State to rein on cartels swindling farmers their earnings

Kenya: The Government will register afresh all crop dealers in the next one month with a view to cracking down on increasing cartels swindling farmers of their hard earned income through unethical trade practices.

Agriculture, Fisheries, and Food Authority (AFFA), the body mandated to regulate all crops listed in the First Schedule of the Crops Act, 2013 warns that cartels have infiltrated the sector and are thus controlling the entire value chain at the expense of the major producer – the farmer.

The sector regulator last month issued a notice to all dealers of crops to register afresh between January 5 and February 5, 2015. AFFA Interim Director General Alfred Busolo said in a recent interview that the new registration process conforms to the new dispensation in the agriculture sector as per the AFFA Act 2013 and Crops Act 2013.

“All dealers in Scheduled Crops are compulsorily required to register with the Authority. Failure to register with the Authority amounts to an offence punishable on conviction to a term of imprisonment not exceeding three years or to a fine not exceeding Sh5 million or to both,” he said.

Mid last year, Agriculture Cabinet Secretary Felix Koskei (pictured) had to suspended two senior officials over fresh produce from Kenya with high chemical contents intercepted by the European Union as part of efforts to instill order in the agricultural sector.

The move on the Horticultural Crops Development Authority and Kenya Plant Health Inspectorate officials followed withdrawal by EU of licences of 11 horticulture firms over high levels of pesticides and other harmful organisms in their produce. Kenya had a September 30 deadline from the EU to comply with maximum residual limits rules (MRLs).

Manipulate prices

Competition Authority of Kenya also launched investigations on allegations that cartels collude to manipulate prices in coffee, tea, sugar, and maize industries.

In coffee and tea, the authority is investigating price manipulation at Nairobi Coffee Exchange and Mombasa tea auction. While in sugar and maize the agency is probing millers’ conduct in regards to illegal exports and imports. Busolo explained that dealers would register in the AFFA headquarters in Nairobi, County Government offices and various crops directorate offices located in Nairobi, Nakuru, Mombasa and Kisumu counties.

Some of the targeted dealers include those in sugarcane, tea, coffee, rhodes grass, Irish potatoes, cotton, sunflower, soya beans, beans, barley, finger millet, and maize. Pearl millet, rice, sorghum, wheat, bananas, French beans, pyrethrum, cassava, sweet potato, sisal, coconut, tomato, and onions are others supposed to register.

“We target traders who are undertaking collection, transports, stores, buys and sells crops or crop products,” he added. Busolo stated the need to register the dealers equally follows the new spirit by the national government to ensure the interests of the farmers are well protected against exploitation by middlemen and brokers. He blamed the emergence of the cartels to past poor regulation and lack of awareness by the farmers.

The trade malpractices, he said, lead to price distortion and market segmentation thus barring entry of new players who are ready to offer impressive prices.

He said majority of the cartel groups are to blame for the rampant smuggling of the commodities across the borders leading to loss of billions of money to the Government and farmers. Affected industries include coffee, sisal, macadamia nuts, maize, and sugarcane.

Equally, in some industries the cartel groups are cheating farmers to enter into dubious contracts a few months after planting and before harvesting. “Through the suspicious contracts, for example in maize industry, growers are cheated to dispose of their produce while still green and unripe,” said Busolo.

The farmers, he added, are forced to grow the crops on behalf of the traders and after harvest the grower has nothing to celebrate.

Grinding poverty

“This has denied the growers full ownership of the crop and equally limit his chances of earning more from produce, thus leading to grinding poverty and under development,” said Busolo.

The cartels trigger artificial shortage of commodities in the local market so that they can exploit farmers through inflated prices and force Government and other value chain players to import.

Last month, the Ministry of Agriculture had to vet maize farmers ahead of reopening of National Cereals and Produce Board depots.