The board and management of KTDA Management Services Limited (KTDA MS Ltd), a wholly-owned subsidiary of KTDA Holdings Limited which provides management services to tea factories, has finalised negotiations to review management agreements for the smallholder tea factories in Embu county.
According to KTDA MS, the reviewed management agreement is a paradigm shift from the current agreement and after implementation it is expected to remedy the relationship between the parties and improve the management of tea factories for the benefit of tea farmers.
Among key changes in the reviewed management agreement include:
1. Reduction of management fee from the current 2.5% to 1.5%.
2. Introduction of key performance indicators to monitor the performance of the management agency on a continuous basis.
3. Reduction of the term of the agreement from the current 10 years to 5 years which is expected to enhance accountability of the management agency.
4. Clear demarcation spelling out the role of the management agency and the board to improve their services to tea factories and farmers.
The team from KTDA MS was led by its newly appointed chairman, Solomon Maina, who noted that KTDA MS has vast experience in managing the smallholder tea sector having managed the sector for more than 50 years. Maina further added that, whilst the agency is committed to implementing the new management agreement, the impact of reduced management fee is substantial and would require fundamental changes in both the structure of KTDA MS Ltd but also in mode of service delivery by adoption of mechanization and automation.
Speaking during the event, KTDA Holdings board chairman, David Muni Ichoho, reiterated that his board and his team are committed to the implementation of all reforms geared towards improving the performance of tea factories and the increasing returns to tea growers.
The KTDA Holdings board chairman underscored the role the agency has played in enabling small-holder tea factories enjoy economies of scale through aggregation which is the hallmark of cost reduction in the KTDA group. He noted that this model is what has enabled the smallholder tea subsector in Kenya to thrive while other subsectors are struggling.
Joe Muchiri, a Director of Rukuriri Tea Factory said that KTD-MS, with over 50 years unparalleled experience in production, processing and marketing of high quality teas has no equal in factory management. He went on to stress the need to protect KTDA-Ms in which the shareholder has heavily invested over many years and continues to reap fruitful returns.
Factories from the West of Rift concluded their review meeting last month. Their meetings were also attended by Tea Board of Kenya. While speaking in Nakuru where the meetings were held the chairman of TBK Dr. Kiarie Mburu implored the parties to work together towards improving the livelihood of over 650,000 tea farmers and many other Kenyan who depends on tea.
He noted that tea has been identified as one of the key value chains for agricultural transformation under the government’s Bottom-up Economic Transformation Agenda (BETA) to improves the livelihoods of Kenyans and increase food security therefore underscoring the importance of the subsector.
He congratulated the parties noting that the KTDA model is the best aggregation model for smallholder tea famers and signing of these agreements is critical in redefining the relationship between the tea factories and the management agent. He noted that this is a key milestone in the implementation the Tea Act 2020 which is meant to revitalize the tea sub-sector.
The reviewed and agreed management agreement with Embu County Factories awaits signing by the parties and will be submitted to TBK for review and approval before implementation.