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Inside government's struggle to revive cash strapped pyrethrum company

By Kennedy Gachuhi and Daniel Chege | October 13th 2020 at 10:00:00 GMT +0300

Pyrethrum Processing Company of Kenya plant in Nakuru that was set up in 2006 at a cost of Sh600 million. [Kipsang Joseph, Standard]

Kenya is not giving up on the dream to recapture control of the global pyrethrum market share as the government continues to pump billions of shillings into the once lucrative sector.

This financial year, the national government will spend at least Sh1 billion in efforts to revive the sector, adding to similar false attempts that have gobbled colossal amounts of money.

Pyrethrum Processing Company of Kenya (PPCK) Managing Director Joseph Waweru wrote to the Ministry of Agriculture in January requesting Sh500 million to finance mass production of planting materials.

On Saturday, Agriculture Cabinet Secretary Pyrethrum Processing Company of Kenya announced that the national government had heeded the company’s call and would pump Sh1 billion into the sector, which used to earn the country more than Sh2 billion annually in foreign exchange.

Lost assets

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“We need Sh1 billion to get the sector back on track. The initial Sh500 million will be released in tranches, with Sh200 million provided in two weeks’ time. The money will facilitate acquisition of seedlings to be distributed in Nakuru, West Pokot, Nyandarua and Meru counties,” Munya said.

The CS said the ministry intends to increase the land under pyrethrum by 1,500 acres by April next year and recover Sh2.6 billion of the corporation’s assets lost to individuals.

This is however not the first time the government is making an attempt to revive the sector, which has the capacity of earning the country Sh5.8 billion annually from sale of refined pyrethrin extract.

Currently, the country controls a paltry one per cent of the global market share, down from the 80 per cent it had and which has since been taken over by Australia and other Eastern Africa countries.

The sector went on its knees in the 1990s as the Pyrethrum Board of Kenya (PBK), now PPCK, was unable to pay farmers on time, forcing them to uproot the crop. PBK enjoyed monopoly then.

Efforts to revive the sector began in 2003 when former President Mwai Kibaki’s administration gave PBK a Sh803 million loan to pay farmers debts accrued between 2001 and 2003.

In 2006, the company acquired a Sh600 million machine capable of crushing 50 tonnes of dry flowers a day. The machine has never roared to life, rendering it a white elephant.

In 2012, then Agriculture Assistant Minister Kareke Mbiuki revealed that Kibaki’s government had spent at least Sh1.3 billion in the revival plans but recorded dismal success.

In 2013, the former president signed the Pyrethrum Amendment Bill of 2011 into law, liberalising the sector with hopes that bringing on board private processors would help get it back on track.

Factory rot

The company has been using a colonial time machine that has the capacity to crush 25 tonnes a day even as the Sh1 billion machine continues to rot at the factory.

Despite the massive infrastructure, former acting Managing Director Paul Lolwerikoi in February 2018 announced plans by the company to acquire another Sh60 million machine for crushing a smaller quantity of dry flowers economically.

“Due to the shortfall in the quantity of dry flowers delivered to the factory, we intend to procure another machine capable of processing as little as five tonnes of dry flowers. It will cost between Sh60 million and Sh70 million,” said Lolwerikoi.

Munya, who visited the Nakuru-based factory on Saturday, announced that plans to buy the low capacity machine and payment of pending debts arising from mismanagement and graft in the sector are still on.

Nakuru’s first governor, Kinuthia Mbugua, had allocated Sh11 million in the 2014/2015 budget for distribution of planting materials, but the initiative was not well received as most farmers had lost confidence in the sector.

After taking office in 2017, Governor Lee Kinyanjui made the revival of the pyrethrum sector one of his flagship projects and pumped millions of shillings into procurement and distribution of pyrethrum seedlings to farmers.

“We have allocated Sh60 million for purchase of pyrethrum seedlings and the necessary support to farmers this financial year. In the past two years, we have helped put 1,000 acres under pyrethrum,” he said.

In the 2018/2019 budget, the county government allocated Sh29 million to purchase planting materials which were freely distributed to farmers in Molo, Kuresoi and Gilgil areas.

In the 2019/2020 financial year, the county and national government jointly pumped in Sh90 million, each contributing Sh45 million to help increase the acreage of land under the crop.

In his tour of the US in August 2018, President Uhuru Kenyatta signed a pact with Kentegra Biotechnology Holdings to allow the firm to make a Sh400 million investment in the country to revitalise the pyrethrum sector.

The firm is among top private processors that have contracted thousands of farmers across the country.

At its peak, PPCK used to crush 300 tonnes of dry flowers per month. Now, the state corporation barely gets half of this annually, according to Pyrethrum Growers Association Chairperson Justus Monda.

“PPCK is doing dismally. Farmers are delivering to the factory slightly below 150 tonnes per year despite the heavy investment made by both national and county governments,” said Monda.

There is no clear data on how much is being supplied to the private processors, he said.

“In Nakuru alone, we have eight private processing companies all of which are buying dry flowers at an average price of Sh200 per kilo. The rate at which the production is growing cannot be clearly stated,” he said.

He said private processors were receiving more flowers than PPCK, citing challenges facing farmers at the state corporation.

“Some farmers are yet to be paid by PPCK since April. The farmers now prefer the private processors who pay same prices but in time,” he said.

According to Monda, constituting a substantive board of management to regulate the sector is the only way to get it back on track.

“There are a lot of public relations stunts while the real issues are being ignored. We need a well-structured board of management that will ensure there is accountability for the funds allocated to bail out the sector,” said Monda.

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