Nuts export ban opens the way for Sh400m factory

KENYAWhen the Wondernuts International processing factory was opened in Athi River last week, the event was not marked with pomp and colour like most that are graced by top politicians.

But two men, Deputy President William Ruto and Boby Thomas looked excited, although for different reasons. To Mr Thomas, the opening of the Sh400 million Wondernuts International processing plant marked the greatest achievement in his business endeavour spanning 15 years.

For Mr Ruto who commissioned the factory, a legal notice he signed during his short stint as Agriculture minister in 2009 that banned the export of raw macadamia, cashew nuts and bixa had borne fruit as it had sparked a transformation of the once chaotic nuts industry.

“It was not very easy. Some people even demonstrated against the export ban in the streets, but we were convinced that was the best decision for our country,” said Mr Ruto, defending the decision to ban to export of raw macadamia and cashew nuts.

Mr Thomas, who eight years ago put substantial amount of money in a cashew nut processing factory in Kilifi County, got the drive and confidence to scale up his investment and diversify into macadamia processing.

“Our products are now selling in major supermarkets across the world in Europe, USA and Asia,” said Mr Thomas.

“Our main customers are amongst the largest nut processors and users in the world including Kraft Foods North America Inc and Trophy Foods from Northern America, C. G. Hackings and Sons Ltd and Delinuts B. V from Europe and Regency Spices LLP from the Asia, making us one of Africa’s most successful nut exporters,” he said.

Wondernut started cashew nut processing in Kilifi 15 years ago. It remains one of the largest processors and exporters of cashew kernels in Kenya.

“We value our customers so much and have ensured that we always provide them with quality products,” he said. “Our macadamia factory in Nairobi is ISO 22000 compliant, equipped with all modern equipment and facilities. We employ 500 people on permanent basis and are guided by qualified managers.”

The entry of the new processor is set to intensify competition in the sector with farmers being the winners as prices are likely to go up while production growth remains sluggish.

Competition is expected from Equatorial Nut processors, Kenya Nut and Jungle Nuts which are already processing nuts for the local and export market.

Wondernut and Jungle Nuts, however, might have a competitive edge as both are operating within the Export Processing Zones where they enjoy tax incentives and other facilities such as good infrastructure and cheaper electricity.

Mr Thomas says his company plans to integrate other oil crops and start producing macadamia oil next year. He believes the single act by the then Agriculture minister did not only boost Wondernuts (K) Ltd, but all the other six nuts processors, some that were facing closure due to low supply as most farmers exported them raw to Asia and mainly China and India.

Mr Thomas was among a group of stakeholders in the nuts industry that visited the then Agriculture minister to convince him that Kenya had the capacity to process all the produced nuts.

Mr Ruto then appointed a four-man taskforce headed by former Kilifi Cashew Nuts Company managing director John Safari Mumba to assess the situation and make a recommendation. The taskforce recommended a blanket export ban on raw macadamia, cashew nuts, peanuts and bixa.

According to the Nut Processors Association of Kenya secretary general Charles Muigai, production of macadamia has risen from 13,000 tonnes to 27,000 tonnes. Farmers’ pay has also gone up to Sh130 per kilogramme compared to Sh30 paid earlier.

“Our association has six member companies that process the largest volume of nuts produced in Kenya. We have combined processing capacity of over 45,000 tonnes of macadamia, 25,000 tonnes of cashewnuts and 20,000 tonnes of peanuts,” says Mr Muigai.

However, the industry suffered a major blow when the former Agriculture minister Sally Kosgey lifted the export ban for six months between December 15, 2010 and June 2011 in an attempt to mop out excess nuts that had caused producer prices to fall.

The six companies went to court to challenge the decision . Six other companies among them AfriChina International, Trima Trading, Top Nut, Dahiraa Enterprises, Hexin Kenya and Qwei Foods Products joined in, calling for the ban to be lifted permanently.

Court ruling

By the time the High Court gave a ruling, six months had lapsed and the ban still was automatically upheld though the new Agriculture, Fisheries and Food Authority Act (Act No 13 of 2013).

The Act that became effective on January 25 last year states in part, “A person shall not export raw cashew nuts, raw pyrethrum, raw bixa or raw macadamia except with written authority of the Cabinet Secretary issued with approval of the National Assembly.”

Mr Ruto has assured investors in the industry that the government will safeguard the industry that has employed over 10,000 people directly and supports over 20,000 farmers.

However, the processors have expressed concerns over the rampant smuggling of raw nuts that has seen the government intercept 90 containers destined to the Asian countries in the last one year.

“Smuggled macadamia nuts estimated at 25 per cent of our national production leads to massive job losses and loss of government revenue,” says Mr Muigai.

September 1, 2014;

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