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Alarm as Chinese firms accused of smuggling raw macadamia

By JACOB NG’ETICH | May 25th 2014

Kenya: The Government has raised concern over malpractices by Chinese companies that allegedly con farmers and smuggle thousands of metric tonnes of raw macadamia nuts for export to China.

A report by a taskforce formed by the Ministry of Agriculture to probe the export has proposed necessary interventions be made to bring sanity in the macadamia industry in which three Chinese firms are accused.

 The taskforce discovered some of these companies do not meet the standards required by Horticulture Crops Development Authority and have been exporting raw macadamia illegally after the government banned its export four years ago.

In 2009, then Agriculture Minister William Ruto declared the  exportation of raw macadamia nuts illegal.

This was aimed at encouraging capacity of local processors, create jobs and enable farmers benefit more.

Based on the findings, the taskforce recommended a committee to vet all processors and weed out those buying the nuts during off seasons and those involved in smuggling.

The taskforce was formed after a lobby of local nuts processors wrote a letter to Agriculture Cabinet Secretary Felix Koskei accusing the Chinese companies of flouting the Government ban by smuggling out unprocessed nuts.

In the letter, the Nut Processors Association of Kenya (NUTPAK) said unless the ministry stopped the smuggling of the nuts, the sector would collapse.

 The letter dated April 28 and signed by NUTPAK head of secretariat Charles Mungai said even after the ban four years ago, smuggling had continued unabated.

They complained the situation had deteriorated despite the fact that the association together with relevant State organs had arrested and prosecuted four cases of smuggling of the nuts, all involving Chinese firms.

Expired licences 

“All these cases concern nine container loads of macadamia nuts originating from Quiwei Foods Ltd, Africhina International Ltd and Hexing Nuts Kenya Ltd,” read the letter.

Mungai said the firms had continued to disregard the law even after their licences expired.

Mungai said, “It was disheartening that the purpose and substance of the license had been reduced to a mere piece of paper as the Chinese firms continued to illegally export the unprocessed nuts.”

Deputy Senate Speaker Kembi Gitura, also Muranga Senator said the continued smuggling of the unshelled nuts could wipe away the significant strides achieved in the past four years following the ban.

 “The return of middlemen and brokers into the industry would not only kill the processing factories but also cause loss of jobs, lower quality of the nuts, there by killing the industry,” said Gitura. 

He said he visited Equatorial Nuts Limited in Maragua recently and noticed it had over 1,000 employees.

 “There are about 800 women alongside other employees employed to sort and grade the nuts. Once unprocessed nuts are exported, these people lose their jobs,” said Gitura.

He was among those who initiated the move to ban the export of unprocessed nuts in 2006. While serving as Agriculture Assistant minister, he said the middlemen  were buying premature nuts thus compromising the quality of macadamia.

Esteemed product

“Kenya has been the second worldwide producer because of her quality of nuts, but now we are nowhere, the middlemen who cannot determine mature macadamia nuts have killed the quality of our esteemed product,” said Gitura.

 The fight for  control of the Sh11billion macadamia industry pitting the local nut processors against the Chinese firms has been complicated by the use of brokers and State officers to aid the smuggling trade.

The vetting committee pointed out that Quiwei Kenya Ltd failed to provide documents from Kenya Revenue Authority, especially system records and bill of landing for 67,000 tonnes of exported kernels in 2012.

“The company also reported to have bought 142 metric tonnes of macadamia nuts in shells in 2013 and processed 27 metric tonnes that they claimed to have sold in the local market. They could, however, not support the claims with any documents,” read the vetting report.

 The report further accused Africhina International Company (Kenya) Ltd of not submitting the inventory of nuts purchased, processed and exported in 2011 and 2012.

It claimed fraud was committed when the Chinese company claimed to have purchased 2,000 seed packages from a farmer in Eldoret only for the ministry to discover the claim was not genuine and the purported farmer had not dealt in macadamia.

In response, Mr Koskei said his ministry was not aware of the smuggling but would look into the matter urgently.

Buying outlets

But Mungai insisted that through the use of middlemen and brokers, the Chinese companies had opened several buying outlets in most of the production region of formerly Central province where they buy the nuts from farmers at between Sh50 and Sh70 for every kilogramme of unshelled nuts.

 “After they buy the nuts, the brokers then sell them to the Chinese companies who process them locally before taking the commodity out of the country through Tanzania,” said Mungai.

They also found out only a small quantity of the nuts is processed in Kenya while three quarters is exported in unprocessed shells.

Local leaders among them Kangema MP Tirus Ngahu said it was not acceptable for the firms to buy and export unshelled nuts thereby killing the local industry.

“We can process the nuts but I do not understand why anyone would export unprocessed nuts. This should not be allowed,” he said.

He demanded that all nuts be processed locally because farmers have processing machines in Murang’a, which should be utilised to create employment.

The MP asked the Government to enforce the ban on the export of the unprocessed nuts to bring back order in the macadamia industry.

Kenya’s macadamia tree bushes were planted in the 1960s to the 1980s and are considered of high quality because of good climate conditions. Kenyan nuts are on high demand globally where they compete with other big producers among them Australia, South Africa and Hawaii.


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