The Macadamia Nuts Association of Kenya (MACNUT) has asked the government to re-evaluate the policy allowing the export of unprocessed macadamia.
They say the export of raw nuts has led to significant financial losses for local processors, farmers and suppliers within the sub-sector’s value chain.
The lobby has asked for the immediate reinstatement of the total ban on the export of unprocessed macadamia to safeguard the quality of exports and the sustainability of the industry.
Speaking in Nairobi earlier this week, the association chairperson Jane Maigua said there is a need for initiatives to be developed to educate farmers about market dynamics to ensure they receive fair compensation for their produce.
“Projections indicate that more than 10,000 workers could lose their jobs by the end of the year if the exports of unprocessed nuts continue,” she said.
“Farmers are now selling their macadamia nut produce at 30 per cent less than before, making it difficult for them to sustain their farming activities. The direct export has also led to a scarcity of processed nuts within Kenya, driving up prices and turning these nutrient-rich foods into luxury items.”
Ms Maigua also urged for the introduction of incentives to foster investments in local processing facilities, facilitating value addition and enhancing global competitiveness.
“Our macadamia nuts processing industry is on the brink of collapse due to the direct export of raw unprocessed nuts to China. We are losing our competitive edge on the global market, and the livelihoods of thousands of Kenyans are at stake,” she said.
These demands come at a time when the sector is facing low prices from Chinese processors and brokers’ involvement in the value chain.
The lobby noted that Chinese buyers primarily buy grafted nuts, leaving indigenous nuts unsold.
This follows the approval of the direct export of raw unprocessed macadamia nuts by the government through the Ministry of Agriculture.
This decision, the lobby claims, has increased the number of Chinese processors buying these nuts directly from farmers in large quantities.
It noted that while the Chinese processors offer immediate cash payments, which is attractive to the farmers, their prices are lower compared to those offered by local processors.
Consequently, local processors are unable to compete with the immediate cash payments offered by Chinese buyers.
The move, the association says, has had a severe impact on different stakeholders in the value chain, including, nut processing companies, which are experiencing losses exceeding 50 per cent, forcing many to shut down.
Consequently, processors are having to lay off their employees, with more than 5,000 workers having already lost their jobs in the first half of this year.
An estimated 20,000 more are expected to lose their jobs by June next year.
Ms Maigua has urged the government to consider regular stakeholder consultations to understand the realities and challenges farmers face.
According to the lobby, Chinese buyers are using X-ray machines to assess the quality of nuts, reducing income for farmers.
The resultant effect is increased production costs for local processors as rejected nuts are mixed with high-quality nuts by farmers and sent to local processors.
The lobby argues that by exporting unprocessed nuts, the government is exporting jobs that would otherwise benefit many livelihoods.
“Key buyers and large retailers from the US and European markets are switching markets from Kenya due to shortage of kernels from Kenya,” said Ms Maigua, noting that this poses a threat to long-standing trade ties between Kenya and these countries.
Additionally, it emerged that Kenya’s position in global kernel markets is also at risk, with its market share falling from 13 per cent due to the scarcity of kernels for export.
If the directive remains as is, the association said macadamia farmers stand not to gain from the negotiated trade agreements, such as the African Growth and Opportunity (Agoa) and Economic Partnership Agreement (Epa).
It also noted that with the export of raw unprocessed nuts, there is reduced availability of nuts for value addition.
“Currently, the market for unprocessed nuts is only in China, which means Kenya is narrowing into a single market rather than diversifying markets,” said Ms Maigua.
“Farmers do not get the benefit of pricing when nuts are exported in shells, brokers are the main ones that benefit.”
The lobby noted that as a result of the exports, Kenya lost $50 million (Sh6.4 billion).
According to Privamnuts EPZ Kenya Managing Director Patrick Mukundi, there has been a reduction in the availability of nuts for processing since the ban was lifted, with the quality of nuts also dropping drastically.
“This is because some Chinese firms are scanning the nuts and all the rejected nuts are sent to local processors. There is also a drop in the number of workers because factories are not operational,” said Mr Mukundi.
He noted that his company has seen a 50 per cent reduction in revenue this year due to the unavailability of nuts for processing.
“We have so many orders sitting in our books, but we are not able to meet them,” he said.
