The East African Tea Trade Association was formed in 1957 to promote the best interest of the Tea Trade in Africa.
The Association's objects are:
- To promote the best interest of the Tea Trade in Africa.
- To foster and ensure the orderly sale of tea and the centralization of the Tea Trade in East Africa
- To establish facilities for the conduct of sale of tea by auction or otherwise.
- To promote close relations within the Tea Industry.
- To facilitate the settlement of disputes within the trade
- To collect and circulate tea statistics and to maintain such records as may be of assistance to members in the conduct of their business.
The Association has approximately 300 corporate members of six categories
EATTA’S Half Century at the Helm
With a current membership of about 240 members from across the tea industry, East African Tea Trade Association (EATTA) is the most credible and authoritative membership organization that is fully in charge of this crucial sector in the region.
Its insuperable history dates back to 1956, when a handful of tea producers, buyers and brokers came together and founded the Association. They decided that the practice of consigning all the Kenya and East Africa’s teas to the London Auction in the United Kingdom was not a very wise thing to continue doing. “Why should Kenya not have its own auction system?” This was the pondering question in the minds of the determined pioneers of the tea trade.
They established Kenya Tea Export Auction, as was then known. However, the amount of tea offered at the auction was very small. The new auction mostly dealt with the secondary grades. Kenya’s annual production of tea was just 10 million kilos then and the bulk of it was still finding its way to the London Auction. This however never killed the morale of the local auction initiators.
The auction was done after every two weeks at Plantation House, along Haile Selassie Road, Nairobi, which remained the venue of the tea business until 1969 when EATTA members resolved to have it relocated to Mombasa. The relocation of the auction from Nairobi to Mombasa was itself not without some controversy and strong opposition from a section of the members. For this reason, the process to relocate took nearly two years.
Relocation
A meeting of the EATTA Management Committee held at Grand Hotel in Kampala on July 23, 1968 mooted the idea of relocating the auction from Nairobi to Mombasa. Participants in the meeting held in the afternoon after an International Tea Conference in the hotel, agreed in principle on the relocation. But they had to circulate minutes of that decision to members in order to get their views.
Present at the Kampala meeting included representatives of the African Tea Brokers Ltd, Kenya Tea Development Authority (KTDA) as it then was, The African Highlands Produce Company Ltd, Kenya Tea Company, Salama Ltd, Abangulu Ltd, Brooke Bond Mombasa Ltd, Stansand (Africa) Ltd, Uganda Tea Brokers, Phillips Harrison and Crosfield Ltd and the Uneximp Ltd.
The members instructed the Committee Secretary Mr. E.B. Sadharwala of George Williamson to circulate the minutes of the resolution (on relocation) to all the EATTA members and to give a six-week notice. It however was a big setback for pro-relocation members when a Management Committee meeting held on November 5, 1968 chaired by Mr. M.J. Clarke heard that only 43 members had voted in favour of the relocation against 76 members who said they preferred the auction to remain in Nairobi. Seven members had abstained in voting while 31 others were yet to respond.
Many members mainly producers complained that it would be very costly for them to travel all the way to Mombasa to attend auctions. Those from Uganda and Tanzania also felt Mombasa was going to inconvenience them.
It happened that more and more tea buyers and brokers were opening their offices in Mombasa where they warehoused their teas and booked ships to export it after having bought it at the Nairobi auction. The brokers and buyers told the producers that they stood to realize better prices for the commodity once the auction was moved to Mombasa. These developments helped to build a case for relocation and it was not long before majority members saw the sense of the proposed shift. Come 1969 and all roads led to Mombasa, the town that would henceforth host the auction to-date and the future.
Growth and Development
At the same time, the tea offerings at the auction grew significantly compared to the early years of the Nairobi auction. In August 1968, when the auction was still in Nairobi, the then EATTA Chairman Mr. O. Brook reported that membership had reached 155 comprising of 63 buyers, 76 producers, 4 brokers and 12 associate members. The offerings, on the other hand, had grown to 195,112 chests and a weekly auction was initiated on a trial basis.
Another significant development in the management of EATTA took place in the same period when a special meeting was convened on August 20, 1968 purposely to alter the organisation’s constitution and the rules and regulations, to pave way for the establishment of an all powerful 12-man Management Committee mandated to oversee the day to day operations of the Association on behalf of the members. This management structure exists up to date and has helped in the smooth running of the Association.
Challenges
Many problems dogged the tea sector in the 1960s, 70s and the 80s. These included delays at the Mombasa Port, high shipping costs, drought, fluctuation of prices, sometimes-unfriendly government regulations and packaging for export. However, through its growing influence, EATTA was able to ensure most of these problems were addressed except those that were obviously beyond its control like the weather conditions and the fluctuations in the world market.
EATTA has been able to negotiate reasonable shipment rates with the shipping lines for its members. It has over the years worked closely with the relevant government institutions like the Kenya Ports Authority (KPA), Kenya Bureau of Standards, Tea Board of Kenya (TBK), the Ministry of Commerce and Industry, Finance Ministry and that of Agriculture, among other institutions, to ensure all emerging issues affecting the industry are tackled with due diligence.
Guidelines and Regulations
An important part of its mandate is to ensure that teas imported into the country for sale at the auction are cleared by the Customs without unnecessary red tape. The Mombasa Auction currently serves 11 countries and it would be foolhardy for the government to put blocks on the official routes through which the commodity is brought into Mombasa for sale.
The tea handling chain has to be foolproof to avoid mix-ups and compromise on the standards. Therefore, back in 1981, the Association saw the need to put in place a detailed code of practice for the warehousing operators. The code that was prepared by the Tea Brokers Association sets out guidelines on tea handling, a system that eases the work of identifying unevenly bulked tea before it is entered into the catalogue.
EATTA has also proved its mettle as an effective self-regulator by successfully enforcing quality standards instead of depending on the government. The importance of the Mombasa Auction continues to grow. Containerized shipments introduced in the late seventies, created further interest from international tea buyers who soon realized the advantages of quick and safe shipment to destination. Thereafter, the conversion of packing to easily palletized paper sacks stretch-wrapped and containerized for shipment has been an additional incentive to exporters.
The introduction of bidding in US dollars in October 1992 has also proved a further strong incentive to producers offering tea in the Mombasa Auctions and additional quantities not only from Kenya but also from the other EATTA-member countries mentioned earlier. This allows payment for teas sold in US dollars ten working days from the date of sale and obviates any devaluation in local rates and ensures rapid payment in a stable currency.
Lobbying and Strategies
Some more recent challenges affecting the tea traders locally have included the following: poor infrastructure, inefficiency of the Mombasa Port, insecurity, tea hawking, high production costs and depressed tea prices.
However, through lobbying, EATTA has been able to impress upon the relevant authorities to effect various intervention measures. Many roads within Shimanzi area where most warehouses are located are currently undergoing rehabilitation and the same case applies to the highways connecting the Kenyan port town with its hinterland where tea originates.
To ensure producers realize better returns for their tea, the Tea Board of Kenya is currently working out a strategy to facilitate tea value addition initiatives through blending, packaging and branding of the Kenyan tea. These activities have been minimal and the investors have complained over the lack of incentives and favourable legal and policy structure.
The United Nations Environment Program (UNEP) is working closely with EATTA on a new project dubbed “Greening the Tea Industry in East Africa” that would involve setting up small hydro power projects to supply tea factories with their energy needs instead of continuing to rely on firewood, which is expensive and has had a devastating effect on the environment.
Production cost comprises 60 per cent of the tea prices realized at the Mombasa auction, 30 per cent of which are energy costs. It is estimated that reverting to HEP energy would help reduce the energy costs to 12 per cent thereby improving the producers’ profit margin substantially.
