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: 19 July 2022; Hits: 1076

UK gov identifies 3 high-potential products for Kenyan agri exporters

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By George Munene

A joint project by the Growth Gateway and Trade Connect programmes commissioned by the British government has identified three high-potential horticulture products that could increase Kenya’s exports to the UK.

These were mixed vegetables, fresh fruit, and value-added products such as nut mixes, dried fruits, and avocado oil.

Mixed vegetables (cut and frozen)

The UK has a large export market for mixed vegetables, and Kenya is already a recognised supplier in the market.

Kenya has existing large suppliers with the potential to scale up from current exports of Sh7.6 billion to Sh17.1 to Sh21.4 million annually by 2030, and to generate many new jobs.

Fresh fruit

Kenya currently exports avocados worth Sh712 million annually. This is however just two per cent of a rapidly growing, health-conscious consumer market.

By scaling up production of the right variety and quality of avocados, Kenya can potentially increase exports to between Sh4.3 million to Sh11.4 million annually by 2030.

There is a smaller opportunity to enter the market for mangoes. Both fruits could generate large-scale jobs for youth and vulnerable groups including women.

Value added products

The UK market for nut mixes and spreads, dried fruits, and avocado oil is estimated to be around Sh92.6 million annually and growing at 9 to 12 per cent CAGR.

This is driven by increasing consumer consciousness around health and wellness. With the right investment, opportunities exist for Kenyan SMEs to tap into this growing market.

Challenges

Kenyan agriculture producers have had issues in accessing the UK market due to having struggles delivering consistent quality and high volumes competitively. Poor trade facilitation, depreciation of the British pound, and uncertainty over post-Brexit food standards requirements have further reduced their market share.

Agro-exporters have also faced rising freight costs.

As a major trading partner, the UK imported Sh83.7 billion from Kenya in 2021. This was mainly made up of crude vegetable & animal materials, flowers, coffee, tea, and fruits.

This trade is vital to Kenya’s horticultural sector, but it has been declining steadily since 2012. The horticultural sector exports high-value products to the UK with the sector being vital for Kenyan smallholder farmer incomes, jobs, and earning foreign exchange, which supports economic growth.

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: 18 July 2022; Hits: 753

Increased transport & permit costs hinder Kenya's agriculture imports

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By George Munene

As Kenya seeks to increase maize, sugar, and wheat imports to reduce rising costs and tackle food insecurity, rising permit costs and transportation, a dollar shortage, and delayed clearance at border points are reducing the ease of doing business for traders.

Tanzania has increased the cost of export permits by 93 per cent. The authorities in Tanzania have increased the cost of acquiring export permits from the previous Sh27,000 per truck to Sh52,000, according to border officials.

Transport costs of maize from the source markets has increased by 150 per cent resulting in transporters charging the equivalent of Sh1,500 from Sh600 previously for a single bag of maize transported from either Malawi or Zambia. This has pushed the landing cost of a 90-kilo bag in Nairobi to Sh6,000.

The Kenya Association of Manufacturers has for its part expressed worries over the prevailing dollar shortage. Members who mainly rely on imported raw materials, it claimed, cannot access dollars at the official market rates.

According to a report by the Alliance for a Green Revolution in Africa (AGRA), delayed pre-arrival clearances by the Kenya Revenue Authority (KRA) is causing traffic queues at border points reducing the ease of doing business for traders.

Increased exports to Kenya have also forced the Tanzania Revenue Authority to post its officials to Mombasa and Nairobi to facilitate the pre-arrival clearance of goods.

Tanzania has imposed a new requirement on grain traders to get an export permit before shipping maize out of the country, in a policy shift that has locked already bought stocks of grain by Kenyan millers at the border.

Kenya and Uganda are staring at another round of trade wars after Nairobi reintroduced a levy on eggs imported from the neighbouring country. Uganda says Kenya is now taxing its eggs at a rate of Sh72 a tray.

Importers and exporters in Kenya are however set to benefit from increased competitiveness and reduced cost of doing business from reduced shipment delays and demurrage charges after President Uhuru Kenyatta assented to the National Electronic Single Window System Bill, 2021, on June 21.

The government has also embarked on a sensitization campaign countrywide to create awareness amongst the business community on the opportunities offered by the African Continental Free-Trade (AfCFTA), and how to exploit the openings offered.

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: 14 July 2022; Hits: 1228

Livestock feed drives up Kenya’s grain imports by 72%

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By George Munene

According to data from the USDA Foreign Agriculture Office, soybeans, soybean meal, and corn imports have seen a 72 percent increase from 2012 to 2021. This has been driven by the rise in the cost of livestock feed production.

In 2021, Kenya imported $21.0 million of soybean meal-- a 97 per cent increase from 2017. Soybean imports peaked at $8.5 million in 2020, most of which came from Ukraine. This is expected to rise further.

As the price of feed production and the country’s livestock capacity increases, Kenya is expected to look outside of domestic products to supplement demand.

The Government of Kenya (GoK) has made key animal feed ingredients (yellow maize, soybeans, soy meal, cottonseed cake, sunflower seed cake, white sorghum, and fish meal) exempt from import duties in an effort to curb these rising feed prices.

The majority of grain imports to Kenya are for human consumption with most feed products a by-product of their processing. Kenya’s reticence to embrace genetically engineered (GE) crops means it cannot access cheaper raw materials from global markets.

Currently, raw materials for feed including cereals, soybeans, and oilcake are majorly imported from EAC and Common Market for Eastern and Southern Africa (COMESA) member states such as Uganda, Zambia, Malawi, and Tanzania, due to low tariffs, geographical proximity, and GE-free products.

However, as the broader Eastern Africa region suffers from the worst droughts in over 40 years and high fertilizer prices, Kenya will be forced to look for alternative sources of grain.

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