Flower exporters in plea for rescheduling of loans
By Zephania Ubwani, Arusha
The Bank of Tanzania (BoT) has been urged to reschedule loans extended to flower farmers because many of them may fail service them because of the global financial crunch.
The prices of horticultural crops, including flowers, have declined in the world market by as much as 30 to 50 per cent since October last year because of the downturn.
Mr Herwig Tretter, the chief executive officer of Mt Meru Flowers, one of the leading flower producers and exporters, said here early this week that Tanzanian growers were concerned about the falling prices of their exports.
He made the remarks when briefing the European Community Head of Mission in Tanzania, Mr Tim Clarke, on the performance of the horticultural industry which had done well for the country's economy until very recently.
Many of the local flower growers took loans from the Tanzania Investment Bank (TIB) through the guarantee of the central bank to boost their production.
"Should we continue to make losses due to this crunch, we will not be in a position to service these loans as expected," he warned.
While the flowers demand and prices went down in export markets by 30 to 50 per cent, vegetable prices decreased by 25 per cent.
Main importers of horticultural produce in Europe are said to give much preference to local producers in the developed countries. The situation has been worsened by the exchange rate of the dollar to the euro.
Furthermore, he said, some horticultural farmers especially small growers have failed to secure credit facilities that were to be provided by overseas banks.
Mr Tretter, who is also the chairman of Taha Fresh Handling Limited, called on the EU to lobby to the Tanzania Government to talk to BoT to reschedule loans extended to flower farmers.
Early this week, Tanzania Horticultural Association (Taha) warned that declining prices and demand for horticultural exports from Tanzania posed a major threat to the lucrative industry.
A decline in the world economy has drastically led to significant reductions of consumer spending and demand for flowers.
"If the financial crunch will continue causing a lower demand in the market, the flowers from Africa (Tanzania included) might find themselves completely pushed out of the market."
"This is a serious threat to the Tanzania flower growers who also are facing the problem of high operational costs. There are some who are contemplating closing down" lamented Ms Jacquiline Mkindi, the Taha executive director.
Mr Clarke also visited Rijk Zwaan Q-Sem seed farm where he was told that investors in the horticultural industry were having problems with Vat refund from the Tanzania Revenue Authority.
Essentially, the investors are exempted from paying Vat but are forced to pay when setting up their businesses on guarantee that they would be refunded later.
"Practically this has not been possible. It takes a long time to get such refunds," said Mr Harold Peters, the managing director of Q-Sem farm near Arusha.
The EU envoy promised to intervene to solve the crisis by offering direct financial support and capacity building of horticultural growers and exporters through Taha.
"We have the funds to address these issues," he said. EU is also a major market of horticultural produce, especially flowers from Tanzania and the rest of Africa.
Ms Mkindi cited other problems facing the sub sector as poor transport infrastructure, power interruptions and insecurity in the farms which have been raided by armed thugs.
She said save for the global recession, the industry registered an eight to 10 per cent growth per annum in the last three years with full from the Government.
The horticultural industry in Tanzania employs more than 40,000 people and was expected to earn the country $130 million this year. Flower farms alone cover about 200 hectares.
