Octobeter Issue 3 2011

KAA,s New Method of Charging Cargo Concession

Kenya Airports Authority made a presentation to cargo stakeholders on ‘New Method of Charging Cargo Concession’ on 18th October 2011 at Simba Restaurant, JKIA, Nairobi.  Alice Mbugua, the KAA Marketing and Business Development General Manager said the new rate will be based on weight at Kshs 0.50 per kilogram (kg) with a minimum charge of Kshs 250 per Airway bill/Consignment.  The review will help to streamline charging system to be in line with other international Airports.

KAA also collected views from stakeholders on the new rate of kshs 0.50 /kg. most expressed fears of the costs of doing business going up. The date of implementation will be communicated once the process is finished. Kenya Flower Council attended the forum.

Mode of charging cargo concession

  • What is concession?

Right granted by the principal in a contract to sell goods or services in a particular territory for which the other party or Agent pays a fee to the principal

  • Cargo concession

It is also referred to as Cargo uplift fees. It is a charge levied by the Authority on all cargo passing through the Airport

  • Historical origins

Under the handling category in Concession Order 189 of 1996, cargo concession was established as a fee chargeable to clearing and forwarding Agents at 6% of their annual Gross turnover with a Minimum Guarantee of Kshs150, 000 per annum for operating at the Airports.  It was later negotiated and fixed at Kshs.200 per Airways Bill/Customs Entry.

Subsequently, it was revised to Kshs.250 per Airway Bill/Entry payable by importers and exporters. The charge is supported by ICAO Document 9562 (Airport Economics Manual 2nd Edition 2006 ) and Airports Council International Guidelines.

German market asks sustainable production

Corporate Social Responsibility (CSR) is becoming an increasingly hot topic when it comes to public opinion in Europe. And it’s starting to drive the market. In an article in FloraHolland Magazine No. 9 (issued Saturday, 24 September), two buyers have pointed out the latest developments and what can be expected in terms of CSR standards in the near future.

Several major German retail chains (including Aldi) have stated that, from 1 January 2012, they will be setting higher standards for their suppliers which include:

  • All suppliers within the EU must have an MPS A, B or C certification. Alternatively, a GLOBALGAP or MPS-GAP certificate will be accepted.
  • All suppliers from outside the EU must have an MPS A, B or C qualification and the MPS-SQ (Socially Qualified) certificate. Alternatively, the BSCI primary production audit or GLOBALGAP with GRASP module will be accepted. In the article, it states that similar certification such as that of the Kenya Flower Council will also apply.

“For growers outside Europe will  require MPS A, MPS B or MPS C along with MPS-SQ (Socially Qualified) or similar certification, such as that of the Kenyan Flower Council. “

The Kenya Flower Council Silver standard code of practice is benchmarked and approved by Globalgap secretariat as equivalent to Flowers and ornamentals version 3.1. Benchmarking to version 4.0 is on-going since the new version is applicable from January 2012. Flower farms that apply for Globalgap Flowers and Ornamentals are issued with a certificate and are also uploaded in the Globalgap data base for verification by customers if and when they wish to do so.

It’s important to note that Flora Holland is represented at the Kenya Flower council certification committee to ensure the interest of the market is met by the KFC Certification Scheme. If other schemes were not included as being equivalent to those listed in the email sent by Flora Holland to suppliers; this would amount to a trade barrier; that is not permitted under the WTO regulations.

The expectation is that many German retail chains will be setting additional standards in terms of sustainable production. It’s not yet known what the exact requirements will be, but it definitely seems that, at the very least, MPS ABC will be the limiting condition. Of course, it’s only a matter of time before retail chains in other countries follow this trend. The wholesale segment is then likely to adopt these requirements too. Until recently, suppliers used to wonder if it was worth acquiring additional certifications. It now seems certain that sales will be lost without certification.

The rose is an important article for the retail trade and vice-versa. Retailers even purchase from suppliers who sell their entire stock through the Clocks.

Koppert acquires rights to biological fungicidal product

Koppert Biological Systems has reached an agreement with Bayer CropScience AG to take over the exclusive worldwide rights on the marketing, registration and production of the new product Shemer, a biological fungicidal product based on the yeast strain Metschnikowia fruticola.

Shemer is an antagonist that protects fruit and vegetables against diseases caused by fungal pathogens. It also supplements and complements pre-harvest and/or post-harvest applications and is ideal for use as a part of resistance management and IPM (Integrated Pest Management) programmes.

Henri Oosthoek, Koppert’s director of global marketing and sales: “The acquisition of this product fits in well with our strategy of broadening our product portfolio and developing new markets. Shemer will add value for growers in established markets such as protected vegetables and ornamentals and will create opportunities to enter the new markets currently in development, including fruit crops and grapes. It will strengthen our position within the growing industry of biocontrol agents. It expands our microbial ambitions for sustainable crop protection.”

Frank Terhorst, Head of Fruit & Vegetables and Insecticides at Bayer CropScience: “By reaching this agreement, we are convinced that we have chosen the right partner to finalise the development of Shemer and to exploit the full market potential of this promising biological fungicide in pre-harvest and post-harvest applications.”

NEW EU GSP SCHEME: overview

The EC proposal was published on 10 May 2011. Highlights of the Key elements of the proposal were that:

  • The structure will remain the same: GSP standard, GSP+, EBA
  • A reduction in the number of GSP beneficiary countries (80 instead of 176)
  • The countries which will no longer benefit from the GSP scheme:

Countries which have been classified by the World Bank as high or upper middle income economies for the past three years, based on Gross National Income (GNI) per capita.

Countries which enjoy another trade arrangement with the EU which provides Substantially equivalent coverage as compared to GSP (FTA)

Overseas Countries and Territories (OCTs)

  • Facilitating access to the GSP+ regime (most important for flowers):

No longer a graduation mechanism

Countries will be able to apply for GSP+ at any time

Reversal of the burden of proof

Implications for the floricultural sector

  • High and upper-middle income countries will be removed from the scheme
  • (both GSP standard and GSP+)
  • GSP+ Countries affected: Colombia, Peru, Costa Rica, Guatemala and Ecuador

Colombia & Peru: GSP+àFTA: Market access guaranteed through the Andean Community FTA

Costa Rica&Guatemala: GSP+ àFTA: Market access guaranteed through the EU-Central America Association Agreement

Ecuador: GSP+àMFN: Likely to lose the most and pay full MFN duty

  • GSP Standard Countries affected: Malaysia &Thailand: GSP standard MFN/ FTA.
  • Next steps: approval by Council and EP. Entry into force expected by 2014

LATEST UPDATE ON THE EPAs NEGOTIATIONS

v    Commission’s proposal to amend the Market Access Regulation (MAR 1528/2007)

Those countries that have concluded an EPA but not taken the necessary steps to ratify and implement it would no longer benefit as from 1 January 2014 from the current EPA market access to the EU (duty-free quota-free).

v    Implications for the floricultural sector:

Kenya initialed the interim EAC-EPA in 2007. It’s the only non-LDC country in the EAC group Likely to lose its EPA (dfqf) market access and fall under the GSP scheme.

v    After approval in the Council, proposal is likely to take effect by 2014

Follow link below:

http://dl.dropbox.com/u/33215498/UF%20GA%202011_VALENCIA/EU%20SECTION%20_%20UF%20GA%202011_Valencia.pdf

Review of the EU plant health regime

The evaluation of the present system started in 2008 and concluded in 2010 /

2011

Main outcomes of the review:

l Focus on prevention strategies

l Need for risk-targeting

l In case of Phytosanitary problem: need for rapid intervention       instruments at an early stage

Next steps:

ü  Consultation with stakeholders now finalized

ü  Legislative proposal expected end- 2012

ü  Implementation anticipated in 2014-2015 at the earliest

ü  New regime will be in place for the next 20 years or so!

Active participation from Union Fleurs in the stakeholder’s consultation process to represent and defend the interests of the floricultural trade:

  • participation in several meetings in Brussels from 2008 to 2010
  • UF position paper in October 2010

Union Fleurs main points of interest:

  • Need for a clear and transparent legislation
  • Better communication with operators and third countries
  • Problems with double-checks
  • Need for more harmonization and mutual acceptance between Member States
  • Importance of risk analysis

Phytosanitary Controls at Import

  • Import controls: new proposal under preparation by the European Commission (review of Regulation 882 / 2004 on Official Controls)
  • Likely to affect the existing provisions for Phytosanitary controls at import into the EU to harmonize them with food / sanitary controls.
  • Review to be carried out in parallel with the review of the EU Plant Health Regime (Council Directive 2000/29) : provisions on Phytosanitary controls at import likely to be transferred under new Regulation on official controls

Council Directive 2000/29 (EU Plant Health Regime)

Objectives of the Commission:

  • Simplify and clarify the legal framework applicable to control activities
  • Implement an integrated approach across the food chain in its widest meaning (including Phytosanitary controls)

Should make sure that it does not unnecessarily modify the way Phytosanitary controls are presently carried out at import into the EU ( flowers &plants ≠ food products)

EU Promotion Policy for Agricultural Products

Green Paper recently presented by the European Commission:

« Promotion measures and information provision for agricultural products a reinforced   value-added European strategy for promoting the tastes of Europe »

  • a more ambitious and more targeted strategy for the future
  • more transparent and less burdensome administrative procedures
  • larger budget
  • encourage multi-country programmes with a greater European dimension

Comments submitted jointly with other sectors via CELCAA

Specific point about the importance of maintaining flowers & plants within the new strategy (and not just food products)

Follow link below:

http://dl.dropbox.com/u/33215498/UF%20GA%202011_VALENCIA/WT%20COMMITTEE_%20UF%20GA%202011_Valencia.pdf

Ethiopia: Draft Directive Weighs On Exporters

The Ethiopian Horticulture Development Agency (EHDA) is drafting a new export management directive, which is expected to take effect this month that changes the unit of measurement of flowers to kilograms as opposed to stems in calculating repatriated foreign exchange.

For this purpose, the draft has changed the unit of measurement of flowers which is estimated after counting those in selected sample boxes.

However, this has opened a door for abuse because the sample stem taken might not represent the type of flower in all boxes and hence will have an effect on the repatriated amount, according to the agency.

It will also affect the quality of the product for if the package is opened the flowers will damage easily.

Out of 120 horticulture producing and exporting enterprises, of which 65pc of them are engaged in the production of roses, 90pc of them are supported by the loans from the Development Bank of Ethiopia (DBE).

If an exporter does not repatriate the correct amount based on the reported amount, it will not be allowed to export the next batch. The Ethiopian Flowers Producers & Exporters Association is trying very hard to stop this directive from passing with the change in measurement.

Source: Allafrica

US Congress ratifies Free Trade Agreement with Colombia and renews preferences under ATPA until July 2013

On October 13th the U.S. Congress ratified free trade agreements (FTA) with Colombia, Panama and South Korea by a wide margin of votes. President Obama is set to sign the agreements this week.

As far as trade in flowers is concerned, the ratification of the FTA between the United States and Colombia is the most relevant one.

According to Ms. Christine Boldt (AFIF) during the recent Union Fleurs general assembly, Colombian flowers have had preferential tariff access since the early 1990s under  the Andean Trade Preferences Act (ATPA) that expired in February 2011. Since then US importers have had to pay duties ranging from 3.2 percent to 7 percent, mostly at the high end of the range.

With the entry into force of the free trade agreement, duties on all flowers coming from Colombia will now be permanently eliminated.

In relation to this, it has also to be noted that the Congress also approved the renewal of the preferences under the ATPA with retroactive effect, from February 12th 2011 to July 31st 2013.  This means that the not only duties will be eliminated  until the entry into force of the US-Colombia FTA but also that flower importers  will receive a refund of around  $2 million in monthly duties they have been paying for the past eight months, reinstating some certainty and predictability for retailers and importers sourcing from these areas.

For more information please find below the links to some articles regarding the US –Colombia FTA  and the implications for the flowers industry:

  • Final passage of trade agreements pleases farmers

http://agalert.com/story/?id=3491

  • Ailing Colombia flower farms eye relief in US pact

http://www.reuters.com/article/2011/10/11/usa-colombia-trade-idUSN1E79A11F20111011

  • Colombia’s winners, losers in U.S. free trade deal

http://af.reuters.com/article/commoditiesNews/idAFN1E79B1II20111013

  • Congress approves free-trade pacts

http://www.miamiherald.com/2011/10/11/2451084/congress-debating-free-trade-pacts.html

Colombians optimistic about free trade with US

Colombian growers, weakened by higher costs, a strong Peso and greater competition from Africa, can get a very necessary relief if the United States Congress approves the trade agreement.  Under the agreement, Colombia, the world’s second largest exporter of flowers after Holland, will be able to export its varieties duty-free to the dynamic American market.

In 2010, the United States represented three-quarters of the US$ 1.248 million of the flower exports from Colombia to the world. However, an early appreciation of the Colombian Peso might put more pressure to the fifth product of export and reduce a good part of the earnings from duty-free flower sales in the United States.

Impact of the peso
While the Colombian Peso has weakened 9.5% from mid July because of the global economic uncertainty, the currency has gained nearly 25% against the dollar from late 2004, a tendency that experts expect to continue.

This situation has reduced the exporters’ earnings, forcing to closure or about to close 3,000 hectares of flower crops near Bogotá and Medellín, the second most important area for the industry of the South American country.

Asocolflores joined the rest of exporters who asked the Colombian Government to take measures to weaken the currency.

While the exporters have benefited from the depreciation of the Peso from July, the economists forecast that the local currency will continue the path of strengthening.

The increasing costs of labor and materials put even more pressure on flower crops. These costs have increased 61% from 2005 because salaries raised in terms of dollars and materials such as plastic also increased due to the oil price.

“Although the labor cost of a worker in Kenya and Ethiopia is US$ 65 and US$ 80 respectively, the same worker in Colombia costs US$ 500 per month”, said González, from Asocolflores.

Source: COLPRENSA : Hortbiz

Dubai flower trade on the rise

Dubai’s trade volume of flowers, live trees, seedlings, roots and bulbs has seen a significant rise of +12.6% in the first five months of the year, compared to the same period in 2010, according to statistics recently released by Dubai Customs.

The emirate’s flowers volume hit Dh71 million (US$ 19.33 mill.) from January to May 2011, compared to around Dh63 million ($ 17.15 mill.) in the same period last year. Ahmed Butti, Executive Chairman of Ports, Customs and Free Zone Corporation and Dubai Customs Director-General, said Dubai exports of flowers, bulbs, live trees and other plants has witnessed a record percentage, reaching +139% to Dh20 million ($ 5.5 mill.) as opposed to last year, when it was at around Dh8.3 million ($ 2.25 mill.). Imports of these products hit Dh49.16 million ($ 13.4 mill.) in the same period, whereas re-exports amounted to Dh1.34 million ($ 0.36 mill.) “The re-exporting activity valued at 1.34 million with a decreasing rate of -53% against the same period last year where it reached Dh2.87 million for the first five months of 2010,” Butti said.

Meanwhile, the Netherlands topped the list of exporting countries of flowers and plants into Dubai with a value of Dh16.6 million ($ 4.5 mill.) = 33.8% of Dubai imports for these products, followed by Kenya with a value Dh6.8 million ($ 1.85 mill.) = 13.8%, and Thailand with Dh5.14 million ($ 1.4 mill.) = 10.5%. “These top three countries constituted a share of 58% of the total Dubai import rate for flowers and plants,” Butti said. As for the top importing countries, Iraq came first on the list with a value of Dh14.15 million ($ 3.85 mill. = 71%), while India came second with Dh2.86 million ($ 0.78 mill. =14.3%) and Egypt third with Dh1.18 million ($ 0.32 mill. = 5.9%).

Flowers and plants exports to these three countries had a share of 91% of the total Dubai export rate for flowers and plants. “However, Kuwait topped the re-exporting list over the period from January to May 2011 with 29.6%, followed by Qatar with 22.5% and Iran with 19.4%. The three countries make a share of 71.6% of the total re-exporting activity in Dubai,” Butti said.

Source: Khaleej Times /MNS / hortibiz

This entry was posted in Uncategorized. Bookmark the permalink.