Kenya staring at reduction in agriculture export revenue
Kenya is staring at a two-pronged cut in its agriculture export revenue.
This comes at the heels of Britain’s exit from the European Union and the looming deadline for signing a deal allowing the country duty-free access to the lucrative market.
Those hardest hit by Brexit are the smallholder farmers exporting fruits and vegetables.
While most of Kenya’s flowers do not go to the United Kingdom (UK), and are unaffected by Brexit, Kenya will be slapped with export duty of between eight and 12 per cent unless the East African Community–European Union Economic Partnership Agreement is signed before October 1.
This will make Kenya’s exports uncompetitive, leading to huge revenue and job losses.
The scenario will hurt one of Kenya’s engines of economic growth as close to 90 per cent of its exports to the European Union are agricultural or agro-processed.
The Kenya National Bureau of Statistics put the country’s estimated value of exports in cut flowers, green beans and mangoes at Sh90.4 billion in 2015.
This could also spell doom for more than 600,000 workers in flower farms and fresh food producers.
For the duty-free deal to come into force, East African Community members ought to endorse it jointly.
But some have been reluctant because they are considered least developed countries and enjoy preferential treatment because of it.
The least developed countries are not required to sign agreements since they enjoy favourable treatment under the ‘everything but arms’ scheme.
This allows them to sell all products to the European Union and duty free, except arms and ammunition, and 41 tariff lines on sugar and rice on which quotas are established until full liberalisation.
Should the deadline elapse before a deal is reached, Kenya will have to revert to less generous access terms under the generalised system of preference, which could mean a reduction, but not complete elimination of tariffs.
Kenya Flower Council chief executive Jane Ngige on Friday warned that failure to sign the agreement would subject it to an export duty of between eight per cent and 12 per cent, which would amount to £3 million a month (Sh4 billion).
The government had last month assured Kenyans that it would sign the Economic Partnership Agreement deal by August 1, but the date came and went after Tanzania threw a spanner in the works during the United Nations Trade and Development Conference held in Nairobi.
Burundi is meanwhile facing sanctions over its civil war, further compounding matters for Kenya.
“We want to assure you that we are working day and night to ensure that we sign the trade agreement and implement it so that we meet the official deadline of September 30 and enjoy the benefits that come with it,” Trade Principal Secretary Chris Kiptoo said.
Meanwhile, smallholder farmers exporting fruits and vegetables to the UK could be the biggest casualties of Brexit—80 per cent of these go to the UK.
Mr Ngunjiri Mwangi of the Kenya Organic Agriculture Network, whose members sell fruits and vegetables to Britain, said on Friday that tedious documentation requirements for the global Good Agricultural Practice and associated costs, which are usually very high, were among the consequences their farmers were facing after Brexit.
“We are yet to fully analyse the extent to which our farmers have been affected, but we are already facing the challenges as we expect new requirements for UK markets especially the high certification costs,” Mr Mwangi said.
Global GAP certification costs Sh300, 000 per a year for a smallholder farmer.
Hits: 61https://farmerstrend.co.ke/kenya-staring-reduction-agriculture-export-revenue/https://i1.wp.com/farmerstrend.co.ke/wp-content/uploads/2016/08/Agriculture-Export-from-kenya.jpg?fit=1024%2C576&ssl=1https://i1.wp.com/farmerstrend.co.ke/wp-content/uploads/2016/08/Agriculture-Export-from-kenya.jpg?resize=150%2C150&ssl=1#Trendingagriculture export from kenyaKenya is staring at a two-pronged cut in its agriculture export revenue. This comes at the heels of Britain’s exit from the European Union and the looming deadline for signing a deal allowing the country duty-free access to the lucrative market. Those hardest hit by Brexit are the smallholder farmers exporting...#FarmersTrendJohn Bujufarmerstrend@gmail.comAdministratorI am a web enthusiast, writer and blogger. I always strive to be passionate about my work. I started my work at the beginning of 2013 by engaging myself with detail reading and exchanging information regarding farming with others. Since then things and times have changed, but one thing remains the same and that is my passion for helping and educating Kenyan farmers, building a successful blog and delivering quality content to the readers. The particular interests that brought me in the world of blogging are gardening, farming and livestock.Farmers#Trend