March Issue 2 2012

VAT Refund follow up

The Kenya Flower Council met the incoming Commissioner General at The Kenya Revenue Authority, Mr. John Njiraini on 29th February 2012. The main agenda of the meeting was to follow up the outstanding VAT refunds owed to the floriculture industry, with over kSh 1.2 billion owed to the KFC members alone. The meeting offered an opportunity to communicate first hand to the new Commissioner, the frustrations that growers go through while pursuing their VAT refunds.

The KRA admitted that problems exist in their internal systems that may not adequately cater for the peculiar needs of the industry from a business perspective as well as with the growers handling of the VAT follow up. The Commissioner General sighted the need for an urgent solution to this problem and as a way forward, he constituted a working group comprising of KRA senior officers, KFC and FPEAK representatives. The team is expected to provide practical solutions for both KRA and the growers.

The team held its first meeting on Wednesday the 7th March 2012. The discussions centered on two areas;

  1. past issues impacting on VAT refunds and
  2. future changes to streamline processes and had

The following were the outputs;

–          Proposal to KRA to issue an official communication regarding the requirement for C17B’s to have export exit verification

–          KRA to work towards completing re-verification of all export documents supporting outstanding VAT refund claims in 1 month

–          Proposals to the Commissioner General to have the KRA up a risk based approach combined with some sampling to establish risk of non bona fide export. This is with due regard to the fact that over 95% of flower production is for export.

–          Proposal to Commissioner General that due to the massive interest burden and penalties that the industry is incurring, KRA proceeds with VAT refund claims with a caveat that any issues subsequently found in re-verification of these to be reclaimed from future claims

–          It was agreed that the industry representatives would submit a detailed summary of all the issues experienced with Customs at JKIA & potential solutions for consideration where possible

–          A follow up meeting be held on 4th April 2012

The Friday Notice Board will keep you informed of the developments.

De-briefing on “evaluation on links between business developments and social welfare improvements in the Kenyan cut Flower industry”

Kenya Flower Council organized seminars for her members to brief them on the findings of the study by Researcher Lone Riisgaard and Peter Gibborn of Danish Institute for International Studies, Denmark carried out last year between May and July in different flower farms from Naivasha, Nairobi, Nanyuki and Thika.

The seminar took place in 3 different locations:

Thika Blue Post Hotel on 6th March 2012

Naivasha Fish Eagle inn on 7th March 2012

Nairobi Lenana Conference Hse Lavington on 8th March 2012

Summary of the report findings

–          Employment conditions: stabilization and standardization dominates. The increase in the share of permanent workers in total employment reflects the fact that most farms in the sector have stabilized in terms of cultivated areas. Three quarters of all workers surveyed had spent two years or more on the farm where they were currently employed, half had spent four years or more, and a quarter had spent eight years or more.  There was no direct evidence on discrimination.

–          Trainings: The volume of training undertaken in the sector has risen dramatically in recent years. There remains a good deal of variation in other areas – in farms’ commitment to technical training and using it to promote better-educated workers or create an ‘extended’ internal labour market.

–          Workers deployment: ‘Vipimo’ drifting up and staff densities drifting down without much friction. Packhouse organization lacks established models. A large majority of workers did not experience work intensification.

–          Pay: fair-trade certified farms maybe dragging average pay upward. Other intra- sectoral relativities also significant.

–          Supervision:  lighter and more rule based, but probably not fully managerialized

–          Standards: standards have accelerated a move away from paternalism and toward unionization.

The final detailed report will be sent via email.

The flower vendor’s training workshop

The Kenya Flower Council organized training for the Flower Vendors Association (FVA) members on Procurement procedures and requirements on 6th March, 2012 at Parklands Baptist Church Westlands. This was necessary for the vendors especially when they are applying for Government tenders.

The training was facilitated by Mr. Stephen Koech of Public Procurement Oversight Authority (PPOA). The aim of the training was to equip the flower vendors with the much needed knowledge that any potential bidder may require. FVA is an associate member of KFC.

The members of the Flower Vendors Association used this forum not only to enlighten themselves but to seek clarification on issues that they did not particularly understand and have some of their queries addressed. They were also taught on their rights and ways to go about reporting or addressing an injustice should they perceive that one had been committed. Others included basic requirements for eligibility to tender, special requirements, the tendering process.

By the end of the meeting a very happy and enlightened group presented Mr. Koech with a basket of flowers to show their appreciation. The Kenya Flower Council takes this opportunity to thank PPOA for agreeing to facilitate the training.  35 flower vendors participated in the training.

Ghana wants to give Kenya stiff competition

The CEO of the Ghana Trade Fair Company Limited Ebenezer Erasmus Okpoti Koney  has stated that Ghana has the potential to compete with leading flower exporting countries. “Our abundant sunshine, fertile lands and eager farmers are looking for opportunities to give Kenya and other leading flowers, fruit  and vegetable exporting nations stiff competition,” he told City & Business Guide.

The growing interest in horticultural exports in the country does not match the search for diversified non-traditional agricultural exports in order to increase foreign exchange earnings.

Koney said the Ghana Trade Fair Company Limited in collaboration with Export Development & Investment Fund (EDIF), is providing a platform to promote horticulture export.

“We are more determined to complete further preparations for this to happen.” Koney noted.

In line with this, facilities in the form of mobile pavilions named ‘export zone’ have been introduced at the on-going trade fair. The CEO, who intends to hold a flower, vegetable and fruit fair at the site, was optimistic it would develop into a regular agro-based exhibition to promote the sector.

The international market for flowers constitutes a small per cent of the total world trade yet Ghana is determined to get a fair share of this market. Developing countries such as Ghana are expected to have a comparative advantage in the production of flowers and perform well in export markets, he added.

The target market for the export of flower, fruit and vegetable, Mr. Koney mentioned, would be the western world. “If they come and do not like our packaging but recognize we have the potential they would bring their technology and then we will move forward.”

Source: Daily Guide > hortibiz

Tesco continues losing market share

The UK’s biggest supermarket continues to see its dominance slip as low-cost rival chains gain territory. Tesco’s market share was 29.7 per cent in the 12 weeks to February 19- touching a level last seen in May 2005.

Meanwhile, Tesco’s competitors saw their share of the market grow with Iceland up from 2 per cent to 2.1 per cent, Aldi up from 3.1 per cent to 3.6 per cent and Lidl up from 2.4 per cent to 2.6 per cent.
Upmarket chain Waitrose recorded an all-time record 4.5 market share this month, up from 4.4 per cent, as it stepped up its store expansion.
But the Co-operative saw its share fall to 6.3 per cent in the 12 weeks to February 19 from 6.7 per cent in the same period last year, fuelling speculation that the supermarket’s food division is struggling to integrate the 800 Somerfield stores it acquired in 2009.

Source: Greenmed Journal> hortibiz

Ethiopian Plans to Undercut Go-Betweens in Flower Export

A decision by the management of the Ethiopian Airlines’ Cargo Division to launch a service to take horticulture products from farm gates all the way to auctions in Europe, thereby cutting out companies in the middle, has brought fierce resistance from industry operators.

The Airline management has announced its plan of leasing space in cargo planes direct to farmers, instead of one of the three companies that go between, at a briefing session held at Radisson Blu Hotel, on Marshal Tito Road, on Thursday, March 1, 2012.

For long, Ethiopia’s nascent cut flower industry has been too small and fragmented to fill a chartered cargo on the capacity of an individual farm. Close to eight growers formed Ethio-Horti S.C., a company created to collectively export their produces, leasing a chartered plane from the national carrier. Two more such companies – Ethio-Horticulture Cooperative and Trade Path International Plc – have emerged, although Trade Path came to be the largest player in the industry. Sher Ethiopia, the biggest flower farm in the country, uses Trade Path to export its flowers from its farm near Ziway town to a market in The Netherlands.

Jointly chaired by Hailesellasie Tekie, director general of the Ethiopian Horticultural Development Agency (EHDA), and Tewolde Woldemariam, CEO of Ethiopian, the announcement made last week by Ethiopian cargo management team to launch the new system to transport horticultural products from the country was stormy. Seen by industry leaders as an attempt that threatens the existence of the three forwarding companies serving flower growers to date, they attack the management for being secretive of its plans to launch the system.

The management set up a new department to undertake the operations originally scheduled to start next week. However, bombarded with series of questions from skeptical growers, who challenged the readiness of the company to take over the job, the Airline management has finally reversed their decision and postponed the date the new system will be launched.

Growers were surprised to learn that they were not consulted while the government was planning such a dramatic and far fetching changes in the industry.

The management envisions the creation of supervisory board to oversee and regulate how the new system functions, comprising eight members from growers, their association, the federal agency regulating the industry and the Airline. Neither were management members ready to disclose the price regime when they laid out their plans last week, a move that infuriated growers, some of whom threatened not to leave the room before told what price the company charges them.

“It’s not appropriate not to disclose price for a grower while telling us that the system will start after three days,” a disappointed flower grower, who attended the meeting, told Fortune. “They were going around the bush instead of addressing our legitimate questions.”

There are currently 91 flower growers comprised under the association with a total land size of 1,310hct. Exporting 41.6 billion stems cut flower last year, they helped the country earn 178.3 million dollars. Nonetheless, this revenues was much lower than the 288 million dollars anticipated from exporting a planned three billion stems, leading officials to question whether there are proceedings that fail to have their way home.

It was after a lot of going around the bush senior managers of the Airline told growers the price would be determined by the supervisory board. Ironically, the managers asked growers to select members of the board at the same meeting that again surprised industry operators. It was after uptight debate that the board was formed, for those attending the meeting demanded time while the managers were seen strongly insisting it should take no time.

“Although Ethiopian never generated much profit from this cargo operation, the management has decided to support the sector at any cost,” Tewolde said during the session.

He promised daily accesses to international market irrespective of the volume to be exported.

“Although we are challenged by high fuel cost, the management decides to absorb all the risks,” Tewolde said. “This is not a temporary business that we are interested at when the business is doing well. Ethiopian is there for a long haul.”

Growers can book their shipment through email and internet, through first come and first served basis.

Ethiopian has also plans to give tracking service to transport the flowers from the farms to the airport, for most of the farmers are within 160Km radius. But this has perplexed forwarders, who question the wisdom of an airline turn out to be a forwarder.


Shortage of flowers causes high prices in Yunnan, China

The Yunnan province in China is suffering from drought and high temperatures for already 3 years. As a result, there is a shortage of flowers at the Yunnan market. This is especially the case for roses. Because of the shortage, prices remain high.

Present prices in Yunnan are 20% to 30% higher than last year. Normally prices will go down after the Valentine peak, but this year is the different situation. After the other peak at Women’s Day, prices will fall again, but it is hard to predict if this happens this year too. In fact, if the drought continues, prices are not expected to drop.

Source: Hortibiz

Celebrating life with flowers: 2

It is March; my how the year is getting old. Seems just like yesterday we were wishing each other a happy new year and now we are saying “hello March, nice to see you again” and none is the happier or sadder than the March baby who is celebrating or is looking forward to celebrating yet another milestone in their life: being one year older (and to those in denial, younger), well all the same I wish you lots and lots of Daffodils and of course happiness and health.

Well let’s get to it, April babies. April babies are brave and fearless, patriotic and are well known for being active and dynamic that is why their birth flower is the Sweet pea (pictured above). The meaning of the April Birth Flower, the Sweet pea can be either Good-bye or Blissful Pleasure (pick whichever meaning appeals to you) but they do tend to be a little aggressive and hasty but not even their short comings would make us think any less of them for they, just like the name of their birth flower denotes, are sweet people.

The May Birth Flower is the Lily of the Valley. The May baby Loves to dream, is usually understanding and usually has deep feelings .He or she may at times be restless and easily angered among other things but that only serves to compliment a member of his birth flowers family (the wild lily) and anyway they know that they are all beautiful the way they are because God makes no mistakes, and so they keep on dreaming their way to a happy tomorrow .The meaning of the May Birth Flower, the Lily of the Valley is Sweetness and Humility

June babies tend to be easily influenced by kindness, they are Polite and soft-spoken, Inquisitive, Clever, Adaptable, Lively and Communicative among other things. They can however be easily bored, fussy and stubborn and that is why their birth flower is the Rose.  The meaning of the June Birth Flower is passion, love and beauty. However in their stubborn streak they can tend to be a thorn in your side so watch out.

The patriot, the dreamer or the inquisitor, this week’s collection of babies have some interesting qualities, wouldn’t you say? To these babies mine is to simply remind you that you are a child of the universe, no less than the trees and the stars; you have a right to be here. And to you and the rest of the babies, until we my words and your eyes bring us together, strive to be happy.

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