Industries lose Sh500m on illegal nut exports

KENYA – Kenyan macadamia processing factories are operating at only 54 per cent of their installed capacity amid rising cases of smuggling of nuts that have forced the industry to shed Sh500 million annually.

Official statistics indicate that the 15 factories are currently processing 35,582 tonnes per year against a combined capacity of 65,000 tonnes.

“The demand for raw nuts has been on the increase but cases of smuggling has made it insufficient to support the installed processing capacity in the factories,” said Agriculture PS Sicily Kariuki.

Ms Kariuki said raw nut exporters evade paying taxes resulting in revenue loss every year and cutting the available volumes to be processed.

“The move has forced genuine processors to run out of supply, which has seen them cut down on employment as their production falls below capacity,” she said, adding that surveillance had been intensified to curb the illicit trade.

Last year, the government revoked close to seven licences of macadamia factories that were found to be taking part in illegal export of the raw nut.

The macadamia is the second major cash crop in nuts category, comprising 27 per cent of the total nut production, bringing in Sh2 billion in sales annually.

Ms Kariuki said smuggling hurts the local nut industry as it lowers Kenya’s competitiveness because the smuggled raw nuts do not adhere to quality requirements, while other macadamia producers carry out best agriculture practices, including traceability.

The PS said the illegal trade also damages macadamia trees because it encourages stripping of nuts from the trees contrary to international best practices whereby nuts should be allowed to fall down on maturity.

The crop occupies an estimated 7,945 hectares of land and is mainly produced by small-scale farmers who sell them to middlemen who in turn supply the processors.

Ms Kariuki said plans were underway to enable major processors to open buying centres close to farmers during the harvesting season to facilitate direct purchase from the growers and stop exploitation by brokers.

She said sealing the existing loopholes in the sector would boost productivity.

Marketing of nuts has experienced a number of challenges since the 1990s after the liberalisation of trade, spurring competition between processors and exporters of raw nuts.

Currently, the Agriculture, Fisheries and Food Authority Act prohibits the export of raw cashew nuts, raw pyrethrum, raw bixa or raw macadamia except with written authority of the Cabinet secretary issued with the approval of the National Assembly.

The Ministry has directed AFFA to step up surveillance with law enforcement agents to ensure total compliance with the law, warning that those found taking part in this illegality will be dealt with.

February 23, 2015; http://www.businessdailyafrica.com/Industries-lose-Sh500m-on-illegal-nut-exports/-/539546/2631968/-/owvmujz/-/index.html

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