Senate Committees Recommend Annulment of Tea Regulations of 2020

Kenya’s Senate Sessional Committee on Delegated Legislation and the Standing Committee on Agriculture, Livestock and Fisheries have resolved not to accede to the Crops (Tea Industry) Regulations, 2020, and recommended that the Senate annul the regulations in their entirety.

While making a statement relating to the activities of the Delegated Legislation Committee to The Senate today, Chairperson Senator Mohammed Faki, said some of the regulations were not in the interest of the counties; adding that they should clearly provide for the role of the counties seeing that Agriculture is a devolved function.

“The committee did not accede to the Crops (Tea Industry) Regulations, 2020 and will be seeking a resolution of The Senate to annul them as some of the provisions were not in the interest of counties. The Regulations should clearly provide for the role of the counties noting that Agriculture is a devolved function,” he told the house. 

In the tabled report to the Senate, the two Committees said “After careful consideration of the Crops (Tea Industry) Regulations, 2020, pursuant to section 15 (1) of the Statutory Instruments Act and Standing Order 221 (4) (b), the Sessional Committee on Delegated Legislation and the Standing Committee on Agriculture, Livestock and Fisheries do not accede to the Crops (Ten Industry) Regulations, 2020 and recommends that the Senate resolves that the Statutory Instrument be annulled.”

In reaching the conclusion, the committees said that they considered the Regulations at length and received submissions from various stakeholders who made both written and oral submissions. Some of the stakeholders the committees engaged included farmers from Nandi, Bomet, Kericho and Murang’a Counties; the Kenya Tea Development Agency and its subsidiary companies and their representatives; East African To Trade Association; and the Council of County Governors.

In the report, the committees observe that the Regulations assigned some functions to the Agriculture and Food Authority which are devolved functions under the Fourth Schedule of the Constitution. 

“In particular, the Committee observed that registration of warehouses by the Agriculture and Food Authority which flies in the face of the law, noting that the Warehouse Receipts System Act, 2019 has tasked county governments, through the respective County Executive Committee Members, to register and license all warehouse operating within respective counties,” reads the report. 

Additionally, the committees faulted the Regulations for failing to provide for County Tea inspectors and dispute resolution mechanisms at the county level with regard to registration and licenses. Further, the committee held that the registration of tea packers should be assigned as a county government function.The Committees also found that the Regulations were overly prescriptive and aimed at controlling one industry player as opposed to providing other players incentives to grow.

“While the Regulations seek to address problems faced by small holder farmers and to increase direct control of the industry by the farmers, they seem to have left out other players in the industry. The Regulations are generally too prescriptive as they are aimed at controlling one industry player instead of providing incentives for other industry players to grow. The Regulations should therefore be reviewed with a holistic view of the industry and especially noting the interests of County Government,” the committees observed. 

Further, the report holds that while public participation was conducted on the Regulations, stakeholders, including County Governments felt that their views were ignored. The report observes that “agriculture is a devolved function under the Fourth Schedule of the Constitution and the Regulations should include the views of all County Governments pursuant to section 40 (1) of the Crops Act.”

On Regulatory Impact Assessment, the report notes that that due to the potential impact of the Regulations, a Regulatory Impact Assessment should be done on the final version of the Regulations and not the initial one. 
The report further notes that the Regulations will interfere with the internal affairs of private companies and may amount to over-regulation of the industry thus stifling growth.

“The Committee observed that the Regulations violate the provisions of the Companies Act which require the internal affairs of private companies. The Committee noted that under Regulation 18, the determination of whether directors are fit and proper is likely to interfere with the internal management of duly registered and licensed companies and deny the company a license on that basis.”

It added “The company is at law a different entity from its directors and shareholders. In this principle, the corporate veil of a company is protected, and a regulation cannot purport to piece the corporate veil without going through the court process and establishing the legal requirements for piercing the corporate veil.”

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