CS Peter Munya addresses 100 coffee society officials in Meru

 

Today CS Peter Munya addressed 100 coffee society officials (chairman and secretary) in Meru who were split into two sessions of 50 each to meet Covid-19 social distance requirements.

The CS emphasized a raft of changes being introduced to revive and improve the coffee sector, both in productivity and farmer earnings. These included:

  • Access to coffee inputs through e-voucher.
  • A 3 billion fund available to farmers at 3 percent and deductible at sale point.
  • Digital weighing and ledger management in the societies.
  • Installation of eco pulper to replace argard pregrader to save water and stop pollution in the rivers.
  • Construct metallic drying tables to improve uniformity in drying, stop termite damage, and increase longevity of the Nylex.
  • Install remote-controlled security systems to curb perchment theft and use solar security powered systems 24/7 reliability.
  • Rehabilitate the milling systems in Dandora, Meru, and Sagana.

The Cabinet Secretary Hon Peter Munya today announced the restructuring of the National Food Reserve and Food storage Management.

The Cabinet Secretary Hon Peter Munya today announced the restructuring of the National Food Reserve and Food storage Management.

Henceforth,
(i) The government will not directly buy, sell maize or set prices of maize

(ii) The government will no longer purchase, distribute, sell or set prices of fertiliser, seeds or any farm inputs

(iii) Going forward the government will focus on its key role, that of creating an enabling environment for producers and traders to make and execute commercial decisions, while ensuring that commercial interests, especially on imports do not disadvantage local producers and consumers.

CS Munya was accompanied by CAS Dr. Linah Jebii Kilimo, PS Prof. Hamadi Boga and PS Harry Kimtai.

Today CS Peter Munya commissioned a Desert Locust Invasion Impact Assessment Exercise which will help inform future interventions and recovery efforts.

Following the invasion, multiplication and spread of Desert Locust (DL), which precipitated serious threat to food security and community livelihoods, today CS Peter Munya commissioned a Desert Locust Invasion Impact Assessment Exercise which will help inform future interventions and recovery efforts.

CS Munya noted that the Government is deeply concerned about the welfare of those affected by the locust invasion and is keen on helping those who suffered loss recover and regain their livelihood.

The Kenya Red Cross will be conducting the survey of the impact of the desert Locust in 16 of the affected counties which will include ; Marsabit, Isiolo, Samburu, Mandera, Wajir, Garissa, Tana River, Turkana, Baringo, Elgeyo Marakwet, Laikipia, Kitui, Tharaka Nithi, Embu, Meru and Machakos.

The ongoing desert locusts control efforts by the Ministry of Agriculture and her partners has drastically reduced locust infestation from 28 counties to only five(5) counties.

Today, CS Peter Munya today presided over the Commissioning and Handing-over of Aquaculture Business Development Programme (ABDP)

Today, CS Peter Munya today presided over the Commissioning and Handing-over of Aquaculture Business Development Programme (ABDP) vehicles to the first six implementing Counties and the Programme Coordination Unit.

In April 2019, the Government of Kenya through the State Department for Fisheries, Aquaculture and the Blue Economy, got a 14.9 Billion shillings support from International Fund for Agricultural Development (IFAD). The Programme dubbed – Aquaculture Business Development Programme (ABDP), is to support aquaculture farming in 15 Counties with high aquaculture potential i.e. Nyeri, Meru, Kirinyaga, Embu, Tharaka Nithi, Kajiado and Machakos in the Central/Eastern Region and Kakamega, Migori, Homa Bay, Busia, Kisii, Kisumu and Siaya in the Western Region
Mr. Munya noted that the Fisheries and Aquaculture sub-sector plays a key role in food security. However, the sector faces challenges which include; Provision of good quality fish feed and seeds, provision and backstopping of technical services, capacity building in fish Processing and value addition, and strengthening of linkages between producers and market as well as other actors across the value chain.
Some of the interventions include provision of good quality fish feed and seeds, provision and backstopping of technical services, capacity building in fish Processing and value addition, and strengthening of linkages between producers and market as well as other actors across the value chain.

The Fisheries and Aquaculture sector has a big potential and there is already a significant gap between the current fish demand of 600,000 metric tonnes and the national fish production – 150,000. Mt. Kenya area aspires to raise the current per capita fish consumption per year from 4.5 kg/person/year to over 10 kg/person/year by 2030. This indicates a huge consumption gap and a potential market for the Kenyan fish farmers.

CS Munya was joined by CAS Dr. Linah Jebii Kilimo and PS Fisheries Prof. Micheni Ntiba.

Government gives a comprehensive and updated status of food security in the country during the Covid19 pandemic

The Government today gave a comprehensive and updated status of food security in the country during the Covid19 pandemic.

The Ministry of Agriculture also outlined new measures to upscale nutritional needs for Kenyans during the current crisis.

In a speech read on his behalf by Chief Administrative Secretary (CAS) Anne Nyagah, Agriculture minister Peter Munya also gave an update over the locust menace saying the destructive insects had been effectively controlled except in five counties where efforts are underway to eliminate them.

CAS Agriculture Madam Anne Nyaga, released the National COVID-19 Nutrition and Healthy Diet Guidelines at Afya House.

CAS Agriculture Madam Anne Nyaga, released the National COVID-19 Nutrition and Healthy Diet Guidelines at Afya House.

In her remarks, CAS Nyaga noted that these guidelines are part of the Ministry’s strategy to intensify the war against COVID-19 as good nutrition is important part of supporting a strong immune system.

Madam Nyaga thanked the Ministy’s Agri-Nutrition team supported by Food and Agriculture Organization of the United Nations and other development partners.

The Government today launched an ambitious Sh 1.5 billion Coffee revitalization initiative supported under ongoing programs of the World Bank.

The Government today launched an ambitious Sh 1.5 billion Coffee revitalization initiative supported under ongoing programs of the World Bank.

The two-year program will be undertaken under the National Agricultural and Rural Inclusive Growth Project (NARIGP) and the Kenya Climate Smart Agriculture Project (KCSAP).

Agriculture , Livestock, Fisheries and Co-operatives Cabinet Secretary Peter Munya launched the program from his Kilimo House office after holding a Virtual Conference with various Governors from the Coffee Growing regions whose counties will be the major beneficiaries of the project.

The CS and the governors discussed various issues concerning the challenges facing the Kenyan farmers, especially those growing coffee.

Components of the Coffee Revitalization Program shall include increasing coffee production, improving the efficiency of farmer co-operative societies, supporting research development and technology dissemination.

The other components of the program include supporting development of alternative coffee markets and project coordination.

Phase one of the program will be piloted in the main eight coffee producing counties of Kiambu, Machakos, Murang’a, Nyeri, Kirinyaga, Embu, Tharaka Nithi and Meru.

These pilot counties account for 70 per cent of the national production and have a potential for quick wins through increased productivity.

These counties have also agreed to inject additional investment to the coffee revitalization project.

Phase two of the project will expand into the other coffee growing counties where lessons learnt from the pilot regions will be up-scaled.

CS Munya said the new project will focus on tangible outputs directed to coffee farmers to enhance more cash flows. The budgets will be rationalized in four main components geared towards selected viable coffee co-operatives.

The CS said the County Governments have a huge role to in play in the implementation of the program especially by committing additional funds in the project.

He thanked the World Bank, which was represented at the function for their continued collaboration aimed at improving the living standards of the Kenyan citizens, investors and other stake-holders in the coffee value chain.

Other institutions represented at the function included the Agriculture and Food Authority (AFA) and the New Kenya Coffee Planters and Co-operative Union (New-KPCU)

Others were the CAS Anne Nyaga, PS Agriculture Research and Crops Prof. Hamadi Boga, PS Co-operatives Ali Noor Ismail and the Acting Commissioner for Co-operatives, Geoffrey Njang’ombe

CS Peter Munya announcing the Policy Regulatory and Administrative Reforms in the Tea Sector in Kenya.

HON PETER MUNYA, MGH, CABINET SECRETARY
MINISTRY OF AGRICULTURE, LIVESTOCK, FISHERIES AND COOPERATIVES, ANNOUNCEMENT OF POLICY, REGULATORY AND ADMINISTRATIVE REFORMS IN THE TEA SECTOR IN KENYA ON 16TH APRIL 2020
Introduction
1. Tea Contributes immensely to socio-economic development of the country. It is the leading foreign exchange earner contributing about 23% of the total foreign exchange earnings. Tea sector also supports the livelihood of over 5 million Kenyans. In the year 2019, the tea industry earned the country Kshs.117 Billion in export earnings and Kshs.22 Billion in local sales. On the supply side, the domestic sales value also increased from ksh.15 billion in 2018 to Kshs.18Billion in 2019.

2. Last year, Kenya produced 458Million Kilograms of Black Tea in the accounting for approximately 7.6% of the Global tea production, while exporting 496Million Kilograms which represented 26% of the Global Tea exports over the same period.

3. In spite of the economic and social challenges posed to Kenya and indeed the global community from the Corona Virus (Covid-19) pandemic, tea production and trading have continued unabated, with tea exports being shipped to about 40 market destinations monthly since January 2020.

4. However, the tea value chain in the country has historically been constrained by structural challenges that have collectively undermined the ability of the sector to achieve its full potential in terms of export earnings and contribution to the macro economy including GDP contribution, job creation and better earnings to tea farmers. These challenges have consistently manifested themselves in form of low or declining in tea prices at the auction and low earnings to farmers

5. As a consequence, there have been fervent appeals by tea farmers and other stakeholders to the Government to intervene and steady the dwindling fortunes of the tea sector. In some extreme cases, there have been instances where some farmers have uprooted tea bushes in protest thus compounding the threats to the tea sector both as a rewarding enterprise to the farmers but also as a significant foreign exchange earner to the country

6. Furthermore, good performance of the tea sector is a central public policy issue because approximately 70% of tea production in the country is undertaken by small scale tea farmers.

7. These challenges, if not address have the potential to recreate the problems faced by the coffee sector over two decades ago that led to neglect and/or abandonment of coffee bushes by farmers and the prevailing low coffee production in the country

8. These real threats to small holder tea farming and the macro-economy have therefore created an urgent need for proportionate Government intervention in the sector in the manner more particularly espoused in the Presidential Directive issued on 14th January 2020
Framing the Problem
9. The Government has therefore contextualized the challenges facing the tea sector and more particularly the tea farmers into three broad categories namely a dysfunctional tea auction system; control and predatory behaviour of KTDA and its subsidiaries in the tea value chain; and low and unstable tea prices. These challenges and their impact in the tea value chain are elaborated as follows:

1) A DYFUNCTIONAL TEA AUCTION SYSTEM
A major problem facing the tea value chain is a dysfunctional and inefficient tea auction system characterized by lack of transparency, accountability and competition; and prone to manipulation, capture, insider trading and cartelization by value chain players leading to ineffective price discovery, low prices and poor earnings to tea farmers. The structural character of the tea auction in Mombasa in terms management, governance and decision making processes is that it is a club where all value chain players, that have a direct commercial interest in the outcome of the auction process run the auction. This is a serious conflict of interest that predisposes the auction process to capture by vested interests, insider trading, price fixing and other malpractices.

2) ABUSE OF MARKET POWER BY KTDA AND SUBSIDIARIES IN THE TEA VALUE CHAIN
Moreover, the tea sector is undermined by the manipulation and predatory behaviour of Kenya Tea Development Authority (KTDA) and its subsidiaries on the value chain. KTDA that supply over 60% of the tea traded at the auction has consistently used its market power, dominance and influence to undermine the auction, curtail price discovery and exploit the vulnerabilities of small holder tea growers. This has been exemplified by the following overt behaviour by KTDA:
a) Instigation of sale of tea from small holder tea growers through an opaque and non-transparent ‘sale by private treaty’ (commonly called Direct Sales Operation). This process is further catalysed by a generous credit facility of between 30 to 120 days given by KTDA to buyers without any requirement to provide any guarantees for the teas bought. As a consequence, buyers interested in Kenyan tea do not have any commercial incentives to compete and push tea prices at the auction because of the opportunity to negotiate a sale by private treaty with KTDA outside the auction, sometimes at below the auction prices.

Moreover, because KTDA managed factories supply over 60% of tea to the auction, price discovery at the auction and the entire auction process is undermined by this parallel window; and tea prices are depressed. Furthermore, due to absence of any security embedded in KTDA’s sale by private treaty arrangement, significant amounts of farmers’ money has been lost to buyers who were supplied tea by KTDA and refused or failed to pay. In addition, due to lack of transparency and accountability in the way KTDA executes sale by private treaty, the process gives unfettered discretion to KTDA officials and is therefore a fertile ground for rent seeking and other governance transgressions at the expense of small scale tea growers.

As a direct result of the governance gaps, between October 2019 and December 2020, KTDA managed teas consistently underperformed the teas from Rwanda and Burundi on month to month basis. It is plausible to postulate that the cumulative adverse socio-economic impact visited on small scale tea growers and the macro-economy by this behaviour by KTDA over extended periods of time is monumental;
b) Imposing of exorbitant, exploitive and grossly opportunistic fees on small holder tea growers by KTDA for management services offered to factory limited companies. The Management Service Agreement between KTDA and Factory limited companies has a management fee of 2.5% of value of tea earnings by the factories. To demonstrate the exploitive and exorbitant nature of this fee, KTDA managed tea factories currently sell between 180,000 to 200,000 million kilograms of tea from over 600,000 small holder tea growers annually. At an average price of about US$3.5 per kg, teas belonging to these small holder tea growers handled by KTDA under the management agreement generate a value of between Ksh. 60 and 70billion annually. At a management fee of 2.5% of the value of tea sales for management services, KTDA holding and its subsidiaries gobble between Ksh.1.6 and 2billion every year as fees.
I consider this fee onerous and unjustifiable for the following reasons:
• Firstly, there is no justification for setting the fees for a management service, just like any other consultancy service as a percentage of the gross earnings of a client. Best practice is to set such fees on a cost reflective lump sum fee basis that includes a reasonable and competitive profit margin for the service provider;
• Secondly, there has been no observable correlation between the growth in these colossal earnings by KTDA and a commensurate growth in earnings by tea growers. On the contrary, earning by tea growers on a Kenya shilling per kilogram of tea basis have been on consistent decline while earnings by KTDA have increased; and
• Thirdly, the hefty fees and all the other toxic clauses in the management agreement are a result of a lopsided, opaque and highly conflicted contractual management relationship between KTDA and the factory limited companies. The KTDA company secretary also doubles up as the company secretary for all the factories. KTDA and its subsidiaries have literally been negotiating management service agreements with their own company secretary occasioning serious conflict of interests.
It is therefore inconceivable to expect that a contract emanating out of this defective structure can yield a fair and balanced contract that protects the interest of farmers.
c) Retention of large amounts of tea farmers’ money usually deducted at source and misapplication of these monies by KTDA as follows:
• Investments in a litany of subsidiaries ranging from power generation, insurance, tea trading, tea transportation, logistics and warehousing, micro finance and equipment manufacturing among others with little or no demonstrable direct benefits to tea farmers;
• Holding large amounts farmers’ money in low interest earning fixed deposit accounts in commercial banks while syndicating expensive commercial loans for the same tea farmers;
• Holding large amounts of small scale tea growers’ money with commercial banks that have a weak financial base leading to loss of billions on shillings. Two commercial banks have over the recent past gone down with billions of small holder tea growers’ money in deposits made by KTDA which demonstrates a general absence of the usual abundance of caution expected of an institution dealing with vulnerable communities;
d) Orchestration of a litany of Inter-factory loans and advances among tea factories using tea earnings from other factories. Currently, a number of tea factories owe and are also owed monies by other factories creating a lot of confusion in the sector; and
e) Inordinate delays in making prompt payments to small holder tea growers despite receiving payments from tea brokers within fourteen days from the date of the auction. This has decimated the cash flow position of small scale tea farmers who have resulted to tea hawking to cater for their basic needs. In addition, delays in making payments to farmers has had the negative effect of ensnaring tea farmers to borrowing expensively from shylocks and other informal leaders to cater for basic expenses such as food, health care and school fees for their children

3) LOW TEA PRICE AND PRICE VOLAYILITY
Thirdly, tea farmers have been also plagued by a twin problem of low prices and price volatility. While the low prices have eroded direct earnings by tea growers, tea price volatility has led to unstable cash flow for tea farmers.
4. PROPOSED POLICY INTERVENTIONS
In order to address the above challenges and guarantee long term growth and stability of the tea sector, the Government has developed the following interventions for implementation in the immediate, short and medium:

a) Immediate Regulatory Interventions

a) The following regulatory remedies have been proposed for implementation immediately these regulations come into effect:

i. All teas produced in Kenya for the export market in shall within two (2) months after coming into effect of these regulations be sold exclusively through the auction process.
ii. Henceforth, sale by private treat commonly known as Direct Sales Overseas is outlawed
iii. Any teas that are not sold during a particular auction shall be re-listed for sale during the subsequent auction;
iv. All registered tea auction organizers shall establish an electronic trading platform for tea auction. However a tea auction organizer existing before commencement of these regulations shall establish and migrate tea trading to an electronic trading platform within two (2) months from the commencement date of the regulations;
v. All tea buyers shall henceforth submit to the Regulatory Authority (AFA) a performance bond in the form of a bank guarantee equivalent to 10% of the estimated value of the tea they intend to buy to underwrite commercial risks associated with buyers who fail and/or refuse to pay in full for the tea bids they win at the auction;
vi. All buyers shall pay in full for all teas they win at the auction before they take custody and lift the tea for export
vii. All factory Limited Companies (Tea Factories) shall henceforth register and enlist with the Authority and auction organizer to participate at the tea auction directly;
viii. A registered tea broker shall offer brokerage services to a maximum of fifteen (15) factory limited companies. Brokers that are already in operation shall continue with their business uninterrupted until the tenure of their registration is due for renewal;
ix. All monies from the sale of tea at the auction shall be remitted directly to Factory Limited Accounts within fourteen (14) days from the auction date less only the agreed commission for tea brokers;
x. Factory Limited Companies shall within thirty (30) days from receipt of proceeds from sale of tea pay tea growers at least 50% of payment for green leaf delivered every month;
xi. The balance due to tea growers shall be paid by the factory limited companies within the financial or calendar year as shall be agreed with the growers

b) In order to address the challenges associated with the lopsided nature of the existing management agreement framework with Factory Limited Companies, the following regulatory interventions are proposed:
i. Any management agency agreement with a factory limited company shall be for a tenure not exceeding 5 years;
ii. The remuneration for any management service shall not exceed two percent 2% of the value of tea sold per year;
iii. Company secretary services shall be excluded from the services offered by management service providers;
iv. Factory Limited Companies shall either recruit in-house company secretaries or outsource the service; and
v. A director or affiliate of a management service provider shall not serve as a director or have a direct commercial relationship with a factory limited company they serve

1. Short to Medium Term Policy and Administrative Interventions

In order to address other systemic challenges facing the tea sector, the Government propose to engage professional consultants with the necessary experience in the tea industry to provide technical advise on further necessary policy and administrative reforms to improve efficiency and productivity in the value chain. In particular, the following interventions are proposed in this respect:

a) Undertake a technical study to define a clear migration path and governance framework from the current tea auction structure to an efficient, competitive and responsive Commodities Exchange for tea. In particular, the study will provide technical advise on the governance framework to deal the inherent weakness of the current auction system that includes predisposition to conflict of interest, capture by vested interests, insider trading, dominance in the auction market and ineffective price discovery system.
b) Undertake a study to evaluate the impact of KTDA commercial behaviour on the entire value including and more particularly the earnings to small holder tea growers. In particular, the study would undertake a historic audit and tracing of deductions of money belong to small holder tea growers over the last 10 years, evaluate the management of the KTDA holding and reserve accounts, evaluate and document losses occasioned by the pooled management of farmers’ earning by KTDA including cash held banks and monies held and/or lost to banks in distress, assess the application and use of public and farmers assets by KTDA, evaluate the risks associated with the sale of tea by private treaty by KTDA and losses that farmers have incurred due to this arrangement; evaluate the extent of application of farmers’ resources in the initial and on-going capitalization of KTDA subsidiaries and value of these subsidiaries to the tea growers among other considerations.
c) Undertake a study on the set up, resourcing and management of a price stabilization fund for tea growers and develop a framework for implementation of a sustainable Minimum Guaranteed Return (MGR) for tea farmers; and
d) Establishment of a steering committee to oversee, monitor and evaluate implement these policy, regulatory and administrative reforms and report to the cabinet secretary

This report and the attached regulations are submitted for public consultations for a period of fourteen (14) days from the date of this announcement. The members of the public and other stakeholders are guided as follows regarding this consultation process:
1. The regulations shall be available immediately on the websites of both the Ministry of Agriculture, Livestock, Fisheries and Cooperatives and the Agriculture and Food Authority (AFA);
2. A hot line has also been provided at AFA for purposes of providing any clarifications; and
3. The Ministry shall only be receiving written Memorandums from members of the public due to inability to hold any public gatherings in the wake of Ministry of Health guidelines on social distancing among other measures in the management of COVID-19 pandemic.

Asanteni Sana

SPEECH BY HON. PETER MUNYA, CABINET SECRETARY FOR AGRICULTURE, LIVESTOCK, FISHERIES AND CO-OPERATIVES DURING THE FLAGING OFF OF NON-Bt COTTON HYBRID SEED ON 15TH APRIL, 2020

Cotton can potentially be grown in 24 counties in arid and semi-arid areas. Its production in the country, however, declined from a peak of 70,000 bales in 1986 to 20,000 bales in 1990. The country has the potential to grow up to 260,000 bales, but currently, the sub-sector is producing a meagre 10,000 bales of lint annually against the domestic market demand of 110,000 bales. While the potential land is 400,000ha, presently only under 30,000 ha is being utilized. Current yield is about 572kg/ha against a potential of 2,500kg/ha. There are currently about 30,000 cotton farmers while the industry can be able to support over 200,000 farmers.

Further, the industry has the potential to employ 1.5 million people under the cotton textile and clothing value chain. Income earnings to growers will contribute to poverty reduction, especially in arid and semi-arid lands (ASALS). Cotton offers the raw material for local textile and apparels industries to manufacture for export and contribute to foreign exchange earnings.

Kenya’s texitile exports enjoy quota and duty free access to the USA market under the African Growth and Opportunity Act (AGO) in addition to other preferential treatment in EU and COMESA markets. There are also numerous opportunities in targeted manufacturing to supply apparels in the local market and for home textiles and home décor.

However, Cotton production in the country has been constrained by various challenges; key among them, inadequate extension services; insufficient integration of the value chain; the high cost of production; lack of certified seeds and lack of affordable credit. Other challenges include fluctuation of seed cotton prices, weak farmer organizations, low production and productivity and obsolete equipment.

To redress these challenges, the Government has commenced the process of supplying certified hybrid seeds which can produce over 2,000 kg seed cotton per hectare against the current average yield is 572 kg/hectare. It is anticipated that with this and other targeted interventions in the pipeline, cotton production in the country will experience a rebound and earnings to cotton farmers will significantly improve.

Under the Presidential Big-4 Agenda, Government has several initiatives that include input support, access and development of improved seeds, price support, construction of seed cotton buying centres, strengthening and formation of farmer cotton co-operatives /organizations, capacity building of extension service providers, and establishment of modern ginneries and commercialization of Bt. Cotton production. It is projected that cotton production will grow from a current low of 29,000 bales per year to about 200,000 bales by the year 2020.
During the launch of Bt Cotton program on 9th March 2020 at Alube University College in Busia (Western Kenya), Government had promised to provide farmers with certified hybrid seed for planting during the long rains of March/April. The Government has since procured 16 metric tons of non-Bt hybrid Cotton seeds from Mahyco Seed Company, distributed to following Counties; Busia, Bungoma, Siaya, Kisumu, Homabay, Baringo, Elgeyo/Marakwet, Kilifi, Kwale, Tana River and Lamu.

Additionally, during the long rains March/April, we are going to establish 720 demonstration sites of Bt cotton in the same counties where non-bt hybrid seed will be grown. These demonstration sites will be used for teaching farmers and extension service providers from all over the country so that full commercialization is done during the short rains October/November. In addition, we are going to establish 720 demonstration sites of bt. Cotton in the same counties. The demonstration sites will be used for teaching farmers and extension service providers from all over the country so that full commercialization is done in the subsequent seasons.

In the next three years, the Government will strengthen policies, research and development of cotton production and value-addition in collaborations with local and international seed companies, local research institutions, the textile and apparel sector as well as other development partners. To ensure the establishment of vibrant certified seed production for both Bt and conventional varieties locally and give our farmers the choice of seed they wish to plant and for which end-products.