Kenya’s pyrethrum sector getting back on its feet

 Since the  appointment of a new management team at the Pyrethrum Board of Kenya steps have been taken to revieve the industry. Managing Director Dr Isaac Mulagholi spoke to Star writer MORAA OBIRIA

What is ailing the Pyrethrum Board of Kenya

Lack
of funds. The board does not have any budgetary support from the
government. Even the banks do not want to give us loans or the credit
facilities because our financial statements are negative. The government
only gave us a loan of Sh863 million at a four per cent interest
annually between 2006 and 2008 to clear the farmers debts and there was
no single investment. And therefore, we do not have the trigger fund.
PBK has an annual budget of Sh1.4 billion but we do not have that
money. All we need is Sh300 million as a trigger fund to generate our
own revenue to jump start our operations.

Have you made successful strides towards reviving the industry

First
we must identify ourselves as a revival team.When we came in in 2009,
we had to visit all the 18 pyrethrum growing counties to introduce
ourselves. We heard their grievances and demands which included increase
of the product price, providing advance payment and planting materials
as others had uprooted the flowers or neglected them. We
sourced for Sh12 million from our foreign customer which we used to
buy the 31 million planting materials from the farmers who had not
uprooted the flowers and then distributed them to others.

We
also used a portion of the same amount to pay farmers Sh100 on delivery
which is an increase from an earlier pay of Sh58 minimum and  Sh375
from Sh200 maximum. We also got Sh5million from the Ministry of
Agriculture which we used for tissue culture laboratories and
nurseries. We were able to produce more than 6 million planting
materials. From August 2009
to the end of last year, we have distributed 37 million planting
materials to restart the farmers production.The advance payment and
increase of product price have acted as incentives to farmers giving
them a morale to come back to the industry. In June 2009, we only had  10 acres under pyrethrum but by September 2011 we had over 20,420 acres. We also got another payment from another international customer to sustain the advance payment. That is a remarkable progress so far.

How do you minimise the factors that are impeding your progress of bringing life to PBK.

Ideally the  local and international customers  are
sustaining the Pyrethrum Board of Kenya. Without them we cannot carry
out our factory operations.They are sparingly taking the risk in paying
for the products up front. Without them we unable to purchase our
inputs. Currently we are focused on sustaining the operations of this
factory because we do not have the money to put back into our system or
invest. Therefore to avoid major hiccups we source for many customers
and take little from each one of them. And as soon as the products are
processed we pay back immediately. Currently we are processing 4,325
kilograms of pyrethrum which we are expected to pay back as soon as
possible to get more money.

Being a government parastatal are there any plans to partner with any foreign firm to boost your operations?

No.We
do not partner with foreign governments but individual customers.They
are the ones who pre-pay for the products thereby not only availing a
ready  market for our products but also cash to run our operations.

PBK
is a major contributer in the agricultural sector and the Kenyan
economy, how much does it expect to gain locally, regionally and
globally from its revival?

Economically, PBK is able
to generate an annual revenue of Sh13 billion to this country from its
technical product and a profit of more than Sh 22,000 from each of its
six end use products. Socially, we will have more malaria treatment and animal health drugs as well as crop pesticides. Environmentally, the pyrethrum produced pesticides are non-poisonous to animals and human beings.They are biodegradable. This is how much we are losing out in this industry’s breakdown.

As we move into the devolved government, do we need revised policies to restructure the whole agricultural sector?

The
new constitution provides for the creation of a new regulatory body.
Already there is a proposal for the establishment of a Crop Development
Authority which will collectively manage the growth of cash crops like
pyrethrum, sugarcane, coffee, tea and others. The authority will pave
way for the creation of Crop Regulatory Act. It is also the wish of the
government to reduce the number of laws governing this industry to at
least five as well as the number of parastatals.I believe this can
bring a tremendous change to the agricultural sector.

Do you see future in PBK?

That is why I am here. We  have
been operating for the last two years without the government’s
investments support and we are still growing strong. If there was no  future
in PBK, I could have given up long time ago and gone away. I could
have suggested to the minister to do away with the PBK. This is a very
lucrative industry. No industry pays its farmers per kilo as we do.
Once we get the trigger fund, we will be up and running and yo will
have nothing negative to report or write about PBK.

There
have been reports in the media that you have sold some of your assets
amounting to Sh4 billion to offset the farmers debts. How true is this?
How far have you gone?

That is
the misconception that we want to clear out. We are not selling some
of our assets to offset the farmer’s debts but to invest in oder to
generate our own revenue to jump start our operations. The government
has already approved  our request to dispose off some of
our assets amounting to Sh300 million. But we are to invest it and not
pay farmers. We only have Sh52 million as farmers arrears accrued from August 2008 to June 2009. With the Sh863 government loan we cleared the 2006 to July 2008 arrears.

Currently
there is a Bill in parliament seeking for amendment of the Pyrethrum
Act to liberalise the industry. If this happens, what is there to lose
and gain.

Nowhere in this world
is the pyrethrum industry liberalised. For the lack of an alternative
term, the legislators should differentiate between the regulatory and
the commercial purpose of the PBK. You cannot detach the  commercial
role from PBK because it is undertaken through registration. The fact
that its is owned by the farmers and not the government makes its
impossible to regulate its shareholdings or partnerships. PBK is like a
private business but becomes a public sector because no single farmer
can solely claim its ownership.

How do you intend to cope with competition from other pyrethrum growing countries in the region or external market?

In
business how do you expect to survive without competition? It is
healthy. But we are not worried about any competition because we know no
pyrethrum growing country in the world can produce more than we can.
In fact we are happy that there is competition because these are the
same customers who are investing in us, helping in our comeback. When
it is dry elsewhere they provide us with the market. Once our
operations are in full swing we will be able to produce more than
20,000 metric tonnes annually of the dry flowers unlike any other
country in the world. Proof from research and testimonials from our
customers who have widespread markets in as far as Australia and
Tanzania.

What challenges does the synthetic pyrethrin varieties pose on the industry?

They
are only existing because they is scarcity of natural pyrethrin.This
provides no other option apart from the available synthetic varieties.
But the people are now more enlightened on the health and environmental
dangers of the synthetic varieties. They are more interested in the
natural ones. Once we are in our full revival we will provide enough of
the products and the synthetic ones, will naturally phase out.