State pushes banks to give farmers better forex deals – Business Daily
Agriculture and livestock development Cabinet Secretary Mithika Linturi addressing journalists at Kilimo house. PHOTO | LUCY WANJIRU | NMG
Agriculture Cabinet Secretary Mithika Linturi has accused commercial banks of denying farmers the foreign exchange gains associated with the weakened shilling on exported teas, calling for adjustments to reflect the actual amount as quoted by the Central Bank of Kenya (CBK).
Mr Linturi said farmers should currently be benefiting from a weakening shilling, however, the commercial banks have denied them by offering rock-bottom exchange rates.
Mr Linturi said they will open a discussion with the banks on the low exchange rates with the view to aligning them to the prevailing rates as set by the CBK.
READ: Shilling drops further to near 115 against dollar
“There is no reason as to why Kenya Tea Development Tea Agency (KTDA) should be given an exchange rate of Sh119 for our teas because that is how we are losing money that we should pay farmers,” said Mr Linturi.
The CS wants the management to immediately negotiate for better rates with the banks as one of the ways of lifting farmers’ income.
The Central Bank of Kenya is currently quoting a dollar at 123 against the shilling while commercial banks are offering at least Sh119 against the greenback.
The shortage of dollars in May triggered the emergence of a parallel exchange rate that saw lenders buying and selling the greenback well above the printed official rate, according to the Kenya Association of Manufacturers (KAM).
The KAM said then that its members, the biggest importers of goods, were buying the dollar at more than Sh120 compared to the central bank’s official exchange rate of 116.81 units in that period.
Tea is one of the largest foreign exchange earners for the country with over 95 per cent of the total commodity produced in the country finding its way to the export market.
KTDA chairman David Ichoho said they have already initiated talks with the banks for a favourable exchange rate for their teas.
“Tea as a commodity is one of the largest foreign exchange earners in the country and that is why we are keen to have a good exchange rate for our produce,” said Mr Ichoho.
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They made the remarks during the KTDA director’s conference in Nairobi, where Mr Linturi urged the agency to increase value addition on the tea that is exported and also scale up the production of orthodox tea.
He warned that farmers are not getting the full benefit from their produce as most of it is sold in bulk, a thing that also makes the country lose its mark of origin as the beverage is blended with other cheap products from other parts of the globe.
The conference brought together close to 400 directors from different regions across the country.
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