THE DYNAMIC REGULATORY ENVIRONMENT BY AGRICULTURE AND FOOD AUTHORITY ATC 2019

Contents INTRODUCTION DEVELOPMENT OF KENYA TEA INDUSTRY. GLOBAL TEA SITUATION ROLES AND LEVELS OF REGULATION. CHALLENGES IN SELF AND LEGISLATIVE REGULATION KEY OBSERVATIONS AND CONCLUSION

AGRICULTURE AND FOOD AUTHORITY The Agriculture, and Food Authority (AFA) was established through an Act of Parliament, the Agriculture, and Food Authority Act of 2013. The Act consolidates the laws on the regulation and promotion of agriculture and makes provision for the respective roles of the national and county governments in agriculture and related matters, in line with the provisions of the Fourth Schedule of the Constitution of Kenya.

MANDATE Administer the Crops Act, and the AFA Act in accordance with the provisions of these Acts; Promote best practices in, and regulate, the production, processing, marketing, grading, storage, collection, transportation and warehousing of agricultural and aquatic products excluding livestock products as may be provided for under the Crops Act, and the Fisheries Act.

DEVELOPMENT OF KENYA TEA INDUSTRY.

INDUSTRY DEVELOPMENT- HACTARAGE YEAR HACTARAGE 1999 118,542 2000 120,396 2001 124,292 2002 130,340 2003 131,453 2004 136,708 2005 141,315 2006 147,076 2007 149,196 2008 157,720 YEAR HACTARAGE 2009 158,394 2010 171,916 2011 187,855 2012 190,717 2013 198,657 2014 203,006 2015 209,426 2016 228,178 2017 232,742 2018 234,300

INDUSTRY DEVELOPMENT- EXPORTS IN Kgs YEAR EXPORTS 1999 241,739,293 2000 216,989,625 2001 270,151,810 2002 272,458,768 2003 269,961,799 2004 333,802,071 2005 349,738,362 2006 313,720,495 2007 345,877,445 2008 383,443,886 YEAR EXPORTS 2009 342,481,547 2010 441,021,493 2011 421,272,373 2012 430,204,569 2013 494,346,983 2014 499,379,622 2015 443,461,219 2016 480,330,230 2017 415,715,284 2018 474,861,590

INDUSTRY DEVELOPMENT- LOCAL CONSUMPTION- KGs YEAR Local consumption 1999 10,488,307 2000 12,653,577 2001 11,289,414 2002 12,628,238 2003 12,651,134 2004 13,626,020 2005 14,025,000 2006 16,549,414 2007 17,642,737 2008 17,387,119 YEAR EXPORTS 2009 18,101,937 2010 18,704,479 2011 20,017,256 2012 22,744,333 2013 26,549,868 2014 32,179,851 2015 29,370,102 2016 29,751,875 2017 37,631,532 2018 38,005,170

INDUSTRY DEVELOPMENT- INDUSTRY PLAYERS YEAR  2012 2013 2014 2015 2016 2017 2018 CATEGORY   PRODUCERS 24 26 28 29 33 35 BROKERS 11 BUYERS/EXPORTERS 72 76 78 79 80 82 86 WAREHOUSES 15 16 18 19 PACKERS 48 53 60 68 90 103

GLOBAL TEA SUPPLY AND CONSUMPTION SITUATION

GLOBAL CTC PRODUCTION – MILLION KG + 264 m kg (14.10%)

GLOBAL CTC PRODUCTION TRENDS – MILLION KG + 121 m kg (6.01%) + 9 m kg (0.45%) + 158 m kg (8.55%) - 24 m kg (- 1.29%)

GLOBAL CTC CONSUMPTION – MILLION KG + 252 m kg (14.03%)

GLOBAL CTC CONSUMPTION TRENDS – MILLION KG + 94 m kg (+ 4.81%) - 9 m kg (- 0.46%) + 142 m kg (+ 7.80%) + 25 m kg (+ 1.40%)

Growth in world black CTC tea consumption increased. BUT Production growth (6.01%) outpacing growth in demand (4.8%). Comparing 2017 and 2018 Calendar Years.

ROLES AND LEVELS OF REGULATION.

ROLES AND LEVELS OF REGULATION “rules and administrative codes issued by governmental agencies at all levels….. Although they are not laws, regulations have the force of law, since they are adopted under authority granted by statutes, and often include penalties for violations.” ( LEGISLATIVE REGULATION)

ROLES AND LEVELS OF REGULATION “Self regulation occurs when an organization or industry regulates itself without external influence or intervention from external influences.

SELF REGULATION

ACHIEVING SELF REGULATION Voluntary Standards organizations Industry Code of Ethics Industry Associations Gentleman’s Agreements

ADVANTAGE OF SELF REGULATION knowledge and expertise of all parties used more effectively; flexible and adaptable; lower regulatory burden on business; more commitment, pride and loyalty within a profession or industry; lower costs to the state; the market can work better.

ROLE OF LEGISLATIVE REGULATION

LEGISLATIVE REGULATION Acts of Parliament MULTILATERAL TRADE AGREEMENTS GLOBAL STATUTORY BODIES

WHY GOVERNMENTS USE REGULATIONS FOR KEY ECONOMIC SECTORS To define common trading language for all actors in the supply chain. To facilitate fair international Trade. To avoid bad quality products in the markets. To guide producers to meet market requirements.

WHY GOVERNMENTS USE REGULATIONS FOR KEY ECONOMIC SECTORS…… To build trust and market opportunities. To encourage High Quality production. Improve profitability. Protect consumer interests. Remove Technical Barriers to Trade

CHALLENGES IN SELF AND LEGISLATIVE REGULATION

CHALLENGES WITH SELF AND LEGISLATIVE REGULATION

NO BODY LIKES TO BE REGULATED

CHALLENGES ( SELF REGULATION) ….. Most Voluntary Standards Certifications will concentrate on the sections on the value chain where there interests are Can be consumer driven and not producer driven or vise versa. May not wholistically or objectively look into the interest of other sections of the value chain Additional cost to the producers and consumers.

CHALLENGES ( LEGISLATIVE REGULATION) ….. Is viewed as beaurocratic and a barrier to conducting business. Difficult to harmonize across the varied interests of different stakeholders including Government.

CHALLENGES ( LEGISLATIVE REGULATION) Kenya Case ….. The process of developing Regulations commenced upon the coming into effect of Crops Act in 2014. Consultations with value chain players in the counties, other government agencies commenced after drafting Several consultative meetings held with Counties under the umbrella of COG. Conducted a Regulatory Impact Assessment on the draft Tea Regulations Two validation forums were held one in Nairobi and another in Mombasa. Comments received from stakeholders have been analyzed and incorporated in the regulations as appropriate

KEY OBSERVATIONS

KEY OBSERVATIONS The Regulatory space in the Tea Industry will continue to expand both at self regulatory and Legislative Regulation. This is considering the expansion in both production, markets, number of players attracted into the industry, emphasis on diversification, changing consumer lifestyles and segments.

KEY OBSERVATIONS Self regulation helps get access to the consumer. Legislative regulation helps you access the market. The consumers are becoming more aware about quality and safety.

CONCLUSION

CONCLUSION Regulations both at Industry ( Self regulatory) and Legislative level should adopt a bottom up approach by encompassing the stakeholder views. This will enable both levels to assess whether the same is causing a facilitative role to Trading or introducing an NTBs that may also increase cost to segments in the value chain.

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