The newly elected tea directors were finally inducted as board directors of KTDA Holdings Ltd.
Speaking during the induction forum, Agriculture CS Peter Munya said KTDA has been synonymous with the smallholder tea sub-sector since its inception over 50 years ago, initially as a Government agency and later as an entity owned by the farmers through the tea factory companies. For many years he said it was associated with tremendous success experienced by the smallholder tea sub-sector and also millions of other people who continue to treasure tea as a key source of livelihood.
Munya said that the impact that KTDA has had in the management of the smallholder sub-sector is often cited as one of the most successful models, with some of the tea producing countries in the region benchmarking and adopting the model.
“Unfortunately, currently the only success story that is recognizable is the number of farmers that has grown to over 600,000 and the farmers’ investment in nearly 70 factories. While KTDA was created to serve tea farmers by providing management services to the tea factory companies and marketing their tea in the local and international markets, the agenda seems to have changed over the last few years. The shift in focus was characterized by a deliberate move to turn KTDA Holdings Ltd into a property of some few individuals who have in effect turned farmers into labourers and suppliers of green leaf for the tea factories. Management contracts for the factory companies have been designed and executed by KTDA Holdings Ltd which was turned into a commercial entity with the proceeds being enjoyed by the new “owners” as farmers have continued to suffer. The individuals that were masquerading as farmers’ representatives proceeded to invest farmers’ money in commercial subsidiaries whose benefits are questionable and never reached farmers,” said Munya while referring to the ousted KTDA Holdings Directors. Some of them like the former Chairman Peter Kanyago has served for many years at KTDA.
Munya said over the last five 5 years when the tea industry has experienced a steady decline in prices and consequently poor earnings by the farmers, “there have been attempts to explain the reasons for the decline in earnings as having to do with something they call “global market dynamics” and production of poor quality teas” by the former directors.
The CS challenged the new Board to give a different kind of leadership. “Apart from your roles in the boards of the tea factory companies, you now have the added responsibility of steering KTDA Holdings Ltd with the mandate of providing management and marketing services for the factories. As you assume office, it is important for you to recognize that you are taking up your responsibilities on the platform of reform and transformation amidst high expectations from the shareholders and farmers who have suffered in the hands of poor leadership for a long time. The most important responsibility that you have is to restore the original mandate of KTDA Holdings Ltd, which is executed through the KTDA Management Services Ltd and to refocus the respective subsidiaries towards serving farmers’ interests and delivering value to shareholders. This may include rethinking the existence and value of some of the subsidiaries,” he said.
Munya added that it will be a tragedy for the tea industry, particularly the smallholder sub-sector, if the Directors fail to take the reform direction and instead relapse to the same old behaviour and selfish undertakings.
The CS said that for the farmers to realize the benefits of the new dispensation, there is an urgent need for KTDA Holdings Ltd to stick to its mandate of providing management and marketing services to the tea factory companies. This should be undertaken within the confines of the contractual obligations and principles to be arrived at and re-negotiated with the respective tea factory companies.
The new KTDA Holdings Ltd board must also act in the best interest of the shareholders – tea farmers – by formulating and implementing only those strategies that are aimed at delivering the best value for the tea they deliver to the market on behalf of farmers.
The subsidiaries he added should only be retained and operated to support the objective of delivering value to smallholder farmers through operational synergies and where they accrue any profits, due dividends must be paid to shareholders. The subsidiaries with conflicting mandates and objectives will have to be reformed with a view to discontinuing programs that are not in tandem with the organization’s core objectives.
The board of directors were also told that they must uphold good governance and desist from participating in any acts that would lead to a conflict of interest, either with regard to the KTDA Holdings Ltd or the tea factory companies.
The Government Munya said will continue facilitating policy support as well as the promotion and marketing strategy through the Tea Board of Kenya. “However, Government support will only make sense if KTDA Holdings Ltd, which has the mandate of managing tea for the smallholder sub-sector plays its part. Finally, I urge you to move with speed in executing actions and strategies that can accord farmers enhanced earnings and get the sub-sector back to the sustainability and profitability path,” opined Munya.