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Brexit crisis tipped for British asparagus as EU seasonal workers stay away

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ROSS-ON-WYE, England (Reuters) – For almost 100 years, Chris Chinn’s family has farmed asparagus in the rolling hills of the Wye Valley in western England.

Asparagus ready for picking is seen in a growing tunnel at Cobrey Farm in Ross-on-Wye, Britain, March 11, 2019. Picture taken March 11, 2019. REUTERS/Peter Nicholls

This year, he fears uncertainty around Britain’s departure from the European Union will keep his eastern European workers away and the asparagus will stay in the ground.

Asparagus grown in Britain is feted by chefs as among the world’s best but the seasonal worker shortage threatens the country’s asparagus industry and the viability of Chinn’s Cobrey Farms business.

It is a predicament shared by many British fruit and vegetable farmers, almost totally reliant on seasonal migrant workers from EU member states Romania and Bulgaria taking short-term jobs that British workers do not want.

At Chinn’s farm, which turns over more than 10 million pounds ($13 million) a year, the workers pick the premium asparagus spears that can grow up to 20 cm a day by hand. Sometimes they pick them twice a day before dispatching them to customers such as Marks and Spencer (MKS.L). and Britain’s biggest supermarket, Tesco (TSCO.L).

“It is incredibly clear cut – there is no UK asparagus on your supermarket shelves without seasonal migrant workers,” Chinn, whose great grandfather started as a tenant farmer in 1925, told Reuters.

“We’re really at the point where we either import the workers or we import the asparagus.”

Britain’s asparagus season is short and early – traditionally running from April 23, known as Saint George’s Day, to Midsummer’s Day in mid-June. It will be the first big test of the 2019 seasonal labor crisis.

NO SHOWS

This year Chinn’s team has had to work much harder to recruit Romanians and Bulgarians who are perplexed by the long Brexit process as Prime Minister Theresa May seeks parliament’s approval for a divorce deal with the EU. They are also wary of the welcome they will receive from Britons, who voted in 2016 to leave the EU.

Though Cobrey Farms has signed up 1,200 workers who are due to start arriving at the end of this month, Chinn fears many will not turn up. He does not think he will be able to harvest the entire crop, meaning valuable asparagus will be left in the fields.

“If we’re 20 percent short of people then we will harvest 20 percent less asparagus,” said Chinn. “UK agriculture’s not a high-margin game, so 20 percent less means we’re in loss-making territory. Fifty percent could sink us.”

Chinn’s concern grew after 20 of the 100 or so workers due to help cultivate the crops in January failed to turn up.

Of 247 workers due to arrive between March 31 and April 6, 125 are yet to book flights, he said. They include 38 who have worked at Cobrey Farms before and stayed in the dozens of static caravans that stand at the foot of the hills on the farm.

Chinn, who voted Remain in the 2016 Brexit referendum, said uncertainty over eastern Europeans’ employment rights and how long they can stay, combined with a fall in the value of the pound, meant Germany and the Netherlands were now considered more attractive destinations.

“They go somewhere which is most straightforward and any, even minor, hurdles you put in their way is just nudging them ever closer to going somewhere else,” he said.

With just 11 days to go until Britain is due to leave the EU, the government is yet to agree a withdrawal arrangement or an extension, meaning the risk of a disorderly “no-deal” Brexit cannot be ruled out.

If Britain agrees on a divorce deal, a transition period will kick in, maintaining freedom of movement until the end of 2020. In the event of no deal, EU citizens arriving after March 29 would need to register to work for more than three months.

Elina Kostadinova, a 28 year-old harvest manager at Cobrey Farms who is from Varna on Bulgaria’s Black Sea, said many workers were worried about coming to Britain because of Brexit.

“They don’t know if they will be welcomed in the country, how long they may be able to stay, how they may be able to travel and what the future may hold,” she said. “It would be wonderful if the UK government could make a decision, so we can relay this message.”

British farms typically pay workers the national minimum wage of 7.83 pounds an hour plus performance-related bonuses.

Chinn said the idea of British workers plugging the gap was fanciful. He does not expect much help from the supermarkets, where sales volumes have already been negotiated for the season and prices have been fixed, barring exceptional circumstances.

PERMIT TRIAL

Britain’s fruit and vegetable sector relies on up to 80,000 seasonal workers from the EU each year. Having previously been inundated with applications, labor agencies say interest dropped off in 2017 and 2018 as workers from Romania and Bulgaria opted to go elsewhere in the EU.

For the last two seasons, Britain has been short by around 10,000 workers, threatening the food supply and forcing farms to pay higher wages and bonuses. At the end of the summer as workers want to leave, farms will offer free accommodation and to pay the cost of flights to try to persuade them to stay on.

Concordia, a labor agency charity that finds EU pickers for British farms, said it now has to work much harder to recruit.

“U.K. agriculture is definitely entering into a crisis. No labor means no harvesting, which means no fruit and no vegetables on shelves in British supermarkets,” Chief Executive Stephanie Maurel told Reuters.

Slideshow (19 Images)

She was speaking in Moscow after the British government sanctioned a pilot trial for 2,500 workers to enter the country from Russia, Ukraine and Moldova for up to six months over the next two years.

Chinn, who has 3,500 acres of land, wants the government to increase the numbers to 10,000 this summer and over 50,000 in the next couple of years.

“We can’t change this natural cycle of the crop … the crop will come out the ground when it warms up,” he said. “So the key is about not waiting for a total disaster that wipes out large swathes of UK horticulture.”

Editing by Guy Faulconbridge and Timothy Heritage

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KISERO: What KCB-NBK merger means

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Columnists

What KCB-NBK merger means

A National Bank of Kenya branch. FILE PHOTO | NMG 

The Press statement by the Kenya Commercial Bank (KCB)announcing its move to acquire the National Bank of Kenya(NBK) through a share swap did not give much detail.

The statement only said that the deal would involve 10 ordinary shares of NBK for every one ordinary share of KCB. If it works, we will have seen the end of one of the most troublesome chapters in the country’s banking sector. Even though NBK has a weak balance sheet, it will bring to the table strong customer-facing assets for the combined entity. It has retained branches in exclusive locations at airports, ports of exit and entry into the country, giving it advantage when it comes to inter-trade business.

Secondly, it has over the years retained exclusive viable public sector clients. In the past, NBK was the designated bank for receiving landing fees for all aircraft landing and taking off from Kenya. It retains a substantial part of the business.

NBK used to be the banker for the largest employer in the country — the Teachers Service Commission. It still retains a substantial portion of the business. It used to be the designated banker for receiving payments to Kenya Revenue Authority and still retains a big chunk of this business.

So, what are the likely outcomes of the proposed merger? First, the government’s stake — now at 17 percent — is bound to increase with consequences for the corporate governance of the largest bank in the country.

The public float, a broad and impressive spectrum currently holding in excess of 80 per cent, may also suffer dilution.

When the details of the transaction are finally put out, it will be interesting to see how the vexing issue of the mainly government-owned preference shares in the books of the bank — which have always been the deal breaker for investors interested in buying the bank — will be treated.

NBK has a peculiar capital structure of having normal ordinary shares and at the same time preference shares with equity-like features that, unlike normal preference shares, allow these securities to share in the profit of the bank.

Indeed, transaction advisers hired in the past to sell the bank have advised that no sale transaction of the NBK is possible unless the preference shares are converted into ordinary shares first, and on a 1:1 basis.

Predictably, the National Social Security Fund (NSSF) has been opposed to the 1:1 conversion formula, arguing that such a move would dilute its current near majority 48 percent stake of ordinary shares of the bank.

This is because, when the 1:1 conversion formula is applied, the Treasury’s stake rises to 70 percent of ordinary shares from the current 23 percent, giving it power to make unilateral decisions on the future of the bank.

It will be interesting to see how the National Treasury and KCB will navigate through this shareholding quagmire.

With the shares of the NBK currently trading at its lowest multiples and at a steep discount on the book value, this transaction could put the government and the NSSF in a position where they can start realising a return on their investments in the bank.

The two investors have not been able to earn a return either by way of capital appreciation or dividends from the billions they invested in the company in nearly two decades. But more significantly, a takeover of NBK will serve as a strong signal that distressed State-owned banks will no longer be artificially kept alive even after they have long outlived their usefulness.

Indeed, many of the State-owned banks have been in poor financial health, only managing to limp along because of support and regulatory forbearance from the Central Bank of Kenya (CBK) .

A good number are currently suffering crippling liquidity problems, forcing them to resort to complete dependence on the CBK discount window for liquidity. In the interbank market, they are unable to access liquidity easily because the large banks are not willing to lend to them, choosing to deal only with their large peers.

How I hope that the proposed merger of NBK and KCB will just be but the beginning of structured changes that will eventually give us a long-lasting solution to widespread distress within the State-owned segment of the banking sector.



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Keter defies GDC board on chief executive new term

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Economy

Keter defies GDC board on chief executive new term

Energy Secretary Charles Keter. FILE PHOTO | NMG 

Energy Secretary Charles Keter has defied the board of Geothermal Development Company (GDC) in extending the term of the firm’s CE0.

Mr Keter has offered GDC boss Johnson ole Nchoe a one-year contract despite the board’s verdict to seek a new managing director.

Mr Nchoe, whose three-year term ended on Wednesday, sought a contract renewal. This triggered a board review that gave him a score of poor.

The board gave him a score of 39.6 percent for the six months to December and 39.8 per cent for the year ended June last year with both scores categorised as poor.

“He sought a contract renewal and we said no based on his appraisal,” said a GDC director who sought anonymity fearing reprisals from Mr Keter.

“The board spoke, but the CS had a final word that was contrary to the resolution of the directors.

“This is out of step with good corporate governance.”

Mr Nchoe, who was picked to head GDC in April 2016 on a three-year contract, previously worked at Kenya Power as IT and telecoms chief manager until 2013 when he joined a group of consultants in Liberia on a donor-funded plan tasked with helping the West Africa nation rebuild its electricity network.

He protested the poor review from the board, arguing it was designed to embarrass him.

“He felt strongly that the evaluation was designed to embarrass the person of the CEO and was inconsistent with the good board evaluation results,” said board minutes capturing Mr Nchoe’s protest.

The one-year contract extension is tied to the fact that Mr Nchoe will next April attain the mandatory retirement age of 60.

His predecessor, Dr Silas Simiyu, also fell out with the board, prompting his resignation in March 2015 after he was adversely mentioned in tender irregularities.

Eight months after Dr Simiyu’s exit, the board suspended six GDC managers including acting CEO Godwin Mwawongo, company secretary Praxidis Saisi and tender committee members Mr Abraham Saat, Mr Peter Ayodo, Mr Caleb Mbayi and Mr Nicholas Karume.



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Tea rebounds to Sh203 at weekly auction amid shrinking supply

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By GERALD ANDAE
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The amount of tea withdrawn from sale at the auction fell 24 percent this week as price increase at the Mombasa auction saw buyers sell most of the commodity.

Data by East African Tea Traders Association indicates only tea worth Sh228.8 million was offloaded from the auction against that valued at Sh302.3 million last week. In trading held on Tuesday, a kilogramme of tea on average went up to Sh203, up from Sh193 realised last week.

Tea prices have been falling in the last two months but have rebounded in the last two sales as volumes offered started coming down because of the ongoing drought.

The volumes offered for sale this week dropped from 7.275 million kilos to 7.2 million as adverse effects of droughts hit tea farmers and factories.

Over 40,000 tea factory workers have been forced to go on advance leave as production went down by half.

Kenya Tea Growers Association (KTGA) chief executive officer Apollo Kiarii says the harsh climatic conditions have forced factories to operate three to four days a week, significantly cutting down operations.

He said it will take another six to eight weeks for the crop to recover if the rains come, and additional cost of replanting and infilling the fields for the dried-up bushes means the industry performance for the year 2019 will be poor than any other time. The Tea Directorate had forecast the volumes will this year drop to 416 million kilos from a high of 474 million kilos last year.



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