The recent enactment of the Tea Bill into law came as a relief to farmers, some of whom had lost hope in the future of the industry.
For the proponents of the Bill, it was certainly a win. But all is not lost for its opponents as there is still room to review and make amendments where necessary.
The law has sparked discussions on many issues that had been put in the back burner — including the geographical brand of Kenya teas, price stabilisation, minimum price for green leaf, and marketing tea as a brand
But looking at it holistically, the law has addreesed pertient issues such as auction sales, value addition, packaging, price stabilisation, and anchoring of the devolution of agriculture to the counties in the Constitution.
In essence, the law has opened up a lot of opportunities for the tea farmers, producers, and the county governments to reap maximum benefits from tea farming.
One of the major contentions in the Bill was the provision that all CTC (crush, tear, curl) teas shall be sold through the auction. Yet herein also lies the opportunity for the counties.
Here is why: with all the graded tea being sold in the auction, there is an opportunity for creating a geographical brand or geographical indications (GIs) for tea in Kenya by selling blended tea from regions through direct sales.
Creating GIs will involve a change in the way tea producers and processors think about tea production. By moving away from the production of homogenous tea towards blended teas, the returns accruing to the tea farmer will certainly increase.
And one feasible way to differentiate the product and add value to it is to brand it with the region of its origin. The creation of an image of the quality of tea made in a particular region in Kenya will make the region achieve consumer acceptance quickly and increase demand, leading to a premium price for the tea.
The protection of GIs is one way of price stabilisation needed by tea farmers and producers who want to move away from commodity production and the volatile price at the tea auction.
GI-based branding strategies as a form of market protection and promotion have long been available to wines and spirits in the European Union, with examples including scotch, champagne, and cognac.
So how do we achieve GIs in the tea industry? It is necessary to have a transparent system to sell the teas, and the Mombasa auction is the right channel for the farmer’s graded CTC teas.
It is important to note that the law does not close the private tea sale per se but creates an opportunity to relook at how private sales can be done and in a way that will benefit all tea industries and the counties, and not a few factories or plantations.
Since blended teas cannot be sold at the auction, the law should at some point be amended to allow blended CTC teas as part of the special tea category. These teas will be only sold as GIs products by the producers in each region or county.
The law should be further amended to allow factories in the same county or region to buy and sell tea to each other for blending purposes.
These amendments can easily be done through the regulations by the Minister for Agriculture.
For example, tea factories in Nandi can blend tea from different factories within the county, and the teas sold as Nandi Tea, with Nandi being the GIs. Other counties can do likewise, leadig to the geographical brands of Kenya tea, just like the champagne from France.
The county governments can create an economic zone where all these processes can take place thus mitigating the issue of value added tax (VAT). This will also create employment and empower the youth in the counties.
The county government will play two major roles: the county agriculture department with collaboration with the Tea Board will facilitate the application and securing of the GIs status and its certification; and secondly, help in the creation of an economic zone for blending the teas.
Because a GI will not be owned by any individual or single tea factory, the county government and tea producers in each county will set standards to control the tea quality and integrity and ensure the appropriate use of GI identifiers.
For the multinationational companies in the tea-growing counties, this will be a win-win situation.
They can continue honouring their forward contracts with their clients by selling them GI teas, and at the same time build good public relations within the counties they operate in while supporting farmers and sourcing from Kenya Tea Development Authority (KTDA) or independent factories within the region thus ensuring that the farmers get better prices for their tea.
GIs serve as a marketing tool that can add economic value to agricultural products by conveying a cultural identity using the region of origin, acknowledging the value of specific human skills and natural resources in the production process, and creating a unique identity for the products.
Other beneficiaries for the GIs will be the local packers, standard gauge railway since most of the teas will be shipped out after being transported by rail from Naivasha, and the counties in the creation of employment opportunities.
By Robert Keter is the managing director of Emrok Tea Factory