TRALAC - Trade Law Centre

Kenya, US partner in setting up cold chain infrastructure for trade

Wednesday, 14 October 2015 Published: | Reuben Wanyama

Source: Citizen (Kenya)

The U.S and Kenya governments are speeding up the development of cold chain facilities in the country as demand for perishable exports-imports between the two countries increase.

Coming hot in the heels of a 10-year African Growth Opportunity Act (AGOA) extension, the Ministry of Industrialisation and US Department of Commerce have launched the Cold Chain Assessment Initiative.

The initiative will assess Kenya’s needs in cold chain infrastructure to ensure it complies with US standards and regulatory requirements in perishable exports.

The launch follows discussions by the US Department of Commerce and the EAC member states under the tutelage of the on-going US-EAC Commercial Dialogue.

Industrialisation Cabinet Secretary Adan Mohamed welcomed the move terming it a vindication of the deepening US-Africa trade and a positive signal that will leverage Kenya’s plan to double its exports in the US market.

“While exports from Kenya to US have seen dramatic growth in recent years, logistical shortcomings related to maximum cold chain efficiency affect our perishable exports traveling a greater distance, limiting Kenya’s share  of the US goods market,” said Mohamed.

He added that cold-chain infrastructure development would aid Kenya’s agro-processing goals while incentivizing Kenya’s strong agricultural sector.

“Kenya’s immediate strategy is to unlock its agro-processing potential which has a value-add of around Sh130 billion (USD 1.3billion) but currently not captured due to challenges related to infrastructure,” said Mohamed. 

Mohamed further lauded the initiative as a timely move that will fast-track Kenya’s desire to expand its export portfolio in the US market while prioritizing on perishable products which it has a comparative advantage in.

“Kenya exports less than 10 of the 6,300 products allowed into the US market, the minimal non-oil AGOA trade gains for the last decade provide an opportunity for our farmers to benefit,” said Mohamed.

Paul Sutphin, US Embassy Deputy Chief of Mission, hailed the initiative as mutually beneficial for both US private sector and Kenya’s foreign direct investments flow.

“Having modern cold facility infrastructure in Sub-Saharan Africa that is USDA-certified will save days and dollars for exporters and consumers in treatment,” said Sutphin, adding that it would provide substantial opportunities for US businesses in Kenya.

The United States is a global leader in cold chain technology and related services, food retail, franchising, and pharmaceuticals, with import-export led perishable commodities business topping Sh35 trillion ($350 billion) in US trade worldwide in the last two years.

According to the Food and Agriculture Organization (FAO), almost a third of all food produced globally is lost or wasted every year.

Of these, Sh350billion ($35 billion) worth of perishable foods are wasted annually, with nearly half of those losses due to temperature changes experienced in-transit between the grower and the grocer.

Sub-Saharan Africa countries have been found to lose as much as 36 per cent of their harvested food, with up to 94 per cent of these losses due to inefficient supply chains during harvest, processing, and distribution.

According to a recently launched Industrialisation blueprint, Kenya is targeting Sh100 billion (USD1billion) in export earnings from the AGOA market in the next two years and Sh1 trillion (USD 10billion) by the time the renewal expires.

The United States is now Kenya’s second most important trading partner, with Kenya’s exports to the US amounting to Sh30 billion last year.

Kenya was ranked 96th largest goods trading partner with USD1.1 billion in total (two way) goods trade to the US in 2013.

Kenya was also United States’ 95th largest goods export market in the same year.

 

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