August Issue 4 2011

Compliance Analysis – the wanting revelation

The Kenya Flower Council conducted a compliance analysis across the member farms, comparing years 2009 vs 2010.  This was a recommendation given by the KFC Certification Committee, to give a pointer on compliance across farms.  The aim of the comparison was to also indicate which chapters of the KFC Silver Standard where members perform poorly during audits, to facilitate modeling for synergies to enhance compliance for the industry.  The Silver Standard chapters on focus were on documentation, Labor and Human Resource Management, Health and Safety,  Good Agricultural Practices, Environment, Postharvest, Training, and Machinery maintenance.

The comparison was done on 37 member farms audited in both years.  For this analysis, please note that the number of clauses are different per each chapter of the Silver Standard as indicated in point number 5 below.

The following information was obtained.

SECTION OF THE KFC SILVER STANDARD
Documentation Human Resource Health & Safety GAP Environment Post harvest Training Maintenance
Year Total No. of Non-compliances Raised per Chapter Total NCRs Raised
2009 39 129 257 260 66 71 26 39 887
2010 23 136 214 167 92 85 34 50 801


The following were the findings and conclusions:

  1. Out of the 8 chapters of the KFC Silver Standard, the number of non-compliance raised generally increased in 5 chapters in the year 2010 i.e. in HR, Environment, PH, Training, & Maintenance.

Since all the farms were audited with Version 12 in year 2010, majority had been previously audited with a lower version, which could have led to an increase in the No. of non-compliances raised in 2010 in the 5 chapters.

  1. Year 2010 however performed better in terms of general performance.  The average number of non-compliances raised per farm across all sections of the Standard decreased from 24 in 2009 to 22 in 2010.
  2. It was however noted that majority of the non-compliances raised in both years on average were from the H&S and GAP sections, with H&S receiving the highest.
  • Although GAP was second in the number of NCRs raised, it is the biggest chapter in the Silver Standard incorporating crop production, plant protection products, and fertilizer use.
  • H&S is fourth is size in the Silver Standard, but scored the highest number of non-compliances in both years.

The number of clauses per section of the KFC Silver Standard Edition 8 Ver 12 was as below.

GAP HR Environment H&S Postharvest Training Documentation Maintenance Total
101 41 38 30 25 13 12 9 269
  1. The training section scored the least non-compliances in both years.
  2. Of concern therefore is the higher number of non-compliances that continue to be raised in the Health and Safety Chapter as scored in the two years of comparison.

Way forward

It is worthwhile to note that the analysis only covered KFC member farms who uphold requirements of the KFC Silver Standard, and it may be of concern to know how the rest of the industry that is not within the KFC membership is performing especially in the area of health and safety.

–          KFC shall be looking for forums to share this information with the relevant government agencies and other stakeholders.  Incorporation of government and industry stakeholders in the KFC Certification Committee has helped KFC on improving the certification process for the membership, and also sharing relevant information amongst the stakeholders.

–          KFC is also in the process of organizing trainings and awareness creation sessions on compliance topical issues, which should promote the spirit of compliance across the industry.  This is to be achieved with the help of our development partners, who are partnering with KFC in a number of projects zeroing in on sustainability and competitiveness of the industry.

To start with, KFC has organized a “Worker Welfare and Healthcare Services Training” on 2nd September 2011, in Nakuru.  The training is sponsored by KFC and shall be targeting the HR managers, Health & Safety and Compliance personnel.

Other projects in the pipeline include:

  1. Capacity building to promote responsible water use by Lake Naivasha Flower growers contributing to sustainable investment.  The project runs from September 2011 to March 2012 and is funded by WWF.
  2. Interactive Video Conference (VC) seminars meant to elucidate challenges facing the Flower Industry in the East Africa Region (Kenya, Tanzania, Uganda, and Ethiopia).  The five Teleconferences are sponsored by the World Bank and the European Union ACP Program, running through the year 2011.
  3. Kenya Flower Industry – Capacity building for Sustained Market Access: A National Mechanism for Industry-wide Compliance.  The project is anticipated  to commence in October 2011

PARKING FEES AT THE AIRPORT

Following the recently announcement on increment of parking fees at the airport by the Kenya Airport Authority, the Kenya Shippers Council suggested that members should hold from paying the proposed new rates until the matter is resolved. According to Mr. Agayo Ogambi they held a meeting with KEPSA and agreed to formulate a letter to the Prime Minister requesting him to intervene on the issue. It was proposed that the issue be raised during the upcoming Prime Minister’s Round Table.

Mututho Bill

The Kenya Flower Council opposes the proposed amendment bill, sponsored by the Chairman of the Parliamentary Committee on Agriculture, Hon. John Mututho, seeking to raise basic minimum wages in the Agriculture Order from Kshs 3,765 to Kshs 10,000 on the grounds that it:

  1. It aspires to make subsidiary legislation through the backdoor thereby usurping an executive function of determining minimum wages. This function is embedded in Section 46 of the Labour Institutions Act. This is a policy issue and not a responsibility of the legislature. Section 46 (2) (a) and (b) of the Act expressly states that it is the Labour Minister who has the mandate to publish a wages order and to table the same before parliament. To this extent, the current sponsor of the Bill lacks the authority to table the Bill before parliament. In this regard, the concept of separation of powers is ignored by this bill.
  2. The Agricultural Wages Council also ought to have recommended to the Minister the minimum remuneration and conditions of employment for persons employed in the Agricultural sector. Prior to making the above recommendations, a Wages Council is required under section 44 of the Act to investigate the remuneration and conditions of employment in any sector and invite written and oral representations from interested parties.
  3. 3. Under section 46 (2) (b) of the Act, a Wages Order can only be legally published (in the Gazette) by the Minister. The same was not done.
  4. The proposed Bill may also be contrary to Article 41 (5) of the Constitution of Kenya which guarantees the right to engage in collective bargaining. This right is also guaranteed for employer organizations and Under section 44 (5) of the Act, the Wages Council is required (in performance of its functions) to consider the ability of employers to carry on their business successfully and the likely impact of any proposed conditions of employment on current employment or the creation of employment. To this extent, the financial strain that the Bill imposes on employers and the adverse effects the Bill will create in terms of employment redundancies was not considered.

On average flower growing companies, spend between 30 to 50% of income on salaries and wages. In addition, they invest substantially in benefits beyond the conventional practices in terms of meal plans, transport, housing, child care, continued education, medication and provision of tools of work.  If the proposed Bill were to pass, this would escalate by 50-60% depending on the nature and character of the farm.

The KFC is working with Federation of Kenyan Employers and KEPSA in handling the issue. KFC has already prepared a statement indicating the industry stand on the same. On the other hand, deliberations are still going on and institutions are preparing their statements for submission.

Just the Opposite of Last Summer

Last weeks’ auction data continuously show reasonable prices for cut flowers; but compared to last year it does not look good, because August 2010 was extremely high in prices. Actually, this year’s market ‘behavior’ is just the opposite of last year: then July was extremely hot, and prices were in lowest dip, while August was cooler, and the market was high.

However, in the 4 weeks (29 through 32) of ‘period 8’ this year FloraHolland’s sales turnover was a bit lower than at the same period in 2010; but this is a very nice result, since period 8 in 2010 was the highest ever in auctions’ turnover. Cut flowers’ sales turnover in period 8 this year was the highest ever, even though the average price was lower than last year. This was the result of the dramatic increase (+37%) in the supply of imported roses. At the same time, plants’ turnover was a little lower than last year, thanks to smaller quantities.

The weather in Holland, which was some warmer in previous weeks, came again to be cool and rainy. Also the prices, which went down in week 31, changed the trend upwards in week 32. Weather forecast for the coming week in Holland shows rainy days, with temperatures not higher than 20ºC. When such weather meets the consumers when they come back from their summer vacations – it usually causes them to buy more flowers.

As mentioned here already, the last weeks were characterized by big gaps in prices between various products. Mainly imported roses showed really low prices, since they arrived in bigger quantities. Also during the last two weeks quantities increased, while prices went down. This had of course impact on the general flowers’ average price. Very low prices were also for hypericum, while most other seasonal flowers fetched really higher-than-usual prices, also in week 32. Especially high prices were obtained for: lilies, gypsophila, delphinium, lisianthus/eustoma, solidago, and proteas.

It is remarkable to learn from wholesalers around Western Europe that demand for flowers sharply went down in August, while prices in the Dutch auctions did not fall down dramatically. It seems like the balance is coming from the East European markets, where 1 September is an important ‘flower day’, for gifts on the first school day (especially in Russia, Poland, and Romania). It was expected that the main impact of this demand would be felt during the current week.

Importers in the various European countries, who get direct shipments from America and Africa, report on over-supply of big roses, but some shortage in carnations, and in salal green leaf.

Analysts in the trade recognize the ‘poor emotional condition’ among consumers in Europe nowadays; however, there are no signs of recession in the demand for floriculture products yet. Maybe, they say, the known phenomenon is repeated: at times of economical crisis people save the ‘big cost’, but tend to compensate themselves with ‘small gifts’ like flowers. Anyhow, it is still too early to evaluate the real impact of the present financial crisis on the European flower market.

Sources: ITC/MNS=>VBN stat wk 32+ FH bolbloemen wk 32 +Marktontwikkelingen periode 8

Power crisis hurts flower sector in Tanzania

As the worst power rationing in the country’s recent history continues to bite, horticulture industry players want plans to privatize power generation and distribution of electricity to provide a buffer for the national grid.

They said the monopoly by Tanzania Electric Supply Company Limited (TANESCO) was partly to blame for the crippling crisis which has started to hurt the horticulture industry, one of the fastest growing sectors of the economy.

“We are still of the opinion that the process of privatizing power generation should be enhanced and further include power supply,” said a statement issued through the Executive Director of the Tanzania Horticultural Association (TAHA), Ms.  Jacqueline Mkindi.

The stakeholders said the horticulture industry, which deals mainly with perishable products for the export market, has been adversely impacted by the power crisis through interruptive stoppages and escalating production costs.

Ms.  Mkindi said TANESCO had failed most of the horticultural producers, especially growers of cut flowers, because it does not give timely communication on proper load-shedding plans to consumers.

She said the intensive power rationing which has been in force in the last three months had dented the horticulture sector. She added that investors in the industry who had propelled the sector from a tiny business involving a few commercial farmers to one of the leading foreign exchange earners for the country have been disregarded.

According to her, the industry is affected because the production, processing and marketing of perishable horticultural products required properly working cold chain facilities throughout the day.
Source: Flowerweb

FloraHolland Trade Fair Aalsmeer – 2- 4 November 2011

From Wednesday November 2 through Friday November 4, flower auction FloraHolland will hold the FloraHolland Trade Fair Aalsmeer, an international trade fair for the ornamental cultivation sector.

During this event, exporters, wholesalers and their domestic and foreign customers are treated to a comprehensive range of flowers, plants, product concepts, trend presentations and new products. This year, in addition to inspiring concepts in the Trends and Concept Plaza, the trade fair will be expanded once again with a pavilion showing visitors innovative opportunities for the consumer market. During the event, many flower and plant growers will be present with their stands as well. The event offers room to approximately 650 growers’ stands. 420 participants have already registered for this year’s trade fair. Their stands will cover a total exhibition area of 5200 square meters. There will be stand holders from the Netherlands, Kenya, Belgium, Denmark, Italy, Spain and Germany.

The FloraHolland Trade Fair Aalsmeer is part of the International HortiWeek. FloraHolland, the Horti Fair and IFTF work together to organize the International HortiWeek in order to put national and international horticulture on the map.

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