May Issue 3 2012

Update on Local Government cess and levies

The Kenya Flower Council has been in communication with the Ministry of Local Government following the imposing of an Agricultural Produce Cess on Flowers, charged at various rates by various Local Authorities around the country.

As a follow up of the same, a meeting to discuss on cess and levies paid by growers to the Government was held on 16th May 2010 in Nairobi. The meeting was called by the Permanent Secretary in the Ministry of Local Government Prof. Karega Mutahi. In attendance were the municipalities of Ol Kejuado, Naivasha and Nakuru and a Kenya Flower Council (KFC) team comprising of the Chairman Mr. Richard Fox, growers and the KFC Chief Executive officer Mrs. Jane Ngige. The meeting resolved that:

1              A nominated team would review the levies and taxes demanded by the different municipalities and indicate the tax burden with due regard to performance of the industry

2             The team would also review existing agreements between growers and any of the municipalities viz a viz  legal statutory requirements  and CSR

3             The KFC would provide a list of all the taxes and levies currently paid to the Government of Kenya

4             The team would prepare a report with clear recommendations for discussions with the PS.

5             In the meantime, growers will only pay the levies that are explicitly provided for by the law.

Third ATI Annual Round Table

The Africa Trade Insurance Agency’s 3rd Annual Round Table took place in Nairobi on 17th May 2012 and graced by the Hon. Peter Kenneth. Kenya Flower Council attended the event. The round table focused on 3 themes;

  1. Shifting Demographics: Perspectives from Future Leaders on Africa’s Political Risk. How can Youth Become Part of the Solution?
  2. Managing Risks in Turbulent Times:
    • Prospects for Africa and the Middle East in the Wake of the Arab Spring
    • The Euro zone Crisis – Impacts on Africa’s Trade Risks and Ability to Access Finance
  3. Expert Panel Interview: Focus on the overarching themes discussed throughout the day to draw conclusions, identify trends and forecast anticipated developments in the coming months.

Outputs

–          Great prospects for Africa as international investors are realizing the many opportunities for investment.

–          The youth will have an important influence in future political process with the social media acting as a change that is linking the youth. A generation of young people who are educated and connected to the world outside of Africa brings both challenges and opportunities. If managed well, this dynamic could lead to more transparent, responsive and open governments resulting in a more positive risk profile for Africa

–          With growing FDI, major opportunities for youth employment. However there is a serious mismatch of the available qualifications and skills required for existing and emerging job opportunities. e.g. the oil engineering sector in light of the oil discovery.

–          There is very little chance of an uprising in the sub-Saharan Africa similar to the Arab spring.

–          No major impact of euro-zone crisis felt by African Economies. It has however caused an increase in the cost of credit, protectionism tendencies by European countries, reduced remittances by Africans abroad and reduced demand for commodities. It has also forced exporters to diversify markets

–          How can investors guard against risk created by volatility?-Insurance and hedging are to ways.

EU’s first Economic Partnership Agreement with an African region goes live

The interim Economic Partnership Agreement (EPA) concluded by the EU and four Eastern and Southern African states (Mauritius, Madagascar, Seychelles and Zimbabwe) took effect on May 14, providing duty and quota free access to the EU market for these countries as well as opening their markets to European exports over the course of the next 15 years.

Furthermore, the Agreement covers provisions on rules of origin, development cooperation, fisheries, trade defence and dispute settlement. This EPA is a substantial improvement for Mauritius, Madagascar, Seychelles and Zimbabwe on the unilateral trade agreements they enjoyed so far because it encourages regional integration and strengthens a partnership approach with the EU, which in turn brings economic and political benefits that individual countries cannot achieve alone.

Turkey Delegation to visit Kenya

KEPSA will host a high level trade delegation from Turkey at KEPSA offices from 10.30 a.m. to 12.00 p.m. on Friday, 25th May 2012.  Some of the companies that will be in the delegation are flower distributors. KFC is inviting Members with interest to attend the meeting.  To get the day’s programme, List of the companies in the delegation and more info kindly contact Pascalina Kagunda on pkagunda@kepsa.or.ke or to kfc@wananchi.com by Monday, 21st May 2012.

Kenya to improve the level of productivity and competitiveness to realize the goals of Vision 2030

The Federation of Kenya Employers (FKE) has said for Kenya to realize the goals of Vision 2030 the country needs to make deliberate attempts to improve Kenya level of productivity and competitiveness, which is currently constrained by dilapidated infrastructure, high taxes, punitive legal and regulatory framework, static educational system, poor land tenure systems, and sporadic insecurity.

In a press release, FKE has stated that the challenges has resulted to erratic economic growth, high levels of youth unemployment, high cost of living, high cost of credit, high cost of transport, high energy costs, and low productivity and competitiveness.

In terms of infrastructure this has not spared the Flower industry either. There has been inadequate electricity power supply during the dry and rainy season.   Recently during the heavy rains, some farms had no power for 3 days in succession, during which there was only a 3 hours supply. Consequently, the fertigation and spray programmes could not be implemented resulting to enormous losses.

What the employers manifesto is seeking for:

  1. Visionary leadership to deliver on the countries development agenda
  2. A Government that continually pushes for and drives Civic Education.
  3. Conducive business environment to improve Kenya’s competitiveness.
  4. Harmonious industrial relations for wealth and employment creation. This calls for a transparent litigation process, such as: and timely court awards; Non punitive appeal processes; Realignment of the country’s labour relations and compensation mechanisms with those of other countries, EAC; Effective dispute resolution and labour administration mechanisms to avoid unnecessary strikes
  5. 5. High and sustainable economic development to address the twin problems of poverty and unemployment.

The employers through FKE have promised to play their role through:

  1. Promoting tolerance in the work place; enabling  the right to vote for a leader of one’s choice
  2. Facilitating employer/employee workplace initiatives to aid cohesion before, during and after the elections through workplace programs
  3. Contributing to the civic education at the workplace

THE WAGE INDICATOR PROJECT

Kenya’s economy has experienced continued pressure for review of wages across different sectors. However, as yet Kenya does not have a credible salary survey. Through the Wage Indicator Project Employers feel this initiative will give Kenyans an opportunity to see what the market is offering with regard to wages.

Consequently, with regard to the issue of wage the Federation of Kenya Employer (FKE), and COTU – Kenya, University of Nairobi and Wage Indicator Foundation are a part of this Wage Indicator Project.

Currently there is little, if any scope for structuring wages, within a particular job-description, to reflect loyalty (in terms of years of service) or qualitative input (in terms of consistent good performance).  Both these work-force attributes contribute significantly to productivity-competiveness.

The initiative offers accessible and accurate information on wages, labour law, decent work and minimum wages in Kenya. It is a great way to see what pay is prevalent with regard to various employment positions.

The goal is to have this information made public allowing for free and fair information relating to salaries and decent work. This will allow people log into the website www.africapay.org or www.wageindicator.org to have access to data with like institutions across the country, per profession per sector.

How does AfricaPay.org Kenya collect salary information?

Visitors to the site are encouraged to fill out the confidential Salary Survey. It takes about 10 minutes, and information from this survey is then gathered as data which reflects wages, as well as working conditions, for Kenyan workers. The more surveys are filled out; the more wage data can be collected.

NHIF

FKE has reiterated that indeed NHIF rates need to be reconsidered, through consultation and is committed to making a positive contribution in this regard.

According to the federation, the emerging issues related to individual contribution rates, possibility of providing exceptions to employees (who currently enjoy a comprehensive medical scheme provided by the employers), and NHIF governance concerns need to be addressed.

Flower growers wilt over new packaging standards

The Ethiopian Horticulture Development Agency (EHDA) is requiring flower exporters to use a new standardized packaging system starting this week, despite members of the association opposition.

At a meeting held last Thursday, agency flower growers and exporters said the new requirements would significantly add to their cost of production. Growers also complained that a majority of suppliers and producers of the newly selected packaging material do not have experience in the sector.

The new standard approved by EHDA and the Ethiopian Standards Agency gives the rights to four packaging material producers to supply the packaging for the growers and exporters. But growers complained that the company known as Unlimited Packaging had the experience they required. “It will affect the sector export,” growers said at the meeting led by Haileselasse Tekie, Director General of the agency.

Experts said that the new regulation will discourage growers from exporting flowers. Previously about 15 packaging producers were supplying packaging for flower exporters, but most of the companies are not included based on the new criteria, which includes standard laboratories and production centres.

Burayu Printing and Packaging, Ethiopian Pulp and Paper Share Company and Menaye Packaging are the three companies selected with Unlimited to supply the packaging product for growers. Based on the new regulation flower growers and exporters will use standard packaging from these companies as of this Tuesday.

Satish Vuyyuru, Head of Addis Ahadu Packaging, told Capital that his company will begin working Monday, May 14 with the other four packaging producers to supply boxes for flower exporters. Owned by Indian investors, it is one of the major companies in Ethiopia’s flower packaging industry. The company has received an award from the Prime Minister two years ago for its contribution to the flower sector, which is about seventy percent of the total packaging targets flower growers, the manager said. Previously Addis Ahadu was not included among the selected packaging producers. But after a discussion, the two agencies have allowed the company to continue its business.

“However they set pre conditions for the company to fulfil in the near future,” the manager added.

Most of the companies that had been supplying their products for the growers will now be forced to leave the sector.

Source: Capital Ethiopia

Mother’s Day promotion to focus on ‘almost mothers’

The collective sales promotion for flowers towards Mother’s Day in France on June 3rd is focused on the ‘almost mothers’, ladies who soon will have a baby.

Flower Council of Holland has decided to carry out this remarkable action, aiming to surprise ‘almost mothers’ with flowers for this Mother’s Day.
At the Web site “mooiwatbloemendoen.nl” people can select personal words for the ‘almost mother’ they wish to surprise. Every day ten lucky participants will get a bouquet sent on their behalf for free. Radio commercials are running, encouraging the public to surprise ‘almost mothers’ they know with a bouquet of flowers. Also Internet promotions are taking place.

A unique PR activity is made through a special device, developed for this action: In several busy shopping centres in the Netherlands and in France, a special ‘almost mother’s day automat machine’ is standing. The ‘almost mothers’ are invited to stand in front of a big mirror; the pregnant women are surprised by the machine with a bunch of flowers… The machine identifies pregnant ladies. At this link you may watch the special ‘flower automat’ in action.

Sources: FloraHolland Newsletter, Bloembollen Visie, Flower Council

Less flower farms in the Netherlands

After 2000 the number of cut flowers in the Netherlands went down by 56% to 1453 companies in 2011. According to figures of the Dutch national statistical bureau CBS, the area of cut flowers cultivation in 2011 was 23% smaller than in 2000.

In 2011, there was an average worker at each 0.44 ha of cut flower production and the average output for a worker was 138,000 euros. In 2000 these figures were 0.38 ha for each worker and an output of 118.000 euros. The economic size of the total cut flower industry decreased from 2000 to 2011 by 22%.

The average size of the cut flower farms in 2011 was 3.3 ha, which is 74% bigger than in 2000. This growth resulted in an 77% increase of yield per company. The labor used per farm sharply increased by 52%.

Source: Hortibiz

Dutch export flowers and plants down by 7% in April

The export value of flowers and plants from the Netherlands in April dropped by 7% to € 505 million, compared with last year. As a result, the cumulative growth until April dropped to 3%, after the growth was 7% over the first quarter of the year. For the first time since 2007, the limit of € 2 billion got exceeded after four months.

The export of flowers until April grew by 6% compared to 2011. The export value in the plants is comparable to last year. This is according to the export statistics of HBAG Flowers and Plants in Aalsmeer. The sales data for Mother’s Day, which date was late this year, are not included in these figures. According the wholesalers the results for this flower day are good.

The weather has a major influence on the flower and plant market. But the influence turns out different for both groups. Because of the cold spring in the Netherlands and the low production in Africa, there was less flowers supply, while the demand remained at a good level. Particularly for the garden plants, the cold weather is a disadvantage. In large parts of Europe people did not start to work in the garden and buy new plants.

In April, the cut flower export turnover went up by 3% to € 287 million. Until April, the increase was 6% to a value of almost € 1.3 billion. Compared with April last year, the export of pot and garden plants decreased by 17% to a value of € 219 million. Until April, the export value of this product group was € 784 million, which is comparable to 2011.

Spring this year was cold, while last year spring was extremely early and lasted long. Last year, there was pressure on the prices of flowers and there was a good demand for garden plants. Moreover, the dates of the flower days were different, as (English) Mother’s Day and Easter.

First Colombian flowers enter US under FTA

4,200 boxes of flowers aboard a Centurion MD11 cargo plane landed in Miamia on May 15th. These was the nation’s first product to enter the U.S. market Tuesday, under the new Free Trade Agreement between the United States and Colombia.

Augusto Solano the president of the Association of Colombian Flower Exporters – Asocolflores, announced that 4,200 boxes with more than 1,200,000 Colombian flowers winged their way to the USA on an 80-ton Centurion and Keuhne + Nagel MD 11 cargo plane bearing products from 9 Colombian flower farms. The flowers were lifted off on Monday, May a flowers already enjoy preferential tariffs, the passage of the US-Colombia Free Trade Agreement is strategic to ensuring floriculture product permanence in its main market constituting 76% of its exports.

Solano went on to point out that approximately 80% of all flowers the US imports come from Colombia, and that thanks to the US distribution network currently in place Colombian blooms and foliage can be found coast-to-coast in supermarkets and florist shops.

Colombian floriculture generates over 150,000 direct and indirect jobs in 48 townships around the country and is the top-ranked national non-traditional agricultural product with 2011 sales reaching USD 1,250 million. Colombian flowers also generate employment inside the United States producing nearly 225,000 jobs set mostly around the products’ main port of entry in Miami.

“Colombian floriculture celebrates the passage of the US-Colombian FTA and hopes it becomes a tool for generating more jobs in Colombia”, said the president of Asocolflores.

Source: Hortibiz

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