The Tea Board of Kenya (TBK) has directed smallholder tea factories managed by KTDA Management Services Ltd to immediately comply with provisions of the Tea Act, 2020 governing participation in the tea auction and the handling of proceeds from tea sales.
In a formal notice, the Board cited Section 36 of the Tea Act, which regulates how tea factories engage in auction processes and receive payments from tea sales.
The regulator said it had established that several KTDA-managed smallholder factories were not compliant with the law.
According to TBK, Section 36(2) of the Tea Act requires all tea factory limited companies to register directly with the Board and the auction organiser in order to participate in the tea auction.
The provision expressly prohibits factories from registering through management agents.
“Board has established that smallholder tea factories managed by KTDA Management Services Ltd have registered with the auction organiser through management agent rather than directly, contrary to the requirements of Section 36 of the Tea Act, 2020,” the notice states.
The Board further cited Section 36(3), which requires the auction organiser to establish an electronic trading platform that is usable and accessible to all players in the tea value chain.
TBK said factory management must have full access to the platform to enable effective monitoring and oversight of auction transactions.
In addition, TBK reminded tea brokers, buyers and the auction organiser of their obligations under Section 36(5) of the Act, which requires that proceeds from the sale of tea be remitted to factory accounts within 14 days from the date of the auction.
To address the breaches, the Board directed affected factories to take corrective action within seven days from the date of the notice.
Factories have been instructed to ensure they are registered directly with both the Board and the auction organiser, independent of management agents.
The Board also directed that factory management be granted full access to the electronic trading platform and that all parties involved in tea trading strictly comply with the statutory requirement to remit auction proceeds to factory accounts within the prescribed 14-day period.
TBK warned that it will conduct routine inspections and compliance audits to assess adherence to the directive and other provisions of the Tea Act, 2020.
“Please note that the Board shall undertake routine inspections and compliance audits to assess adherence to this directive and other applicable provisions of the Tea Act, 2020,” the notice said, adding that non-compliance would attract enforcement action without further notice.
