June Issue 3 2011

JETRO Chairman and CEO visit Primarosa Flowers Ltd

The chairman and chief Executive officer of the Japan External Trade Organization (JETRO) Tokyo Mr. Yasuo Hayashi visited Kenya from 16th to 17th June 2011. During his brief stay, he visited Primarosa Flowers Limited in Athi River.

He was accompanied by a delegation which included Mr. Tomohiro Takashima, Director, Secretariat Office, JETRO Tokyo, Mr. Nobuyuki Nakajima, Senior Coordinator for the Middle East and Africa, JETRO Tokyo, Mr. Hiroshi Komatsuzaki, Executive Director, JETRO Nairobi, Mr. Hiroki Nagamine, Director, JETRO Nairobi, and Mr. Robert Kimani, Senior Project Officer, JETRO Nairobi. Others included Mr. Kennedy Onchuru from KEPHIS and Mrs. Jane Ngige Chief Executive Officer of Kenya Flower Council.

The delegation was given a warm welcome by the General Managers of Primarosa Flowers Ltd Mr. Vimal Shah and Mr. Santosh Kulkarni and was taken around the farm to have a feel of how growers in Kenya carry out their business of growing flowers.  Mr. Hayashi said that Kenyan flowers have penetrated the Japan market adding that about 60 million units of cut flowers enter Japan from Kenya annually.  He said that JETRO will always offer their hand where needed to facilitate trade between the two countries.

The issue of flower fumigation in Japan was raised and it emerged that discussions to agree on protocols are underway to see whether it’s possible to have Japan inspectors here in Kenya to carry out the inspections together with Kephis. If this is successful losses will be reduced since unnecessary costs will not be incurred, for example destruction/fumigation of a contaminated consignment at owners cost in Japan.

Mr. Santosh noted that last year only one consignment from Primarosa was fumigated due to the high standards they apply in the farm.

JETRO is a Government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO’s core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential.

JETRO has in the past arranged for participation in the International Flower EXPO Tokyo (IFEX) for flower producers in Kenya, to build up a brand image of Kenyan flowers among the Japanese market and expand further flower business with Japan.

In 2006, they launched JETRO cut flower program for the East Africa to support and foster the export of cut flowers from industries in East Africa as a part of Japanese Government’s official development assistance (ODA) program. They have been very instrumental in the development of the Japanese market for Kenyan flowers. In November 2008, they facilitated participation of Primarosa at the IFEX.  JETRO also carried out an extensive radio and television coverage / promotion of the Kenya flower industry and as a result Kenya has grown to become a significant supplier, responsible for about 20% of Japanese cut flower imports.

Primarosa Flowers Limited, a well-established group of modern rose flower farms was formed in 2003 and boasts of modern infrastructure, advanced crop management systems and high quality control systems that have made it a showpiece of the flower industry in Kenya.

They have two farms namely the Primarosa Flowers Farm and The Zuri Farm. They export their flowers to the UK, Middle East and Holland. Primarosa farm in Athi River has over 600 employees. The farm has a production facility of 24 hectares with about 16 varieties of roses. Primarosa flowers Ltd have a propagation facility and a bio factor where they rear predators to control mites in the green houses.

They farm harvests rain water and has about 8 dams with a capacity to store 450,000 cubic metres to ensure they have a year-round production even during extended droughts. They are also committed to the protection of the natural environment, safe production of cut flowers and providing a safe working environment to their team members.

Income Tax Returns

As read by the Minister for Finance, during his speech for the financial year 2011/12, the filing of income tax returns by employees who have no other sources of income (apart from employment income) and their PAYE has been paid to the exchequer by their employers was abolished effective 9/6/2011.

Effectively, employees will not be required to file returns for the year 2010 unless they have other sources of income.

Source: Federation of Kenya Employers (FKE)

Excerpts on VAT issue in Budget Policy Statement

142. Mr. Speaker, in my budget speech last financial year 2010/2011, I highlighted the challenges facing the administration of Value Added Tax (VAT), especially the complexities in its administration and the ever increasing VAT refund backlog. I undertook to review the VAT Act, with a view to making it simpler and easier to administer.

Mr. Speaker, I have kept my promise and wish to report to this House that the Task Force I constituted has finalized the review and produced a Draft VAT Legislation Bill. Consistent with spirit of our Constitution, I intend to upload this Draft VAT Bill on our Treasury website shortly for the public to make their comments and then submit a revised version to a stakeholders workshop scheduled for end of August 2011.

143. Thereafter, Mr. Speaker, I shall incorporate comments received before finally submitting the final Draft to the Cabinet for consideration and approval allowing for publication by the

Attorney General and tabling to this House. I wish to call upon this House to fast track debate on this critical bill when submitted and pass it into law to accord our taxpayers the earliest opportunity to comply with a simpler, modern and new VAT law.

Homegrown Changes Name to Finlays Horticulture

Homegrown (Kenya) limited has changed its name to Finlays Horticulture Kenya Limited. The rebranding took effect from 16th June 2011. The company owns five flower farms namely Hamercop, Kingfisher, Flamingo, Siraji, and Sirimon. All are Gold and Silver certified members of Kenya Flower Council.

Finlays purchased the Flamingo Group in 2007. The acquisition brought with it many different brands and logos and it is felt that now is the right time to standardize and simplify the Group’s existing brands, to provide a consistent Finlays image.

Today the Finlays Group has a turnover of £611M, with 39,000 employees and is a well respected global brand, with a 250+ year old heritage. As an agri-business, it has operations in many countries and is well known across the tea and horticulture industries.

“Finlays has demonstrated confidence in Horticulture through continued investment and this is reflected in our name change. We are pleased to be part of a vertically integrated and geographically diversified Group taking a leadership role in sustainability.” said Mr. Martin Hudson, CEO Finlays Horticulture Holdings.

According to Mr. Hudson, there will be no changes in the way they conduct business or to their commitment to provide their customers with Quality, Value, Service, Innovation, Insight and Sustainability.

The company has 800 acres of flowers under greenhouse or polytunnel in Kenya, South Africa and Mainland China producing over 325 million stems per year for the UK, continental Europe and Japan. They are one of the world’s largest producers and packers of Fairtrade roses and lilies. They are also engage in the business of tea, coffee vegetables, rubber timber, coconuts, integrated Pest management and cold storage.

World Environment Day activities in the Farms.

The World Environment Day was celebrated on 5th June 2011. This is an annual event that is aimed at being the biggest and most widely celebrated global day for positive environmental action.

Harvest Limited

At Harvest Limited they commemorated the World Environment Day by declaring week 23 (6th -11th June) as their tree planting week. This involved mobilization of staff both from the general workforce and the management to plant and identify with a tree at their freshly refurbished sports ground. During the exercise they used in-house resources including seedlings from their nursery, compost from their in-house organic waste management processes and water from 5 their waste water recycling activities.

By the end of the exercise 150 trees were planted during the week which is in line with the national theme of increasing the forest cover. Moreover; they have a continuous program of Planting 70 trees a month around the farm. As a result the number of Acacia Trees in the farm has risen by 65% in the last 5 years.

Oserian Development Company Ltd

The following activities were undertaken at Oserian to mark the World Environment Day

  • Oserian Schools and all departments in the farm planted 5,000 trees.
  • 300 trees were donated to and planted by Naivasha Police Station and Kongoni police station.
  • There was a Cleanup exercise at Kamere centre by Oserian employees together with DOD officers and Oserian High school students.
  • Oserian high school students were given a presentation on Environment and sustainability

Koppert Biological Systems has over 40 years experience in the breeding, multiplication and distribution of natural pollination systems and biological control agents for use in crop protection. They preferred partner in developing and marketing IPM systems for protected and high-value crops, by being a reliable provider of innovative, effective and top-quality solutions.

Koppert Kenya endeavour’s to avail all relevant IPM and bio-control products, technology and expertise to growers to assist them improve their crop protection systems. The products currently available in Kenya include:

  • SPIDEX (Phytoseiulus persimilis)
  • SPICAL (Amblyseius californicus
  • SWIRSKI-MITE (Amblyseius swirskii)
  • ERCAL (Eretmocerus eremicus)
  • TRIANUM (Trichoderma harzianum strain T-22)
  • HORIVER and ROLLERTRAP -sticky traps
  • The book “Knowing & Recognizing –The Biology of Glasshouse Pests and their Natural Enemies”
  • LUREM-TR -thrips attractant
  • ATTRACKER -thrips lure.

For more information kindly contact them via:

Tel. No.  +254 20 2021918 /+254 20 4453780/1/2

Mobile: +254 736 256524 / +254 724 256524
E-mail: info@koppert.co.ke Web: www.koppert.com

Zimbabwe: Horticulture Exports Fall Sharply

The Horticulture Promotion Council says deterrent freight charges, high production and export-related costs had caused a steep decline in horticultural exports over the last seven years.

HPC Chief Executive Mr.  Basilio Sandamu  has said the planes they contracted to ferry produce were failing to get southwards bound cargo and were only getting northwards bound cargo.  This, he said, had made it very expensive to contract them as their charges were designed to make up for all the losses incurred. Freight charges constitute 55 percent of all the costs of production.

“In the past there were between four and five flights to European markets every week but now there are only three, which reflects that export volumes have fallen sharply. “Last year we exported seven million kilogrammes of flowers down from the traditional 24 million kilogrammes per year in good years,” explained Mr. Sandamu.

He said it was now critical for the industry to maintain the current 7kg mark and start building from there as any further descent would be disastrous and would also give regional competitors like Kenya and Uganda more edge over Zimbabwe.

“Critical mass is key in making a footprint on the markets. It is a game of volumes so we must maintain our grip on the market to be taken seriously,” he added.

He said Zimbabwe enjoyed preferences in EU markets under the EU/ACP (African, Caribbean and Pacific) agreement that enabled it to export flowers duty free.

At the moment the country sends 85 percent of its flowers to EU destinations through the Dutch auction floors, which makes it vital to access cheap funds to refurbish infrastructure and re-plant new varieties while expanding the area under production.

“In the past we used to have 400ha under horticulture, now it is less than 150ha. We are currently operating at 30 percent of our full potential. “The most painful fact is that we have very good growing conditions and highly skilled personnel,” lamented Mr. Sandamu.

Furthermore, he said funding constraints had seen farmers failing to refurbish greenhouses or replace old varieties with new ones to keep pace with developments on the markets.

“Farmers have no access to credits. This comes against a background of the liquidity crunch that has seen prices for basic export requirements like the CD 1 form rising from US$50 in the recent past to the current US$250 for a single pad. Indirectly, this is taxing farmers and compromising viability,” he said.

Mr.  Sandamu said phytosanitary, Zimra and nursery charges accompanied by the SADC and EUR 1-certificate costs made it very difficult for farmers to operate viably.

In the end the costs of exporting end up higher than the returns, which discourage farmers from producing for the export markets. Additionally, very high production costs are making life difficult for farmers, as they need 16 Euro to establish a square metre of a green field while a hectare needs 160 000 Euro.

To break even, the farmer needs to have planted nothing less than 5ha in which the first 18 months will be without an income.

“Working capital of 40, 000 Euro per hectare per year is also needed, which is difficult for the current crop of farmers. In the past those who excelled used proceeds from tobacco and other crops to fund horticulture. There was a lot of cross subsidization and this made it possible for the farmers to survive before they even started reaping anything from their horticultural projects,” further explained Mr Sandamu.

Horticultural earnings now contribute between 1.5 and 2 percent to the country’s GDP, down from a high of 5 percent in the recent past.

“Farmers are no longer re-capitalizing but only maintaining what is there leaving us operating at a fifth of what we used to do in 2001. There are economic fundamentals to be addressed first, failure of which the industry is doomed to continue singing the blues,” he said.
Source: allafrica.com

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