 2.93 | 3.29 | 3.45 | | | | Ndima | 2.33 | 2.98 | 2.79 | 2.95 | 3.03 | | | | Thumaita | 2.31 | 2.93 | 2.75 | 2.88 | 2.74 | | | | Kathangariri | 2.54 | 3.09 | 2.85 | 3.05 | 3.15 | | | 6 | Mungania | 2.38 | 3.01 | 2.80 | 2.97 | 3.05 | | Embu | | Rukuriri | 2.42 | 3.02 | 2.84 | 3.07 | 3.19 | | | | Githongo | 2.46 | | | 3.03 | 2.97 | | Meru | | Igembe | 2.28 | 2.97 | 2.82 | 2.94 | 2.90 | | Meru | | Imenti | 2.47 | 2.91 3.00 | 2.75 2.82 | 3.06 | 3.16 | | | | Kiegoi | 2.25 | 2.92 | 2.79 | 3.05 | 3.13 |

TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT)

| COUNTY | ZONE | FACTORY | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | FY 2024/25 | |---------------|--------|-------------------|--------------|--------------|--------------|--------------|--------------| | | | Kinoro | 2.34 | 2.92 | 2.74 | 3.00 | 2.98 | | | | Kionyo | 2.32 | 2.92 | 2.74 | 2.97 | 3.01 | | | | Michimikuru | 2.06 | 2.72 | 2.67 | 2.61 | 2.37 | | | | Njeru Estates | 1.49 | 1.96 | 1.72 | 1.42 | 1.20 | | Tharaka Nithi | | Weru | 2.20 | 2.85 | 2.72 | 2.83 | 2.81 | | | | Chelal | 1.95 | 2.58 | 2.50 | 2.39 | 1.77 | | | | Kapkatet | 1.94 | 2.56 | 2.46 | 2.26 | 1.71 | | | | Litein | 1.93 | 2.56 | 2.49 | 2.03 | 1.57 | | | | Momul | 2.13 | 2.72 | 2.65 | 2.74 | 2.45 | | | | Tebesonik | 1.97 | 2.58 | 2.53 | 2.51 | 661 | | | | Tegat | 1.85 | 2.52 | 2.48 | 2.31 | 1.65 | | | | Toror | 1.90 | 2.53 | 2.49 | 2.35 | 1.68 | | | | Kapsongoi Estates | 1.60 | 1.73 | 1.85 | 1.16 | 1.26 | | | | KalyetEstates | 1.54 | 1.85 | 1.83 | 1.27 | 1.37 | | | | KipsinendeEstates | 1.54 | 1.60 | 1.61 | 1.08 | 1.30 | | | | Kabianga Estates | 1.48 | 1.71 | 1.63 | 1.10 | 1.28 | | | | DL Kapchebet | 1.41 | 1.39 | 1.39 | 0.88 | | | Kericho | 8 | Estates | | | | | | | | | TilyaTea Estates | 1.41 | 1.53 | 1.56 | 1.08 | 1.12 | | | | SettEstates | 1.40 | 1.28 | 1.22 | | 1.17 | | | | Kelunet Estates | 1.39 | 1.68 | 1.67 | 1.06 | | | | | Tagabi Estates | 1.37 | 1.27 | 1.38 | 1.03 | 1.23 | | | | ChebownEstates | 1.34 | | | 1.01 | 1.15 | | | | Kaisugu Estates | 1.32 | 1.41 | 1.66 | 1.06 | 1.02 | | | | Lelagoin Estates | 1.32 | 1.58 | 1.60 | 1.07 | | | | | CheboswaEstates | 1.17 | 1.05 | 1.20 | 0.90 | 1.19 | | | | Jamji Estates | 1.13 | 1.03 | 1.16 | 0.87 | 1.18 | | | | Kimugu Estates | 1.10 | 1.10 | 1.14 | 0.87 | 1.15 | | | | SambretEstates | 1.01 | | | 0.88 | 1.18 | | | | Kericho Estates | 0.95 | 0.95 | 1.17 | 160 | 1.14 | | | | Boito | 1.91 | 2.54 | 2.49 | 1.82 | 1.41 | | | | Kapkoros | 1.89 | 2.52 | 2.46 | 1.47 | 1.44 | | | | Kapset | 1.86 | 2.50 | 2.42 | 1.58 | 1.50 | | | | Kobel | 1.90 | 2.53 | 2.47 | 1.86 | 1.49 | | | | Mogosiek | 1.91 | 2.55 | 2.43 | 1.98 | 1.61 | | Bomet | 9 | Motigo | 2.01 | 2.63 | 2.54 | 2.39 | 1.80 | | | | Rorok | 161 | 2.51 | 2.46 | 1.85 | 1.50 | | | | Tirgaga | 1.95 | 2.56 | 2.49 | 2.05 | 1.51 | | | | Masingi Estates | 1.77 | 2.17 | 2.04 | 1.62 | 1.42 | | | | Bondet Estates | 1.75 | 2.17 | 1.94 | 1.57 | 1.43 |

| COUNTY | ZONE | FACTORY | FY 2020/21 | FY 2021/22 | 2022/23 | FY 2023/24 | 2024/25 | |----------|--------|---------------------------------|--------------|--------------|-----------|--------------|-----------| | | | Changoi Estates | 1.72 | 2.11 | 2.05 | 1.53 | 1.60 | | | | Chebango Estates | 1.68 | 2.12 | 1.96 | 1.41 | 1.50 | | | | Kipkebe Estates | 1.67 | 2.04 | 2.03 | 1.44 | 1.25 | | | | Maner Estates | 1.67 | 1.81 | 1.80 | 1.27 | 1.31 | | | | TiluetEstates | 1.64 | 1.82 | 1.81 | 1.31 | 1.31 | | | | Sisiba Estates | 1.62 | 1.85 | 1.84 | 1.27 | 1.34 | | | | NdarawettaEstates | 1.61 | 1.79 | 1.63 | 1.37 | 1.47 | | | | ArroketEstates | 1.60 | 1.74 | 1.77 | 1.16 | 1.30 | | | | Mettarora Estates | 1.60 | 1.91 | 1.86 | 1.31 | 1.32 | | | | Siomo Estates | 1.57 | 1.87 | 1.75 | 1.38 | 0.83 | | | | Chemamul Estates | 1.57 | 1.83 | 1.88 | 1.17 | 1.14 | | | | Manaret Estates | 1.56 | 1.91 | 1.88 | 1.34 | 1.42 | | | | Laibei Estates | 1.50 | 1.96 | 1.98 | 1.44 | 1.50 | | | | KonoitoTeaEstates | 1.39 | 1.64 | 1.70 | 1.19 | 1.35 | | | | Tea-Max Fresh Estates | 1.39 | 1.59 | 1.61 | 1.06 | 1.27 | | | | Kipsonoi Estates | 1.39 | 1.73 | | | | | | | Ngoina Estates | 1.30 | 1.07 | 1.29 | 0.87 | 1.15 | | | | Kapgwen Estates | 1.16 | 1.22 | 1.28 | 0.98 | 1.26 | | | | Kaptien Estates | 1.15 | 1.17 | 1.30 | 1.08 | 1.19 | | | | Koiwa Estates | 1.11 | 1.05 | 1.15 | 0.88 | 1.14 | | | | Koruma Estates | 1.02 | 1.11 | 1.18 | 0.94 | 1.14 | | | | Olenguruone | 1.92 | 2.54 | 2.52 | 2.17 | 1.66 | | | | Kiptenden Estates | 1.79 | 2.02 | 2.03 | 1.55 | 1.33 | | | | Setyon Estates | 1.63 | 1.91 | 1.97 | 1.39 | 1.49 | | Nakuru | 9 | Tinet Estates | 1.59 | 1.81 | 1.78 | 1.30 | 1.47 | | | | Siarra Estates | 1.47 | 1.71 | 1.80 | 1.07 | | | | | Kiptagich Estates | 1.47 | 1.62 | 1.65 | 1.10 | 1.35 | | | | Tachasis Estates | 1.47 | 1.63 | 1.71 | | | | | | Gianchore | 1.98 | 2.60 | 2.54 | 2.49 | 1.85 | | | | Kebirigo | 1.91 | 2.53 | 2.44 | 2.22 | 1.81 | | | | Nyankoba | 1.98 | 2.58 | 2.53 | 2.46 | 2.10 | | | | Nyansiongo | 1.86 | 2.57 | 2.53 | 2.49 | 1.75 | | | | Sanganyi | 1.89 | 2.51 | 2.45 | 2.14 | 1.70 | | | | Sombogo | 1.85 | 2.61 | 2.60 | 2.58 | 2.14 | | Nyamira | 10 | Tombe | 1.92 | 2.55 | 2.52 | 2.31 | 1.86 | | | | | 1.50 | 1.88 | | | 1.01 | | | | KeritorEstates | 1.44 | 1.47 | 2.13 | 1.61 | | | | | Nyarinda Estates Magura Estates | 1.41 | 1.68 | 1.51 2.01 | 0.96 1.60 | 1.23 1.25 | | | | | 1.39 | | | | 1.28 | | | | Mogeni Estates Sakawa Estates | 1.20 | 1.48 1.69 | 1.52 1.95 | 1.06 1.42 | 1.15 |

TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES(USD/KGMT)

| COUNTY | ZONE | FACTORY | FY 2020/21 | FY 2021/22 | FY 2022/23 | FY 2023/24 | FY 2024/25 | |----------|--------|--------------------|--------------|--------------|--------------|--------------|--------------| | | | Eberege | 1.86 | 2.50 | 2.50 | 2.41 | 1.88 | | | | Itumbe | 1.88 | 2.50 | 2.46 | 2.28 | 1.77 | | Kisii | | Kiamokama | 1.85 | 2.52 | 2.47 | 2.33 | 1.83 | | | | Nyamache | 1.86 | 2.50 | 2.47 | 2.36 | 1.84 | | | | Ogembo | 1.84 | 2.50 | 2.48 | 2.40 | 2.03 | | | | Rianyamwamu | 1.93 | 2.52 | 2.49 | 2.17 | 1.78 | | | | Chebut | 1.87 | 2.45 | 2.39 | 1.35 | 1.49 | | | | Kaptumo | 1.90 | 2.50 | 2.48 | 1.95 | 1.55 | | | | Kamarya Estates | 1.99 | 2.37 | 2.30 | 2.13 | 2.17 | | | | Chemomi Estates | 1.98 | 2.44 | 2.36 | 2.22 | 2.04 | | | | KapchoruaEstates | 1.98 | 2.42 | 2.32 | 2.05 | 1.99 | | | | Kepchomo Estates | 1.93 | 2.42 | 2.28 | 2.04 | 2.00 | | | | Kibwari Estates | 1.92 | 2.36 | 2.30 | 2.12 | 2.05 | | | | Kipkoimet Estates | 161 | 2.41 | 2.25 | 1.97 | 1.68 | | | | SiretEstates | 1.89 | 2.25 | 2.27 | 2.00 | 2.04 | | | | SokotEstates | 1.87 | 2.26 | 2.27 | 1.98 | 1.93 | | | | TinderetEstates | 1.86 | 2.24 | 2.19 | 1.82 | 1.75 | | | | Savani Estates | 1.83 | | | | | | | | Kaimosi Estates | 1.76 | 2.20 | 2.16 | 1.68 | 1.67 | | | | KombeEstates | 1.74 | 1.67 | | 1.39 | 1.50 | | | | SangaloTeaEstates | 1.74 | 2.01 | 2.05 | 1.53 | 1.59 | | | | TaitoEstates | 1.73 | 2.13 | 2.10 | 1.73 | 1.70 | | Nandi | 12 | Mbogo Tea Estates | 1.72 | 661 | 2.03 | 1.52 | 1.56 | | | | Reyna Estates | 1.72 | 2.04 | 1.94 | 1.51 | 1.55 | | | | SangaloEstates | 1.70 | 2.04 | | 1.92 | | | | | Sitoi Estates | 1.67 | 1.99 | 2.01 | 1.61 | 1.63 | | | | SaptetEstates | 1.66 | 1.88 | 1.93 | 1.52 | 1.65 | | | | Marich Estates | 1.65 | 1.98 | 1.95 | 1.48 | 1.53 | | | | Kipchabo Estates | 1.64 | 1.98 | 1.79 | 1.37 | 1.52 | | | | Toiyoi Estates | 1.62 | 1.96 | 2.03 | 1.43 | 1.44 | | | | Mokong Estates | 1.58 | 1.60 | 1.83 | 1.33 | 1.40 | | | | TimsooEstates | 1.57 | 1.63 | 1.92 | 1.38 | 1.51 | | | | KebenEstates | 1.55 | | 1.74 | | | | | | EmrokEstates | 1.57 | 1.73 | 1.63 | 1.20 | 1.44 | | | | Chepkumia Estates | 1.54 | 1.78 | 1.73 | 1.13 | 1.37 | | | | DLKoisagat Estates | 1.53 | 1.33 | 1.47 | 0.92 | 1.03 | | | | Cupatea Estates | 1.51 | 1.77 | 1.65 | 1.18 | 1.26 | | | | Tungor Estates | 1.28 | 1.30 | | | 1.14 | | Trans | | Kapsara | 1.87 | 2.48 | 2.41 | 1.37 | 1.56 | | Nzoia | 12 | ElgonTeaEstates | 1.50 | 1.66 | 1.60 | 1.23 | |

| TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | TEA FACTORIES PER COUNTY PER ZONE AVERAGE MARKET PRICES (USD/KGMT) | |----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------|----------------------------------------------------------------------| | COUNTY | ZONE | FACTORY | FY 2020/21 | FY 2021/22 | FY 2022/23 | 2023/24 | 2024/25 | | Kakamega &Vihiga | 12 | Mudete | 1.87 | 2.49 | 2.49 | 2.05 | 1.70 | | Narok | 12 | Mara Tea Estates | 1.31 | 1.47 | 1.51 | 1.31 | 1.45 | | Other | 12 | Swazi Estates | 1.35 | 1.32 | 1.30 | 0.86 | 1.09 |

• 49.Analysis ofpayments at the factory level forboth regular and bonusesfor the last five years:Tea'bonus'isa secondpayment totea farmerswhich ispayable atthe endof eachFY.Every month,tea farmers inEoR are usuallypaid an initial amountof Kshs.25perKgofgreenleaf;Kshs. 24for factories in Kisii,Nyamira,and Nandi;andKshs.23for factories in Kericho,Bomet,Vihiga themonthsinceproceedsfromthesaleof teaareonlyrealisedafterforty-five(45)daysofdelivery ofgreen leaf tothe factory due to the timelinesinvolved in manufacturingprocesses(withering, fermentation and drying),transportation,valuation and cataloguing the tea for sale at theAuction. It is therefore treated as a cost financed throughborrowingup anduntil the tea issold.
• 50.The second payment(popularly referred to as'teabonus),is the netof the price realised after the saleof teaminusthecostofmanufacturingandoperationsandtheinitial monthlypayment.However, theearningsbya teafarmeristhetotalofboth themonthlypaymentand thesecondpaymentdone duringtheyear.Total paymentsin differentparts of the country for thelastfiveyearsforKTDA factories are as shown in table 2.

Table5:Paymentstofarmersfrom202lto2025

| Region/Factory | June 2025 | June 2025 | June 2023 | june 2022 | June 2021 | |---------------------|---------------------|---------------------|---------------------|---------------------|---------------------| | Region One (Kiambu) | Region One (Kiambu) | Region One (Kiambu) | Region One (Kiambu) | Region One (Kiambu) | Region One (Kiambu) | | Kambaa | 66.00 | 75.70 | 62.50 | 56.00 | 42.48 | | Kagwe | 65.00 | 69.30 | 65.00 | 56.00 | 45.47 | | Gachege | 60.00 | 71.30 | 61.00 | 56.00 | 37.51 | | Mataara | 61.20 | 73.10 | 62.00 | 54.00 | 40.97 | | Theta | 65.00 | 75.50 | 63.00 | 56.20 | 43.59 | | Ngere | 78.10 | 87.00 | 67.00 | 57.70 | 46.56 | | Njunu | 75.00 | 87.20 | 65.00 | 57.00 | 40.56 | | Makomboki | 72.00 | 87.50 | 68.00 | 59.00 | 46.11 | | | 70.00 | 85.90 | 67.00 | 53.00 | 39.61 | | lkumbi | 70.00 | 84.00 | 65.50 | 57.50 | 44.01 | | Gacharage | 76.10 | 87.80 | 66.00 | 60.70 | 48.61 | | Average | 68.95 | 80.39 | 64.73 | 56.65 | 43.23 |

| Region/Factory | June 2025 | June 2025 | June 2023 | June 2022 | June 2021 | |-------------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------|-------------------------------| | Kiru | 57.00 | 76.00 | 64.10 | 51.20 | 35.59 | | Gatunguru | 58.00 | 77.00 | 60.00 | 52.20 | 36.68 | | Githambo | 57.00 | 67.00 | 62.00 | 56.00 | 38.52 | | Kanyenyaini | 58.00 | 76.00 | 58.20 | 51.50 | 36.18 | | Iriaini | 65.00 | 71.00 | 59.00 | 55.00 | 35.74 | | Gitugi | 67.50 | 78.00 | 78.30 | 62.20 | 43.74 | | Gathuthi | 81.00 | 82.00 | 65.00 | 61.00 | 38.61 | | Chinga | 68.00 | 75.30 | 62.00 | 54.00 | 37.68 | | Ragati | 65.00 | 70.50 | 57.00 | 52.00 | 37.24 | | Average | 63.38 | 74.76 | 62.84 | 55.0! | 37.78 | | Region Three (Kirinyaga/Embu) | Region Three (Kirinyaga/Embu) | Region Three (Kirinyaga/Embu) | Region Three (Kirinyaga/Embu) | Region Three (Kirinyaga/Embu) | Region Three (Kirinyaga/Embu) | | Thumaita | 65.00 | 71.00 | 66.00 | 53.20 | 39.56 | | Kangaita | 65.20 | 75.70 | 63.10 | 52.00 | 40.68 | | Mununga | 82.00 | 87.70 | 68.00 | 56.50 | 43.56 | | Kimunye | 71.00 | 76.00 | 67.20 | 55.00 | 41.72 | | Ndima | 72.00 | 75.10 | 63.00 | 54.20 | 40.81 | | Mungania | 76.00 | 85.00 | 64.10 | 61.00 | 46.61 | | Rukuriri | 82.50 | 86.50 | 65.60 | 62.50 | 48.68 | | Kathangariri | 75.50 | 81.20 | 63.00 | 60.50 | 45.54 | | Average | 74.52 | 81.03 | 64.86 | 57.39 | 43.94 | | Region Four(Meru) | Region Four(Meru) | Region Four(Meru) | Region Four(Meru) | Region Four(Meru) | Region Four(Meru) | | Kionyo | 74.50 | 80.00 | 64.00 | 57.30 | 40.23 | | Weru | 67.05 | 75.50 | 64.00 | 57.20 | 38.85 | | Imenti | 81.00 | 85.30 | 73.10 | 62.20 | 45.87 | | Kinoro | 73.10 | 80.00 | 66.10 | 58.10 | 41.70 | | Githongo | 75.10 | 81.00 | 66.50 | 61.00 | 45.77 | | Kiegoi | 75.20 | 76.00 | 67.00 | 55.10 | 38.09 | | Igembe | 66.10 | | | | | | Michimikuru | 51.50 | 60.00 | 68.60 | 52.10 | 34.73 | | Average | 70.44 | 76.83 | 67.04 | 57.57 | 40.75 | | Region Five(Kericho/Bomet) | Region Five(Kericho/Bomet) | Region Five(Kericho/Bomet) | Region Five(Kericho/Bomet) | Region Five(Kericho/Bomet) | Region Five(Kericho/Bomet) | | Litein/Chelal | 40.00 | 44.00 | 51.00 | 41.00 | 27.00 | | Kapkatet/Tebesonic | 47.00 | 55.00 | 52.30 | 43.00 | 27.40 | | Momul | 55.00 | 73.30 | 64.80 | 50.00 | 38.00 | | Tegat/Toror | 37.50 | 48.00 | 51.50 | 38.10 | 27.00 | | Kapset/Rorok | 36.00 | 43.00 | 51.00 | 42.00 | 26.50 |

| Region/Factory | june 2025 | June 2025 | June2023 | June 2022 | june 2021 | |--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------| | Mogogosiek/Kobel/ Boito | 35.00 | 43.00 | 51.50 | 42.00 | 27.00 | | Kapkoros/ Tirgaga/ Oleng/Motigo | 37.00 | 43.10 | 52.00 | 44.30 | 31.00 | | Average | 40.52 | 49.91 | 53.44 | 42.91 | 29.13 | | Region Six(Kisii/Nyamira) | Region Six(Kisii/Nyamira) | Region Six(Kisii/Nyamira) | Region Six(Kisii/Nyamira) | Region Six(Kisii/Nyamira) | Region Six(Kisii/Nyamira) | | Kebirigo | 37.00 | 48.40 | 50.00 | 45.00 | 26.00 | | Nyansiongo | 36.00 | 54.50 | 56.50 | 47.00 | 28.50 | | Nyankoba | 46.00 | 64.00 | 55.00 | 40.10 | 25.00 | | Sanganyi | 36.00 | 49.00 | 50.00 | 48.00 | 24.00 | | Gianchore | 37.00 | 54.00 | 51.00 | 41.00 | 24.00 | | Tombe/Sombogo | 37.00 | 54.00 | 51.50 | 42.00 | 24.50 | | Nyamache/Itumbe | 35.00 | 44.00 | 50.00 | 40.00 | 24.00 | | Kiamokama/ | 34.00 | 44.00 | 44.70 | 40.50 | 22.00 | | Rianyamwammu Ogembo/ Eberege | 36.00 | 44.90 | 45.00 | 39.00 | 22.00 | | Average | 36.39 | 51.93 | 50.41 | 42.51 | 24.44 | | Region Seven (Vihiga/Kakamega/Nandi) | Region Seven (Vihiga/Kakamega/Nandi) | Region Seven (Vihiga/Kakamega/Nandi) | Region Seven (Vihiga/Kakamega/Nandi) | Region Seven (Vihiga/Kakamega/Nandi) | Region Seven (Vihiga/Kakamega/Nandi) | | Chebut/Kaptumo | 34.50 | 41.00 | 49.00 | 40.00 | 27.00 | | Mudete | 33.00 | 42.00 | 47.00 | 40.00 | 23.70 | | Kapsara | 33.00 | 38.00 | 42.45 | 40.00 | 22.00 | | Average | 32.62 | 40.33 | 46.15 | 40.00 | 24.23 | | Grand Average | 56.12 | 64.00 | 59.02 | 50.18 | 34.71 |

• 51.The declineinpayments inFY2024/25was caused byvarious factors,including:the strengthening of theKenya Shillingfrom an averageof Kshs.I44toKshs.129perUSD,reducingexport earnings by aboutKshs.15for every dollar of revenuereceived;drop inprices of tea fromKshs.379perKg toKshs.322 mainly attributedto challenges and instabilityin some of thekey tea markets,aswell as the effects of carry-over stocks from previousyears,which mainly affectedWoRfactories.This wasdrivenby theintroductionofreservepriceswhichwereabolishedinOctober2024andthe previouslegislativebanon direct salesoverseas thatwas sincereviewed;and dropingreen leaf productionby12percent,from1.4billionKgsin2024to1.24billionKgs in2025,affectingthecost absorptionrateperKgofmadeteaandthereforeimpactingonnetrevenues.

52. Market structure,practices and auctioning processes carried out by KTDA as the marketing agent:Tea is sold through two main outlets:Mombasa Auction(MA) which sells about 80%ofKTDATea;andDirectSaleswhereteaissolddirectlyfrom thefactorytothebuyer,either locally (Ds-L) or overseas (Ds-O).The tea market comprises:producers/factories on one side; buyerson theotherend;andteabrokerswho actonbehalfofproducers andbuyersinbetweenin

• anauctionsetup.Mostof thebuyers'in the auction areagentsorindenterswho actonbehalf of thefinal recipientsof thegoods(alsocalled consignee) in theimportingcountries.
• 53.TheMombasa TeaAuction ismanagedbyEATTAwhopreparesan annual calendarofweekly auctionsdefinedbytheyear/weeknumber.EachweekKTDAallocatesteasfromeachfactoryto therespective teabrokers.The allocationvolumeisguidedbythevolumeoftea already available at thewarehouse from the factory and subjectto the forecasted market absorption capacity.Once allocation is done,samplesofeachlotof tea issentto thebroker,who tastes andgivesavaluation andthensends thesamplestotheregisteredbuyers.Eachteaissoldbasedona samplesenttothe buyers.Thebuyers taste the teaand assigntheirownvalue internally.Thetea allocatedeachweek issold in theauctionthreeweeks later.Duringthe auction,buyerscompetefor each lotof teabased ontheirqualityassessment.Thehighestbidder takesthetea.
• 54.The relationshipbetween TBKand KTDA andanyconflictingroles and functions betweenthe two institutions:TBKisaStatecorporation establishedunderSection3of theTea Act,2020 toregulate,develop andpromote the teaindustry.ltsfunction istoregister alltea value chain players such as tea manufacturers (tea factories),management agents(such asKTDA),green organizers(suchasEATTA).TBK's primary role isto enforce theTeaAct,2020 andregulations thereoftoensureethicalteafarmingandtradingpracticesinKenya.
• 55.KTDAon theotherhandisaprivatecompanyownedby54smallholder teacompaniesinKenya. KTDAManagementServicesisoneof thesubsidiaries andislicensedbytheTeaBoardofKenya as amanagementagenttooffermanagement servicestoall the54 smallholderteacompaniesinKenya. Therefore,therole ofKTDA is tooversee the day-to-day operationsof the teafactoriessuch as

leaf collection,transportation,manufacturing,sales,warehousing,sales and marketing,financeand human resource,administration among others in accordance with the management agreement signedbetweenitself andthefactories.Therefore,thereisnoconflictintherolesofTBKandKTDA teafactoriesandothersubsidiarieslikeChaiTrading thatisregisteredbyTBKas abuyer/exporter.

• 56.Measures that can beput in place to reduce/eliminate thepossibility of the regional havechallengeswithquality;encouragingfactoriestobenchmarkwith those thatareperforming well;product diversification andvalue addition;and product-buyermatching.
• 57.Reasonswhy the qualityof tea from theWoR is lower in comparison to thatfrom the EoR:The quality of tea is determinedbynatural geographical factors like altitude,soil,climate (amount ofrain and distribution,temperature etc.) and human influencesof agronomy like plant husbandry,varieties/clones,pluckingstandards,luckingcycles andpost-harvesthandlingoftheleaf WoRcatchment area isgenerally characterisedby the following:rampantteahawking due to the proliferationofmanyfactoriessomewithoutclearsourcesofleaf;greenleafover-handling/poor stuffing&storage inbags;oldteaclonesandseedlingfieldswhichneedtobeprogressivelyreplaced limitedfactorycapacitiesinthepeakseason.
• 58.Additionally,the term quality as used in tea trade means appropriateness for use.Each buyer procuresteaforacertainobjectivein mindandoften,basedonanenduseinanalreadyexisting brandormarket.Tothisextent,thebuyerwillhaveacertainprofileofattributesthathewill look lookingfordifferent attributeswill notconsiderthattea thesameway.Forinstance,in thePakistan Bazaar market,theblacker the dry tea appearance is,thebetter the quality is perceived.On the otherhand,theUKandEuropean marketsconsider the liquor/cupandnotso muchvalueonthe leafappearance.Thisisthereforemoreof'buyervalue perception'.
• 59.Quality also signifies thefullness of desirable character of tea and absence of manufacturingfaults. Manufacturingfaults include presence of fibre,poor size of the grade,mixed grading,high firing, stalenessetc.Consistencyisalsokey.Thegeneral statement thatthequality of tea from oneregion isbetterthantheother'isthereforenotaccurate.Afactoryin theEastorWestofRiftcanmake poor qualitytea.Otherfactorsthatdeterminepriceof tea are:
• a)thevolumeof teaavailable inthemarket isabigdeterminantofprice if the demand(specific buyerrequirement)forthecalibreofteaishigh.TheTBKReportfortheperiodbetweenJanuary andJuly2025indicatedthattherewasproductionof241.035MKg.Outofthis,therewas143.521 MKgfromWoRand97.514MKgfromEoRaratioof1.5:l;and
• b)substitutabilityof tea.Theeasieritis tohave sufficientvolumesofclosesubstitutesofteafrom other origins or evenwithinaregion,themorechallengingit is tosell it.The teafromWoRis similar to theSouthIndiateasandthuscaneasilybesubstituted.SouthIndiateasarealittle andabsorptionpickupandviceversa.Ontheotherhand,EoRteascomparecloselywithRwanda teas.Rwandahashoweveralowervolume thantheKTDAEoRandthereforethepricesrealized areoftenhigher.

• 60.Qualityattributesunder consideration and implicationon thepricingof tea fromWoR and EoR respectively:Leaf appearance:cutting (i.e.regular/iregular,open or flakey), texture/sizing (i.e.well graded and sized/mixedgrades/little mixed grades);and fibres (i.e.fibre free/embeddedfibre/excessfibre/prominentfibre) andcolour(i.e.black/blackish,greyish/brownish); liquors:astringency,briskness,high fired/fully fired,dryish/smoky or harsh/course/rawish.All negativeattributeshave thesamenegativeimplication on theteapricesforbothWoR andEoR factories.
• 61.Specific operational costs that are incurred by factories in the WoR and EoR respectively

Figure5:OperationalcostsincurredbyKTDAinFY2024/25

62.Global tradingconditions affecting the priceofKenyan tea:They include:

• Bilateral andotherpolitical arrangementsbetweenKenya andothercountriesthatimporttea. Presently,Sudan and Iran have bannedKenyan teasbecause of disharmony.Sudan wasa key importerofKenyaBPlandFlgradesofteawhilelranimportedBPIandOrthodoxgrades.
• b)Geo-political disruptions e.g.theRussia-Ukrainewar hasimpacted on logistics assafetyconcerns affectbusinessoperationsin the Region.The Israel-Hamas conflict saw disruption in shipment routesassomeshippinglineshad toavoid theSuezCanalroutetoEuropeto avoidtheHouthi Rebels intheRedSea.Thismade shipments toEurope take longerandcosts almost tripled.
• Economic challenges in keyimporting countries e.g.the devaluation of the Pakistan Rupee portendsbigchallengesforKenyan tea asitbecomesmore expensiveforPakistanimporters.
• (P Costof production and order processing.High overheads due to cost of inputs such as labour, electricityandotherfactorssuchastaxesandleviesmakeKenyanteacostly andlesscompetitive.
• e)Implementation ofpolicies,directives and interventions that disrupt trade dynamics like:
• KTDAfactoriessufferedanimmenselossduetotheselectiveimplementationofReserve PricesandselectivestoppageofDirectSalesin2021to2024.Manybuyerslookedfor

alternativesourcesofteareplacing theKTDAFactoryteasandthisoccasionedthe accumulationof teastockswhichinturnhashauntedfactoriesinamyriadofways.

• ii. Thesuspensionof theRainforestAllianceCertificationprogramislikely tooccasiona similar situation ifnotreversedat the earliestas keybuyershave startedavoiding factorieswhoseRAannual licenseshave expired.

2. f Oversupplyof teatotheglobal marketwithpoorlocal consumption.Kenya,thoughthe third teahavemorethansufficientvolumestoselectfrom. 3. 63.StepsthatKTDA hasputin place to stabilise tea pricesin all parts of the country:Total paymenttogrowersinafactoryisdeterminedbyteapricesduringthe auctionprocess,thesupply anddemanddynamicsandproductioncosts.Thisimpliesthattherewill becyclesofpricesthatare above andbelowaverage.KTDAhasputinplacemeasuresto deliverconsistentqualityvolumesof productioncostse.g.automation,establishmentofwoodfuelplantationsandSHPP. 4. 64.PlansbyKTDA to improve the currentmethodof tasting tea to enhanceobjectivity: Thequalityoftea isprimarilyassessedthroughorganoleptictastingat thefollowingstages:factory which is done(every hour) during themanufacturingprocess andoncepacked into alot;at the head office;bytea brokers and bybuyers.Subjectivity is usually reduced through the above and having a panelofexperienced andtrainedtastersatcriticalstages.

3.3MR.JOSEPHRONOCHUMO

Inamemorandum submittedto the Committee,Mr.Joseph ChumoMemo submitted as followson behalfofTESTEFAforRiftsmallscaleteafarmers:

• 65.A circularoutlawingtea hawking/sellingof sub-standardgreenleaf shouldbeimplemented.Themode ofelectingTBKdirectorsshouldbebydelegateselectedbytea farmersalongwith thefactory directors toavoidconflictofinterest.Thecurrent modeofelectingTBKdirectorsputs theTBK directors atthe mercyof factorydirectors,hence impedingtheTBKdirectors'oversightroleof the factorydirectors.The hiringof teabrokersforrespectiveKTDA managed factories should be devolved tothefactorydirectors.TBKshouldaccreditthe teabrokers.Thetea stabilisation fund shouldbereintroducedthrough theTeaLevy attherateofI%of theteaexportssales.
• 66.Farmer'steapaymentsflowtoKTDApool accountshouldbedisbanded,andtheproposedmodel ofpayingfarmers through theproposal topayfarmers through theDsSasprovidedin theTea (Amendment)Bill,2023adopted.IntheDSS,farmersarepaiddirectlybythebrokerwithinfourteen (14)daysthrough an accreditedbank.ConflictofinterestinKTDAHoldings andKTDA-Msboards. AdirectorofKTDAHoldingsshouldnotsitintheboardofKTDA-MS.StaffofKTDAHoldingsand KTDA-MS shouldbereshuffled topavewayforabalancedregional representation at the apexof themanagementstructure.
• 67.Kipsonoi Hydro-powerprojectneedsforeign audit toestablish howa contractorwaspaidKshs.300 million and there isnosubstantiveworkdone ontheground.Teamarketingshouldbeliberalised, either, through auction,direct sale (private contract) or factory gate.Due to saturation of the Mombasa TeaAuction,a second inland tea auction should beestablished.Mombasa TeaAuction

handlesmorethan5o0millionKgsofmadeteaannually,while thesecond largesttea auction in the worldhandleslessthan3o0millionKgsofmadetea.Humanresourceshouldnotbeoutsourcedto savefarmers'earningsandtostoptheexploitationoffactoryworkers.

3.4KENYATEAGROWERS'ASSOCIATION(KTGA)

InameetingwiththeCommitteeheldonWednesday,26November2025,Ms.LindahOluoch,Chief ExecutiveOfficerforKTGAinformedtheCommitteethat:

• 68.KTGAwasestablishedinI931by large-scaleteaproducerstopromote thecommon interestsof membersin thecultivationandmanufactureoftea.Asanemployers'association,KTGApromotes goodindustrialrelations and soundwagepoliciesfor theworkers throughadvancing collective interestsoftheindustry.Itpromotesindustryleadershipandfosterssustainablebusiness andgood corporate citizenship.The membershipofKTGAis drawn from tea producing companies with operationsinKericho,Bomet,Nyamira,NandiandKiambu Counties.Their membersare:Browns East Africa Plantations Plc(formerly Lipton Teas &Infusions Kenya):Browns PlantationsKenya Limited(formerlyJamesFinlayKenyaLtd);Emrok InvestmentsLimited;Kaisugu Limited;Kapchorua TeaPlc(WTK);Karirana EstatesLtd;KipkebeLimited;Sasini Tea CompanyLtd;Nandi Tea Estates Ltd;SotikTea Company Ltd;SotikHighlands CompanyLimited;WWilliamsonTeaKenya(WTK) Ltd,
• 69.Withoperations mainly situated inruralareas,theindustryiskeyin advancingruraleconomic development by creatingrural employment,enhancing access to health and education;access to water;infrastructuraldevelopment andconservationofnaturalresources,andparticularly, indigenouszones in the expansive estatesrunby theproducers.As awhole,the teaplantation subdevelopment.
• 70.Theeconomic impactof large-scaleteaproducersis asfollows:45,0o0 smallholderfarmerssell their tea throughestates;Kshs.5billionpayment tosmallholder farmersperannum;35,000Kenyans earningsperannum;50%labourcostsasapercentageoftotalcostofproduction asat202l;Kshs. 1.6billionCSRcontributiontocommunitiesoverafour-yearperiodspanningfrom2020toabout 2024;Kshs.2.2billion localprocurementofgoods andservicesper annum;Kshs.75millionper 130%rise incostof energy;andapproximatelyKshs.2.6to17.5million standards compliance cost perauditperannum.
• 71.Large-scaleproducers source competitivelyforgreenleaf from theirregistered farmers.Theprices ofgreenleafareregularlypublishedandanychangesinpricingarecommunicatedtotheteafarmers. For Auction sold teas,tea pricing is determined through samplesprovided toa brokerby the producerforteastobepresentedatascheduledauction.Thesesamplesaredistributedtobuyers whohave expressed interestina certain garden mark.Thebuyer does the tea tasting,basedon whichtheydeterminethepriceoftheirbidfortheteaswhentheteasarepresentedattheauction. Theeventualpricerealisedforthemarkisthroughthecompetitivenessofthebidsplacedforthe markbyotherparticipatingbuyersattheAuction.

• 72.Producersrely on broker tasting andvaluation to assess the price that their teas are likely to attract. Toarrive atthebrokervaluation,brokersrelyon analysisof previousweeks'teaprices ontowhich isenhanced as appropriateoftenbyadditionofcents toarrive attheindicativepriceof thetea.For directsaleoftea,theAuctionpricesareareferencefornegotiationbetween theproducerandthe buyer,withtheproduceroften abletocaterfor theircostofproducingthetea throughalong-term tea supply contract.
• 73.The ideal operation of an auction should entail thefollowingpricingmechanism:A producer avails samplesto thebroker;thebrokertastes theteaandadvisesontheindicativepriceofteabasedon its assessed value,marketresearch,demand for the tea,among the most relevant factors;the indicativeteavalueshouldfactor thecostofproductionoftheteas as advisedby theproducer;and theproducerthenreliesonthebrokerassessedvaluationandthecostofproductiontosetminimum orreservepricefortheirteasattheauction.Thiswouldideallybe thelowestacceptablepriceof theteasatwhich anylowerbidswouldbe rejectedby theproducer.However,the abilityofa producertosettheprice atwhichbiddingfortheirteasstartsand thebargainingpower torefuse anylowerbids,havebeenhamperedinrecentyearsbythefollowingfactors:Increase involumesof teaproducedinthecountrywithoutputrisingfrom537.83millionKgsin2021to598millionKgs in2024;andhighcostof localproductionforindustryincontrastwith thedecliningvalueofKenyan teasas illustratedbythe average auctionpricesfrom2020 to2024;reliance onfewmarketsand challenges invariousmarketsforKenyan tea likeRussia-Ukraine war;and accumulation ofunsold teavolumesasaconsequenceof thesettingofa minimumpricein202l.Thetablebelow shows changeinteapricesovertheyears.
• 74.Thebroker-producerrelationshipisacontractual relationship enteredtosecuretheexpertadvice ofabrokerbyaproducertoenabletheireffectiveparticipation attheAuction and inprice discovery for theirteas.Thisrelationshipshouldbestrengthenedtoenhance theproducer'sbargainingpower. Arelevantplatform thatoffersanopportunityforobjectivevalueandteapricedeterminationisthe Annual TeaAwardsthroughwhichtastingandevaluationofdifferentteasandpotential forquality teaproduction canbe assessed.The followingfactors also contribute to thepricerealised for teas sold at theAuction:Pricing is also determined by buyerpurchasingcapital andvolumes;andpricing

Table 6:Change in teapricesover theyears

| Year | Average Prices (USD/Kg) | Tea%Change inTea ValuePrices Value vs 2015 | |--------|---------------------------|----------------------------------------------| | 2015 | 2.73 | (Decline) 0% | | 2016 | 2.29 | %91- | | 2017 | 2.98 | %6 | | 2018 | 2.60 | -5% | | 2019 | 2.20 | %61- | | 2020 | 2.01 | -26% | | 2021 | 2.10 | -23% | | 2022 | 2.49 | %6- | | 2023 | 2.23 | -18% | | 2024 | 2.19 | -20% | | 2025 | 2.01 | -26% |

• 75.PricesettingthroughtheGovernment directive issued inJuly,2021hasmajorlycontributed tothe currentprice levelsin the industry.The directive by the Ministry ofAgriculture establisheda minimumpriceforsmal-holder factoryteassoldattheAuction.Thesettingofaminimumprice, themarket,failedtodrive a positiveresponseby themarketand insteadled toan oversupplyof tea attheAuctionand theworstdecline in teapriceshistorically.ltcreateda buyers'market.AsatJuly 2024,unsold teas stood at over 100 million Kgs,while the TBK production reports reflected increasedteavolumesowing tofavourableweather anda fertilizer subsidyinitiativeby the Government.
• 76.The accumulationof unsoldvolumeswas ascertainablefrompublished auctiondata on teasoffered forsaleagainstout lots.Upon itsintroduction,large-scaleteaproducersobjectedto theprice setting directivebecauseofanticipatedriskofmarketdistortion thatwouldfollowfrom:Highlocal productionwhichweakenedthepowerofproducerstonegotiateagainstbuyersforastipulated minimumprice;reliance onfew traditional marketsand the inelasticity of tea prices;andrising productioncosts.
• 77.Despite the data presented to relevant regulators demonstrating that the sustained minimum reservepricewasunsustainablegiven thevolumesof teasproduced,andnotwithstandingKTGA's recommendationforitsremoval,theTBK,deniedboththeaccumulationofteasandanyresultant negativeimpactonprices.However,byOctober2024,theestablishmentofaTaskForcetoreview thehighvolumesofunsoldteasconfirmed thatsignificantquantitiesremained in storage.TheTask November 2024,incurring storage costs.Timely acknowledgment and response to evidence of adverse impacts ofpolicyis essential to facilitating effective andprompt solutions to industry challenges.
• of high-quality teas,while promoting increasedvolumes of output.The typical outcome is reduced marketuptakeandaccumulationofunsoldteas.Producersareoftencompelledtodisposeoffsurplus stocks atlowerpricesinthesamemarketsintendedforfreshlyproducedtea,therebycreatinga cycleofdecliningpricesthatfurtherdepresstheoverallvalueofthecrop.Thesettingofminimum priceshouldthereforebeguidedbyproducerprudencedependingonthecostofproduction,the broker'sprofessional opinion regarding the tea;marketability of the teas whichis governedby demand and marketfactors and anycash-flowneeds of thebusiness.National level directivessetting minimumpriceshavehaddemonstrablyresultedin negativeconsequencesfor theuptakeofteas
• 79.Valuechaincostsintheteasectorareshowninthetablebelow:

Table7:Value chain costsin theteasector

| 'ON/S | CATEGORY | PURPOSE | |---------|------------|--------------------------------| | 1. | Tax | NationalGovernmentcompliance | | 2. | Regulatory | Serviceandregulatorycompliance | | 3. | Operator | Industryparticipationcosts |

| 4. | Labour | Employee costs | |------|--------------------------------------|----------------------------| | 5. | CountyLicenses | Operatorlicensesandpermits | | 6. | Standards & Certification | MarketCompliancecosts | | 7. | Capitalinvestment&land related costs | Capitalcosts |

• 80.Themain contributorstocostare:Labourwhich hasincreasedby42%overthepastfive-yearperiod; which have been enhancedowing to change in Government policies;county government fees and chargeswhichvaryowingto enhancedownsourcerevenuemeasures adopted atcounty level and alsodrivenbyNational GovernmentPolicies.Astableregulatoryenvironment would enable marketexpansion,productinnovationandincreasedvalueaddition.Withrespecttothefrequent regulatoryfees;alignmentofregulatoryfeestoserviceprovision andefficiencyenhancement;sectorspecificexemptionsforteaowingtothe exportdependenceofthesector;andharmonisationof
• 81.Teaharvestingstandardsvaryfor differentproducers and thepricepaidfortea isa factorof the pluckingandmachine harvesting.Thisis because the marketabsorbs differentharvestingregimes. pricingofadefinedqualitystandardforthedifferentteasrequiredbymarketcoupledwitha regulatedvolumeofnational teaproduction.Theadoptionofmachineharvesting,wasdrivenbythe escalationof thecostsofhighnumbersofworkersrequiredor large-scaletea operations,beyond arecoveredbyaCBAsattractregularwage increments andenhancementoftermsofworkin addition tovariousin-kind benefits.Quantifiedin monetary terms,thebenefitssecuredunder the KTGA CBA amount to approximatelyKshs.51,409reflecting a246%enhancement of the statutory minimum wage.
• 82.Publiclyavailabledataonpricespaidtofarmersshowsthatwhilealarge-scale teaprocessorpaysa WoR indicate paymentsrangingfromKshs.18toKshs.21 for aKgof green leaf.This shows a
• 83.Appropriatelydesignedtea carrierswhich areregisteredwiththeTBKareusedfor transporting green leaf fromfields or out-grower green leafcollectioncentres to thefactory.Made tea is transportedbyroadtoMombasaforexport.Thecontainerisedtrucksarepreferredowingto the easeofaccesstotheportforexportconsignmenttoships.
• 84.With increasing requirements for environmentally sustainableproduction through energy and resource efficiencyenhancement,the followingrequirementsfor licensing should be observed: Assuredgreen leafsupply fromwithinreasonabledistance from factories shouldbeensured in licensinganynewfactories toensuretheoptimumvolumesofteaarepresentedto themarketto

allowforeffectivepriceandvaluerealisation,thelicensingof factoriesshouldensureanoptimaltea volumeisallowedtobeproduced.Thiswill improvethe abilityofKenyanteastoattractcompetitive prices.StatisticspublishedbytheInternational TeaCommitteeindicatethatglobal teasupplyin2024 overshot demand by approximately 300 million Kgs,most production derived from African producers;andRequirementsforwoodfuelsustainabilityforteaproductionshouldbeadheredto inlicensingoffactories.Thereisneedtoensurethatfactoriescontinuallydemonstrateadherence to environmental conservation through sustainable cultivation or sourcing of firewood.In the absenceofeffectivecompliancewithwoodfuel sustainability,tea processingstartstobeclassified asposingarisktoclimatemitigationandadaptationandoverallenvironmentalconservation.

• 85.The licensingof factoriesshould ensure attainmentof theappropriatenational productionvolumes, millionKgswouldleadtotruevaluerealisationforKenyanteasintheglobalmarket.Theduplication duplicated services and harmonisation oftherelated levies,fees andcharges.Thiswill improve regulatory efficiency:facilitate industry andreduce operational costs in the industry,and thereby shouldbe employed,totesttheaboveproposalsfor theimprovementofpriceandvaluerealisation andguideanyfurtherinterventionsintheindustry.
• 86.Itcanbeleveragedon toincreaseearnings in the tea sectorin thefollowingway:
• transparency,improve efficiency,and strengthen value creationacrossthe tea value chain,the sectorshould acceleratethe effectivedigitisationofregistrationprocessesfor all actors.Aunified digital registrywouldstreamlinecompliance,reduce administrative delays,andcreateareliable singlesourceoftruth forindustryoversight.Thesectorshouldfullydigitisethe submissionof statutoryand operational returns,including price trends,productionvolumes,auction data, exportperformance,andlocalsales.Automatingthesereportingworkflowsnotonlyminimises errorsandenhancesreal-timevisibilitybutalsoenablespolicymakersandindustryleadersto makedata-drivendecisions.

Amoderniseddigitalinfrastructurewillalsosupportthemonitoringofproductionpatterns acrossregions,highlightinefficiencies,and help detectanomalies that mayindicate qualityor sustainabilityrisks.Digitisationofindustry-widedatashouldbecomplementedbythesystematic publicationofrelevantanalytics and insights.By convertingrawdata intoactionable intelligence, such as market trend dashboards,productivitybenchmarks,cost-of-production insights,and forecasting tools,theindustry can attractbetter-informedinvestment,support expansion into

• b)Digital Marketingand Youth-Led Campaigns toDrivea Modern Tea Consumption Culture: marketing capabilities,presentsaunique opportunity to cultivatea modern tea consumption beverageforyoungconsumers,thesectorcanunlocknewearningswhilediversifyingawayfrom

social influence,and entrepreneurial energy of young people,particularly content creators, studentassociations,digitalmarketers,andlifestyleentrepreneurs.

trends,social experiences,andconvenience-based consumption.Atthe continental level,generic digitalteacampaignsshouldbedesignedtoexpandawarenessofAfricanteasandstimulate demand across theregion.These canbe amplified through targeted online advertising,influencer partnerships,andcross-bordere-commerce channels.Inparallel,region-specificmedia campaigns should promote the unique attributes of Kenya tea,highlighting quality,sustainability,and local brands.By leveraging social media platforms,food and beverage bloggers,digital festivals,and experiential pop-up events in major towns,the sector can stimulate trial,build loyalty,and consumerbase but alsogenerate sustainablemarketpull forKenya'steas.Harnessing the digital fluency andcultural influenceof theyouth demographicwillpositionteaasavibrant,relevant productinthemodernmarketplaceultimatelyincreasingearningsfor thesector.

• c)StrategicCross-Sectoral PartnershipswithSports andMusictoPromoteKenyan Tea Globally: Kenya'sstrong presence inglobal sports and itsvibrant music and creative arts scene offer that elevate brandrecognition,deepen consumer engagement,and open new premiummarkets. Strategicalliances with elite athletics,football,rugby,and other globally followed sports can integrate Kenyan tea into international events,athlete endorsements,wellness narratives,and sportstourisminitiatives.

GivenKenya'sreputationforproducingworld-classathletes,associatingteawith performance, endurance,andhealthylivingprovides an authenticandcompellingvalueproposition forglobal consumers.In the creative economy,collaborations with musicians,cultural festivals,and digital creatorscan amplifyKenyan teaasa lifestyleproductthatresonatesacrossdiverse audiences. Musicvideos,live performances,cross-brandingon streamingplatforms,andco-created digital contentcanhelpposition tea asa contemporary,culturallyrelevantbeverage withstrongAfrican identityandheritage.

87.Value additionof teaforexportishinderedby:

• a)HighCostof LocalProduction:Thepersistentlyhigh costofproduction continues tosuppress incentivesforfurtherlocal investmentinvalue-addition.SinceKenyanmadeteaalreadyattracts addition.This cost structure results invalue-addedproducts that arepriced above comparable offerings from competitor origins,makingit difficultto competeinglobal consumer markets. This can be mitigated by pursuing targetedfiscal incentives such as reduced import duties on packaging materials and machinery used in value addition,remission of certain charges,or tax credits linked to export performance;accelerating energy costreductionsby enabling factories to transition to cheaper andgreener energy alternatives including biomass,hydro and solar, supported by concessional financing:promoting shared processing hubs or clusters where multiple producers can access value-addition equipment, packaging lines and cold storage

manufacturing and automation technologies toreduce wastage and improve production efficiency.

• b)LimitedMarketExpansionInitiatives:Kenya'smarketpenetrationforvalue-addedteasremains coordinated branding,weak presence in premium consumer-packaged goods markets,and competition from origins suchasSri Lanka and India constrain opportunities.Even though the AfCFTA providesenhancedpotential forregional trade,the lackofaggressive andcoordinated include:lmplementationof joint industry-governmentmarket development programmes targetingemergingmarkets in Africa,the MiddleEast,andAsia with coordinatedbrandingof Kenya tea;strengthening Kenya tea origin branding to build consumer recognition and differentiation from bulktea competitors;expansionof digital marketingande-commerceroutes, includingcross-borderonlineplatforms and direct-to-consumerchannels;anddeployingtrade value-addedteasinkeymarkets.
• c)Uncoordinated Value-Addition initiatives:Establishmentofadditional common user facility withoutoptimisationofexistingcapacity.Thiscanbemitigatedbystreamliningandincentivising and strengthening partnerships with universities,food technologists,and private-sector innovatorstodevelopnewproductlines.
• agenciessuchasKEBS,NEMA,KRA,and the TBKincrease compliancecosts andcreate delays that discourage investment invalue addition.This can be mitigated by simplifying and harmonising regulatoryprocesses through one-stopregulatorywindowsfor teaprocessors;reviewing and rationalisingfees,timelines,andduplicativerequirements;andpromotingrisk-basedregulation toreduce unnecessaryburdenson compliantfacilities.
• e)InadequateGlobal ConsumerAwarenessofKenyanTeaProducts:WhileKenya iswell known for producing high-quality CTCteas,global consumers have limited awareness ofKenyan branded andpackaged teas.This undermines competitiveness invalue-addedsegmentswhere brand identity is critical.Mitigation options include launchingglobal brandvisibility campaigns in partnership with sports,music,tourism,and cultural sectors; facilitating coordinated participation byproducers in international food andbeverage exhibitions and securing strategic forKenyanvalue-addedteas.
• 88.In addition to the high costofproduction,the following are additional challenges facing tea productionandhamperingthedevelopmentofthesub-sector:
• a)Insecurityoflandrightsaffectinglong-terminvestment:Large-scaleteaproducerscontinueto s potential for tea tourism,anareawith strongprospects for jobcreation andlocal economic development,remains underexploited due to land-related risks,community protests,and

concernsovercontinuityof landtenure,despitevalidlyheldleasesbylarge-scaleteaproducers. forinvestorstosupportclarityonvaluation,renewal terms,andobligationsofboththecounty andinvestors.

• b)Discriminatory county-level rates reducing investor confidence: Several counties impose charges areoften inconsistent across counties andnot alignedwith economicprinciplesguiding fair taxation.Theunpredictability and escalatedchargescreateapunitiveoperatingenvironment thatdiscourages long-term investment andundermines competitiveness.This canbe mitigatedby harmonization of county charges through the CoG,National Treasury,and sector representatives to ensure predictability and fairness;alignment ofcounty-level charges with serviceprovision andbusinessfacilitationrather thanenhancementofrevenueraising;advocating forperformance-basedcountyincentives,wherecountiesbenefitmorefromsupportingindustrial growth thanimposingarbitrarycharges;andencouragingcounties to adoptinvestment-friendly ratingframeworks,includingremissionofratesforconservation areas,publicinfrastructure,and communityfacilitiessupportedbyproducers.
• c)Heightenedandfragmented industryregulationlimitingmarketexpansion andinnovation:The highlyregulatedenvironmentofteaproductionlimitsthesector'sabilitytogrowmarkets, diversify products,adopt new technologies,or invest in value addition.Incentives,not rigid directives,areneededtopromoteinnovation,productdiversificationandvaluecreationacross thevalue chain.This can be mitigated by establishinga consolidatedregulatory system to address the duplication of approvals,licences,certifications and compliance checks;transition to riskbased regulation,where compliant facilities face fewer routine inspections and reduced administrativeburden;introductionofinnovationincentives,includingaccelerated approvalsfor new tea-based products,taxcredits for ResearchandDevelopment(R&D);and creation of regulatorypredictability guidelines,requiringagencies to provide adequate notice,transition periods,andimpactassessmentsbeforeintroducingnewdirectives.
• 89.The trendsofproposedamendments in the sector showdisregard fora competitiveindustry operation.Amendments to law andreviewofpoliciesshouldbeevidencedriven.Theindustry that enablesKenyan tea tomaximiseitsvaluecreationpotential.Byfosteringinnovation,facilitating marketexpansion,and incentivisingvalueaddition,thesectorcan unlockgreatereconomicbenefits, enhance competitiveness in global markets,and strengthen local livelihoods.Industry players communitiesinwhichtheyoperate,whilecontributingmeaningfullyto thenational developmentof the country.To achieve this,collaborative engagement with government,regulators,and other stakeholders isessential to ensure policies andinitiatives are alignedwith the sector's growth andtargetedpromotion,bothlocallyandinternationally,theteaindustryispreparedtomaintain its pivotalroleasa driverofeconomicresilience,employment,andsustainable developmentinKenya.

3.5MR.DAVIDICHOHO

Inameetingwith theCommittee heldon2dDecember2025,Mr.David Muni Ichoho,formerNational Chairman,KTDAinformedtheCommitteethat:

• 90.Toimprove thepriceof tea,stakeholdersneedto addressinternal inefficiencies,external dynamics, stakeholder culpabilities,reformsinitiativesandcoordinateddeliberate actions.Theproblem is dire andlikely tobepersistentifnotresolved urgently andwithexpertise.He listeda numberof contributorstothelowearningsandproposedsolutions.Theyare:
• a)Political disruptionsto theKTDABoardparticularlytheNational Chairmanby theGovernment distractsKTDAinexecutionofitsmandate
• b)Disruptive ordersbyTBK/GoKonteabusinessprocesses like stoppingDirectSales andremoval of thereserve price.
• ? )BureaucraticbottlenecksbyTBK.
• d)Breakdownofkeyinternational marketslikeIran,Sudan andPakistan.
• e) Conflictof interest likeappointing theChairmanofTBKwho is alsoa tea brokerresulted in antagonisticpolicyshiftandarbitraryadministrativeorderstoKTDA.
• StalledreformsnKTDA-Ms,KTDA Holdings,subsidiaries,financial reforms,HRrestructuring andmarketingreforms.
• g)Reformsin theAuction andteabrokershavenevercommenced.GovernancereformsatEATTA have neverbeen done.
• h)The stalledhydropowerplantshave huge financial costs as they areholding significantcapital in arepaid after longperiodsof timeyettheplants arestill paying loans.KPLCisyettoprovide wayleavetariffwhereKTDApowercanbetransmittedtothenationalgridbutthishasn'tbeen doneyetthewayleavetariffwill enabletheplantstosellpowertootherteafactories.
• Privatefactories areallowedtosell through directsaleswhileKTDA factories areprohibited. Thishasaffectedcompetitivenessof factoriesintheWoRwhocompeteinunfairtermsof trade.
• TheworkingrelationshipbetweenKTDAandGoK/TBKhasbeenweakandsuspicious.Most reforms andlegislations arenot taken through stakeholder engagement and they failto appreciatetheglobaloperationofthebusiness.
• k)Therearedelaysin thereleaseofsubsidisedfertilizerswhichaffectsthecostofcreditandcash flowofKTDAfactories.
• 1)Theteasectoroperatesinaglobalmarketwhere95%ofteaissoldinvariousdestinations aroundtheworld.Thesectoristhereforeaffectedbygeopolitics.

• 91.He proposed the followingways of dealing with the above challenges:The GoK should diplomatically seekformarketsforKenyanteawithinAfricaasper theAfCFTA;employaspecial tea trade representativeforliaisonofthetradeinPakistan,specialattentionshouldbegiven toEgypt,lran architecturereforms,reforming thesubsidiaries,marketingreformsandorganisation restructuring toenhance efficiency and effectiveness ofKTDA;reforms in all factories to ensure financial reform of the Auction in governance,operations and auction system audit;amend the Tea Act puttingin mindbusiness concern interestsfor effective trade;directors at thefactory level should have skills andcompetencies,thenational chairman should have a minimumofa degree;develop tea policytoprovideframeworkofteadevelopment,production,processing,marketing,valueaddition proposal totransportmadeteatowarehousesbyrailwayshouldbeimplemented,KRshouldprovide specialratesforthis.

3.6TEAFARMERSFROMWESTOFRIFTVALLEY

• 92.Intheirmemorandum,thefarmersfromWestofRiftValley submittedthatKenya'steaindustryis structuredaroundsmallholderfarmers andlarge-scaleestates.Smallholderfarmerscontribute60% ofteasoldattheMombasa auctionwhilelarge-scale teaestatescontribute40%of theteavolumes. KTDAmanagesthesmallholderteasectorwith8subsidiarycompaniesinKenyaandIinDubai. TheAgencymanages71factorieswithagovernance structure of5 directors per factory(noncompliantwithTeaAct2020).
• 93.The Mombasa tea auction operates asfollows:Serves 12African countries,it ismanaged by brokers KTGA andEATTA,pre-qualifiedbyKTDADirectors through theTea BoardofKenya,payment flowstoKTDAHoldingsSalesaccountwithin2weeks,brokersreceivetheircommissionbefore funds aredistributedandsmallholderfarmershavenodirectsayinauctionproceedings.
• 94.Theyraised thefollowingnational-Level Issues:Incompetent and unaccountableleadershipbyKTDA Directors,undermining farmers'trust and sector performance;directors serving management interests insteadofrepresentingfarmers,violating democraticrepresentation principles;conflictof interestinKTDAManagementServicesBoard,wherestaffserveasboardmemberscompromising oversight;lack of transparency and farmer exclusion from key decisions,leading to systematic disempowerment;politicisationof teafarmingwithpoliticalinterference derailingreforms;regional representationfailurewithWestRiftdirectorsunable to securenational leadershiproles despite highproduction volumes;excessive paid meetings by Directors(l65annually),inflatingcosts and toregional disparitiesin pricing;KTDA staffingstructure skewed,marginalisingWoRin decisionmakingbodies;imbalanceinKTDA Holdingsrepresentation,requiringTeaBoardregulationbased onproductionvolume andfactorycount;directors'failuretoprotectfarmersfrommismanagement creatingopportunitiesforexploitation;non-compliancewiththeTeaAct,2020requiring3Directors perfactory,notthecurrent5;andgender imbalance in theKTDA Board ofDirectorsand management.
• 95.SystemicFinancial Issues:Misappropriationof fundsbyKTDA directors andfactoryboards,eroding trustandreducingfarmerincome;theftthrough falsifiedweightsand tamperedscales,depriving farmers of fair returns;extravagant spending and irregular allowances,contributing to high

production costs;widespread corruption among clerks,managers,and directorsrequires lifestyle audits andrecruitment investigations;lackof transparency in KTDA investments,with unclear impact on farmer earnings;double payment to seniormanagers through both management service fees(2.5%)and management salaries;poorfinancial management and lack of accountability at KTDA; control risingproductioncosts,includinginflatedfirewoodprocurementandstaffexpenses;starting economicallyunviable projects as conduits for theft;favouritism in senior managementpositions; KTDAishiring expensive lawyerstofightfarmersusingfarmers'ownfunds;and takinghigher loans against stalledprojects athigh interestrates(e.g,hydropower).

• 96.Management and Operational Challenges:Poor factory-level management and a lack of professionalism,leading to widespread inefficiencies;failure to implement reforms due to governance resistance;absence of Key Performance Indicators (KPls)to track management effectiveness;frequent rotation of factory managers disrupts operational continuity;KTDA's operational systemisperceivedasadversarial,withfarmersfeelingsystematicallyexploited;hydro powerprojectsstalledin theWoR(Setet&Kipsonoi)despiteKshs.3billionindeductions,with funds allegedly divertedtoEoR;poor communicationbyKTDAwith farmers;resistance to change byKTDAManagementandstructures;andfailuretoguide farmers inqualityteaproduction.
• 97.Pricing and Market Access Problems:Low bonus payments and regional disparities,with WoR farmersreceiving significantly less than theirEoR counterparts;no minimum guaranteedpaybefore ofvalue addition,limiting competitiveness inglobal markets;discrimination in auction sequencing sales,undermining market stability;lackof transparencyin pricingformulas and bonus calculations; manipulationofpricesattheEATTA marketbyteabrokersandcartels;corruptcartelsoperating at theMombasaAuction;removal of theminimumguaranteed reserveprice bypoliticiansatthe Mombasa auction adversely affectsWoRfarmers;reintroductionofdirectsalesbycartels,bypassing despite68%national teacontribution,indicatingstructural bias.
• 98.Production and Quality Concerns:Substandard green leaf due to poor crop husbandry,linked to lackof extension services andinput support;shortageofpluckers andcartel control over labour, reducing harvest efficiency and increasing costs;primitive tea tastingmethods(sipping and spitting) posepublichealthrisksandviolatemodernfoodsafetystandards;inconsistentaccesstofertiliser andfarmnputsisaffectingquality,yield,andfarmermorale;poorandunderweightfertiliserisbeing s
• 99.FarmerEmpowerment lssues:Farmerslack awarenessof theirrights,limitingtheirabilitytodemand accountability;KTDAcontinuestocentraliseoperationsdespitetheTeaAct,2020grantingfactory autonomy;WoRfactorieslackindependentfinancialcontrol,withnoseparationofaccountsor accesstoauditedstatements;farmersaresidelinedfromfinancialdecisionsandgovernance structuresasdirectorsincursecretdebtstofundbonuses;andWoRfarmersareunderrepresented innational teapolicyorgansandKTDAgovernancebodies.

commercial conflicts of interest;and serious commercial conflicts ofinterest throughout the organisation.

• 101.Tea Auction and Brokerage Concerns:Most tea brokers originatefrom theEast,creatingregional bias;cartel manipulation at the MombasaAuction;moneyrouting through brokers before reaching factories;andlackoffarmerrepresentationinauctionproceedings.
• 102.Factory-LevelProblems:Use of faultyweighingscales by clerks;lack of directprocurement authority; financial dependence onKTDA Holdings;and poor bonus payments (some factories paying less than 20shillings).
• 103.Tea Board of Kenya Regulatory Failures: Incompetence in regulating the tea industry;failure to protect smallholderfarmers;lackofenforcementoftheTeaAct,2020 provisions;andneedfor disbandmentandrestructuring.
• 104.TheWoR faces systematic discrimination despite contributing68%ofnational tea production. Evidence of thebias is:Lower bonus payments compared to EoR;auction sequencing disadvantage (positions38-70vs.1-37);only1of 13brokerage firmsfrom the region;hydro power projectfunds diverted to EoR;underrepresentation in KTDA staffing and governance;quality confirmation throughblind tastingnotreflected inpricing.
• 105.To handle the above issues, they made the following recommendations:Governance and accountabilitywhere theyproposeddisbandingKTDABoardof Directors andKTDA Holdings top management,recallingofnon-performingdirectors,linkingdirectors'allowances toperformance metrics,implementingmandatoryforensicauditsinall factories;implementing202IForensicAudit Reportrecommendations,reshufflingfactorymanagersafter2years,andencouragingcompetition from other management companies duringprocurement;Legal andregulatory compliancewhere AssociationwithTeaAct,2020,aligningFactoryArticlesofAssociationwithTeaAct2020,TBK should enforce the thirdgenderruleforKTDA Directors,appoint a Director of Finance atKTDA accountabilityatfactories,factorymanagersshouldavoiddoublepaymenttoseniormanagers,direct paymentfromauctiontofactoriesbypassingbrokers,factoriestohandletheprocurementofgoods andservices directly,reduce production andoperational costs atthefactory level);marketreforms (reinstate theminimum guaranteedreserveprice removedby politicians,all tea should be sold at theMombasaAuctionwithnodirectsalesbyfactories,buildaTeaAuctionMarketatMombasawith aDryTeaPricingCommittee,dismantlecartel networksinthe teaindustryandeliminatebrokers, implement transparentpricingformulasandset tea qualitypolicyandpractices);farmerprotection andempowerment(institutewhistleblowingmechanismstoreportmismanagement,reportfraud cases for faulty weighing machines,public participation by farmers for any projects before implementation,the Technical Working Committee to conduct civic education on director elections, factories paying less than 20 shillings should be investigated,and implement Key Performance Indicators for management effectiveness);andregulatory reforms(disband the TBK regulatetheTBKbasedonproductionvolumeandfactorycount.
• 106.Theyproposed establishmentof anindependent auctioninfrastructureatMombasawithin twoyears by theNational Government,development partners and tea farmers(through contributions).This

will encourage transparent pricingmechanism throughtheDryTea PricingCommittee.Additionally, theKTDAArticlesofAssociationshouldbe alignedwith theTeaAct,2020withinsixmonths.

CHAPTERFOUR

4.0FIELDVISITSCONDUCTEDBYTHECOMMITTEE

• 107.To getmore information on the pricing of tea inKenya,the Committee undertook fieldvisits to the followinginstitutions:
• i. TeafactoriesintheWestoftheRift
• ii. TeaFactoriesintheEastoftheRift
• il. TheTeaResearchInstitute
• iv. TheMombasaTeaAuction
• V. TheQualityAnalysisandTeaTestingLaboratory
• vi. ChaiTradingCompanyLimited(CTCL)

TheCommitteegotthefollowinginformationfromthefieldvisits:

4.ITEAFACTORIESINTHEWESTOFTHERIFT

The Committee conducted field visits to five (5) tea factories (Konoin,Mogogosiek,Kapkoros, KiamokamaandNyamache)intheWoRon22ndand23rdOctober2024andthreeteafactories(Motigo, TegatandSanganyi)on17hand18hNovember2025.Membersof theCommitteegotthefollowing informationfromthevisits:

4.1.1 Konoin,Mogogosiek,Kapkoros,Kiamokama and Nyamache TeaFactories

• 108.FarmersintheWestoftheRiftgotabonusofKshs.20while thoseintheEastof theRiftgota bonusofKshs.62.80with allegationsthattheEastoftheRiftdominatedthefirstthirty-six(36) slots
• 109.According to them,KTDA condoned unfair trade practicesby allowingmanualbids insteadof electronicbidsattheMombasaTeaAuction and theAuctiononlyhandled60%ofthe total teasales. They proposed thatinvestigations into the marketing structureofKTDAand practices at the Mombasa Tea Auctionbeconducted.
• I10.They alsoallegedthattherewasconflictof interestin themanagementandboardsof TBK,KTDA and the factories includingtheoutsourcingof services.Theyproposed thatan auditof KTDA,TBK andfactoryleadershipbeconducted.Additionally,operationalcostsoffactoriesintheWoRwere highandpowerprojects thatweremeanttoreducethecostshadstalled.
• itwashigher than theglobal averagechargedperkilogramof madetea.Additionally,thenumberof electoral zones anddirectorsper factory shouldbereduced tobringdownoperational costs and directorstobenominatedonqualification andmerit andtheirterm limitsremoved.
• 112.Further,the cess collected by county governments from tea farmers be returned to the factories fortarmackingandmaintainingtheroadnetworklinkingfarmstofactories.Thefactorieswereusing firewood asa sourceofpowerwhichwas costly(35%of the costofproduction).Hydroelectric

powerprojectshadstalledforseveralyearsandfarmerswereburdenedwithrepayingtheloan borrowedforthehydroelectricpowerprojectsinKapkorosandKiamokamaTeaFactories.

• 113.Thereshouldbecompleteautonomyof satellitefactoriesfromparentfactoriesincludingfinancial accounts,demarcation ofelectoral zones andindependentfactoryboards.KapkorosTeaFactory wasreluctanttoreleaseitssatellitefactoriesbecauseitinvestedinconstructionofthefactories.
• 114.TheynotedthatKTDAneededtobebannedfrommanagementofsmallholderteafactoriesto reducecosts;deliverylogisticschallengeshadforcedfarmers toplucktea inthe eveninglowering the quality oftea;andprocessingplants were getting obsolete hencehigher operational and maintenancecosts.Modernisationwasnecessary for the agingmachinery.
• 115.They observed thattherewasneedtooverhaul finance andinternal auditdepartmentstoabate the possibility ofexternalauditors colludingwith factorydirectors andmanagement toconceal corruption.Forensicauditoffactoryassetsandloansneededtobeconducted.
• 116.They added thattherewasneedfor urgentcomplianceto thenewKTDAoperational agreement andprovisionfordirectteasalesbyfactoriesandintroductionofaDirectSettlementSystemsothat farmersarepaidoncethebrokerhasreceivedproceedsfromteasales.Acommercialbankunder CBKregulationcouldprovide thefacility tosettledirectsales overseas.
• 117.They alleged thatsomeprivatefactories hadabandoned theirpurposeofprocessingorthodoxtea, alsoallegedthattherewas exploitation throughfalsificationofgreenleaves assomeagentsactedas bothbuyersandbrokers at theauction.
• 18.They observedthat itwas important to open a tea auction in theWoR or allocate equitable representationof theRegionattheMombasaTeaAuctionbecause therepresentationattheTea AuctionwasskewedtowardstheEoR.Somefarmersproposed thattheminimumreservepricebe reinstated to cover all tea producers,includinglarge-scale tea growers,whileothersproposed that supply anddemandforcesshoulddictate marketprices,as theminimumreservepricemay lead to lowerdemand,henceaccumulationofunsoldtea.
• I9.Theyproposed thatKTDAsubsidiariesshouldbescrapedandKTDArestricted tomanufacturing and marketing of tea.Alternatively other managing agents should be licensed to compete with KTDA.Additionally,theservicesrenderedbyKTDAshouldbedevolvedand theKTDABoard countiesoverchargedfarmersbyimposingnumerouschargesaslevies,managementfees,transport feesandconsultancyfees.
• 120.Theyalsoproposed thataTeaRevolvingFundsimilar to theCoffeeCherryRevolvingFundbe createdtohelpintheconstructionofnewfactoriesorpowerprojects,since thetealeafproduction wasmore than the factories could process.Kapkoros Tea Factoryhadsecuredlandand manufacturinglicensefor theproposedKamogosoTeaFactorybutconstructionwasyettostart duetolackofcapital.

• 121.Theyfurtherproposed thattheTeaActbe amended toreview apportionmentof theTea Levy to boost stabilisation fund andinfrastructure portions.They alsoproposed that scientific tea-testing, tearesearchandsoil testingshouldbeputinplace.
• 122.Theyaverredthatitwasunfairthatteafarmerspaid fertilizersuspense(Kshs.1.5) and thefertilizer subsidywasnotbenefitingteafarmers.TheTeaActneededtobefullyimplementedandenactment oftheTea(Amendment)Bill,2023fast-tracked.

ThefieldvisitstoKonoin,Mogogosiek,Kapkoros,Kiamokama andNyamacheTeaFactoriesinpictures

4.1.2 Motigo,Tegatand Sanganyi Tea Factories

TheCommitteeconductedfieldvisitsto three(3)teafactories intheWoRon18hand19hNovember andSanganyiTeaFactories.TheCommitteegotthefollowinginformationfromtheteafactories:

• 123.Regardinghowthepricingof tea inKenya is conducted,theCommittee established thatit is done through:the Mombasa Tea Auction by supply and demand,quality of tea,buyer competition, valuation andvarious marketoutlets;directsalesthrough direct contractsforinternational buyers price trends and operational costs;global markets influenced by the FX rate,patterns affecting standards.
• 124.Paymentprocesstofarmersintermsofmonthly andothers includingbonusis done asfollows:Initial monthlypaymentis determinedbyrespective factory BoDswhoengage stakeholderspriorto determination of initial payment throughboarddecisionsand therateat that timewasKshs.23per KgofgreenleafupfromKshs.20inFY2023/24.Thesecondpayment(annual bonus) ispaidoncea yearafteraudited accountsare approved.Itis the surplusthatremainsafter deductionof all costs from total revenuerealised in theFY.TheBonus isarrived atuponconsiderationofthecostof

• 125.There are a number of costs that are met by factories before thebonus ispaid,they include:Initial green leaf payment;factory operational costs (electricity and fuel costs,factory maintenance, processingmaterials e.t.c.);labour costs(salaries andwages,employee benefits,casual labour e.t.c.); transport and logistics costs(greenleaf transportcosts,madetransports costs,vehiclerunningcosts
• 126.Bonuspayments are disbursedviaaKTDAcentrally managedfarmers'payroll andremittances are made directly to various established farmer pay points in banks,SACCOs or micro-finance institutions.Factoriescalculateeachfarmer'stotalgreen leaf toacentralisedpayrolland announce registeredaccounts.Disbursementsaredoneinonelumpsum then farmersreceivepaymentpays lips/statements.
• 127.Themanagementfeeof I.5%ofnet sales ispaid toKDA-MSbased onmonthly salesrealised.KTDAMS utilises the same to pay salaries to all managers seconded to factories and meet its other production services,financial and accounting services,agronomy,extension and farmer support servicescentralisedprocurementservices,ICTsystemsandsupportservices,technical servicesand supportservices.Thepercentageisfixedina managementcontract signedbyeachfactory andis reviewed after fiveyears.Factories are not allowed topay above theagreedpercentage unless the agreementisformallyreviewedandamended.
• 128.100%ofall factory level costs(including the management fees,labour,energy,transport,financial charges,depreciation e.t.c.) are met by the farmer through deductionsfrom total sales proceeds. Themanagement fee is levied at I.5%of net salesvalue(gross sales less sellingcosts and distribution costs).
• 129.Thefactorieshave anumberofvaluechainrelatedcosts.The tablebelowshowshow thecosts are minimised.

Table 8:Value chain related costs atMotigo,Tegat and Sanganyi TeaFactories

| ON/S | COSTS | FACTORS AFFECTING COST | MITIGATING MEASURES | |--------|-------------|------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | 1. | Labour | CBA adjustmenteveryyear andfailuretoengagelabour as perKTDA staff compliment | 100% 6outsourcingof general workers, depressedreturnstofarmersshouldbe consideredduringCBAnegotiationsandstaff are engaged daily guidedby the crop and KTDAstaffcompliment. | | 2. | Electricity | Tariffincreasesandlow factorythroughput | Governmenttoexemptfactoriesfromsome levies,enhance through put and reduce reworks,andenhance/fundminihydropower generationplants. |

| S/NO. | COSTS | FACTORS AFFECTING COST | MITIGATING MEASURES | |---------|----------------------------------|--------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | 3. | Firewood | Highcost ofdieselfor transport poorly seasonedwood | Government to assist in allocatingforest land tofactories,enhance throughput andavoida lot of re-processing,ensure maintenance of high stock levels,have adequate firewood sheds&ensureallfirewoodisundercoverand useofmature firewoodand thoseofhigher calorificvaluesuch ashardwoods. | | 4. | costs | Leaf collectionHigh diesel price, low vehicle haulage, high maintenancecosts,highfuel consumptionandpoortyre management. | Governmenttoexemptfactories from fuel levies,enhance higher haulage,replace high consuming modelswithlowconsuming models with same output,change to electric trucks,observe5yearsvehiclereplacement policy,monitor tyre management and consider outsourced(private)leaf collection services. | | 5. | Packing andE forwarding expenses | Exchange rate fluctuation andtransporttoMombasa | Avoidpapersacks andotherpackingmaterial damages and unnecessarywastage and explore cheaperpackingmaterials. | | 6. | Factory Administrative costs | Lowcropyields | Continuous farmer engagement to optimise on crop production, improve on outturn/conversionandimprovementinsales. | | 7. | Financial | Increase in exchange rate, depreciation and high interestonloans | Avail cheap loans,improve on retentions to avoidborrowingandimproveteaqualityto avoidprolongedstorage. | | 8. | Selling price | Ware house storage charges, brokerages fees andhandling charges | Improve on outturn/conversion and higher market absorption by improving qualityof madetea to avoidunnecessarystoragefees. |

• 130.AccordingtoMotigoTeafactory;farm level costs include:Pruningcostapproximated atKshs.4/kg ofgreenleaf;pluckingcostbetweenKshs.9and10perKgofgreenleaf;weedingcostapproximating to50cts/Kgofgreenleaf;fertilizeratKshs.2,500perbag(Governmentsubsidized),applicationand transport;and other costswhich includetea seedlings,landpreparation andweeding.
• 131.Atfactorylevel,thecostofproductionisestimated atKshs.I09/Kgof made teainclusiveofall costs ofproduction atthefactoryall thewaytosellinganddistribution apartfromtheinitialgreenleaf payment.Further,transportationtoMombasaperunitKgofmade tea(alreadyfactoredin thecost ofproduction include transportationrate toMombasa atKshs.4.ll/Kgofmade tea,insurance 0.98/KgofmadeteaandTeaLevy/cessinMombasaatKshs7,000per40ftcontainer).

• 132.Tea management relatedcosts atMotigoTeaFactory include:Selling expenses averagingKshs.6per Kgof made tea sold;brokerage fee leviedat0.75%ontheproducer sales invoicevalue;insurance freight chargedatKshs.0.98perKgof made tea;andtea transport towarehouse atKshs.4.11per Kgof made tea chargedbasedonper tonperkilometre(weight and distance).
• 133.Motigo andKapkorosTeaFatorieshadmonthlyprocessing averages of1,919,234and1,861,292Kgs Tea Factories.
• 134.From the above table,MotigoTeaFactory isoverutilisedbybetween3to4millionKgsper annum; KapkorosTeaFactoryisoverutilisedbyanaverageof 5millionKgs,howeverconstructionofanew processingplantwasunderwayatKamogosotocover theexcesses;TegatTeaFactoryoperated belowitsoptimallevelintheFY2023/24;andTororTeaFactorywasaboveitsoptimal level.
• 135.Thereweredifferentialsinoptimisationof theprocessorduetothefollowingreasons:Highyielding clones;machinery and equipment inefficiency;skilledworkforce due tochangesin technology;low quality raw material;management practices;energyand utilities;external factorse.g.weather conditions;and increasedgreenleaf competition from private factoriesi.e.hawking.
• 136.Therewere casesof over and undersupplyfollowingweatherpatternswithseasonsof low andhigh crop.Lowsupplyiscausedbyadverseweatherconditions(drought,frostorextremetemperatures),

Figure6:ValuechaincostsatMotigoTeaFactory

Table 9:Green leaf processing trend forthe last threeyears

| COMPANY | LICENSED CAPACITY(KG) | MAXIMUM GREEN LEAF | COMMENTS | |-----------|-------------------------|----------------------|-----------------------------| | Motigo | 20,000,000 | 27.7 | Overutilised | | Kapkoros | 25,000,000 | 30,000,000 | Overutilised | | Tegat | 20,000,000(3 lines) | 18,782,842 | 94%(slightly below capacity | | Toror | 15,000,000(2lines) | 20,335,943 | Overutilised |

high infestations of diseases and pests,poor farm husbandry,delays in supply of fertilizers and competitionforgreenleaf.Peak supplyis asaresultof favourableweather conditions,proper managementofpestsanddiseases,advancedtechnologyandgoodfarmhusbandry.

• 137.Suboptimal supply of teatofactorieswas as a resultof:Unregulatedprivatefactoriespracticingleaf hawking,competitorspayingcashon delivery andacceptingcoarse leafweathervariability(frost, hailstorms andprolonged dry spells),delayed/expensive fertilizer supply,escalatingpluckingwages leading to fewer plucking rounds;weather patterns fluctuatingdrought;emergingprivate tea processors;crop husbandry at farm level;cost ofproduction;initial green leaf payment;and economicfactorsi.e.paymentratesandpromptness.
• 138.Therewasabout60%adherenceoffineleave(twoleavesand abud) against therequired68%.This couldbebecause:Leaf quality is determinedbypluckerswho arepaidperKgplucked and therefore rejection;dominanceofmultinationalandprivatefirmswhocompeteforleafandencouragedefiance (leaf hawking);poor crop husbandry and farm practices;payment differential models in terms of monthly and second payment compliment; farmers knowledge and training;labour and time practices.
• staffcomplimentofa3-linefactory.KapkorosTeaFactoryhad102permanentand100seasonal stafftotallingto202whichwaswithin thecomplimentofa3-linefactory.TegatTeaFactoryhada respectively.
• 140.Staff levels at Motigo TeaFactory arebasedonexpectedcroplevels for seasonal staffwhereas process through advertisement,interviews,selectionand employment as per theapplicable HR policies.Seasonal employeesare outsourced from HR firms competitivelyrecruited forLabour provision.AtTegatTeaFactory,recruitmentstrictlyfollowedKTDAHRPolicy.The staffinglevels were adequateandflexedwithcropvolumes.TheBoards ensuredcomplianceof thepolicieshence, no cases ofnon-adherenceto the setrecruitmentpolicies.Staffproductivitylevelswere calculated and monitored on monthlybasis.Hence,labour isfullyoptimised.
• 141.Othervariablecosts incurredby thefactories are energy costs.Thetablesbelow showthecostof energybyMotigoandKapkorosTeaFactories.

Table Io:Costofenergy atMotigo TeaFactory

| Type and Source of Energy | 2025 | 2024 | 2023 | |--------------------------------------|--------|--------------------|--------| | Electricity:KPLC costperKgofmade tea | 13.90 | 16.16 | 11.43 | | Fuelwood/biomass:Farmers | 13.69 | 11.02 | 10.03 | | Diesel-agorates:Vendors | | 171.68201.64204.64 | |

TableIl:Costofenergy atKapkorosTeaFactory

| Type and Source of Energy | 2025 | 2024 | 2023 | |-----------------------------------------------------|--------|--------|--------| | Electricity:KPLC cost per Kg of 15.52 madeteaperkWh | | 16.80 | 13.21 | | Fuelwood/biomass:Farmers | 14.86 | 14.65 | 11.41 | | Diesel-agorates:Vendors | 159.30 | 151 | 179.20 |

• 142.AtTegat TeaFactory,the cost of firewoodperKgof made tea wasKshs.12.7in the FY2024/25, electricity Kshs.12.1 and diesel Kshs.2.30,representing an increase fromKshs.1.50 in the FY collection,road maintenance,fertilizer distribution,stakeholders'allowances,training and benchmarking.
• 143.The factories preferred the following energy sources:Electricity(Kenya Power);Firewood from vendors;diesel from vendors;briquettes/Biomass from vendors;future hydropower (own Generation);andsolar.
• 144.lnTegatTeaFactory,theCostoffirewoodhasincreasedfromKshs.12.44perKgin2022/2023of madeteatoKshs.13.30in2024/2025.CostofelectricityanddieselvariedfromKshs.14.10and Kshs.1.41in2022/2023toKshs.12.53andKshs.2.38in2024/2025respectively
• 145.Mostteafactories transport green leaffromthe farmer to factoriesusing theirown fleetwhile transportationofmadeteais outsourced to external tea transporters.MotigoandKapkorostea factories have 14and 16leaf carriersrespectively.Motigo andKapkorosTeaFactoriesprefer transportinggreenleafusingtheirownfleetdueto easeofcontrolofthe process,flexibility, convenienceandassuranceofrawmaterial safety andquality.
• 146.Thefollowing aredeterminantstocommencelong-terminvestmentsatfactorylevel:Capacity,value andregulatoryrequirements;highgreenleafproductionbeyondfactorycapacitymayforce afactory tostart a satellite factory;scarcity ofreliable supply offirewood(own firewood land);andhigh electricitycost(hydropowerandsolar).
• 147.For decision-makingoninvestmentstobemade,determination(proposal)bytheBoardsoccasioned bytheneedforexpansion,modernisationornewacquisitionduetotechnological changes,legal and approvalsandprojectimplementation.Whenaneed arises,boards authorisemanagementtocarryoutfeasibilitystudiestoestablishviabilityandcostoftheinvestment.Aboardpaperisprepared givingjustificationandsourceoffundingandpresentedtotheboard.Theboarddeliberatesand approves vide board resolution if they are in agreement.Management agent then does the implementationasauthorisedin theresolution.
• implementation hence.Feasibility studieswhere necessary are conducted to establishviability.The acquisitionof assets whichhelp the factorygeneratemore income or savein costofproduction.

However,sincethey areassets to thecompany,the depreciationcostsare metby thefarmer.This isanecessarycostforfailure tomeet thecostcanmake thefactoryincurhugecostsinfuture.Full transferofcostviaassetbasedorloanorequitycontributionarrangements.

• 149.Teapricesfrom theEoRaregenerallyhigher thanthosefrom theWoRbecause:quantityofleaf in WoRishigher,hence effectonsupply and demand;historical adverse perception on the qualityof teasfromWoR;competition fromprivatefactoriesandmultinationals thatdominate theWoR inhibitprice discoveryforinstance,Tegatand Tororfactoriescatchmentareahas13privateand multinationalfactories.Leadingtoseverequalitydeteriorationbecausefarmersknowcourse leaves willbeacceptedelsewhere.Further,farmersareluredbyinstantcashpayments andfalsenarratives aboutKTDA;marketsegmentationwheremostbuyersoftheWoRteaspreferliquorwhilethose for theEoR teaspreferblacker teas(Pakistan);andEoRfarmershaverelatively smallportionsof land.Pluckingis donebyfamilymembersand thereisnolabour shortage.On theothe hand,WoR have largerportionsoflandandpluckingisdonebypluckerswho are quantityrather thanquality driven.
• 150.Operational costsincurredbyfactoriesintheWoRarehigher thanthoseincurredbyfactoriesin the EoR due to:Longer distance to Mombasa impacts on transport costs of made tea and inputs such asfertilizer cost dependon distance from the Coast.Insurance costs are higher forgoods in transit;poorroadnetworkwithin thecatchmentleadingtohighcostofmotorvehiclemaintenance; duetohighvolumesespeciallyforpeaktimes;lackofcomprehensivevalueaddition;underdeveloped borrowing).
• 151.Thefollowinggapswerepointedoutintheinstitutional logisticalandregulatoryframeworksinthe tea sector:Tea hawkingrequires regulatory intervention;infrastructure enhancement especially roadnetworks within catchments;developmentofhydropowerplants;absenceof"onegrower, one factory"registration system;no geographical zoning of factory catchments;no uniform enforceablenationalgreen leafqualitystandard;uncontrolledlicencingoffactorieswithoutown tea leaf;political interference in tea business;policyreforms;capacitybuilding;market transparency; research and innovation;and Governmentshould supportvalue addition,productdiversification, automationandinnovations.
• 152.Thefollowinginefficienciesleadtolowreturnstoteafarmers:Poorroadstotransportrawmaterial; high hydropower cost;low,fluctuating and unsustainable market prices;increasing cost of production;limited market accessand information;weak institutional support;poor roads to lackoffull automation;negative politics;academicqualifications of directors;and continuous land subdivisionleadingtouneconomicalunits.
• 153.Theyproposed thefollowingrecommendationstodealwiththeinefficiencies:Legislateandenforce leave collection;enactingand enforcingnational minimumgreen leaf quality standard applicable to all buyers;institutea statutory minimum payment and mandatory annual bonus for all factories;

• seasons;andrequire every firm tohave its ownregistered tea farms proportionate toinstalled capacitybeforeallowingthird-partypurchases.
• 154.Thefollowing issueswereraised in the meetings:KTDA leadershipconcerns undermining farmer's trustandsectorperformance;lackofregionalrepresentationof theWoRinthenational leadership marketaccessrelated challenges;regional disparities between the EoR andWoRin regard to paymentofbonus,representation bybrokerage firms,KTDA staffing and governance,fundingof hydro power plants and auction sequencing:and electricity chargesfor other companies arecharged offpeakunlikeforteafactories.
• 155.Thefollowingrecommendationswereproposed to increase earningsbyfarmers:Mandatoryforensic auditofall factories;implementationof therecommendationsofthe202lForensicAuditReport; splittingKTDAmanagementservicesinto two distinctentitiesin theEoRandWoR;implementation ofthe Tea Act,2020;implementation of transparent pricing formulas;farmer protection and empowerment;reinstatementoftheminimumguaranteedreservepriceon thebasisofminimum returns tothe farmer andnoton the auction;implementationofkeyperformanceindicators for management effectiveness:formulation of tea quality policies and practices;development and implementationoftransparentperformancebasedremunerationframeworkforKTDA-MStiedto factoryprofitability and farmerpayments;requireboard approval forallinter-factoryloans andmajor procurements;establishmentoftheIndependentTeaIndustryOversightCommitteereportingto Parliament;;promotingKenyan tea to new and emergingmarkets andrebuilding international buyer confidence;imposing heavy and consistent penalties on illegal leaf hawking:implementation of the TeaStabilizationFundandTea RevolvingFund forfarmers;establishingTeaAuction centres in other regionsasitisinSri Lanka andIndia;adoption ofblindtestingorscientificmodel testingoftea regardlessofitsregion oforigin;adoptionofdirectnomination for regions'representationin EATTA;incentivising the teaindustrybywaivingtaxesforimportationof teaprocessingmachinery; abolishingofclassificationoftea industries;KTDAmanagementfeesbeproratedbased on sales performance;andimplementationof theMunyaReportonTeaIndustryReforms.

FieldvisitstoMotigo,TegatandSanganyiTeaFactories

4.2TEAFACTORIESIN THEEASTOFTHERIFT

The Committee conducted fieldvisits to four(4) tea factories in theEastof theRifton18and19h November 2025.Members of theCommittee heldmeetings with farmersatMichimikuru,Rukuriri, Gacharage andNdarugu Tea Factories.The Committeegotthe followinginformation from the tea factories:

4.2.IMichimikuru TeaFactory

FactoryManagement

• 156.MichimikuruTeaFactorywasestablishedby theEasternProduceKenya Limited inearlyI960's as Nyambene Tea Company Limitedwith an own farmof twohundred andsixty(260) Ha called MichimikuruTeaEstate.Thefactorywasboughtby small scalefarmers inI994underThananga Leaf Base.ltis managedbyKTDA andgovernedbya boardof directorselectedbyfarmers afterevery threeyears.
• 157.Thefactoryhashadperceptionchallenges due tohistorical constrained capacities thatmadeit appearlikeitcouldnotproducebetterteasthatcouldfetchbetterprices.Inabid tochange the perception,theboardof directorsbegunmodernisationof thefactory'smachinery in2006in abid to increase productionfloor andwithering capacities.The Continuums Chemical/Physical Withering buildingandmachinerywas installed in2016and theAutomaticWitheringMachinerycommissioned in2023toimproveonthewitheringspaceduetoincreasedvolumes.
• 158.Thefactoryinstalledthe firstorthodoxproductionplantin2015inabidtoincreaseanddiversify farmersincome.The pricesoforthodox tea,however,slumped in 2023/24afterlran,amajor marketfor orthodox tea,was sanctioned by the USA,and the Russia-Ukraine war.Toencourage purchaseof the teas,KTDA-MSintroduced theminimumreservefloorpricesinallfactoriesinApril 2025.However,theintroductionofminimumreserve floorpricesdidnotimprovesalesasbuyers preferredcheaperteas.Thisledtohugeunsoldstocksresultinginlowcashflowtosupportfactory operations.Inviewof theforegoing,theboard andmanagementhadbeenengagingwithstakeholders moderatingleafcollectiontoattaintherequiredleafstandard.
• 159.TheBoard andmanagementmade thefollowingrecommendationson teapricingandsmallholder farmerpayment:
• a) Thegapbetween thehigh-andlow-pricedfactoryteasshouldbenarrowedtoreducedisparities. Thepricingshouldbequalitybasedandfarmersshouldbeencouragedtopluckbetterquality teassothatuniform qualityteas arepresentedtobuyers.
• Diversify exportmarkets andpromotelocal consumption.Explorenew markets inAsia(China and Japan),Europe (Germany and Netherlands),North America and emerging African economies.
• b TheGovernmentshouldremove themultipletaxesonprocessedteasandpackagingmaterials toencouragevalueadditionandlocalconsumption.
• d)Encouragelocalvalue addition andbranding

• e)Strengthenbilateral agreementstoreduce tariffsandnon-tariffbarriersespeciallywithPakistan, EgyptandEU andstrengtheninternational marketingcampaigns.
• PutinplaceDigital MarketIntelligenceSystemslikeAl/Bl toolstomonitormarkettrends,buyer behavioursandpriceforecasts.
• g) Capacity buildingand training of farmers,marketers and producers on best practices in production,packagingandbranding.

Farmers

• 160.Farmersinformed theCommittee thatoperationsof thefactoryhadbeenfacedwithpolitical interferenceasaresultofpersonal interestswhichaffectsfarmers'earnings.Thefactoryhadtwelve (12) directors,six(6) elected by farmersandsix(6) illegally picked by the political class.They requested the Committee's intervention in the restoration of proper and legally recognised governancestructures.
• 161.Theyproposed thefollowingmeasuresto improve earningsbyfarmers in thecompany:putinplace extensionservicestoenablefarmersembracethedynamictechnological farmingstrategies;reduce efficiency andvalue addition;improve theroadnetworksincebadroadsincreasemaintenancecosts ofvehicles;adopting alternativetransportmethods;thefactory shouldembraceleanmanufacturing: reduce the downtime andmaintenance costsby employingproactive andpredictivemaintenance

4.2.2RukuririTeaFactory

FactoryManagement

• 162.Rukuriri TeaFactory is locatedinEmbu Countyon an altitudeof 1,800M above sea level.Itwas establishedinI984andismanagedbyKTDA.Itserves13,460 small scale teagrowerswitha combined acreage of1,624.76hectares,a total of 60 tea buyingcentres and 12un coded tea buying centres.lt isathree(3) linefactorywith a capacity ofprocessing20 millionKgsofgreen leafper annum.It has a withering capacityof35,9922ft,two(2) ContinuousFermentationUnits(CFUs)and three(3) driers.The tablebelowshows thefactory'sgreen leaf production,costofproduction and paymentmadetofarmers.

Table I2:Rukuriri Tea Factory green leaf production,cost ofproduction and payment to farmers

| Financial Year | 2020/21 | 2021/22 | 2022/23 | 2023/24 | 2024/25 | |----------------------------------------------------------------------|---------------|-------------|-------------|-----------------------------------------|---------------| | Green Leaf Production | 19,449,033.66 | | | 19,293,832.3620,460,116.5521,830,806.18 | 18,751,307 | | Tea Prices (Kshs.) | 259.77 | 333.30 | 353.81 | 439.92 | 406.70 | | Average Cost of Production Exclusive of Initial | 68.01 | 73.49 | 101.40 | 94.00 | 95.62 | | Average Cost of Production Inclusive of Green Leaf Payment (Kshs/Kg) | 142.70 | 159.79 | 189.82 | 192.73 | 194.38 | | Initial/Monthly Green Leaf Payment (Kshs/Kg) | 18.50 | 21 | 21 | 23.52 | 25 | | 2nd Payment/ Bonus(Kshs/Kg) | 30.10 | 41.50 | 44.60 | 61.50 | 57.50 | | Total Green Leaf Payment (Kshs/Kg) | 48.60 | 62.50 | 65.60 | 85.02 | 82.50 | | Return to the growers (%) | 72% | 78% | 78% | 79% | 79% | | TotalGreenLeaf Payment (Kshs) | 565,076,395 | 800,225,928 | 912,497,326 | 1,342,567,509 | 1,078,200,153 |

• 163.The company has the following strengths:Fairly small catchment hence good for post-harvest leaf management;cool weather conditions;suitable soilsfor tea farming;supportive and enlightened tea workforce.
• level (labour,electricity,fuel,packing materials hindering value addition,machinery e.g spares/installation,otherinputslikefertilizerandpoorroadnetwork);unreliableandunpredictable weather conditions affectingproductionandplanning;unpredictable markets;fluctuatingexchange rates;unsustainable energy sources;small farm size dueto subdivisionleading toreduced earnings

perhousehold;growersoverborrowingfundsfrom localfinancialinstitutionsandSACCOsthathas left them in aviciouscycle of borrowingyearinyear out thusimpoverishinghouseholds;suspension procured and titles cancelled);highcostof value addition materials andmachinery;andunfavourable taxregimes.

Farmers

• 165.FarmersinformedtheCommitteethat:Thefactorydirectorsemphasisedon thequalityofgreen leaf;theywere trainedon tea handlingby trained farmers andextensionofficers;theywerenot allowed tosubmit teato thefactory except teaplucked on the same day;thefactoryandfarmers did not allow greenleafhawking;they apply fertilizers on time;and theyrecognised tea planting as a businessintended togenerateincome and tookitserious.

4.2.3GacharageTeaFactory

Factory Management

• 166.TheBoardpresentedwrittensubmissions,anAnnualReportandFinancial Statementsfortheyear ended30June,2025totheCommitteedetailingtheoperationsofthecompany.Thecompanyalso madeoral submissionbefore the Committee.The Committeewas informed thatwhena factory producesmore,pricesinthe auction fall resultinginto thefactorymakingless money ata higher production cost andwhen afactoryproduces less,theprices at the auction gohighresultingintoa highincomeatalowproductioncost.
• 167.Thefactorymanagementraisedconcernaboutthepoorstateof theMauMauroadswhichaffect leaf areforcedtogoroundcovering twicethedistancetheywouldordinarilycoverresultinginto highcostofproduction intermsoffuel consumption andvehiclemaintenance.
• 168.Themanagement pointed out that packagingmaterials are expensive and the government needs to either exemptorzeroratethemfromtaxtoreducethecostofproduction.Theyalsonotedthat permanentandpensionable staffwere subjectedto theCBAstakingupmostof the labourcostsince team because they hadworked in the company fora long time,some up toforty(40)years.They were alsosubjectedtonumerouscourtcasesby theunions andgaveanexamplewherethecourt orderedthefactorytopayKshs.Ioomillionfordefaultinginannual increaseofanemployee.

• 169.They noted that the cost of wood fuel wasveryhigh having spentKshs.I00million onwoodfuel. Theysoughtthe interventionof theCommitteein theirrequesttothegovernmenttoallocate them 500acres of forest landtoplant,cut andreplant trees stating that thiswillreduce the cost of productionbyalmosthalf.
• 170.Themanagementrequested theCommitteetoamend thelawtoallowfactoriestobemembersof EATTA to allow them participate directly in the auction.They also sought the Committee's interventiontostopKTDAfrom interference andusurpingpowersof thefactories.
• 171.They observed that delaysin paymentof subsidies needed tobe addresses andpayments made upfront ifpossible.TheCommitteewasrequested to intervene ona circular issued byKEBS requiringcompaniestopay2.5%of theirannualearningtoKEBS.
• 172.Themanagementstated thatthebigdifferencebetween teaprices intheEoRand theWoRwas becauseofthefollowingreasons:
• a) TheEoRhas an understandingthat theindustry demands quality andproperprocessingand thereforeinvestinthat.
• b) TheEoRinvested inmodern technologyandautomated their factoriestoreduce thecostof production.Theyalsoreplacedtheirmachineryingoodtime.
• P FactorydirectorsintheEoRwereelectedfromfarmerswhohavetheinterestoffellowfarmers andtheyworkforthegoodofthefarmers.
• FarmersintheEoRwereoften trainedon theimportanceofqualityandtea handlingfrom plantingtoprocessing.
• e The highaltitudeof theEoRcontributetothehighqualityof teain theRegion.

Farmers

• 173.Farmersinformed theCommitteethattheir tea usuallyfetcheshighpricesinthemarketcompared tothatfromtheWoRforthefollowingreasons:Theyupholdqualitybecausetheyarecontinuously trained on tea handling;theyplough their farms and applyfertilizer on time;their directorsare farmersknown to them andtheyhaveacordialworkingrelationship;theyonlyplucktwoleavesand onebud;theypluckteaon the samedaythey aretakento thefactory;they areeachother'skeeper in ensuringqualityofthe teawhileinfarms;theybenchmarkwithotherfarmerswithin theRegion; tea hawkingcompromiseson quality and they donot allowit;andcompanies intheRegion invite buyersfromtime to time to inform them onwhat to checkwhenbuyingtea in themarket.

4.2.4NdaruguTeaFactory

FactoryManagement

• 174.The CommitteeheldameetingwiththefactoryBoardMembers,themanagementteam and farmers.TheBoardpresentedwritten submissions,Annual ReportandFinancial Statementsfor theyearended30thJune,2025to theCommitteedetailingtheoperationsofthecompany.The companyalsomadeoralsubmissionbeforetheCommittee.
• 175.The factoryismade of twofactoriesnamely:ThetaandNdarugu andtheprocessof legal separationwas ongoing.Managementstatedthatcostisafunctionofquality andinformedthe Committeethatdelaysintheprocurementofsubsidisedfertilizersneededtobeaddressedsince itwasaffectingproduction.
• 176.Theyobservedthattheirfarmerswerefocusedanddidnotcompromiseonquality.Farmers ensuredthatteabusheswerewellmanagedandwellpluckedi.e.theyusuallyplucktwoleaves andabud.Thequalityofteaispreservedfromthefarmasonlybamboopackingbasketsare usedtocollectgreenleafandthevehiclescarry justenough capacityofgreenleafanddonot overload.Additionally,thefactoryhastrainedextensionserviceofficerswhovisitthefarmsfrom time to timeand trainfarmersongoodtea farmingpractices andfertilizer applicationby the farmersisuptoonehundredpercent(loo%).
• 177.WWhen thefactoryrejectsgreenleaf becauseof quality,theleaf isdiscarded andused asmanure inthefarmandisnothawkedbecause thefarmers andthecompaniesdonotallowleaf hawking Thefactoryundertakesregular maintenanceofmachinery andtrainingofstaff andhasapolicy of75%returnstothefarmer.
• 178.Themanagementhoweverindicatedthatlegalcasescreateddelaysastheytooklongtoresolve. Theyrequested theCommitteeconsideramending theTeaActtoputinplacea tribunal to themembershipofEATTAshouldincludeatleast50%representationbyKTDAoronpro-rata basisofteaperKgoftheteaproducers. Farmers
• 179.Therepresentativesof farmerssubmitted that:They hadinvestedincollection centresand ensuredthatstandardswereadheredtofromfarms;theywereusuallytrainedonqualityand teahandlingandhad accessto extensionservice officers;theyelecteddirectorsfrom amongst themselves;the Government should leave factories tomanage theprocurementofsubsidised fertilizerstoavoiddelays;theGovernmentneedstointervenein themarketingoftea;androad infrastructurewasaproblemintheRegion.

4.3THETEARESEARCHINSTITUTE

TheCommitteevisited theTea Research Instituteon Tuesday,18h November 2025and established that:

4.3.IFactorsAffectingTeaQuality:FieldVariables

• 180.The quality of black tea refers to all the characteristics such as colour,brightness,appearance liquoringproperties,strengthandaromabywhichitmaybejudged,foritsmarketvalue.lnall,black teaqualityisasummationofall itsdesirableattributes.Intea trade,teaqualityrefersto thepresence ofspecial desirablecharacters in theliquorrequiredby themarketatagiven time.The quality attributes and the special characterswhich may bepresentin some teasmay cause special buyer preference,thus causingprice differentials.If the demand for themorepreferred tea ishigher,it problembecause the supplyofmade teawas adequate forall the marketdemandandselective pricingrarelyoccurred.
• 181.With increasedproductivity per unit acre of landand further expansion,the supply appearsto be outstrippingthedemand and thebuyers arebecomingmoreselective.Therefore,thequalityofmade tea hasbecome avital aspectof teaproduction asmostof thetimeit islikelytodetermine theunit theaflavins and thearubigins,proteinnitrogen and the aromacomplexoftea.
• 182.Traditionally,tasters'evaluation has been the most importantparameterfor classifyingteas into differentqualities in trade.Generally,tea quality is influenced byfactorsboth in thefield andfactory. These factors can broadly be divided into controllable andnon-controllable factors.Controllable factors include field cultural and factory practices and to some extent genetics.Thenon-controllable through the use ofthe same varietiesor clones,thus providing similar leafmorphological and chemicalcharacteristics.
• 183.Most of the culturalpractices which affect made tea quality can easilybe controlledwhile the environmentalfactorsarethemostdifficulttocontrol.Otherfactorswhichmayinfluencemadetea quality include the prevailing marketforces,availability ofgoodcommunication infrastructure, factory condition,management of the factory andstorage anddistributionof theprocessed tea.

Geneticfactors

• 184.Thequalityof tea isdeterminedbygeneticfactorsbasedon leafmorphological characters and affectmadeteaquality.StudiesconductedinKenya indicatedthatyellowleafedteabushesgave higherleafextracts,highpolyphenol contentsandlowproteinnitrogen.Incolourdevelopment,the yellow leafed bushes were better inboth colour intensity andbrightness.Thereis no direct relationshipbetweenyieldpotential andqualityof madetea.The chemical compositionof theleaf, viz.theleafpolyphenol content,theflavour compounds andcaffeinecontentwhich aregenetically influencedaffectmadeteaquality.

• 185.The chemical compositionand hence qualityvarywith tea clonesgrown inKenya.Each clone hasits formofvariationandthere isnosinglepredictablepatternofvariationwithinclonesof their tea quality.Although clonal variation inmade teaqualityhasbeen demonstratedamongKenyan clones, geneticallyitisthoughtthatthishasverylittleeffectonvariationsinmadeteaqualitywithinthe smallholders.The smallholder tea sector obtains most of thepropagation material from KTDA nurserieswhichprovidesimilarmixturesofclonalmaterialstomostfarmers.Thisensuresthatmost farmersindifferentzonesareprovidedwith similarsourcesofgeneticmaterial andthusminimal variationinmadeteaqualityfromgeneticsources.

Environmentalfactors

• 186.Theenvironmentalfactorswhich affectthenaturalgrowthofteabusheshavegreateffectonthe qualityofmadetea.Suchfactorsaffectleafmorphology,therateofshootgrowth and thechemical compositionoftheleaf.Thevariationofmadeteaqualityanditsenvironmenthasbeen demonstratedinKenya.However,theprincipal operatingfactors in each environmentwerenot identified.ltwas suggested thatfactors whichfavour slow growth of tea shoots also favour the productionofbetter-qualityblacktea.Themainenvironmental factorswhichcausevariationinmade tea qualityare:
• a)Rainfall:It has been demonstrated that soil moisture influences leafcharacters,such thatfine andsmall leavesareproducedunderlowmoisturecondition.Suchleavesproducedbetterquality teawhenmanufactured.Dryseasonsleadtoslowershootgrowthrateandhighqualitymade tea. Teaflushes(grows)fastduringrains and theblackteasfrom such teasgenerallyhave flattaste andlowquality.Moistureisthus animportantfactordeterminingmadeteaquality.
• thequalityofmadetea.Hightemperaturesfavourfastgrowth andhighyields,providedmoisture isnotlimiting,butlowteaquality.Theeffectoftheseasonoftheyearinwhichteashootsdevelop demonstratethecomplexenvironmentaleffectonmadeteaquality.InSriLanka,forexample certainseasonsproduceflavouryteaswhichareratedashighqualitywhileinotherseasons,plain teasareproduced.Theseareduetotheclimaticchangeswhichfollowtheonsetofaseason.In Kenya,seasonalchanges incaffeine andtheaflavinscontentsof teahavebeen demonstrated.
• c)Altitude:Thealtitudeatwhichtea isgrownhasaneffectonmadequality.Thishas been demonstratedbyKenyanandDarjeelingteaswhichareratedveryhighlyintheinternational tea low,favouringtheformationofleafthatismorelikelytohavehighmadeteaquality.Theeffect ofaltitudeonmadeteaqualityinKenyahasbeenreportedanditwasshownthataltitudinaleffect varieswithinclones.Themadeteaqualityofsomeclonesimprovedwithriseinaltitudewhile othersdecreased.Thealtitudeatwhichtea isgrown mayhavean influenceonyields through growthrate.Athigh altitudes,theair temperatures aregenerally low causing declineingrowth rateandloweryields.
• d)Soil factors:There is littleevidence thatsoilpropertieshavedirectinfluence onquality of made tea.However,thenutritionofthebush affectsmadeteaquality.
• 187.Themainfactorswhichwouldappeartoaffectmade teaqualityinKenya areenvironmental,mainly the climate.Kenyanteas aregenerallyregardedashighqualitybecauseof thealtitudeatwhich they

aregrown,butwithintheseteasthereisvariationdependingontheparticularenvironmentatwhich theteaisgrown.Climatically,theKenyanteazonesarebroadlydivided intoEoRandWoR.Some major geographical featureshavemademajorclimaticdifferencesbetween thetwozones.The presenceofLakeVictoriainthewesternzonehascreatedasituationwherebythezonerealizes warmandwetconditionsduringmostoftheyear.Thishascreatedapotential forfastandeven growthoftheteashootsmostpartsoftheyear.Fastgrowthrateandcontinuousproductionof potentialalsofavourlowqualitypotential.Thereisthusahighpotential forhighyieldsbutlow quality in theregion.In theEoR,there are twodistinctrainfall seasons.There arewetanddry seasons aswell.Duringthedryseason,thereisslowgrowthrate andthuslowbushyields.These temperaturewhichareconduciveforhighqualitymadetea.

Culturalpractices

• 188.Fieldoperationshave a lotof influenceon thequalityofmade tea.Among the culturalpractices whichinfluencemadetea quality areplucking,pruning,fertilizers andshade.
• a)Plucking:Theobjectiveofpluckingistoobtain economicyields,toproducehighquality teaand ofharvestedshootsisreferredtoasthepluckingstandard.Afinepluckingstandardreferstothe selectionof shootsconsistingmainlyofarangeofbetweenoneleaf and abud andmostly two leavesand a bud.Coarsepluckingstandardconsistsmainlyof three or more leaves and abud. Thechemicalcompositionoftheleafvarieswiththepluckingstandard.

Thequalitypotentialof theleafdecreasesfrom thebud towardstheolderleaves.Thus,abud hashigh concentrationofchemical compoundswhich formgood teaquality.Very fineplucking reducesthefreshleafyieldandthequantityofoutputfor thegrower.ltisimportanttofinda compromisebetweeneconomicyieldproduction andqualityso thatafarmercanproduceatthe mostoptimal economiclevel.In Kenya,pluckingisprobably themost importantcontrollable culturalvariablewhichmaydetermine thequalityofmadeteaunderanygivencircumstances.It hasbeensuggestedthatduetodifferentialgrowthrates andyieldpotentials,areaswithveryhigh yieldpotentialsbutlowqualitycouldresorttoveryfineplucking.Thiswouldproduceleafwitha highproportionofone andabud in thepluckanalysisand thus haveahigherqualitypotential.lt isargued thattheyield lossesasaresultofveryfinepluckingcouldbecompensatedby thegain thetime,dependingon theprevailingmarketconditions.

• b)Pruning:Once the tea bushesgrow too high for efficientplucking,it becomes necessary to prune.Under EastAfrican conditions,it takes three to fouryearstocomplete onepruning cycle Afterpruning,therecoveringbushesdisplayveryfastgrowthrate andproduceveryheavyand large shoots.Thequalityof made teaisaffectedbytheage frompruning.InKenya,teas thatare ofdifferentagesfrompruning differin theirmade tea quality,withthe teaplants justrecovering bestquality.

• c)Fertilizers:Several studieshaveshown thatclimaticconditionsandagronomicpracticeswhich promote high greenleaf production havean adverse effecton quality.Fertilizers,especially particularoverrideitsnegativeeffectonquality.InKenya,therehasbeenlittleevidenceofyield incrementsduetophosphaticorpotassicfertilizersbutincrementsduetonitrogenanditseffect onteaqualityhavebeendemonstrated.Ingeneral,theratesof fertilizerapplicationinKenyahave notreachedastagewhereitcan threatenteaquality.Caution,however,shouldbetakeninorder to avoid futureproblems.Onlyrecommendedratesasadjustedfrom time totime,dependingon researchfindings,shouldbeapplied.
• d)Shade:In itsoriginal habitatthe teaplantgrewundernatural shade,thus theuseof shadetrees intheteaplantationswasadoptedasanimitationofnaturalconditions.InEastAfrica,theuseof shadetreeswasdiscontinuedwhenitwasrealisedthattheshadereduced theyield.Atpresent asituationisdevelopingamongsmallholderswheresometreesmighthavetobeplantedinthe tea farms inorderto supplement the farmers'domestic energyrequirements.Such treeswould provide some amountof shading to the tea bushes.Therefore,a comprehensive studyof the effectoflimitedshadingmaybenecessary.StudiesconductedinKenya haveshown thatshade reducestheyieldof teabushes,butimprovesteaquality.Bothqualityimprovementandyield declinedependon theintensityof theshade.

4.3.2FactorsAffectingTeaQuality:Post-HarvestVariables

• 189.Blacktea ismadefromgreenleaf and theprocessofconvertinggreenleaf toblacktea starts after harvestvariablesthataffectthequalityofteainclude:

LeafHandlingandTransport

• 190.ln tea processing,oneof the areasthat hasreceived little research isthe leaf handlingbetween plucking and the time it reaches the withering troughs.Some factors below affect tea quality during thisperiod:
• plentyofleaf topluck,thepluckerstendtoholdasmuchleafaspossibleintheirhandsinorder getssqueezed andcellsgetbruised.This causes thepolyphenol oxidase and thecatechins to mix andstartearlyfermentation.Thisunwantedearlyfermentationcanleadtoloweringofqualityas willbenotedunderthefermentationsection.
• b)Pluckingbaskets:Differentpluckingreceptacles areused.However,thebestbasketshould be thosethatareadequatelyaeratedtoallowforfairlyfreeaircirculation afterleafisputintothem. The plucked leaf,if not wellaerated,generate heat.lf the generated heatmakes the leaf temperature tobeinexcessof43°C(approximatelyIl0°F),thenthere isabreakdownofcell structureresultingintothesameeffectofearlyfermentation asdiscussedabove.

Ithasbeenobservedthat althoughpluckingbasketscanbewell designedwithadequate aeration, freeaircirculationwithin thebasketresultinginto excessiveheatdevelopmentandcell structure breakdown.Overloading thepluckingbasketisthereforeapracticewhichshouldbeavoided. Theleaf inthepluckingbasketshouldremainwell flaffed andthereshouldnotbeany attempts tocompactleaf inabasketoncefull.Differentsizesofpluckingbasketshavebeen usedindifferent tea producing countries.Generally,in the smaller,round or conical baskets,larger abrasive surface area isexposedperKgof leaf than in largepluckingbaskets.Leaf normallygetsripped on the sides of these small baskets.The resultant cell breakdown causes unwanted early fermentation.WWhenleaf is plucked intobags made of clothes,an increase inbacterial infection willoccuriftheclothesarenotkeptclean.

• c)Transport to buying centres:In the large tea estates ofKenya,the general practice isto transportthepluckedleaf toaweighingshadeinthesamebasketusedbytheplucker,thisiseasy asthedistance isnormallyshort.However,in the small-holder teasector ofKenya,thedistance from the farmer'sfieldsto the buying centrescan belong.Farmers therefore sometime use differentcontainersto transport the leaf to the centre after plucking.Occasionally,it hasbeen observed that some farmers compress the plucked leaf into non-ventilated sacks then use donkeys,bicycles,or carts to transport the leaf to the buying centres.Thisresults in much leaf bruisingandheat development causingpremature fermentation hence loweringof tea quality. Whateverthemethodused,theleafmustnotbecompressedandnon-ventilatedcontainersmust notbeused.Itisimportanttokeeptheleafwellflaffedduringtransportation.
• d)Weighing shades or leaf buyingcentres:Before theleaf is taken to beweighed in a leaf shade orbuyingcentres,it isequally important tokeep it well aeratedto avoid excessive heat development.lf plucked leaf is unduly exposed tothe sun afterplucking,theheatgenerated from respirationbythemassoftheleafispreventedfromescaping,cell membranebreaksdownand Theleaf should thereforebekeptundershadebeforeweighing.

Asageneralrule,leafshould take the shortest timein the field.At theleafweighingshadesor buyingcentres,considerabledamagecanbedonetotheleafifitisoverhandled.Everyhandling of the leaf causes some degree of bruising.The more thehandling steps,the morebruisingwill be done to the leaf.Thus,attempts must be made to minimise handling steps.To ensure that pluckerspluckleafofacceptablestandard,itiscommonpracticetoexamine andsorttheleafat the buyingcentres or weighing shades.These should be donewith utmost care to avoid bruising. Once the leaf isreceived from the farmers,the leafweighing or buying clerks shouldkeep this leafwellaerated in the shade to avoid excessiveheatgeneration.This can be achieved at the centresbyspreadingtheleafonthefloorwhilestillwaitingfortransport.However,duringthis leafshouldbetransportedtothefactorywithoutdelay.

• e)Transport to factories:Notlong ago,leaf transportation to factories inKenya used tobe done inbulk in lorries or trailers.This system is stillused in a number of tea growing countries.The bulkedleafgenerateheatduetorespirationofthelargemassofleaf,leadingtocellmembrane breakdown andsetting inpremature fermentation.Transportation in bulk as described aboveis opentoabusebyleafhandlingpersonnelridinginthelorriesasthereistemptationtositorstand

on the leaf causing further bruising and damage to the leaf.In some instances,the lorries or trailersdidnothave suitablecanopies,thus theleafwasalso exposed to thesun andrain.

InKenya today,thishas considerably changed and lorries or trailersusedto ferrythe plucked leaf to thefactories aredesignedfor thisspecialtask.Theleaf isnow transported in smaller containersandthecontainersareloadedinamanner that thereisfreeaircirculationbetween andin them.Where distancefromthe fieldtofactoryisshorter,like in thelargeestatesof the Kenya tea industry,partiallyventilated sacks can be used as containerswithout causingproblems. Itisimportant thattheleaftransportedin thismannermustbespread,inawell flaffedmanner immediatelyon thewitheringtroughs and airfans startedtodissipate heatgenerated assoon as itreachesthefactory.

FortheKenya small-holder tea sector,however,the situation isalittle different.The time the leaf takesbetweenpluckingandreachingthefactory can beverylong.ltis thereforeimportant that the leaf is transportedin well-ventilated sacksso that heatgeneratedis dissipated in the processoftransportation.Sometearoadsareinabadstate,especiallyduringrainyseasonswhen theseroads areimpassable.Lorriesortrailerscarryingleafthereforespendlongertimesreaching factories.Thereshouldbe attemptstomake tearoadsallweatherroadsso thattheleafreaches factories inshortestpossibletime.Generally,itisbelievedthat teamanufacturestarts after the leafreachesthefactory.However,the abovevariableswhichtakeplace afterpluckingbutbefore theleafarrivesinthefactorycan anddoaffectqualityofmadetea.

FactoryVariables

• 191.Factory personnel can only directly improve tea quality after theleaf is delivered to the factories in good condition.Thiscanbedonebyensuringthatfactoryoperationsare done incontrolledmanner.
• a) Withering:lmmediately theleafisplucked,witheringisinitiatedandsomephysiological and biochemical processes start to occur.At the same time,the leaf undergoes some physical changeslike loss ofwater andchangesin thecellwallmembrane permeability.Both the the qualityoftea.InOrthodoxmanufacture,thephysicalwither,isknown tobevitalas the unwitheredleaf isturgidandnotamenabletobeingrolledintotightlytwistedconditionwhichis commercially desirable.The unwithered leaf breaks in rollers and juices containingvaluable catechinsandenzymes arelost.TheresultantteasfromunwitheredOrthodoxmanufacturehave thin liquors.InCTCmanufacture,softwitheredleafcausesproblems.Duringmaceration,the CTCrollers(cutters)clog and there is considerable losses of the juices necessary for makingof goodqualityblackteas.

Thephysiologicalandbiochemical changesoccurringduringwitheringarecollectivelyreferred toaschemicalwither.Severalstudieshavedemonstratedthatchemicalwitherisvital forthe production ofVFCin tea.In tea trade,Kenyateas havebeenclassified asplain to medium recently demonstrated thatthisisnotso.lthasbeenfound thatqualityparametersofKenyan teasare affectedby chemical wither.Also,Kenyan teas havebeendemonstrated tohave reasonableflavourwhentheirVFCarecomparedwithteasfromotherpartsoftheworld.The plain teaqualityparameters andVFCofKenyanteashaverecentlybeenshown tobe affectedby both thephysical andchemical wither.To achievechemicalwither,ithasbeen shown that fourteen(l4) hoursofwitheringarenecessary.

The changes in the qualityparametersdue towitheringwere attributedtochanges inlevelsof amino acids,simple carbohydrates,caffeine,polyphenol oxidase,andlipoxygenase activity.The activity ofPPO,the enzyme responsible foroxidising the catechins toTFandTR,changesduring withering.Although decreaseofthePPOactivitywith increaseinwithering timehasbeen observed,mostworkershaveshown thatPpOactivityinitiallyincreaseswithwitheringtime followedbyadecline.RecentstudieshavedemonstratedthatTFlevelsdecreaseduetoincreased witheringtime.lthasalsobeenshown thatblackteacolouris increased duetolongwither, while quality is decreased by longwithers.Cold temperaturewitheringfavours quality and development of flavour.Greenness(probably similar to brassiness and clonal) in tea liquors is

ItwasrecentlydemonstratedinKenyathatcold temperaturewitheringproducesblackteasof superiorquality.Teaproductionisincreasingworldwide.Manufacturers therefore areinurgent need to developmore efficientmethodsofteamanufacture or tobuild newfactoriesat considerablecost to cater for extra leaf.Withering hasbeen recognisedas the part of Asa result,space saving two stage withering techniques have been developed.Studies have shown thatin two stage withering,it is necessaryto achieve chemical wither before doing physicalwither.Althoughattemptscanbemadetoachieveproperchemicalandphysicalwither, the treatmentof theleafwhen it arrivesin thefactorycanalso affectquality.lthasbeennoted thatheapingleafon thewithering troughwithout air fans being switchedon causesheat generation and breakdownof theleaf cellmembranes.Thiscausespremature fermentation and reducessubsequentqualityofmadeteas.ltis thereforenecessary thatwhen leafarrivesinthe factory,it is properly flaffedand spread on thewithering tough.The air fans should then be switchedonassoonaspossibletodissipateheatthatmighthavedevelopedduetorespiration.

• b)Maceration:The maceration step of tea manufacture involves massive destruction of cell structure leadingto extensivemixingof theenzymes,catechins,lipids,amino acids andterpene glycosides.This process sets in conditions for fermentation.The extent ofcell membrane disruptionplaysakeyrole inthe typeof tea manufactured.Several methodsofmacerationhave been practised.Theseinclude Orthodoxrollers,Orthodoxrotorvane,LTP,CTCandrotorvane CTC.
• i.Orthodox:InOrthodox/rotorvanemanufacture,itwasobservedthatOrthodox(rollers) teaswith superiorcolour,however,thegradedistributionwasthesame.Therotorvane Considering the totalvalueof the crop,however,Orthodoxrollerswere found tobemore preferableasitimprovedbothflavour andquality.
• ii. CTC:InKenya,mostfactorieshavechangedfromOrthodoxrollersorOrthodoxrotorvane torotorvaneCTCorLTP.Recently,HarrisandEllisshowed thatthe differentmaceration methods produced differentcharacteristic tissue disruptionpatterns,both in the superficial structureoftheshoottissueandatsubcellularlevel.Theseledtoproductionofteaswith

differentTFcontents,TCandvaluations.Themethodof macerationusedproduceddifferent distributionoftheprimegrades.

DataonTFandTCwashowevercontradictory.InatrialheldinApril 1975,TFvalueswere in theorder:rollers>rotorvane>CTC>LTP,buta month later,theorderwasCTC> LTP>rollers>rotorvane.The extent of cell membrane disruption is dependenton method of manufacturing used and thisis in theorder:CTC>LTP>rotorvanerollers.Theeffectof usingCTC and Orthodoxrollersontea qualitywas recentlyre-examined inKenya.This studydemonstrated thatCTCmanufactureproducedteaswithhigherTFandTRcontent whileOrthodoxrollersmanufactureproduced teaswithsuperiorflavourcharacteristicsand highercaffeinecontents.

The tasters'evaluationrevealedthatCTCmanufactureproducedteaswithbetterbriskness, thicknessandcolourwhileOrthodoxteashadbetterflavour.Theseobservationsaredueto variationsin chemical changes takingplace duringfermentation due to changesin the extent ofcell membranedisruption duringtea manufacture.For the desired type of tea,therefore macerationmustbedoneuniformlytoensurethata uniformproductisproduced.

• c) Fermentation:Maceration initiates fermentation.During the process,catechins undergo polyphenoloxidase catalysed oxidation to TFandTR.Degradation of lipids is initiatedby lipoxygenaseproducing GroupIvolatile flavour compounds.Amino acids are degraded to aldehydeswhile terpene glycosides arehydrolysed to simplefree terpenes.Conditions must thereforebesetrightfor these transformations to occur.A studybyCloughleyhasshown that higher amounts of TF during manufacture.Thus,temperature control during fermentation isa key step in ensuring that higher quality teas are produced.There are many ways of ensuring temperaturecontroland themethodcheapest to useinterms ofoperationandeconomics should beadopted.It istherefore common tohumidify"dhool"duringfermentation.Thislowers fermentationtemperatureandproducesbetterqualityteas.

atloweraltitude.Thisdifferencewas attributedto thedifferenceinfermentationtemperature. Thus,factory sitingis also an important consideration in themaking of good quality teas.During fermentation therefore,the temperaturesshouldnotexceed30°C(approx.85°F)andshould fermentation andunequal distributionornon-availabilityimplies thattherewouldbeuneven fermentationrateorstoppageoffermentation.

Severalstudieshavedemonstratedthattherateofformation ofTFduringmanufactureis quadraticinnaturewithrespecttotimeandthatTRformationcontinueswithfermentation time.Thus,thebest optimum fermentation timewillbedictated by thekindof tea desired. Formation,ofbrighter,briskerbut thinner teas will require shorterfermentation times while fermentation time.Thebalancewill varyfrom time to time dependingon marketdemands.

• d)Firing(Drying):To terminate fermentation,the"dhool"is subjected to high temperatures of

polyphenoloxidase andotherenzymes,andalsoreducesthemoisturecontentofteatobetween 2.5and5%.It takesless than30 minutes to accomplish this and theproduct,blacktea,comes outin a consumable and storableform.InKenya today,twobasicprinciples are presently used in drying.There are convectional driers(CD) using moving beds and fluid bed driers(FBD)of differentdesignsbutwherethedryingtea isfluidisedbyawarm aircurrent.Mostfactories are changingfromCD toFBD.Although CDdriersmakeblackerteas,FBDhavehigher throughput and thushelpinprocessingmoreteasinagiven time thanCD.

The processoffluidisationalsoremoves some ofthefibre thushelpingtopre-sortthe teas. Though theteasproduced byFBDaregreyish,the product isnormallygrainy andnotopen and flaky compared to CD teas.Additionally,FBD teas are more compact and have higher bulk density. This minimises shipping volume and hence costs. Thus,operationally there are advantagesinusingFBDoverCD.

Recently,thequalityparametersarisingfrom theuseofeitherFBDandCDweredetermined. There were no differences in TF and TR contents due to use of the driers,however,FBD producedteaswithimprovedflavourandhighercaffeinecontents.Indryingofteatoproduce good quality tea,however,there are important operations which must be done right.The temperaturecontrolshouldbeverystrict.Thetemperaturemustnotbeallowedtofluctuateas factorscausingfluctuationswouldcause theex-driermouth teas tohavevaryingamountsof residual moisture.Thepurposeoffiringistokeeptea inastorableandconsumableform.

Chemical reactions arefasterin liquidmedia thansolidmedia.lf thepost-driermoisturecontent faster.Atthesame time,whenmoisture contentisreduced tobelow2%indriedteas,theteas arenormallyover-firedandhaveaburnttasteoraresmoky.Productionofsmokyteascanalso be avoided.Apartfrom temperature control,the other aspectwhich causes uneven dryingis rateoffeedingfermenteddhool intodriers.lf thefeedingrateisconstant,theex-driers teas moisture contentwill alsobe constant.Overfeeding or under-feeding causes the teas to have varyingmoisturecontents.

• e) Grading(Sorting):Tea issold after grading.Thegrading depends on the particle sizes and can bemanipulatedbymaceration.Indeed,differentfactoriestendtomaximisetheproductionof those grades producing premium price.This is a good practice as it ensures maximum return. The important aspect of grading is that the teas produced are very clean and of uniform sizes i.e. there should not be mixing of grades.The cleaning up of the teas should take into account the factthatif itisover-doneitwillchangethelookofteatobecomegreyishandlooklessattractive asthiswillreducethepriceofsuchteas.

Grading teas causesvariationsin the chemical qualityparametersof tea.In both Malawi and Kenya,ithasbeenshown thattheorderofTFcontentsofdifferentgradesis dust>pekoedust >pekoefannings>brokenpekoe.Thisisin the order of increasingparticle sizesi.e.the smaller thegradeparticlesize thehighertheTFcontentsofblacktea.ThesameorderofTRcontents was also noted.Thus,smaller particle grades produce teas with better briskness,brightness colour and thickness.However,theflavour quality of theteaswasinthereverse.Thelarger the particlesize,themoresuperiortheflavour.

OtherVariables

• 192.Storage:Post manufacture,the tea stays for variousperiods before consumption.Up to three weekscanpassbeforetheteaisremovedfrom thefactory.Subsequently theteacantakeanother six months before auctioning and indeterminate timebeforeconsumption.Tea ishygroscopicand absorbs moisture upon storage.Upon the moisture absorption,some chemical reactions rates get fasterleadingtoquality deterioration.Prolongedstorage as aresult produces lowering of TFin teas. Also,the flavours of teasgo off dueto prolonged storage.These changes take placefasterif teas are thatthereisminimalmoistureabsorptionandatlowtemperatures.
• 193.Factorysiting:Differentreasonshavebeenused insitingafactory.However,it isnoteworthy that someoperationalvariablesshouldbenotedwhendecidingonwheretositeafactory.lthadbeen observedthatmanufacturingathigher altitudeproducedbetterqualityteascomparedtomakingthe teas at lower altitude.This was attributed to the lower temperature athigh altitude making fermentation control easier.InKenya,ithasbeenobserved thatsome factoriesarebuiltin valleys where aircirculationisverypoor.Thesefactoriesarelikelynottoachieveoptimumwithers.Thus, poorqualityteas.

4.4THEMOMBASATEAAUCTION

The Committee undertooka fieldvisit to the MombasaTeaAuction on inMombasa Countyon24th November2025andreceivedsubmissionsfromEATTAandtheTeaBrokers'AssociationofKenya.

4.4.lEastAfricanTeaTradeAssociation

TheMD,Mr.GeorgeOmugainformedtheCommitteethat:

• interestsoftheteaindustryinAfricaregisteredinI956.EATTAismandatedto:promotethetea tradeinAfrica;foster closerworkingrelationships amongmembersof the teaindustry;host and facilitate theorderly saleofAfricanteas ina centralizedformat in the internationalauction in Mombasa;facilitate the settlementofdisputeswithinthe trade;collectandcirculate statistics and tradeinformation andtomaintainsuchrecords asmaybeofassistancetothememberintheconduct oftheirbusinessaffairs;andactasalinkbetweenthetradeandgovernment.
• 195.GlobalteaProduction in2024stoodat7.037billionKgsagainst6.701billionKgsin2023,anincrease of5.01%.Globalconsumptionstoodat6.635billionKgsin2024comparedto6.212billionKgs in 2023 resulting toan increaseof 6.8%in consumption.This therefore means that global tea productionhasoutstrippedconsumptionbyover 400 millionKgsthereby affecting theglobal tea prices.ProductioninChina increasedbyI2%,India declinedby7.8%,andSri Lanka increasedby 2.4%,compared to 2023.Among EATTA members,Kenya,Malawi,Rwanda and Burundi experiencedincreasedproductionby5%,15%,0.6%and4%respectivelyin2024comparedto2023. Similarly,Uganda andTanzania,experienceda declineinproductionby37%and22%respectively in 2024comparedto2023.

• 196.The Mombasa TeaAuction is the largestAuction Centre in the world.It is the onlymulti originTea Auction intheworld.Teaissoldasfollowsin theAuction:Pre-AuctionProcesswhereproducers sendteastobrokers,brokersthencatalogue,gradeteasanddistributesamplestobuyerswhoassess samples for quality(flavor,aroma,etc.);Auction System which isa digital online auctionplatform wherebiddinghappenslotbylotwithinseven(7)secondsandthehighestbidderwins.Theprocess takes place weekly on Mondays and Tuesdays;andPost-AuctionProcesswhere the sale is confirmed. tea.Buyersthencollectteafromproducers'warehouses.
• 197.The auction system has thefollowing advantages:Centralizedmarketfor multiple countries(multi i.e.EBBwhichis onlinebidding.The following arethekey trends in the tea auctionmarket:
• Trading System has improved transparency,efficiency,and remote bidding,broadening participation.
• b)Market Demand Fluctuations:Demand is shaped by consumer preferences for healthconscious,specialty,andorganicteas,withgrowinginterestfromnewmarkets.
• c)Climate Impact onSupply and Quality:Unpredictable weather and climate change affect
• d) Price Volatility and Economic Factors:Currency fluctuations,inflation,and economic
• e)Sustainability and Ethical Sourcing:Growing demand for sustainably sourced teas inEurope, thereby influencing auction priorities and product offerings.
• Rise in Blended Teas&Re-exporting:Countries like Pakistan and UAE import teasfor blendingandre-exporting,diversifying auctiondemand.
• 198.Thefollowingare thefactors thatdetermineauctionteaprices:Qualityof teaoffered intheAuction; global tea demand and supply dynamics(quantities offered inAuction);geopolitical factorsin major tea export markets(Sudan,Russia-Ukraine war,RedSea conflict and Middle East conflicts);socioeconomic factors(dollar currency challenges in major tea countries,prices and income variables, demographics such asage,education,occupation,and cultural background);climatological factors; diversification.

Figure 7:Value of tea against the averageprice in dollars

Figure 8:Production against absorption at the Auction

Figure9:Teamarketing saleschannels

Figure 10:Kenyamarketshare of tea exports in2024

FigureIl:Pakistan 2023teaexportdestinations

Figure I2:Volume and value of tea sold atthe Mombasa Tea Auction

Figure I3:Prices in major tea auction centres

Figure I4:Mombasa Auction prices:KTDA,Non-KTDA vsRwanda

• 199.Thereservepricewas introducedin2021butwasremovedinOctober2024duetothefollowing effectson the tea sector:Shortterm prices improvement;increased teaproduction(2022(535m), 2023(570m)and2024(598m));compromisedteaqualityofferedtotheAuction;increasedweekly teaauctionoffersfrom 12mto25m;reducedweeklyAuction absorption;increased weeklyAuction Out lots;build-up ofhuge stocks accumulation;increasedmarket selectivity;depressed tea prices; reduced farmersearnings;reduced factoryprofitabilityleadingtoclosureofsomefactories(Kenya, increasedwarehousingoperational costs andreducedwarehouseearnings.
• 200.Thequalityofgreenleafhasthe following impactoncost andearnings:High-quality tea isbetter equippedtowithstandchallengingmarketconditions;highqualityteawillalwaysbeindemand,even ifsubjecttoprice adjustments;teaproducedwitha focusonvolumeover qualitymostlysuffer during market downturns;cost ofproducinggood andpoor-quality teas within the factory is profitabilityandsustainability;andpoorleafqualityaffectsthebushhealth andproductivity.

• 201.The tea sectoris facedwith amyriad of challenges including:Overproduction;depressed auction legislativeandregulatorychallenges;lowlevelsofvalueaddition andlackofconduciveenvironment for tea value addition;over reliance on the traditional bulkexport markets(market access challenges);lackofProduct diversification;multiple levies and taxes;tea quality challenges;global challenges;climate change(unpredictable weather patterns);and port congestion and multiple costly governmentagenciesinvolvementinteaexports.
• 202.EATTAproposed the followingareas offocusfor teasectorsustainabilityandprice stability interventions:Green leafquality drive through Good Agriculture Practices(GAP);Governmentto reduce the high cost of inputs throughreduced taxes oninputs,provision of subsidized fertilizer, electricity,mechanization,automation,national wages policy and settingupof a stabilization fund; exportmarket diversification and aggressive development ofnew marketsaccess mechanisms; product diversification(Orthodox and Specialty tea manufacture);value addition and creatinga conduciveenvironmentforteavalue addition;drivetoincreaselocal teaconsumption;regulationof newteaplantationsandunregulatedfactorylicensingbyTBK;introductionofTeaConsolidated regularconsultationwith theteastakeholderspriortointroducingchangesthatmay adverselyaffect the tea sector;restructuring ofbank loans through Governmentinterventions(sector bail out through stabilization fund); and support research in developing alternative uses of tea
• 203.EATTA made thefollowingrecommendations:Slowdownonteaproduction throughsoundpolicies; frequent supply and demand simulationneeds tobe done on aregularbasisand shared to act as an earlywarning:diversificationfromnon-CTC teas tovalue-addedandspecialtyteas.Thishastobe supportedbyincentives;curtailregistrationofnewteafactoriesthatdonotmeetstipulated drivenresearch anddevelopment activities;enhancedpromotion especially in new andemerging markets;establishaTeaStakeholdersledComprehensiveExportMarketingStrategyandplan; improveonqualityofteaproducedthrough quality assessment;introduceaminimum economic area under teaforplantinglicense thatisguidedby theTeaResearch;andconsiderreintroduction ofthedefunctTBK'splantinglicense.

4.4.2 TheTeaBrokers'Association ofKenya

Mr.Caesar Thairu,the Chairman of the Tea Brokers'Association ofKenya informed the Committee that:

• 204.Ateabroker isalegallyregisteredcompany licensedby theTBK to trade intheAuction and/or throughprivate treaty sales.To tradein theauction,the teabroker acquiresEATTAmembership andhastosatisfytheEATTABoardthatithasqualifiedstaffwhocan taste,valueandsell teas.The brokermustobserveandadhereto thelawsofKenya,EATTArules,andcodeofethics.
• 205.Theroleofbrokersisto:Promote thesaleofteasthrough theAuction(theonlyproventransparent price establishing mechanism in the tea world);consolidate through the catalogues different producers'teashencepullingdemand toacentral pointand attractingmultiplecustomers;tasteteas processedbythefactories they serve onaweeklybasisforquality assessment andadviseon areas

thatmayrequireimprovementtoenhancethefactory'spositioninginthemarketandtoarrestany faults thatmaybepicked;taste allinvoiceteasdestined tothe auction andvalue the sametoenable them make the mostinformed decision at thetime ofsale;ensurethatall teasoffered for sale are correctly sampledto all thebuyers operatingin the auction;ensure thatevery tea lotis sold to the receive the teastheypurchased after payingfor the same;andensure that thefunds areremitted to theproducers.

• 206.Brokersofferthefollowingservicestoproducers:Performs tea manufactureprocess audits/factory visits;advisefactorieson themarkets'qualityrequirements;samplesanddistributes all the samples of catalogued teas; tastes,values and produces analytical quality assessment reports for all teas offered for sale;advises theproducer on themarkettrends andmarketdemands;makes thebest businessdecisionforthesaleoftheproducers'teastothehighestbidder.
• 207.Brokersofferthefollowingservicestobuyers:consolidates teasfromd different contractsinonesitting;samplesanddistributesallcataloguedteasandascertainsthesamples transparentmanner;operationalise theauctionwhereTeaisusuallypurchasedatbestmarketvalue through competitive bidding;andprovides a trading forum where buyers know the seller is committedtosell.
• 208.Brokersdonotbuyteasforresale;onlyearnwhena teaissold;ensurethatthesalesproceedsare remittedtoproducersontimeandinfull.Thebiggestdilemmaofbrokersabouttheteasectoris: Promotion of mistrustamongplayers in thevalue chain andbetweenplayers inthe valuechainand Government; fast eroding governance and integrity standards along the value chain;unclear regulatorypolicyonproductionexpansion.
• 209.Therehasbeenarecordproductionof teainKenyawithaleapfrom458millionKgs in2019to569 millionKgsin2023(therewasproductionof533millionKgsin2022,570millionKgsin2023and 598millionKgsin2024).Thepricesofteaplummetedtothelowestin fouryearsin2021.The averageabsorptionforallteasintheauctionfrom2023todateisapproximately10millionKgsper week,in2024theabsorptionwas9.4millionpersale(Kenyaonly7.74million)whilein2025tosale 46at8.6millionKgs(7.04millionKgs inKenyaonly).
• 210.lntroduction ofreserveprices(GMR)resulted tosome farmerschasingquantity attheexpenseof quality(totalcollapseofdemandforsomefactoriesespeciallyinregionswithhighconcentrationof independentproducers).Therewasa majorpriceshiftforthefactoriesin theWoRin thereserve price dispensationmaking them unattractive.Failure to match themarketprice levelsmayhave resulted in product substitutions hence leading tomostof the teasbeingneglected.Favourable growing conditions sustained very good production(there was assured availability which has persisted to date).TheBPI marketwashitby the exitofIran,theRussia-Ukrainewar andSudan adjustmentofthesameinlinewiththedemandlevels.Therewasadistortionofthemarketforces ofsupplyanddemand.

• 211.According to theFAOIGG/TeaSecretariat27,price developmentsin2017indicatethedelicate balance between supply and demand,and the need tomaintain this to achieve sustainability.For example,assumingthatoutputincreasesbyafurther5percent,theimpactonpriceswouldbequite because there was failure to use research data to make critical decisions in production;supply outmatched demandandwith the healthy production,the carry overs onyear-to-yearbasis have increased;andfailuretoutiliselessonslearntinthepast.
• 212.Torealisemoregainsfrom thetea industry,theTea Brokers'Associationrecommended:

Short Term

• a)Restoration oftrustintea business".Rather than politicians and leadersportrayingplayersin thevaluechain as cartelsouttofreezethe small-scalefamers'hard-earnedcash,they should respect them asseriouspartners inbusiness.
• b)Allow market dynamics to operatein the auction.Sellers shouldbe allowed to makebusiness sellingdecisions.
• c)In scenarios where there arefirm reserve prices.There should be a home for the unsold teas buttheteasshouldnotbelefthangingasstocksindefinitely.
• e)Putonholdanynewplantingandconstructionoffactoriesandfocusonqualityimprovement.
• f)Creationof auditablegovernancestructuresforallteavaluechainplayers.
• g)Aggressive andwell targetedmarketinggloballyto createahomefor theincreasednational production.

Long Term

• a) )Teabeingakey economicdriverandwell placed inBETA,shouldbesafeguarded asa strategic industry.

2. b)TBKand EATTAshouldteam upwith thenational institutionsofhigherlearningandrolloutthe teacurriculum.Thisinitiativewasforgotten afteradraftcurriculumwasdevelopedin2014. 3. c)Diversifythemarketsandreduceoverrelianceonthetraditional markets. 4. P competewithothersglobally. 5. tomarketKenyanteas.

TeaPricinginKenya

• sales:

The Mombasa Tea Auction (Primary PricingMechanism)

• IndicativeValuationnot thePrice Organolepticassessment attributes.Pricingat the auction follows thisprocess:Tea factories send tea tobrokers;brokers sample,taste,and categorise the tea by quality against standards.All teasare sold through samples,thebuyer coming to the auction will teasequal andwideexposure to themarket;teabuyerssubmitbidsduringtheliveorelectronic auction.Buyersbidon teasdeemedto them assuitingtheirclients.Themore thenumberofbuyers biddingona tea thebetter thechances of fetchinga better price.Price is discoveredwhen demand pressureiscreated inthemarketfrom differentbuyers andthe selleracceptstosell;andthehighest bidacceptedbythesellingbrokerbecomesthepriceforthatlot.
• 215.Key factors influencing auction price are:Quantity onoffer;quality(liquor,aroma,appearance,leaf size);seasonality(dry season=higher prices);global supply(Assam,Sri Lanka,Malawi,India and Rwanda productionlevels);demandfrommajormarkets(Egypt,Pakistan,AE,K,Russia,lranand Sudan);FXrates,especially theKshs.vsUSD;andgeopolitics.

DirectSales

• 216.This iswhere some factoriesnegotiate directlywith foreign buyers.Price isnegotiated one-on-one andisusuallyfixedincontracts.Thepricecanbehigherorlower thanauctionpricesdependingon: Buyer relationships;quality consistency;and contract duration.

4.5THETEABOARDOFKENYALABORATORY

TheCommitteeundertookafieldvisittotheTeaBoardofKenyaLaboratoryinMombasaCountyon 24November 2025.The Ag.Director for Registration,Licensing & Standards,Mr.Julius Kingoo informedtheCommitteethat:

• 217.Kenya isknownforproducinghigh-quality andpesticide free teas owingtoitsclimaticconditions givingitacompetitiveedgeoverotherteaproducerswhousepesticidesandproduceteawith MRLs.However,there areinstanceswhenKenyan tea tradersimportteasfromothercountriesfor blendingandre-export asKenyan tea.There arealsoinstanceswhen herbicides areusedtocontrol weedsonothercropsinteagrowing areas.There is therefore need to ensure thatteameettheset valuationofteainMombasa iscurrentlybasedon theorganoleptictastingmethod.Themethodhas toobjectivity.
• 218.There have been rising concerns on the decliningqualityofKenyan tea and thedifferences in auction pricesbetweenteasfrom theEoRandthosefromtheWoR.Thedeclineinthequalityofteahas

significantlyaffectedteapricesespeciallyforteasfromtheWoRwheresustainabilityofsmallholder teafarmingisthreatened.Whereas the declineinqualityof tea hasbeen attributed topoorquality ofgreenleafandother farm managementpractices,stakeholdershave expressedtheneedfora scientificmethodofanalysingthequalityofKenyanteaforthepurposeofpricedetermination.In addition,TBKneeds a laboratory toverify thatimportsmeet therequired standards forKenyan tea.

• 219.TheTeaAct,2020requiresteaimporters toobtainapre-import approval from TBKpriorto importation of the tea by submittingapre-importtea sample analysis.TBKhasbeen outsourcing theservicesofquality analysisof teafrom thirdpartylaboratoriesatapproximatelyKshs.7million perannum for200samplesagainsta demandof9,650samples annually.ln thisregard,TBKhasonly beenundertakinglimitedanalysisofteatherefore limitingitsabilitytoundertakeacomprehensive andcontinuousanalysisofteaasrequiredbytheAct.
• 220.The laboratory aims at enhancing tea farmers'earnings fromKshs.50.18in2022 toKshs.100per Kgofgreenleafby theyear2027in linewithBETA throughimprovedqualityof Kenyantea andthe Medium-TermPlanIVofVision2030which seekstoenhanceproductionandproductivity,value addition andmarketaccess and attracting local andforeign investment.It is alsoalignedwith the implementation of theNational FoodSafetyPolicy byprovidingstrategiesfor food quality and standards.
• 221.The laboratorywill supportTBK's regulatory and oversightrole of promotingbest practices and standardsin theproduction,procesing,marketing,grading,storage,collection,transportationand warehousingofteaasprescribedin theTeaAct.ltwillfacilitatetheBoard'sfunctionofregulation ofsales,imports andexports oftea andmonitoring and enforcementofcompliancewith tea standards.Itwill further supportcompliancewithnational,regional and international standards.
• 222.Benefitsofthelaboratory include:standardised approachin the assessmentof tea quality thus enhancingreliabilityofteapricedeterminationmethods;provisionofadvisorytoteaproducerson theimprovementofqualityandcompetitivenessofKenyantea;provisionofascientificmethodof qualitydetermination toenhanceobjectivityintheteavaluationmodelandgiveconfidenceand safeguardKenya'sreputationas aproducerof highquality teasbyundertakingquality assessmentof accessofKenyanteaintheglobalmarketbyassuringKenya teabuyersofthequalityofKenyantea; Enhancedefficiency andeffectivenessbyTBKinregulationofqualityofteaforexportandimport; and facilitate characterisation ofteasaccordingto theirgeographical indications toprofilethem in linewithrespectivemarketpreferencesforbetterpricerealisation.
• 223.The laboratory has the components:Analytical testing of tea based on physical quality, microbiologicalparameters,MRLs and emergingcontaminants;promptscientificverificationof teas offeredforsaleat the auction todeterminetheirvaluationbasedonqualitybycheckingNitrogen, Polyphenolsandashcontent;andsensoryevaluationof tea tocomplementthescientifictestingof tea to be used in determination ofprice.Theprojectwill also entail acquisition of specialised analytical equipment,auxiliary equipment,glassware,chemicals,reagents andreference standards. Thetablebelow showsthetotalcostrequiredtocompletetheproject:

TableI3:Costofconstructing the laboratory

| | S/NO.ACTIVITY | DURATION (MONTHS) | ESTIMATED COST Million (Kshs.) | EXPECTEDKEY OUTPUT | PERFORMANCE INDICATOR | Million (Kshs.) | Y2 | Y3 | |----|----------------------------------------------|---------------------|----------------------------------|-----------------------------------------------|--------------------------------------------------------------|-------------------|------|------| | | Acquisition of laboratory equipment | 36 | 234 | Equipped laboratory for tea quality assurance | Installation, testing and commissioning certificate/ report. | 50 | 74 | 110 | | 2. | Trainingof laboratory staff | 36 | 13.20 | Trained laboratory staff | Equipmentmanual Trainingrecords | 6.2 | 3 | 4 | | 3. | Developing laboratory operational guidelines | 12 | 9.80 | Laboratory operational guidelines | Approved guidelines | 86 | | | | 4 | Accreditati onofthe laboratory | 12 | 5 | Accredited laboratory | Accreditation certificate | | | 5 | | 5. | Installation of laboratory MIS | 24 | 18 | Laboratory Information Managemen tSystem | Installation, testing and commissioning certificate/report | | 3 | 15 | | | TOTAL | 36 | 280 | | | 66 | 80 | 134 |

4.6CHAITRADINGCOMPANYLIMITED

TheCommitteeundertookafieldvisitto theCTCLinMombasaCountyon24hNovember2025.Ms. Dorcas Mohammed,Ag.ManagingDirector,CTCLinformed the Committee that:

• 224.ChaiWarehousingLtdwasestablished in2002with themandateofwarehousingof teas,clearing& forwardingandtransport.KTDAMombasaLtdwasestablishedin2003andlaterchangeditsname toChai Trading Company Ltd in2005with the core function of trading in teas.In 2007,Chai WarehousingLtdand Chai TradingLtdmerged toform ChaiTradingCompany Ltd.Thekey objectiveofthemergerwas toachieveoperational efficiency and take advantageof thecombined synergies.KTDADMCCwas incorporatedinUAEin2009 asabranchof CTCLwithfocusbeing penetrationofMiddleEast&CiSmarkets andvalue addition.Itwasregisteredasa subsidiaryof Chai TradinginUAEIN2013.
• 225.CTCLhasMore than I.2million sq ft ofwarehouse space (the biggest in theregion).This enables CTCLtowarehouseallKTDAfactory teasaswell asthosefromotherproducers.Thisresultsto economiesof scale due to cost advantages such as logisticscostandgeneral improvementof operationalefficiency.All thewarehousesarefoodgradecertifiedbyglobalstandardswithsome adoptingmodernracking technology.Theyoffer shippingandclearing&forwardingservicesto KTDAMSandotherplayersin themarketforbothstraight line andblended teas.However,dueto highproductionlevelsand lowabsorptionratethey areoccasionallyrequiredtosourceformore

warehouse space from other thirdpartiesto accommodate all the teas from thefactories.They wereputtingup more warehousing space,approximately 600,000 sq ft fullyracked toachieve

• 226.The increased warehouse space will ensure that all KTDA teas are handled in centralised, standardisedandcompliantwarehouses;longtermstabilityof lowestwarehouse handlingrateswill be guaranteed to the factories as operational efficiency ismaximised;and attracting non KTDA businesswhichwill increasedividendstofarmersaspartofdiversificationstrategy.
• 227.Unlikeothermultinationalplayerswhohave forwardintegrationin theirmarketsthrough their trading arms,KTDA teas once sold at the auction hadnovisibility onwhere the teaswere being consumedandthereforedifficulttomaintainrelationshipswithclientstogettheirfeedback.Itwas againstthisbackgroundthat theidea of settingupCTCLwasmootedto activelyplayaroleinbuying andsellingwithbiasonKTDA teastoensurethefarmergotthebestvalue and itsactivitiesentail: Buyingand sellingof teas from theMombasa Auction;marketspenetration andgrowth;market intelligence;andvalue addition toensureKTDA teasreached thecustomerwithoutgettingblended withotheroriginsto enable theconsumergetthereal tasteof KTDA teaswhichwasnot the case withotherleadingbrandsof teawhichwerepredominantlymultioriginblends.
• 228.CTCLiscurrently the third biggestbuyerof KTDA teas at the auction afterGlobal Tea andUnilever. This hasbeen achieved through aggressivemarketing,specifically targeting marketswhereKTDA teashaveagreatermarketshare.CTCLis activelyinvolved invalue additionthrough itsbrandChai Gold.

Figure15:MarketshareforFY2024/25

Figure16:MarketshareforFY2025/26

• 229.CTCLis facedwith the following challenges:Decline in export value byPakistan attributed to currencydevaluationbymore than50%whicherodedthepurchasingpower:declineinvaluein Egypt attributed tohighinflationthough themarketisnormalising:declineinbothquantityandvalue byUK attributed to issues around Brexit i.e.devaluationof GBPagainst theUSDandchanging Kenya shilling against the USD dollar;trade and economic sanctions in Iran;high cost of finance (overdraft facility);high import tariff onKenyan teas inAfrica and other emergingmarkets;county taxes/cessfeesnegatively impacton overallcost of final tea;and inconsistency in thequalityof tea affectsthepriceoftea attheinternational markets.

CHAPTERFIVE

5.0COMMITTEEFINDINGS/OBSERVATIONSFROM THEINQUIRY

Inconducting theInquiry,theCommitteemade the following observationson theobjectivesofthe Inquiryafteranalysisof thedocumentssubmittedbythestakeholders andfrom theinformationgathered throughthefieldvisits:

• 1.Tea frommost of the factories in theEastof Rift Valley earnbetter prices at theAuction compared tothosefromtheWestofRiftValley.

2. QualityofteadeliveredtotheAuctionbyfactoriesintheWestofRiftValleyislowerthanthatfrom EastofRiftValley duetoseveralfactorsincluding:teahawking,licensingofmoreindependenttea processorsintheRegionthusprovidingmarketforteasrejectedbyKTDAfactories;andmultiplicity ofcultivars. 3. AgriculturalWorkers'UniononbehalfofthefactoriesbyKTDA-MSintheWestoftheRift.ltis monthlyproceedsoffarmerssupplying(andowning)thesamefactory.Factoriesin theEastofRift ValleyoutsourcelabourtoavoidtheCBAs. 4. TheCommitteedidnotcome across anyteasectorpolicy toprovide a frameworkforgovernance ofthesectorinKenya. 5. There are nineteen(19)KTDA shareholding tea processing factories in theWest of Rift Valley and thirty-five(35)in theEastofRiftValley thatownKTDAHoldingsLimited;therearesixty-five(65) independent teafactories in theWoR andsix(6)in the EoR;and there are fifteen(15)licensed satelliteKTDA factoriesin theWoRagainsttwo(2)intheEoR.As such,there isa totalofninetynine(99)teafactoriesin theWoRcompared toforty-three(43)in theEoR.Assumingtheprocessing leafbyfactoriesintheWoR. 6. Thereisnoofficial forumfor consultationsforplayersin theteasector,particularly thefactories (both independentandKTDA factories)tomeetandhavedeliberations on thequalityoftea producedbyallfactoriesinthecountry. 7. Energy isoneof thebiggest cost items infactories.Kenya has an electricity Energy Use Indexof 0.57 kWVh/Kgofmade teawhile that forwoodenergyis3.83m/tonofmadeteawhich ishigh in thecheappowerfrom theirhydropowerplantsbecause theyareforcedtosellpower tothe nationalgridcheaplyandbuyitatahighercost.

• 8.Tea factories incur several costs, they are:operational costs (sitting allowances due to increased therequirednineteen(19),and travel costs);operational costs(factoryrelatedcostse.g.delapidated and inneficient machines,and labour costs where services are outsourcedyet personnel are employed to perform the sameroles),transport costs(tear andwear,outsourcing ofvehicles,

servicing andpoor road maintenance);financial costs (loans,overdrafts,interest and penalties);and compliance costs(KRA,NEMA,KEBSe.t.c.).

• 9.In some factories,board members were themain beneficiaries of procurement processes.
• RiftValleywhileittakestwo(2)hoursin theEastofRiftValley.
• 11.Some managershadworkedin thesame factoryformore thanfourteen(l4)years hence familiarity whichimpactedon theirperformance.
• 12.Cases of falsification of theweighing scale atbuying centreswerereported intheWestof RiftValley.
• 13.Differentvarieties andcultivarsof tea in theWestof RiftValley areprocessedtogetherdespite the factthattheyhavedifferentfermentation times,thisnegativelyimpactson the qualityofprocessed tea.ThecultivarsinEastofRiftValleyarethesame hencebetter qualityofprocessedtea
• 14.Investment inhydropower generation plants inWestof Rift hasnot born fruits.
• 15.About50%ofKenyan teas aresold to twocountries,Pakistan and Egypt.The twomarketsdictate theprice andpreference of tea.
• 16.TheTeaResearch Institute is inadequately funded.Thisposesa negative challenge in the execution ofitsmandate.
• 17.Kenya predominantlyexports CTCteas.There isvery littlevalue addition that is doneinthecountry mainlybecauseof thehighcostsinvolved.

CHAPTERSIX

6.0COMMITTEERECOMMENDATIONS

TheCommitteemade thefollowingrecommendationsontheInquiryintothePricingof Tea inKenya:

• 1.TheMinistryofAgriculture and LivestockDevelopmentshouldinstitute an independent auditon thelevel of adherence and compliance to legislation on the licensing of factories by theTea Board ofKenya.

2. shouldimplementthelawonpowerwheelingtoenableteafactoriesthataregeneratingpower to distributeittofactorieswithintheirproximitythatareinneed.

• 3.Factorymanagements shouldreplace the old dilapidated ineficient machines with newones to ensurebetterperformance,reducecostsandincreaseefficiencyinthefactories.
• 4.TheTeaBoardof Kenya shouldconduct auditsof the hydropowerplantprojects that are ongoing intheWoR.Theyshouldlookintohowmuchtheapprovedbudgetsfortheprojectsare,howmuch hasbeenspentsofar,theamountof money thatfarmershavespenton theprojects andexpected dates ofcompletion of theprojects.The Board should take action on deviation from the expectations.
• 5.The Governmentneeds toput inplace deliberate effortstomarketKenyan tea in all parts of the worldinabidtoopenupnewmarketsforKenyantea.ThiscanbedonediplomaticallywithinAfrica as per the AfCFTA,and by all Kenyan Missions abroad adopting targeted tea marketing and reporting.

6. direct salesof their teas as opposed torelyingon theMombasaTea Auctionas themainwayof sellingtheirteas.

• 7.TheTea BoardofKenya should developmechanisms toensure that factories thathave adopted quality-basedhandlingandprocessingofteabenefitfromtheireffort.

8. TheMinistry ofAgriculture andLivestockDevelopment should ensurethat theTeaResearch Instituteisadequatelyfundedtofullyandeffectivelydischargeitsmandate. 9. TheTeaBoardof Kenya incollaborationwiththeKenyaTeaDevelopmentAgencyshouldencourage benchmarkingvisitsby farmersin theWoR tofactoriesin theEoRtolearnbestpractices.They should alsoorganise eventswhereplayersinthe teasectorcan interactandexchangeideas.

• 10.TheMinistryofAgricultureandLivestockDevelopmentshould ensure thattheTeaAct,2020isfully operationalisedfor theproperfunctioningof theteasectorin the country.
• I11.The efforts of auditing tea factories by theTea Board of Kenya should purpose to cover all factories andanymalpracticeidentified andconfirmedprosecutedaccordingly.

• 12.The Tea Board ofKenya should conduct lifestyle audit of the directors,clerks and otherinfluential personsin thefactories.
• 13.TheTea BoardofKenya should ensure that approved agricultural andmanufacturing standards are adhered to acrossboard,enforcementprocesses aredeveloped,sharedand applied.
• 14.TheMinistryofAgriculture andLivestockDevelopment should come upwith alternative methods (scientific,blind tasting)forqualityassessmentof tea tocomplement/improve on the commonlyused organolepticmethod.
• 15.Factory managements should explorealternative tea-basedopportunities to improve on their income.
• 16.TheKenya TeaDevelopmentAgencyHoldingsLimitedshouldpurpose toeffectivelycommunicate theproportionateshareof investmentof factoriesin theWestandEastof theRiftValleyinKTDA Holdings as a guiding principle in apportionment of board membership.
• 17.Managementroleof KTDA-MS should be universal acrossallKTDA managedcompaniesforoptimal business.
• 18.Reforms need to be instituted in all factories through costreduction,prudentcreditmanagement andadherencetologicallyprofitableinvestmentdecisions.
• 19.TheNational Assembly needs to amend the Tea Act,2020 to conform tothe growth and developmentoftheteaindustry.

SIGNED...

.....DATE...

HON.(DR.JOHNKANYUITHIA MUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTUREANDLIVESTOCK

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THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DEPARTMENTALCOMMITTEEONAGRICULTUREANDLIVESTOCK

ADOPTIONSCHEDULE

We,the undersigned Honorable Members of the Departmental Committee on Agriculture and Livestock today,Tuesday,QndDecember 2025 dohereby affix our signatures to thisReporton the Inquiry into thePricing of TeainKenya to affirm our approval and confirmits accuracy,validity and authenticity:

| S/NO. | NAME | SIGNATURE | |---------|--------------------------------------------------------|-------------| | 1. | HON.(DR.)JOHNKANYUITHIAMUTUNGA,PhD,CBS, MP-CHAIRPERSON | | | 2. | HON.BRIGHTONLEONARDYEGON,MP-VICE- CHAIRPERSON | | | 3. | HON.SABINAWANJIRUCHEGE,CBS,MP | | | 4. | HON.FERDINANDKEVINWANYONYI,MP | | | 5. | HON.GEOFFREY MAKOKHAODANGA,MP | mo | | 6. | HON.JUSTICEKIPSANGKEMEI,MP | | | 7. | HON.JARED OYOOKELO,MP | | | 8. | HON LAWRENCEMPURUABURI,MP | | | 9. | HON.DAVIDKIPLAGAT,MP | | | 10. | HON.GABRIELGATHUKAKAGOMBE,MP | | | 11. | HON.MONICAHMUTHONIMARUBU,MP | | | 12. | HON.PATRICKKIBAGENDIOSERO,MP | | | 13. | HON.YUSSUFMOHAMEDFARAH,MP | | | 14. | HON. MAKALI.MP | | | 15. | HON. IADHIAMBOBUSIAODINGA,MP | | | 16. | HON. FRANCISSIGEI,MP | | | 17. | HON.MARIANNEKITANY,MP | | | 18. | HON.RICHARDKIPKEMOIYEGON,MP | | | 19. | HON.DORICEDONYAABURIMP | |

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTESOFTHE48THSITTINGOFTHEDEPARTMENTALCOMMITTEEON AGRICULTUREANDLIVESTOCKHELDONWEDNESDAY,3RDDECEMBER 2025ATARGYLEGRANDHOTELAT 3:00PM

PRESENT

• 1.Hon.(Dr.)JohnKanyuithia Mutunga,PhD,CBS,MP- Chairperson

2. Hon.Brighton Leonard Yegon,MP

Vice-Chairperson

• 3.Hon.Sabina Wanjiru Chege,CBS,MP

4. Hon.GeoffreyMakokha Odanga,MP

5. Hon.JaredOdoyoOkelo,MP

6. Hon.David Kiplagat,MP

7. Hon.Gabriel Gathuka Kagombe,MP

8. Hon.PatrickKibagendi Osero,MP

• 9.Hon.YussufMohamed Farah,MP

• 10.Hon.John Okwisa Makali,MP

• 11.Hon.Richard Kipkemoi Yegon,MP

• 12.Hon.(Amb) Francis Sigei,MP

ABSENTWITHAPOLOGY

• 1.Hon.FerdinandKevinWanyonyi,MP

2. Hon.LawrenceMpuruAburi,MP

• 3.Hon.Justice Kipsang Kemei,MP
• 4.Hon.Monicah Muthoni Marubu,MP
• 5.Hon.Ruth Adhiambo Busia Odinga,MP

6. Hon.Marianne Kitany,MP

• 7.Hon.Dorice Donya Aburi,MP

INATTENDANCE

A.COMMITTEESECRETARIAT

• L. Ms.Laureen Wesonga

ClerkAssistantI

2. Mr.VictorKilimo

ClerkAssistant IlI

3. Mr.ShadrackMusyoki

SeniorResearchOfficer

4. CPA RobertNg'etich

Fiscal Analystl

5. Mr.Gerald Kadede

Legal Counsel Il

6. Ms.Jacinta Maru

Serjeant-at-Arms

• 7.Ms.LovinWabwire.

AudioOfficer

AGENDA

• 1.Prayers
• 3.ConfirmationofMinutes
• 2.Preliminaries/Adoption of theAgenda
• 4.Adoptionof the Reporton thePricingof TeainKenya
• 6.Adjournment/Dateof theNextSitting
• 5.AnyOther Business

MIN.NO.NA/A&L/2025/210:

PRELIMINARIESIADOPTIONCFTHE AGENDA

The Chairperson called themeetingtoorder attwenty-threeminutespast threeO'clockand prayed.He thenwelcomed themeetingtodiscuss theday'sAgenda.

TheAgendaof the daywas adopted havingbeen proposedby theHon.(Amb.)FrancisSigei, MPandsecondedbytheHon.Gabriel Kagombe,MP.

MIN.NO.NA/A&L/2025/211:

CONFIRMATIONOFMINUTES

Thisagenda itemwasdeferredtothenextmeeting.

MIN.NO.NA/A&L/2025/212:

ADOPTIONOFTHEREPORTONIE INQUIRYINTOTHEPRICINGOFIA INKENYA

After extensive deliberations,Members agreed on the following observations and recommendations:

OBSERVATIONS

1. TeafrommostofthefactoriesintheEastofRiftValleyearnbetterpricesattheAuction comparedtothosefromtheWestofRiftValley. 2. QualityofteadeliveredtotheAuctionbyfactoriesintheWestofRiftValleyislower thanthatfromEastofRiftValleyduetoseveralfactorsincluding:teahawking,licensing ofmoreindependentteaprocessorsin theRegionthusprovidingmarketforteasrejected byKTDAfactories;andmultiplicity ofcultivars. 3. High labour costs driven by Collective BargainingAgreementsnegotiatedwithKenya PlantationandAgriculturalWorkers'UniononbehalfofthefactoriesbyKTDA-MSin theWestoftheRift.Itisnotjustifiablethatthelowestpaidfactoryworkerhasamonthly wagefive timesormore the averagemonthlyproceedsof farmerssupplying(andowning) thesamefactory.Factoriesin theEastofRiftValleyoutsourcelabourtoavoid theCBAs. 4. The Committee did not come across any tea sector policy to provide a framework for governanceof thesectorinKenya. 5. There are nineteen(i9) KTDA shareholding tea processing factories in theWest of Rift Valley andthirty-five(35) in theEastofRiftValleythatownKTDAHoldings Limited; thereare sixty-five(65) independentteafactoriesin theWoRandsix(6) in theEoR;and therearefifteen(I5) licensedsatelliteKTDAfactoriesin theWoRagainsttwo(2)in the

EoR.As such,thereis a total ofninety-nine(99) tea factoriesin theWoRcompared to forty-three(43) in the EoR.Assuming the processing capacity of the factories ismore or less thesame,there is therefore apparentcompetitionforgreenleafbyfactoriesinthe WoR.

6. There isnoofficial forumfor consultationsforplayersin the tea sector,particularlythe factories(bothindependent andKTDAfactories)tomeet and have deliberationson the qualityofteaproducedby all factories inthecountry. 7. Energy is one of the biggestcost items infactories.Kenya has an electricity Energy Use Indexof0.57kWh/Kgofmade teawhile thatforwoodenergyis3.83m2/tonofmadetea areforcedtosellpowertothenationalgridcheaplyandbuyitatahighercost. 8. Tea factories incur several costs,they are:operational costs(sitting allowances due to increasednumberof sittingswithonefactoryreported toholduptofifty-five(55) sittings relatedcostse.g.delapidatedandinneficientmachines,andlabourcostswhereservices areoutsourcedyetpersonnelareemployedtoperform thesameroles),transportcosts (tearandwear,outsourcingofvehicles,servicingandpoorroadmaintenance);financial costs(loans,verdrafts,nterestandpenalties);andcompliancecosts(RA,NEMA,KE e.t.c.). 4. 9.Insomefactories,boardmemberswerethemainbeneficiariesofprocurementprocesses. 5. 10.It takesbetween twelve(12) to eighteen(18)hours todelivergreen leaf to factoriesin theWestofRiftValleywhileittakestwo(2)hoursin theEastofRiftValley. 6. 11.Somemanagershadworkedinthesamefactoryformorethanfourteen(l4)yearshence familiaritywhichimpactedontheirperformance. 7. 12.Casesof falsification of the weighingscale atbuyingcentreswerereported in theWest ofRiftValley.SomefarmersaregivenlessKgs thanwhattheyhavesuppliedtherefore reducingtheirearnings. 8. 13.DifferentvarietiesandcultivarsofteaintheWestofRiftValleyareprocessedtogether despitethefactthattheyhave differentfermentationtimes,thisnegativelyimpactsonthe qualityofprocessedtea.The cultivarsinEastofRiftValleyare thesamehencebetter qualityofprocessedtea. 9. 14.Investment in hydropower generation plants inWestof Rift hasnotbornfruits. 10. 15.About50%ofKenyan teasare sold to twocountries,PakistanandEgypt.Thetwo marketsdictatethepriceandpreferenceoftea. 11. 16.The Tea Research Institute is inadequately funded.This poses a negative challenge in the executionofitsmandate. 12. 17.Kenyapredominantlyexports CTCteas.Thereisvery littlevalue addition thatis done in thecountrymainlybccauseofthehighcostsinvolved.

RECOMMENDATIONS

• 1.TheMinistryofAgricultureandLivestockDevelopment shouldinstituteanindependent auditonthelevelof adherence andcompliancetolegislationonthe licensingoffactories by theTeaBoard of Kenya.

2. MinistryofEnergyshouldimplementthelawonpowerwheelingtoenableteafactories thataregeneratingpower todistribute ittofactorieswithintheirproximity that arein need. 3. Factorymanagementsshouldreplacetheolddilapidatedinefficientmachineswithnew onestoensurebetterperformance,reducecostsandincreaseefficiencyinthefactories 4. TheTeaBoardofKenyashouldconductauditsofthehydropowerplantprojectsthatare ongoingintheWoR.Theyshouldlookintohowmuchtheapprovedbudgetsforthe projectsare,howmuchhasbeenspentsofar,theamountofmoney thatfarmershave spenton theprojects andexpecteddatesofcompletion of theprojects.TheBoard should takeactionondeviationfromtheexpectations.

• 5.8 The Governmentneedstoputinplace deliberateefforts tomarketKenyantea in all parts of the world in a bid to open upnew markets forKenyan tea.This can be done diplomaticallywithin Africa as per theAfCFTA,and by allKenyan Missions abroad adoptingtargetedteamarketingandreporting.
• 6 toexplore directsalesof their teas asopposed torelyingon theMombasaTeaAuction asthemainwayofsellingtheirteas.
• TheTeaBoardofKenya shoulddevelopmechanisms toensure thatfactories thathave adoptedquality-basedhandlingandprocessingofteabenefitfromtheireffort.

8. TheMinistry ofAgriculture and Livestock Development shouldensure that theTea ResearchInstitute isadequatelyfundedtofully andeffectivelydischargeitsmandate. 9. TheTeaBoardof Kenya incollaborationwith theKenyaTeaDevelopmentAgency shouid encouragebenchmarkingvisitsbyfarmersintheWoRtofactoriesintheEoRtolearn interactandexchangeideas.

• 10.TheMinistryofAgricultureandLivestockDevelopmentshould ensure that theTeaAct, 2020isfullyoperationalisedfortheproperfunctioningoftheteasectorinthecountry.
• Il.TheeffortsofauditingteafactoriesbytheTeaBoardof Kenya shouldpurposetocover allfactoriesandanymalpracticeidentifiedandconfirmedprosecutedaccordingly.
• 12.TheTeaBoardofKenya should conduct lifestyle auditof thedirectors,clerks andother influentialpersonsinthefactories.
• 13.TheTea BoardofKenya shouldensure thatapproved agricultural and manufacturing standards are adhered to across board,enforcement processes are developed,shared andapplied.

4|

• 14.TheMinistryofAgricultureandLivestockDevelopmentshouldcomeupwithalternative methods(scientific,blindtasting)forqualityassessmentofteatocomplement/improve onthecommonlyusedorganolepticmethod.
• 15.Factorymanagements shouldexplore alternative tea-basedopportunities to improveon theirincome.
• 16.TheKenya TeaDevelopmentAgencyHoldingsLimitedshouldpurposetoeffectively communicatetheproportionateshareofinvestmentoffactoriesin theWestandEastof membership.
• 17.Managementroleof KTDA-MS should be universal across all KTDA managed companies for optimal business.
• 18.Reformsneed to be instituted inall factories through costreduction,prudent credit management andadherencetologicallyprofitableinvestmentdecisions.
• 19.TheNational Assembly needsto amend theTeaAct,2020 toconform to thegrowthand developmentof thetea industry.

ADOPTIONOFTHEREPORT

TheCommitteeadopted theReporton theInquiryintothePricingofTea havingbeen proposedbyHon.JaredOdoyoOkelo,MPandsecondedbyHon.GeoffreyMakokhaOdanga MP.

MIN.NO.NA/A&L/2025/213:

ADJOURNMENT/DATE OF THE NEXT MEETING

Therebeingnootherbusiness,themeetingwas adjournedattwenty-eightminutes toeight O'clock.Thenextmeetingwillbeheldonnotice.

12/2025

7

SIGNED:....

.....DATE:....

HON.DR.JOHNKANYUITHIAMUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTES OF THE 47THSITTING OF THE DEPARTMENTAL COMMITTEE ON AGRICULTURE AND LIVESTOCK HELD ON WEDNESDAY,3RD DECEMBER 2025ATARGYLEGRANDHOTELAT10:00AM

PRESENT

• 1.Hon.(Dr.)JohnKanyuithia Mutunga,PhD,CBS,MP Chairperson
• 3.Hon.SabinaWanjiru Chege,CBS,MP
• 2.Hon.Brighton Leonard Yegon,MP
• 4.Hon.Geoffrey Makokha Odanga,MP
• 6.Hon.David Kiplagat,MP
• 5.Hon.Jared Odoyo Okelo,MP
• 7.Hon.Gabriel GathukaKagombe,MP
• 8.Hon.PatrickKibagendi Osero,MP
• 9.Hon.Yussuf Mohamed Farah,MP
• 10.Hon.JohnOkwisa Makali,MP
• 11.Hon.RichardKipkemoi Yegon,MP
• 12.Hon.(Amb)Francis Sigei,MP

ABSENTWITHAPOLOGY

• 1.Hon.FerdinandKevinWanyonyi,MP
• 2.Hon.LawrenceMpuru Aburi,MP
• 4.Hon.Monicah Muthoni Marubu,MP
• 3.Hon.Justice Kipsang Kemei,MP
• 5.Hon.RuthAdhiamboBusiaOdinga,MP
• 7.Hon.Dorice Donya Aburi,MP
• 6.Hon.Marianne Kitany,MP

INATTENDANCE

A.COMMITTEESECRETARIAT

• 1.Ms.LaureenWesonga

ClerkAssistantl

• 2.Mr.VictorKilimo

ClerkAssistant IIl

• 3.Mr.Shadrack Musyoki

SeniorResearchOfficer

• 4.CPA RobertNg'etich

Fiscal Analystl

• 5.Mr.GeraldKadede

Legal Counsel ll

• 6.Ms.Jacinta Maru

Serjeant-at-Arms

• 7.Ms.Lovin Wabwire.

AudioOfficer

• Vice-Chairperson

B.TEABOARDOFKENYA

1. Mr.WillyMutai

ChiefExecutiveOfficer

2. Mr.JohnKariuki.

Director,Finance

3. Ms.RosemaryOwino

Director,MDTA

4. Mr.PeterKibiku

Director,P and S

5. Mr.Julius King'oo

Ag.DirectorRLS

AGENDA

• 1.Prayers
• 3.Confirmation of Minutes
• 2.Preliminaries/Adoption of the Agenda
• 4.MeetingwithTeaBoardofKenya toDiscuss thePricingof TeainKenya
• 5.AnyOtherBusiness
• 6.Adjournment/Dateof theNextSitting

MIN.NO.NA/A&L/2025/206: AGENDA

PRELIMINARIES/ADOPTIONOFTHE

TheChairpersoncalled themeetingtoorderatsevenminutespasttenO'clockand prayed.Hethencalledall personspresenttointroduce themselves.

TheAgenda of the daywasadopted having beenproposed by the Hon.Patrick Osero,MPandsecondedby theHon.RichardYegon,MP.

MIN.NO.NA/A&L/2025/207: CONFIRMATIONOFMINUTES

Thisagendaitemwasdeferredto thenextmeeting.

MIN.NO.NA/A&L/2025/208:

MEETINGWITHTEABOARDOFKENYA TO DISCUSS THE PRICING OF TEA IN KENYA

Mr.WillyMutai,ChiefExecutiveOfficer for theTeaBoardofKenya informed the CommitteeaboutthemandateofTBK,thestructureof the teaindustry,auctionprice trends,costofproduction trends,backgroundonloansaudit,loanbalance asat30 June2025,keyfindingsfromtheauditandrecommendationsontheaudit.Fromthe presentation,theCommitteeestablishedthat:

• 1.Teaproductionhad increasedgloballyfromabout3.6billionKgs toabout7.2 billionKgs.Kenyacontributes25%totheglobal teaexportmarket.
• 2.75%ofKenyanteaissoldthroughAuctionwhile theremaining25%issold pricesofteaincludingthosesolddirectlybyfactories.
• 3.QualityofmadeteafromtheWestoftheRiftValleyislower thanthatfromthe Eastof theRiftValley,thus,teas from theEoRfetchhigherprices.Toimprove thequalityofteaintheWoR,TBKhasbeensettingupclinicsto teachfarmers best practices,encouraged production oforthodox tea and sourcing for new markets.

• 4.Theproductioncosts intheWoRarehigher thanEoRdue tomanyreasons amongthemdirectors'expenses(moresittingsthanrequired)
• 5.Somefactories intheWoRhadtakenloanstopaybonuseswhichhave contributed to thehighproductioncosts.The informationon theloansborrowed topaybonuseswashowevernotprovidedduringtheaudit.Someof theloans wereapprovedbyKTDAwithouttheknowledgeofthefactoryboardsasthere werenoboardresolutionsonthesame.
• 6.TBKhadpreparedaconceptpaperon themodernisationof teafactoriesandit hadbeenapprovedby theNational Treasury.
• 7.Thequalityof leadersintheEoRwasbetter thanWoRmakingitpossibleforthe leadershipintheEoRtocontaincostsintheirfactoriescompared toEoR.

DetailsofTBK'ssubmissionareinChapterThreeoftheReportontheInquiry into thePricingofTeainKenya.

MIN.NO.NA/A&L/2025/209:

ADJOURNMENT/DATE OF THENEXT MEETING

Therebeingnootherbusiness,themeetingwasadjournedatfifteen minutestoone O'clock.ThenextmeetingwillbeheldatthreeO'clock.

2

Z02s

SIGNED:.

......DATE:.

HON.DR.)JQHNKANYUITHIAMUTUNGA,PhD,CBS,MP

CHAIRPERSON,

DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTES OF THE 46TH SITTING OF THE DEPARTMENTALCOMMITTEEON AGRICULTUREANDLIVESTOCKHELDONTUESDAY,2NDNOVEMBER2025AT ARGYLEGRANDHOTELAT3:00PM

PRESENT

• 1.Hon.(Dr.)JohnKanyuithia Mutunga,PhD,CBS,MP Chairperson
• 3.Hon.Sabina Wanjiru Chege,CBS,MP
• 2.Hon.Brighton Leonard Yegon,MP
• 4.Hon.Geoffrey Makokha Odanga,MP
• 6.Hon.David Kiplagat,MP
• 5.Hon.Jared Odoyo Okelo,MP
• 7.Hon.Gabriel GathukaKagombe,MP
• 8.Hon.PatrickKibagendi Osero,MP
• 9.Hon.YussufMohamedFarah,MP
• 10.Hon.John Okwisa Makali,MP
• 11.Hon.Richard Kipkemoi Yegon,MP
• 12.Hon.(Amb)Francis Sigei,MP

ABSENTWITHAPOLOGY

• 1.Hon.FerdinandKevin Wanyonyi,MP
• 3.Hon.Lawrence Mpuru Aburi,MP
• 2.Hon.Justice Kipsang Kemei,MP
• 4.Hon.Monicah Muthoni Marubu,MP
• 6.Hon.Marianne Kitany,MP
• 5.Hon.RuthAdhiambo Busia Odinga,MP
• 7.Hon.Dorice Donya Aburi,MP

INATTENDANCE

A.COMMITTEESECRETARIAT

• 1.Ms.LaureenWesonga

ClerkAssistantl

• 2.Mr.VictorKilimo

ClerkAssistantIIl

• 3.Mr.ShadrackMusyoki

SeniorResearch Officer

• 4.CPA Robert Ng'etich

Fiscal AnalystI

• 5.Mr.GeraldKadede

Legal Counsel Il

• 6.Ms.Jacinta Maru

Serjeant-at-Arms

• 7.Ms.LovinWabwire

AudioOfficer

B.FARMER

• Vice-Chairperson

Mr.David Ichoho

AGENDA

• 1.Prayers
• 3.Confirmation ofMinutes
• 2.Preliminaries/Adoption of theAgenda
• 4.Meeting to consider the Reporton lnquiry into thePricing of Tea inKenya
• 5.AnyOtherBusiness
• 6.Adjournment/Dateof theNextSitting

MIN.NO.NA/A&L/2025/202: PRELIMINARIES/ADOPTION OF THE

AGENDA

TheChairpersoncalled themeetingtoorderatfiveminutespast threeO'clockand prayed.He thenrequested all personspresenttointroduce themselves.

TheAgendaof the day thewasadopted having beenproposed by the Hon.(Amb.) FrancisSigei,MP andseconded by the Hon.Jared Okelo,MP.

MIN.NO.NA/A&L/2025/203:

CONFIRMATIONOFMINUTES

Thisagendaitemwasdeferred to thenextmeeting.

MIN.NO.NA/A&L/2025/204:

MEETINGWITHMR.DAVID ICHOHO TO DISCUSSTHEPRICING OFTEA IN KENYA

Mr.David lchoho,a farmer from the Eastof Rift Valley and former National ChairmanofKTDAinformedtheCommitteethat:

• 1.Toimprove thepriceof tea,stakeholdersneed toaddress internal inefficiencies, extermal dynamics,stakeholderculpabilities,reformsinitiativesand coordinated deliberateactions.Theproblem is direand likely tobepersistentifnotresolved urgentlyandwithexpertise.Helistedanumberofcontributors tothelow earningsandproposedsolutions.Theyare:
• a)Political disruptionstotheKTDABoardparticularlytheNational Chairmanby theGovernmentdistractsKTDAinexecutionofitsmandate.
• b)DisruptiveordersbyTBK/GoKonteabusinessprocesseslikestoppingDirect Salesandremovalofthereserveprice.
• c)BureaucraticbottlenecksbyTBK.
• d)Breakdownofkeyinternational marketslikeIran,SudanandPakistan.
• e)ConflictofinterestlikeappointingtheChairmanof TBKwhoisalsoatea brokerresultedinantagonisticpolicyshiftandarbitraryadministrativeorders toKTDA.

• f StalledreformsinKTDA-Ms,KTDAHoldings,subsidiaries,financialreforms, HRrestructuringandmarketingreforms.
• g)ReformsintheAuctionandteabrokershavenevercommenced.Governance reformsatEATTAhaveneverbeendone.
• h)Thestalledhydropowerplantshavehugefinancialcostsas theyareholding significant capital in millions of dollars.The excess power from the operationalhydropowerplantssuppliedtoKPLCarepaidafterlongperiods oftimeyettheplantsarestillpayingloans.KPLCisyettoprovidewayleave s hasn'tbeendoneyetthewayleavetariffwillenabletheplantstosellpower tootherteafactories.
• i)Privatefactoriesareallowedtosell throughdirectsaleswhileKTDAfactories areprohibited.ThishasaffectedcompetitivenessoffactoriesintheWoRwho competeinunfairtermsoftrade.
• TheworkingrelationshipbetweenKTDAandGoK/TBKhasbeenweakand suspicious.Mostreformsandlegislationsarenottakenthroughstakeholder engagementandtheyfailtoappreciatetheglobaloperationofthebusiness.
• k)Therearedelaysinthereleaseofsubsidisedfertilizerswhichaffectsthecost ofcreditandcashflowofKTDAfactories.
• 1)Theteasectoroperatesinaglobalmarketwhere95%of tea issoldin variousdestinationsaround the world.Thesectoris thereforeaffected by geopolitics.
• 2.Heproposed thefollowingwaysof dealingwith theabovechallenges:TheGok shoulddiplomaticallyseekformarketsforKenyanteawithinAfricaasperthe AfCFTA;employaspecial teatraderepresentative forliaisonofthe tradein highconsumersofKenyanteas;restructuringofKTDA-MS,financialarchitecture reforms,reforming the subsidiaries,marketing reforms and organisation restructuringtoenhanceefficiencyandeffectivenessofKTDA;reformsinall factories to ensure financial sustainability through cost management,loan mindbusinessconcerninterestsforeffectivetrade;directorsatthefactorylevel should have skills and competencies,the nationalchairman should have a minimumofadegree;developteapolicytoprovideframeworkoftea KFSshouldleaseforestlandtofactoriestoplanttreesforwoodfuel;andthe proposalto transportmade teatowarehousesbyrailwayshouldbe implemented,KRshouldprovidespecialratesforthis.

Resolution

FromMr.Ichoho's submission,theCommitteeresolved toinvitethe TeaBoardof Kenyatorespond toissuesconcerning thelicensing offactoriesinthe country beforefinalisingonthereport.

MIN.NO.NA/A&L/2025/205:

ADJOURNMENT/DATEOFTHENEXT MEETING

Therebeing nootherbusiness,the meeting wasadjoumed athaifpast sixO'clock. ThenextmeetingwillbeheldonWednesday,3December2025at tenO'clock.

202S

SIGNED:

....DATE:.

HON.(DR.)JOHNKANYUITHIAMUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTES OF THE 45TH SITTING OF THE DEPARTMENTALCOMMITTEE ON AGRICULTUREANDLIVESTOCKHELDONTUESDAY,2NNOVEMBER2025AT ARGYLEGRANDHOTELAT10:00AM

PRESENT

• 1.Hon.(Dr.)John Kanyuithia Mutunga,PhD,CBS,MP Chairperson

Vice-Chairperson

• 2.Hon.Brighton Leonard Yegon,MP
• 3.Hon.Sabina Wanjiru Chege,CBS,MP
• 5.Hon.Jared Odoyo Okelo,MP
• 4.Hon.Geoffrey Makokha Odanga,MP
• 6.Hon.David Kiplagat,MP
• 7.Hon.Gabriel GathukaKagombe,MP
• 8.Hon.PatrickKibagendi Osero,MP
• 9.Hon.Yussuf Mohamed Farah,MP
• 10.Hon.JohnOkwisaMakali,MP
• 11.Hon.RichardKipkemoi Yegon,MP
• 12.Hon.(Amb)FrancisSigei,MP

ABSENTWITHAPOLOGY

• 1.Hon.FerdinandKevinWanyonyi,MP
• 2.Hon.Justice Kipsang Kemei,MP
• 4.Hon.Monicah Muthoni Marubu,MP
• 3.Hon.Lawrence Mpuru Aburi,MP
• 5.Hon.RuthAdhiamboBusia Odinga,MP
• 7.Hon.Dorice Donya Aburi,MP
• 6.Hon.Marianne Kitany,MP

INATTENDANCE

A.COMMITTEESECRETARIAT

• 1.Ms.LaureenWesonga

ClerkAssistantl

• 2.Mr.VictorKilimo

ClerkAssistant IIl

• 3.Mr.Shadrack Musyoki

SeniorResearchOfficer

• 4.CPA Robert Ng'etich

Fiscal AnalystI

• 5.Mr.GeraldKadede

Legal Counsel Il

• 6.Ms.Jacinta Maru

Serjeant-at-Arms

• 7.Ms.Lovin Wabwire

AudioOfficer

AGENDA

• 1.Prayers
• 3.Confirmationof Minutes
• 2.Preliminaries/Adoptionof theAgenda
• 4.Meeting to consider the Report on Inquiry into the Pricing of Tea inKenya
• 6.Adjournment/Dateof theNextSitting
• 5.AnyOtherBusiness

MIN.NO.NA/A&L/2025/198:

PRELIMINARIES/ADOPTION OF THE AGENDA

thencalledallpersonspresenttointroducethemselves.

TheAgendaoftheday thewasadoptedhavingbeenproposedby theHon.David Kiplagat,MPand secondedby the Hon.Sabina Chege,MP.

MIN.NO.NA/A&L/2025/199:

CONFIRMATIONOFMINUTES

Thisagendaitemwasdeferredto thenextmeeting.

MIN.NO.NA/A&L/2025/200:

MEETING TO DISCUSSTHEREPORTON THE INQUIRY INTO IN THE PRICING OF TEAINKENYA

Membersdeliberatedon thedraftobservationsandrecommendationsontheInquiry into thePricingof Tea inKenya.Theyresolved to inviteMr.David lchoho,afarmer beforefinalisingonthereport.

Themeetingwasadjournedtoallow theCommitteeSecretariat toincorporatethe observationsandrecommendationsinthereport.

MIN.NO.NA/A&L/2025/201:

ADJOURNMENT/DATE OF THE NEXT MEETING

There being nootherbusiness,the meeting wasadjourned at three minutespast oneO'clock.ThenextmeetingwillbeheldatthreeO'clock.

M

SIGNED:..

...DATE:.

HON.DR.)JOHNKANYUITHIAMUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTESOFTHE4THSITTINGOFTHEDEPARTMENTALCOMMITTEEON AGRICULTURE AND LIVESTOCK HELD ON TUESDAY,26THNOVEMBER 2025INCOMMITTEEROOMI7,3RFLOOR,BUNGETOWER,PARLIAMENT BUILDINGSAT IO:OOAM

PRESENT

• 1.Hon.(Dr.)John Kanyuithia Mutunga,PhD,CBS,MP

2. Hon.Brighton Leonard Yegon,MP 3. Hon.GeoffreyMakokha Odanga,MP 4. Hon.Lawrence Mpuru Aburi,MP 6. Hon.Gabriel Gathuka Kagombe,MP

• 5.Hon.David Kiplagat,MP

7. Hon.PatrickKibagendi Osero,MP 8. Hon.YussufMohamed Farah,MP

• 9.Hon.Richard Kipkemoi Yegon,MP
• 10.Hon.DoriceDonya Aburi,MP
• 11.Hon.(Amb) Francis Sigei,MP

ABSENTWITHAPOLOGY

• 1.Hon.Sabina Wanjiru Chege,CBS,MP
• 3.Hon.Justice Kipsang Kemei,MP
• 2.Hon.Ferdinand Kevin Wanyonyi,MP
• 4.Hon.JaredOdoyoOkelo,MP
• 5.Hon.MonicahMuthoni Marubu,MP
• 6.Hon.John Okwisa Makali,MP
• 7.Hon.RuthAdhiamboBusiaOdinga,MP
• 8.Hon.MarianneKitany,MP

INATTENDANCE

A.COMMITTEESECRETARIAT

• L. Ms.Laureen Wesonga

ClerkAssistantI

2. Mr.VictorKilimo

ClerkAssistantI

3. Mr.GeraldKadede

Legal Counsel Il

4. Ms.....

• 5.Ms.Jacinta Maru

Serjeant-at-Arms

Chairperson

Vice-Chairperson

B.KENYATEAGROWERSASSOCIATION-KTGA

Lindah Oluoch

ChiefExecutiveOfficer

C.KENYATEADEVELOPMENTAGENCY

• 1.Mr.Chege Kirundi

National Chairman

• 2.Mr.Wilson Muthaura

ChiefExecutiveOfficer

• 3.Mr.John Wasusana

BoardMember

• 4.Mr.MosonikSKM.

oardMember,KTDA

• 5.Mr.Collins Bett

MD,KTDA-MS

• 6.Mr.VincentMwingirwa

General Manager,KTDA

• 7.Mr.MathewsOdero

GroupCompanySecretary,KTDA

D.FARMER

Mr.David Ichoho

Farmer,EastofRiftValley

AGENDA

• 1.Prayers

3. ConfirmationofMinutes

• Preliminaries/Adoptionof theAgenda

4. MeetingwithStakeholdersin the Tea IndustryStakeholders toDiscuss the Pricingof Teain Kenya 5. AnyOtherBusiness 6. Adjournment/Dateof theNextSitting

MIN.NO.NA/A&L/2025/19: PRELIMINARIES/ADOPTIONOF THE AGENDA

The Chairperson called the meeting to order at half past ten O'clock andprayed.He then calledall personspresenttointroducethemselves.

Hon.Gabriel Gathuka Kagombe,MP declared conflict of interest in the matter under deliberationpursuanttoStandingOrder90asheisaBoardofDirectorofKTDA.Members deliberated theextentofhisconflictanditwasresolved thathewill attend themeetings becausehispresencewill not influence theCommittee'sdecisionon the Inquiry.Hewas howeverrequestedtojoinKTDAduringtheirpresentation.

TheAgenda of the day thewas adopted havingbeen proposedby theHon.Yussuf Mohamed Farah,MP and seconded by theHon.PatrickKibagendi Osero,MP.

MIN.NO.NA/A&L/2025/195:

CONFIRMATIONOFMINUTES

Thisagenda itemwasdeferred tothenextmeeting.

MEETINGWITHSTAKEHOLDERSIN THETEAINDUSTRYTODISCUSSTHE PRICINGOFTEAINKENYA

THEKENYA TEA GROWERS'ASSOCIATION(KTGA)

Ms.LindahOluoch,ChiefExecutiveOfficerforKTGAinformedtheCommitteethat:

• regulatoryuncertaintyandhighvolumesofteainKenya.TheminimumpriceforKenyan teaswhichwasputinplaceinJuly202lcontributedtohighvolumesofunsoldteas. NEMA and theWater Regulatory Authority) contributed to the costofproduction.
• 2.Labourcostsfor teaplantationswerehigherincomparisontosmallholderfarmersas mostemployeesworkinginteaplantationswerein unionsboundbyCBAs.Employeesin plantationsarepaidKshs.22perKgofteapluckedwhile thoseworkingforsmall holder costoflabourthatteaplantationsbegunusingmachinestoplucktea.

3. Contrary toperceptions,mechanised teaisableto meet therequiredstandards.ltis almostthesameashandpluckedtea.Sheundertook toprovidedata on theuse of mechanisation inteaplucking.

• 4.Members of KTGA usuallyplant high-yieldingvarieties developed in partnershipwith the Tea ResearchInstitute.AhectareofteainplantationsproducesI3,oo0Kgsofgreenleaf whilesmallholderfarmersrealise5,0o0Kgsofgreenleafperhectare.
• 5.Mostplantationsdovalueadditionforthelocalmarket.
• 6.Regulationsmadein theteasectordonotrecognisethatthere aredifferentplayersin the sector.Large scale teagrowersobjected to thesettingofaminimumpriceof tea.They alsoobjected thebanningofDirectSalesasitwouldleadtoclosureofmostoftheir businesses.
• 7.Organoleptictestingof tea isscientificbecause there is empirical evidence showing that there arebuyerswhopaymorebecauseof thetasteof tea.
• and statementsof teafactoriesunderKTGAintheWestof theRiftValley.

Details of KTGA's submission are in Chapter Three of the Report on theInquiry into the Pricing of Tea inKenya.

THEKENYA TEA DEVELOPMENTAGENCY(KTDA)

Mr.ChegeKirundi,NationalChairmanofKTDAinformedtheCommitteethat:

• 1.Factories aregovernedbygrowerswho elect directors.The elections are conducted by theIndependentElectoralandBoundariesCommission.KTDAhasI5boardmembers, 12electedfromthe12zonesand3executivedirectors.Eachofthetwelvezoneshasa minimumof3factoriesandamaximumof8factories.

2. DuringtheprivatisationofKTDA,54companies(19from theWestoftheRiftValley and 35from theEastof theRiftValley)boughtsharesinKTDA.This explainswhyKTDA has moreboardmembersfromEoR(7)comparedtotheWoR(5).The54shareholdersare theownersofthe7lteafactoriesunderKTDA. 3. Thepriceof teaisdeterminedbythebuyerdependingontheircapacityandmarket.The amountofmoneyrealisedbyafamerfrom toasalsisdeterminedbythecostsinthe farm,manufacturingandsales.Thequalityofteaiserminedbyseveral factorsincluding altitude,clones,husbandry,plucking,and tmewiiwhichitis deliveredtothefactory. Theweather androadmaintenance affectthetimewithinwhichgreen leaf iscollected fromfarms. 3. 4.Greenleaf hawkinghascontributedtothelowqualityof teaintheWestof theRiftValley anditneedstobeaddressedurgently. 4. 5.Some of the operational costs incurred by factories arelabour (19%),power (12%), electricityandcostoffinanceespeciallyintheV/oR. 6. approvedbytheboard. 7. Thecostofwood fuel hasgone upbecauseKTDAdoesnothaveenough trees. 8. Thereare4statutoryKTDAmeetings andIM.KTDAusually budgets for6 operational meetingsfor directorstobe apprisedonistate ofoperations in factories. Hovver,theTeaActgivesfactoriesindependence andtheycantherefore holdmeetings thatKTDAisnotawareof. 8. KTDA cannot determine the directorselectedbecauseitis done democraticallyby farmers. 9. 10.Thereis onecomplete hydropowerplantin Nyamira County,ChemositPowerPlantis

Detailsof KTDA's submission are in Chapter Three of the Report on the Inquiry into the Pricing of Tea inKenya.

Members'Deliberations

1. Members proposed that therewas need to look into the attitude towards quality especiallyintheWoR. 2. Itisimportanttotakefarmersfrom theWoRforbenchmarkingvisitstofactoriesinthe EoRforthemtolearnbestpractices. 3. LifestyleauditneedstobedoneonKTDAdirectorsintheWoR. 4. KTDAshouldprovidewrittensubmissionsonlawsthatneedtobeamendedtoimprove theteasectoranddataontheshareholdingofeachofthe54companiesthatownthe Agency.

Mr.DavidIchohoaFarmerfromEastofRiftValleywasrequestedtomakehissubmissionon MondayIDecember,2025.

MIN.NO.NA/A&L/2025/I97:

ADJOURNMENT/DATEOFTHENEXT MEETING

Therebeingnoother business,themeetingwas adjourned atthirty-five minutespast three O'clock.ThenextmeetingwillbeheldonMonday,IDecember2025attenO'clock.

12025

SIGNED:

.....DATE:...

HON.(DR.JOHNKANYUITHIAMUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

MINUTESOFTHE43RDSITTINGOFTHEDEPARTMENTALCOMMITTEEON AGRICULTURE AND LIVESTOCKHELD ON TUESDAY,IITHNOVEMBER 2025INCOMMITTEEROOM3,2FLOOR,BUNGETOWER,PARLIAMENT BUILDINGSATIO:OOAM

PRESENT

• 1.Hon.(Dr.)John Kanyuithia Mutunga,PhD,CBS,MPChairperson

2. Hon.BrightonLeonard Yegon,MP 3. Hon.Sabina WanjiruChege,CBS,MP 4. Hon.GeoffreyMakokha Odanga,MP 5. Hon.Justice KipsangKemei,MP 6. Hon.JaredOdoyoOkelo,MP

• 8.Hon.PatrickKibagendi Osero,MP
• 7.Hon.David Kiplagat,MP
• 9.Hon.Yussuf Mohamed Farah,MP
• 10.Hon.John OkwisaMakali,MP
• 11.Hon.Marianne Kitany,MP

ABSENTWITHAPOLOGY

• 1.Hon.Ferdinand Kevin Wanyonyi,MP

2. Hon.Lawrence Mpuru Aburi,MP 3. Hon.Gabriel GathukaKagombe,MP 4. Hon.MonicahMuthoni Marubu,MP 5. Hon.Ruth Adhiambo Busia Odinga,MP 6. Hon.Richard Kipkemoi Yegon,MP 7. Hon.Dorice Donya Aburi,MP

INATTENDANCE

COMMITTEESECRETARIAT

• 1.Ms.Laureen Wesonga

ClerkAssistantl

• 2.Mr.VictorKilimo

ClerkAssistantIIl

• 3.Mr.Gerald Kadede

Legal CounselIl

• 4.Ms.Teresia Macharia

Intern

Vice-Chairperson

AGENDA

• 1.Prayers
• 3.ConfirmationofMinutes
• 2.Preliminaries/Adoptionof theAgenda

4. Meeting toDiscusstheTerms ofReference for the Inquiry into thePricingof Tea inKenya

• 6.Adjournment/Dateof theNextSitting
• 5.AnyOther Business

IN.NO.NA/A&L/2025/190: PRELIMINARIES/ADOPTIONOFTHE AGENDA

TheChairpersoncalled themeetingtoorder athalfpasttenO'clockandprayed.He then inforined themeeting that the HonourableSpeakerhadcooptedHon.MarianneKitany,MP; Hon.Richard Kipkemoi Yegon,MP andHon.Dorice Donya Aburi,MP to the Committee for purposesof the lrquiry.

MPandsecondedby theHon.PatrickKibagendi Osero,MP.

MI.NO.NA/A&L/2025/191:

CONFIRMATIONFMINUTES

Thisagenda itemwaseferredto thenextmeeting.

MIN.NO.NA/A&L/2025/192:

MEETINGTODISCUSSTHETERMSOF REFERENCEFORTHEINQUIRYINTO THEPRICINGOFTEAINKENYA

The draft terms ofreferencefor the Inquirywaspresented t the Committee by the Secretariat.Membersadopted the termsofreferencewiththefollwingamendments:

I.ScopeoftheInquiry

In conductingtheInquiry,theCommitteewill:

• a) chain i.e.pre-production, production,harvesting,conveyancing, processing marketing,auction,retail and export.The Committee will alsoidentify thepoints at whichpricingofteaisdoneandthedeterminants,aswellasassesstheflowof informationanddecisionmakinginrelationtosettingthepriceof tea;
• b) reviewtherolesofTBK,KTDA andotherplayersby analysingthelegalframeworks governingthemarketing,auctionandexportoftea toidentifyoverlappingroles,

3. examinetheteaauctionprocessandalternativemarketingchannels; 4. (P examine the cost of inputsi.e.fertilizers,transport,labour e.t.c.and analysefactory andexportprofitmarginsand identifyinefficiencies alongthevalue chain; 5. e)investigatefarmerpayment structures,thebonussystem and deductions;

• addition,diversification andinnovationstrategies;and
• (B examineteatestingandclassification.

2. Includefactoriesin theWestoftheRiftin thefieldvisits. 3. IncludetheTeaResearch andTrainingInstitute in thelistofinstitutionstobevisited.

TheCommitteeSecretariatwasdirectedtoconductdeskresearchon thecategorisationof teainotherpartsof theworld.

MIN.NO.NA/A&L/2025/I93:

ADIOURNMENT/DATEOFTHENEXT MEETING

Therebeingnootherbusiness,the meetingwas adjourned attwenty-fiveminutespasteleven O'clock.ThenextmeetingwillbeheldonThursday,13thNovember2025attenO'clock.

2025

SIGNED:.....

.DATE:.....

HON.YDR.)JOH KANYUITHIAMUTUNGA,PhD,CBS,MP CHAIRPERSON, DEPARTMENTALCOMMITTEEONAGRICULTURE&LIVESTOCK