Proposed Tea Amendment Bill sparks controversy over farmer subsidies 

KENYA – The Tea (Amendment) Bill 2023, aimed at revising provisions in the Tea Act 2020, has passed its first reading in Kenya’s National Assembly, raising concerns among tea farmers over the potential loss of a guaranteed subsidy fund. 

According to Business Daily Africa, the Bill proposes changes to the allocation of funds from the one percent tea levy on imports and exports, initially introduced under the Tea Act 2020.  

Under the current Act, 50 percent of the levy is earmarked for income or price stabilization for tea growers, with the remaining funds divided among the Tea Board of Kenya (15%), the Tea Research Foundation (20%), and infrastructure development in the tea sector (15%). 

However, the new Bill seeks to reallocate the levy, giving 60 percent to the Tea Board of Kenya (TBK) to support its operations and 40 percent to the Tea Research Foundation. 

This amendment eliminates the guaranteed portion previously allocated for income stabilization, leaving it to the discretion of the TBK whether funds will be directed toward supporting farmers. 

The Tea Act 2020’s levy provision has yet to be operationalized due to ongoing legal battles. Several tea firms have contested the levy, arguing it is unconstitutional. 

Consequently, the TBK continues to rely on funding from the national exchequer. 

Senator Wakili Hillary Sigei and Hon. Brighton Yegon, the Bill’s sponsors, argue that the new allocation structure is necessary for the efficient functioning of the TBK and the Tea Research Foundation.  

The Senate approved the Bill on October 8, 2024, and forwarded it to the National Assembly for concurrence. 

Kenya’s tea exports in the previous year amounted to KES 138.09 billion. If the tea levy had been implemented, the TBK would have collected KES 1.8 billion from exports alone, says Business Daily. 

Critics argue that the proposed reallocation could negatively impact farmers, as it removes the subsidy safety net designed to cushion them against volatile global tea prices.  

The subsidy fund, initially guaranteed under the Tea Act 2020, provided financial relief to approximately 600,000 tea farmers across Kenya. 

Despite the contentious nature of the proposed amendments, the Bill retains Section 54 of the Tea Act, which establishes a Tea Fund.  

This fund, supported by budget allocations, the tea levy, and grants, aims to address broader financial needs in the tea sector. 

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