Dorothy Nakaweesi
1 April 2008
Kampala — TEA dealers in Uganda have raised their hands protesting against the increasing non-tariff barriers in Kenya that are making tea export business difficult.
All the tea in Uganda that is exported is sold through the Mombasa tea auction market in Kenya. The Plant Inspection Permit (PIP) by the Kenya Plant Health Inspectorate Service (KEPHIP) is the latest of these hindering measure requiring tea exporters to pay KShs500 (Shs 13,398) for every loaded truck and each truck is supposed to have its own certificate.
The new levy introduced last September is expensive and involves lengthy bureaucracy that hinders Ugandan exporters from reaching the auction market in time, consequently many have been frustrated by losses incurred from missing out on premium prices.
"The inspection fee Kenya is charging has become barrier to us. We don't export to Kenya but transit through and this permit and the whole inspection process have made us uncompetitive because of the delays involved in the processing," the Executive Secretary of Uganda Tea Association (UTA), Mr Isaac Munabi said.
The exporters have been using the Common Market for Eastern and Southern Africa (Comesa) certificate of origin which allowed them to travel to all the member states.
A Ugandan tea dealer who talked to Business Power but preferred anonymity for fear of being victimised said the PIP is an extra and unnecessary cost to them.
"My Company works out the logistics of the PIP with the assistance of the clearing agents but this is an extra cost which we had not budgeted for and it's inflicting on our annual sales," he said.
The source said on average close to 200 trucks loaded with tea go to Mombasa auction from the 22 tea exporting companies in Uganda and each truck has to have its own PIP permit no matter how many trucks belong to the same company.
"Sometimes it gets worse as delays means paying demurrage and each truck is charged $200 (Shs340,000) per day," the source said. The source added that further to PIP, there is also another international requirement called the phytosanitary certificate which traces the tea right from the plantation and all the subsequent handling.
The normal practice internationally is that phytosanitary certificates are issued by a competent authority in the country of origin and in this case Uganda not country of destination or transit.
The tea exporters' outcry follows recent losses made after the Mombasa tea auction was suspended during a month-long political crisis in Kenya.
This year, the price at the auction has lower that last year's offer.
For every kilogramme a Ugandan exporter sells to Mombasa auctioneers earns $1.1 (Shs1,750) down from $1.4 (Shs2,380) earned last year. The Kenyan buyers then re-export the tea branded variously as originating from Kenyan tea producers.
Every kilogramme tea can be used to prepare and serve 500 cups of tea in a London restaurant. Each cup costs about 3 pounds (Shs10,500) which is an equivalent of Shs5,250.
The Ugandan tea dealer who spoke on condition of anonymity said it's very expensive for Ugandan tea companies to export directly because they would be out competed by their Kenyan counterparts who are internationally reputed being big players and are ranked highly.
"Some few companies have embarked on some export straight-line to UK and Pakistan but its still on a smaller scale. But we are optimistic that we shall reach there one day," the source disclosed.
Currently Tea is one of the ten leading export commodities and takes a third position among the non-traditional cash crops of mainly coffee, tobacco and cotton among others. In 2006, tea earned the country close to $36 million (Shs64.8 billion) and it's projected to hit a $40 million (Shs72 billion) in 2007.
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