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Kenya Tea Development Agency (KTDA) Holdings is set for major restructuring as tea factories start signing new management agreements which require them to pay reduced fees in line with the Tea Act, 2020.

Through its subsidiary -KTDA Tea Management Services Limited (KTDA MSL), the agency that manages 66 factories commenced negotiation meetings with smallholder tea factories in Nakuru County last week.  

Tea Act, 2020 enacted in 2021 slashed management fees charged by KTDA to small scale farmers from 2.5 per cent to 1.5 per cent annually. 

Every year, KTDA holdings earns close to Sh2 billion as management fees which is based on 2.5 per cent of annual tea earnings.  But the same will decrease by over Sh1 billion starting 2023/2024 financial year, a reduction which stakeholders say will have a great impact on the management of the KTDA.

Directors from tea factories drawn from regions five and six, that comprises factories in Kericho, Nandi, Bomet, Kisii and Nyamira counties signed off the reviewed management agreements with KTDA MS Ltd after a three-day forum. The document will later be submitted to Tea Board of Kenya (TBK) for review and approval before implementation.

Speaking during the event, KTDA Holdings board chairman, David Ichoho, reiterated the agency’s commitment to implement all reforms designed to improve the performance of tea factories and the increasing returns to tea growers.

He underscored the role the agency has played in enabling small-holder tea factories to enjoy economies of scale through aggregation which is the hallmark of cost reduction in the KTDA group.