‘‘Multiple taxes make our produce uncompetitive” – Horticulture Q&A with Apollo Owuor

Mon, Jul 26, 2021

Apollo Owuor is the Chairman of Fresh Produce Exporters Association of Kenya (FPEAK) and a board member of the Europe-Africa-Caribbean-Pacific Liaison Committee (COLEACP). He spoke to Horticulture News on various local and international issues that affect horticulture in Kenya.

  1. What is the role of FPEAK in ensuring that the government is playing its part in trade facilitation?

One of the core objectives of FPEAK is advocacy and lobbying. To meet this objective, FPEAK is in constant touch with the relevant government agencies and foreign missions in trying to ensure that the government is playing a facilitative role in the horticulture sector. We also sit in a number of committees, like the National Taskforce in Horticulture, Horticulture Competent Authority Structure, Technical Committee on Standards at KEBS, National SPS committee, national committee on traceability, among others where we represent the interests of our members in policies.

FPEAK also participates in promotion and market linkage initiatives — like participating in international exhibitions like Fruit Logistica, London Produce show, Mac Fruit, where we package Kenya’s horticultural produce, its potential and the industry’s position.

  1. FPEAK and other industry organizations rely heavily on donor support through the NeXT Kenya programme and other similar initiatives. Is there a likelihood of the industry weaning itself from donor dependency in the foreseeable future? What could be done to ensure the industry matures enough to stand on its own feet?

Like other BMOs, FPEAK relies on membership subscriptions which largely cover admin costs.  To be more effective in service provision, FPEAK requires sustainable and income generating projects to survive.  This requires capacity enhancement to build the institutions.  An approach such as Practical Training centers to offer required certified training to members. Research and data are the next important aspect for BMOs. Technical support will be the most important seed capital to allow these institutions to wean off reliance on donor support.

  1. You are in the unique position of being FPEAK chairman as well as a board member of COLEACP. Are you satisfied with the level of cooperation between donor institutions such as COLEACP and stakeholders in the industry? What needs to be done to build on this cooperation?

Yes and No.  There is a need to align stakeholder agendas and how donor institutions intervene.  Currently there is lack of synergy and confusion with most donor institutions coming up with pre-emptive solution without making appropriate assessments.  There is equally lots of duplicity in the approach that most donor institutions take.  It is important that there is a proper stakeholder engagement and assessment of GAPS to enable seamless and effective approach to providing technical assistance. There is need to consult the private sector when developing projects so that we can all address the issues at hand accordingly.

  1. You recently addressed a COLEACP conference on challenges and opportunities of the horticultural industry. What are the key challenges and opportunities in the industry?

One of the main challenges is airfreight rates and airfreight capacity.  Highly perishable products are air freighted to destined markets.  Since the pandemic, there has been limited cargo capacity occasioned by reduced passenger travel, hence a reduced number of passenger vessels.  Nearly 60 per cent of cargo is shipped through passenger aircraft. To help out, Kenya Airways went to the extent of converting a passenger plane to carry cargo.

The cost of freight has gone up following this reduced capacity and a high demand for cargo space.  Additionally, due to reduced airfreight capacity, there are a number of offloads.

Brexit is another challenge. Kenya now has to re-negotiate with Britain on trade deals since we cannot trade under similar conditions as the EU. There is a need to work on this quickly since Britain is a major market for our horticultural produce.

Emerging regulations from importing countries such as the EU Green deal, social accountability, regulated pests, and limitation of the use of crop protection products, have all presented challenges.

In addition, climate change affects the production systems in farms. Farmers cannot properly plan on planting seasons due to the ever-changing rainfall patterns as well as temperatures.

The high cost of doing business in Kenya is also an impediment. The horticulture industry pays a number of levies to the government. There is multiple payment of agricultural cess to counties, double taxation on inputs, high cost of energy, delayed tax refunds, and inspection fees, among others. All these make our produce uncompetitive in the market.

  1. As an industry, horticulture has to deal with numerous government agencies, which include HCD, KEPHIS, PCPB, and KALRO. Is this a case of over-regulation and does it cause confusion regarding the respective mandates of such agencies?

Each institution has a mandate and role to play. These roles must be understood. These are key institutions and if they execute their roles effectively as mandated, they will drive the sector to greater success.  Any cross cutting mandates must be dealt with and areas of weaknesses for these institutions strengthened.  Over-regulation arises whenever there are negative policy and legislative actions that are introduced.

  1. We have seen the government take measures adverse to the industry without consultation with stakeholders, including on taxation. What is FPEAK and the industry doing to stop this trend?

FPEAK together with other industry players continues to play a leading role in engaging with the government on the need for public participation during the enactment of legislation as well as policy formulation with regards to ensuring ease of doing business.  Where no agreements are reached, there are options available to seek redress through established legal channels.

  1. What are the key lessons for exporters and the industry as a whole from the COVID-19 pandemic?

That the pandemic is there to stay and necessary guidelines and protocols as established by the government through the Ministry of Health should be adhered to.

The horticulture industry needs to look way beyond the traditional markets and venture into other markets like China, USA, Korea among others

There is a need to invest in other freight channels such as sea freight.

There is also a need to expand the product range away from the traditional exported products

  1. A lot of interest has been generated on horticulture. The country has seen farmers uproot other crops to turn to horticulture. How has the industry prepared for this avalanche of interest? Is there a danger that with this rapid growth, quality may be compromised?

Export of fruits and vegetables is 5 per cent of the entire horticulture value chain.  There has been a major interest in expansion of the avocado value chain. If this is established through a well-managed process and with established good practices, it will be highly successful.  It is important to note that supply-and-demand forces as well as availability of freight capacity as well as the capabilities of growers and exporters to meet market requirements are the key drivers in the exports sector.

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