A worker prepares flowers for export to Holland, England and New York. FILE PHOTO | NMG
Actors in Kenya’s multibillion tea and horticultural industry
are hoping for a smooth transition even
as the United Kingdom, a key market for their produce, exits the European Union bloc today.
as the United Kingdom, a key market for their produce, exits the European Union bloc today.
The UK is a key export destination for Kenyan flowers, most of which are auctioned in the Netherlands.
Currently,
Kenyan flower exports enjoy zero tariffs on cut flowers sold to the EU.
This is courtesy of an interim arrangement, which Kenya secured through
the signing and ratification of the Economic Partnership Agreement
(EPA) between the EU and the East African Community (EAC).
The deal is temporary until the three other members of the EAC sign up so it can come into full effect.
Other major Kenyan exports such as tea, fruit and vegetables also enjoy the same preferential terms.
Tea
and horticultural exporters in Kenya say although the UK has assured
them of retaining the preferential trade deal, there were concerns of
the effects of the expected changes in trade terms between Britain and
the rest of Europe post-Brexit.
“Tariff would be a bit
of challenge on our flowers once Britain leaves the EU, we might see a
decrease in market or our produce will sell at a higher price for the
clients to recover the cost, a thing that could it on our market share,”
says Ojepati Okesegere, chief executive at Fresh Producers Consortium
of Kenya.
The UK has also been a major buyer of Kenyan tea and it is among
the top three purchasers of the beverage over the years. In 2019,
Britain bought 46 million kilos of tea worth Sh12 billion to make it the
third-largest buyer of the commodity last year.
cost of production
Britain
normally re-exports the tea it buys from Kenya to other countries in
Europe. According to industry players, the UK might cut on the volumes
of the beverage that it buys from Kenya.
The tariff
implies that Kenyan flowers will become expensive in the market and it
might not compete favourably with other countries with a lower cost of
production.
Mr Ojepati says stakeholders from the
sector will be in Europe next week where they will visit several
countries to assess the situation after Brexit.
He says, however, the UK mission in Kenya has assured them that Brexit will not affect trade between Kenya and Britain.
“We
have had a discussion with the UK mission locally and have told us that
Brexit will not have a negative impact on our trade with that country,”
he said.
Flowers
made the bulk of the earnings in 2018 bringing in Sh113 billion with
fruits emerging second by raking in Sh27 billion followed by vegetables
at Sh12 billion.
Earnings from horticulture dropped by
Sh6 billion in eight months to August signalling a bad year for flower
and vegetable farmers in 2019.
Statistics from the
Kenya National Bureau of Statistics (KNBS) show that the earnings in the
review period dropped from Sh103 billion in the corresponding period
last year to Sh97 billion this August with only two months before the
end of the year.
The move implies that government will
also earn less foreign exchange from the produce due to depressed
income. The cut-flower exports remain the largest earner of
horticulture, contributing more than 70 per cent of the total fresh
produce annual earnings.
Britain buys tea from Kenya to resale to other UK countries with Ireland being one of its major buyers of the commodity.
Kenya’s
tea exports to Ireland have been growing in recent months as a result
of direct purchases of the commodity in the wake of Brexit, over
uncertainties at the border point once Britain exits the European Union.
Data
from the Tea Directorate indicate that volumes of tea bought by Ireland
in nine months to September 2019 rose to 2.9 million kilos from 1.9
million kilos in the corresponding period last year, an increase of 52
percent.
The figures from the directorate also indicate
that the numbers went up in nine months to September last year to reach
a high of 3.1 million kilogrammes from two million kilos in the same
period last year, a growth of 50 percent.
“Brexit could
be a motivation for the increase in direct purchases of tea by Ireland,
it is one of the factors that could have led to increase in purchases,”
says East Africa Tea Traders Association managing director Edward
Mudibo.
At present, goods and services are traded
between the two countries with few restrictions. That is because the UK
and Ireland are part of the EU’s single market and customs union, so
products do not need to be inspected for customs or standards.
But
after Brexit, all that could change — the two parts of Ireland could be
in different customs and regulatory regimes, which could mean products
being checked at the border.
The EU had indicated it
would involve Northern Ireland alone remaining in the EU’s single market
and customs union, leaving Great Britain (England, Scotland and Wales)
free to strike trade deals.
No comments :
Post a Comment