May Issue 4 2011

The Kenya Flower Council undergoes ISO/IEC Guide 65:1996 Accreditation Audit

KFC tests its own medicine……………….

On 24th – 26th May 2011, The Kenya Flower Council hosted 3 lead assessors from The South African National Accreditation System (SANAS).  The Council was undergoing a Re-assessment on Accreditation to ISO/IEC Guide 65:1996 (or EN45011 as it is known in its European version), an ISO standard on ‘General requirements for bodies operating product certification systems’.

KFC was first accredited as a Certification Body on 16.10.2008 for a period of three years, with the current certificate expiring on 11.10.2011. ISO/IEC Guide 65 Accreditation provides assurance and formal recognition of the competence of an organization and its staff in performing specific tasks.

ISO Guide 65 accreditation is performed against a reference standard or standards. The just ended re-assessment will have KFC Accredited for the next three years to certify producers on KFC Silver and Gold Standards, and other certification schemes that KFC has been granted the mandate to conduct certification audits for example GlobalGap, Fair Flowers Fair Plants (FFP), and Tesco Nurture.

The procedures for attaining and maintaining ISO 65 Accreditation involves five phases;

§  Application and screening of documentation

§  Evaluation and assessment of certification body performance

§  Accreditation

§  Surveillance

§  Re-evaluation

The ISO Guide 65 Accreditation has helped KFC improve service delivery to our members, and we take this opportunity to thank the membership for offering us all the support over the years as we execute our mandate.

This is a commendable mile stone that KFC has achieved in the course of enhancing the spirit of compliance in the flower industry, and at the same time strengthening our international recognition.

Kenya Economic Survey 2011 Highlights

Every year, prior to the reading of the National Budget Statement, the Ministry of Planning and National Development, through the Kenya National Bureau of Statistics, releases the Economic Survey of the year. The survey highlights the economic indicators and their performance of the year under review as well projections for the following year. This data is used to formulate and inform government intervention measures to be factored in the next National Budget to accelerate growth and mitigate constraints that may be identified in the Survey for the year under review.

According to this years survey presented by Hon. Wycliffe Oparanya, EGH, MP. Minister of State for Planning, National Development and Vision 2030, all the sectors of the economy recorded positive growths of varying magnitudes.

Sector                                                                   2009                                       2010

Agriculture & Forestry                                   -2.6                                        6.3

Wholesale & Retail Trade                             3.9                                          7.8

7

Transport & Communication                       4.0                                          6.9

Manufacturing                                                  1.3                                         4.4

Financial Intermediation                               4.6                                          8.8

Agriculture

The sector expanded impressively to record a real growth of 6.3 per cent in 2010 compared to contractions of 4.1 and 2.6 per cent experienced in 2008 and 2009 respectively.

The turnaround was primarily due to:

– Favourable weather conditions that prevailed in 2010

– Government intervention through supply of subsidized seeds and fertilizers;

– Improved prices for some key agricultural exports such as tea and coffee.

– Rising global demand resulted in improved prices of tea, coffee, sisal, pyrethrum and tobacco among other crops. Fresh horticultural produced 147.1million tonnes in 2010 compared to 180.8 million tonnes in 2009 1 which was an 18% drop.

Manufacturing

Manufacturing sector grew by 4.4 per cent in 2010 compared to a marginal growth of 1.3 per cent in 2009. This growth is mainly attributed to:-

–        reliable power supplies arising from favourable weather conditions that bolstered electric power generation

–        favorable tax policies, including the removal of duty on capital equipments and some raw materials

–        Increased credit to the manufacturing sector.

–         Increased availability of raw agricultural materials.

–        Growth in the regional market (EAC, COMESA).

–        The recovery in the global economy positively impacted on the EPZ programmes recording an increase of Kshs 5.5 billion in turnover to Kshs 31.7 billion in 2010.

–         Investments in the Export Processing Zones (EPZ) attracted an additional Kshs 1.3 billion in 2010

Public Finance

During the fiscal year 2010/11, the Government adopted a policy geared towards;

– Consolidating economic recovery

– Putting the economy back on the Vision 2030 growth path

– Containing the risk of recessionary effects of multiple shocks encountered in the preceding years.

In 2010/11, overall Government expenditure is expected to stand at Kshs 998.3 billion compared to Kshs 805.3 billion in 2009/10. Total budgeted recurrent expenditure is projected to increase from Kshs 620.5 billion in 2009/10 to Kshs 691.6 billion in 2010/11.  Development expenditure is also expected to increase from Kshs 184.8 billion in 2009/10 to Kshs 306.7 billion in 2010/11.

The stock of Central Government outstanding public debt increased by 19.5 per cent from 889.9 billion in June 2009 to Kshs 1.1 trillion in June 2010. Domestic debt stood at Kshs 534.5 billion and accounted for 50.2 per cent of the total debt. External debt stood at Kshs 528.9 billion  and ratio of total debt to GDP stands at 42.3 per cent in 2010 compared to 37.6 per cent in 2009

Energy – Petroleum

The annual average price of oil increased to US$ 79.16 per barrel in 2010 compared to US $ 62.65 per barrel in 2009. The high international oil prices translated to higher petroleum prices in the domestic market. Total demand of petroleum products grew by 4.3 per cent from 3,610.8 thousand tonnes in 2009 to 3,760.7 thousand tonnes in 2010.

International Trade

Value of total exports grew by 18.8 per cent from Kshs 344.9 billion in 2009 to Kshs 409.8 billion in 2010. Value of imports grew by 20.2 per cent to Kshs 947.4 billion in 2010 compared to a marginal growth of 2.3 per cent in 2009. Consequently, Kenya’s trade balance worsened by 21.3 per cent in 2010 compared to the earlier deterioration of 4.1 per cent in 2009

Domestic Economy

Real GDP expanded by 5.6 per cent in 2010 compared to a growth of 2.6 per cent in 2009 Economic Outlook for 2011. The global economy is projected to continue on a recovery path but at a slower real GDP growth rate of 4.2 per cent in 2011 compared to 4.6 per cent in 2010. Similarly the domestic economy is likely to maintain a positive growth but at a decelerated rate of between 3.5 and 4.5 per cent

Risks likely to shape economic growth include:

– High international oil prices – which could remain high for the rest of the year (due to instability in the Middle East and North Africa)

– Fluctuations in the exchange rate

– Inadequate rainfall – which has so far been insufficient

– Rising global food prices

– Political environment as the country moves close to 2012 elections

Cabinet brief

The Constitution implementation process got a major boost on 19th May 2011, with the approval of two crucial bills by the Cabinet. The Cabinet met at State House Nairobi, under the Chairmanship of His Excellency President Mwai Kibaki.

The bills approved were:

1. Supreme Court Bill 2011. The bill seeks to operationalise the Supreme Court that will be the highest court in the land, charged with the interpretation of the constitution. The Court will have seven judges including the Chief Justice who will serve as the President and the Deputy Chief Justice, who will serve as Vice President of the Court. The court will have exclusive original jurisdiction to hear and determine disputes relating to the elections to the office of the President. The Supreme Court shall also hear and determine appeals from the Court of Appeal and any other court or tribunal as prescribed by national legislation.

2. Independent Offices Bill. The bill will make operational the key offices of Controller of Budget and Auditor General. The office of the Controller of Budget shall oversee the implementation of the budgets of the national and county governments by authorizing withdrawals from public funds. The Auditor General is charged with the responsibility of auditing and reporting on the accounts of various offices under both the national and county governments.

Another Bill approved was the Retirements Benefits (Deputy President, Speakers of National Assembly and Senate) Bill 2010.

The Cabinet meeting also approved the renewal of a contract by the Ministry of State for Immigration and Registration of Persons for the production and issuance of 2 million national identity cards. This is a stop-gap measure as the Ministry prepares for the third generation identity card system.

Also approved is Social, Economic and Security Program for the people of Turkana. The program will seek to implement measures to ensure long term security in the region. It will also seek to enhance food security including initiation of irrigation projects in support of the well being of the people of Turkana.

Other initiatives to be implemented and approved at the meeting were:

1. Decongestion of Nairobi Roads through modernization of the Commuter Railway system. This will entail:

a) Improvement of the existing railway lines that serve commuters.

b) Construction of several modern passenger stations along the railway route.

c) Construction of new passenger commuter lines to serve areas that are not catered for under the current system.

d) Construction of a railway line to JKIA.

2. The development of a beach operator’s tourist market along the Coast.

3. Development of a First Class Hotel at the Bomas of Kenya Grounds.

Task Force on the Implementation of Devolved Government visit Counties

Pursuant to the constitutional requirements on devolution and governance, the Deputy Prime Minister and Minister for Local Government established the Task Force on Devolved Government on the 22nd October 2010 through Gazette Notice 12876 dated 25th October 2010. The purpose of the Task Force is to help think through the implementation of the devolution process and advise the government on policy and legal frameworks of devolving power, resources and responsibilities to the people of Kenya for effective local development.

The Task Force submitted the Interim Report to the Deputy Prime Minister and Minister for Local Government on 20th April 2011.

In view of the aforesaid, the Task Force will be visiting all the counties in Kenya from 23rd to 31st May 2011 to present the Interim Report and receive feedback from stakeholders.

You are therefore free to attend the validation meetings at your convenience to stay abreast of the developments and implication of devolution to business.

FERTILIZER POLICY AND MARKETING STRATEGIES IN AFRICA

The International Fertilizer Development Center (IFDC) has organized  an international workshop entitled “Fertilizer Policy and Marketing Strategies in Africa” scheduled to start from July 4-8, 2011 in Nairobi, Kenya.  The workshop will be Co-Sponsored by The African Union Commission’s, Department of Rural Economy and Agriculture.

The workshop is designed for policymakers, private sector entrepreneurs, producer organizations, agro- input dealers, financial institutions and development partners supporting agricultural and fertilizer market development in Africa.

Those who wish to attend can register on-line. Registration is open until June 4, 2011.

Program Fee due by June 4, 2011:

US $1,200

Late Program Fee (after June 4, 2011):

US $1,400

The carbon challenge

Africa has a fight on its hands rising to the challenge of carbon management but the technology to do it is maturing fast

The environmental challenge facing the planet has thrust the oil and gas industry into the spotlight perhaps more than at any other time. This presents it with both challenges and opportunities: one of them is the management of carbon dioxide arising out of upstream field operations.
Carbon dioxide, or CO2, is routinely cited as one of the bad guys of climate change, perhaps the most damaging of the greenhouse gas (GHG) emissions blamed for choking the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) – the leading body for the assessment of climate change, established by the United Nations Environment Programme (UNEP) and the World Meteorological Organization (WMO) – has called for dramatic cuts in GHG emissions, including CO2, to turn things around.
The IPCC has prescribed a 50 per cent to 80 per cent reduction of GHG emissions by 2050, in order to stabilize GHG emissions at 450 PPM, thereby limiting global warming to 2oC.
This is a big test for all, however, not just those participants in the energy sector.
To meet these emissions targets, the world will require a mix of sustainable energy technologies related to energy efficiency, renewable energy and clean fossil fuel based power generation. The same challenges apply to the power sector, the transport industry, and pretty much all segments of the global economy, including ordinary households.
At the same time, the oil industry – in the front line of hydrocarbons production – needs to be seen taking a lead in fighting CO2 and other harmful emissions.
And it is. A number of emerging technologies are tackling carbon head on. These include carbon capture and storage (CCS) techniques, one of the high potential technologies now under scrutiny by oil companies, the world over.

Opportunity in Africa
Major energy businesses are already alert to the potential of Africa – now one of the world’s established energy producers –and the spread of CCS.
This includes initiatives such as CCS Africa, a body supported by leading academic, industry and science groups, designed to raise understanding of CO2 mitigating technologies in the continent. It is led by the Energy Centre of the Netherlands (ECN).
The initiative includes projects that aim to share CCS-related technical, geological, economic and policy knowledge and experience from the European (and other relevant country’s) context with African institutes, and adapt it to the specific local circumstances.
For the most part, this has targeted the power sector, with CCS Africa drawing up potential market reports on coal-rich countries like Botswana and Mozambique.
It is clear though that it is early days for Africa in CCS technology and development.
“Any efforts on CCS in the target countries should be aimed at the longer term, and would necessarily involve an initial period of awareness raising and basic capacity building,” it said in a report.
The exception perhaps is South Africa, another coal-rich economy, which is keen to take a pioneering role in CCS, as it did in areas such as synthetic fuels years ago.
It established the South African Centre for CCS in 2009, a first step in the creation of a CCS industry.
The first activities of the new centre include the development of a CO2 geological storage atlas and a roadmap for CCS in South Africa, with a vision of achieving an initial demonstration project by 2020.
With work still in an embryonic stage, it means major corporate involvement is still not as evident as in certain other locations, notably the developed economies.
The Middle East is also ahead with the likes of Mitsubishi Heavy Industries (MHI) of Japan opening a dedicated office in Abu Dhabi last year, specifically targeting areas such as CCS, and enhanced oil recovery (EOR) using CCS.
CCS-EOR involves technologies enabling effective recovery of oil by injecting the oil layer with CO2, which is separated and recovered from flue gas emitted from power generation plants and other sources.
While these technologies are expected to boost Abu Dhabi’s oil economy, it is an additional cost burden that may not yet be ripe for many of Africa’s emerging markets.
Abu Dhabi was named as the world headquarters for the newly formed International Renewable Energy Agency (IRENA) in2008.

Global CCS development
But CCS is more than just an experimental technology and is now active in various guises at several flagship fields around the world, including Africa.
At one of Algeria’s biggest natural gas fields, In Salah, operator BP has a system to re-inject CO2 into deep wells, which significantly reduces overall GHG emissions. To avoid venting the gas into the atmosphere, BP and its partners, Sonatrach and Statoil, recruited engineers from JGC and KBR to design CO2 capture facilities, which then inject CO2 into a brine formation approximately one mile below the surface.
In Europe, Statoil has played a similarly pioneering role in the deployment of CCS technology in its home Norwegian market. The company has even produced a comprehensive ‘carbon road map’ – a detailed compendium of carbon dioxide sources, transport mechanisms and long-term storage initiatives. One of Statoil’s flagship CCS initiatives is at Western Europe’s only liquefied natural gas (LNG) plant, which takes its gas from the Snøhvit field in the Barents Sea.
The Snøhvit gas contains 5-6 per cent CO2 which freezes to solid matter (so-called CO2 ice) at a higher temperature than natural gas. It must therefore be removed before the gas is cooled into LNG.
Moreover, the carbon dioxide also has to be separated from the hydrocarbons at a sufficiently early stage in the process, so that the gas mixture does not freeze and block the heat exchangers in the processing plant. A separate pipeline transports the carbon dioxide from the Hammerfest LNG plant back to the Snøhvit field.
There, it is stored in a suitable geological layer of porous sandstone called the Tubåen formation. This structure lies 2,500 metres beneath the seabed and under the layers in Snøhvit containing gas. More than 700,000 tonnes of carbon dioxide are to be stored annually at the site.
A separate monitoring programme has also been established, which is being part-funded by the EU, to examine how the carbon dioxide behaves in the reservoir.

Norway leads

It’s Technology Centre Mongstad (TCM), currently under construction, is the world’s largest facility for testing and improving CO2 capture, supported by companies including Statoil, Shell and Sasol. TCM’s administration hub was unveiled recently by Norwegian energy minister Terje Riis-Johansen, a key step in the construction process, which is scheduled for completion in 2012.
“TCM is taking a leading position internationally through the establishment of a test facility for users of capture technologies and industrial partners which develop and provide such technologies,” the minister said.
Part of the rationale behind TCM is to reduce the costs of CCS to encourage a wider adoption among other countries internationally. It will test two different technologies, from Aker Clean Carbon and Alstom, for capture of CO2 from two flue gas sources with different CO2 content.

CCS constraints

Potentially, Africa – as one of the world’s fastest growing oil producing regions – could also become a key testing ground for these and other emerging carbon technologies. Environmental compliance is particularly strong for operators of mature reservoirs, who are gravitating toward the economic benefits of injecting captured CO2 for enhanced oil recovery. This is clearly apt in the case of some of the region’s more established oil producers. But despite the environmental pluses, cost remains a significant drag.
In some cases, as has already been shown, the captured CO2 can be used for EOR purposes, which often reduce, if not fully offsets, the costs associated with the capture. Indeed, innovators are already glimpsing an opportunity to turn GHG emissions into profit.
It will need innovative financing mechanisms to bridge the gap however, a trend that is already shaping developments elsewhere. For instance, financiers have drafted plans to make Dubai a regional hub for carbon offsets trade, which could turn the Middle East’ sizeable carbon footprint into cash.
But that may be some way off given the fairly limited activity on the ground to date in relation to the region’s huge oil production capabilities. Looking around that region though it is not difficult to find projects taking shape. The world’s biggest oil producer Saudi Aramco is currently experimenting with carbon capture technologies at the world’s largest oil field, Ghawar.
The state-owned company hopes to inject some 40mn standard cubic feet per day (cfd) of CO2 into the oilfield by 2012. The aim of the pilot project is to both improve production rates and at the same time reduce emissions levels. The Ghawar field pumped around 5 million barrels per day (bpd) in 2008, a large chunk of the kingdom’s entire output. With most of Africa’s producing fields considerably smaller there are once again clear economies to take into consideration.
The higher cost of doing business may slow the rollout of CCS projects in Africa but the continent – at some point – stands to benefit from the huge advances now being pioneered elsewhere. This includes research work in South Africa and operational projects in Algeria.

Source: Africa review

A good 2010 financially; sector-wide cooperation needed more than ever

The sale of Flowers in FloraHolland flower Auction increased by 7% in the year 2010. The auctions sales  were over €4.1 billion, with Price recovery being the principal reason behind the  increase. According to Floraholland over 12 billion flowers and plants were sold over the year through the cooperative’s five Dutch locations at Aalsmeer, Bleiswijk, Eelde, Naaldwijk and Rijnsburg.

“But even this price recovery was not enough in and of itself to put the growers and traders on the road to profitability,” General Manager Timo Huges said as the annual figures were unveiled. “So more than ever, it’s crucial to work closely with producers and traders to unlock the market potential that we see.”

The cooperative auction organization, whose production and sales are increasingly international in nature, marks its centenary this year.

Money back to the members

The auction’s robust financial health has allowed some money to be returned to its members. “We’ve been able to hand back €19 million to our members, which is half of the money paid in 2010 in member loans — giving them a bit of a breather,” says Financial Director Erik Leeuwaarden. “With a solvency of 23 per cent and a solvency base of nearly 47 per cent, our cooperative has a sound base.”

In  2010 and 2011, FloraHolland has been investing €75 million, mostly in logistical resources (such as standardizing the fleet of auction trolleys) and in expansion opportunities for its customers, wholesalers and exporters.

The rise and rise of digitization

Sales at the auctions are becoming more and more virtual. Around 50 per cent of cut flower sales via the auction clock are now processed through Remote Buying (KoA), a system that lets the buyer — whether present in the auction room or anywhere else in the world — make their decisions based on digital information. Over 70 per cent of total flower and plant sales are traded without the buyer ever having physically seen the product at the clocks or at FloraHolland Connect.

Digital information is also increasingly important for sales via FloraHolland Connect, where it is provided in services like supply catalogs. FloraHolland Connect arranges its commercial operations around the various market segments and is increasingly developing into a commercial knowledge center.

The auction clock remains, as ever, a strong sales instrument and one that is being heavily invested in. All locations now have projection clocks, enabling image auctioning (auctioning without the product physically appearing at the clock).

Internationalization

Veiling Rhein-Maas in Herongen, Germany is a joint venture between FloraHolland and the German organization Landgard. The former FloraHolland location at Venlo was merged into this joint venture in late November last year. So far, Veiling Rhein-Maas has been achieving higher sales than had been predicted.

Production and sales are becoming increasingly international in nature. Also in Germany last year, the logistics hub of Tradepark Bremen was set up in partnership with the Flower Nursery Products Wholesale Association (VGB).

By integrating the TFA import auction, FloraHolland has been able to offer growers and traders more market opportunities and a broader, more in-depth assortment. It is partly thanks to this move that the number of overseas members of the cooperative has grown to over 500.

FloraHolland centenary

At the end of 2011, under the motto of “FloraHolland — 100 Years’ Color”, the auction will be celebrating the fact that the first cooperative flower auctions in the Netherlands were established a hundred years ago. For a whole century, growers across the country and far beyond its borders have teamed up in cooperative auction organizations. Thanks to these auctions, growers and traders have been able to specialize. “Working together, they built up this global floriculture chain, which contributes so colorfully and powerfully to the economy. For me, this centenary is first and foremost to honor all those entrepreneurs,” Huges explains. “Because these entrepreneurs’ collaboration paved the way for the robust floriculture chain that we know today.”

Flower growers smile as prices stay high in Japan

All agricultural commodities delivered good returns in 2010 but the year was exceptionally good for flower growers.

“Winter was exceptionally good this year for the floriculture sector,” said Me-gha Borse, president, Maharashtra Flower Growers’ Association.

Roses were sold for about 7 per stem during the winter marriage season. The annual average price of a rose this year is higher by a couple of rupees as compared to the previous year. “There were some losses as exports to Japan stopped completely post-tsunami.

The prices in the domestic market too dropped to 50 paise to 75 paise per stem. But the situation improved from April,” said Shivaji Bhegade, president of Talegaon Flower Growers’ Association . Roses are being sold for 3-4 per stem in the summer.

Growing trend of using artificial flowers in marriage hall decorations might have affected the sales of flowers. However, a small farmer who grew flowers on 10 guntas of land has earned an average income of about 30,000 per month.

Source: economic times

Falling Japanese demand has anthurium exporters eyeing local sales

Kaohsiung’s exports of anthuriums to Japan have plunged significantly since that country’s double disaster in mid-March, forcing growers to explore domestic market opportunities and pitch the flowers on the Internet.
Kaohsiung’s Neimen district, the southern city’s main anthurium growing area, sold 60 percent of its production of anthuriums, also known as flamingo flowers, to Japan before the March 11 earthquake and tsunami.

Since then, however, Japanese demand has fallen 50-60 percent and prices have plunged from 100 yen (NT$35.4) per stem to 40-50 yen per stem, driving growers to look for alternative markets.

The Agricultural Bureau of the Kaohsiung City government said that it had recently authorized Taiwan’s Chinese Flower Design Association to design and promote anthurium bouquets on the Internet to tap into local market opportunities.

The association is helping design bouquets for students to send to their teachers on their graduation days in June and bridal bouquets to coincide with Kaohsiung’s wedding dress exhibition to be held in June and July.

The bureau said that once the bouquets are photographed by mid-June, they will be posted for sale on its website.

Source : CAN (By Pin-Yu Chen)

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