When rats 'ate' pyrethrin worth Sh2.4bn, and other shameful tales

On March 30, 2003, when fire gutted down the pyrethrum processing factory in Nakuru, Kenyans were told that the "likely cause" was an electrical fault – the usual culprit in unexplained inferno in government buildings.

It was a lie. It was later claimed in Parliament that this was a case of arson. The total loss that evening was Sh268 million. After this, the processing capacity of the 1930s plant was reduced from 64 tonnes to 20 tonnes per day.

But every calamity comes with an opportunity. For the barons at the Pyrethrum Board of Kenya (PBK), a decision was made that lorries would be ferrying pyrethrum from Nakuru to process the product in Rwanda then return it back to Nakuru.

Throwaway price

The pyrethrum cartels had their day. It was further claimed in Parliament – though not investigated – that the cartels wanted to destroy the factory so that they could buy it at a throwaway price, or set up a new one.

On the day the PBK plant burnt, claimed Nakuru Town Member of Parliament Mirugi Kariuki, "There was not a single fire fighting equipment at the factory".

By then the pyrethrum stores were full and most of it was lost – or had simply been sold in advance. Nobody knows. The Pyrethrum board later told a parliamentary committee on agriculture that investigated the matter – and it is captured in the report – that pyrethrin worth Sh2.4 billion was "eaten by rats".

Auditor-General's reports

How rats could eat pesticide is not clear? But they did. If you look at the reports of the Auditor-General, all the pyrethrin received between 1999 and 2003, valued at Sh1.4 billion, was also unaccounted for.

The Nakuru plant had the monopoly to produce pyrethrin and had since 1928 invested heavily in research and assets. Pyrethrin is a product of pyrethrum and it is on high demand worldwide because it is environmentally friendly. Actually, Kenya have never satisfied the demand.

The plant had also acquired prime properties and choice farms in all the pyrethrum-growing areas where it was doing bulking and arranging for planting material for every season. At one point, one of the prime lands, worth Sh1.6 billion, was sold for Sh33 million.

Collapsed bank

Even at a time when it could not pay its farmers, the board could afford to put Sh150 million into the collapsed Euro Bank, which had no assets. This meant it was the farmers who would suffer that loss. It would later be claimed in court, at least by the National Hospital Insurance Fund, that President Daniel Moi instructed parastatals to support Euro Bank because it was indigenous.

When the Auditor-General went through the books of the Pyrethrum Processing Company of Kenya (PPCK), which took over the functions of the PBK, it found a firm that was ailing with a negative working capital of Sh351 million, three years ago. Technically, the Auditor-General stated, the company was "insolvent and its continued existence is dependent upon the financial support of the government and its creditors".

Great scandal

How a country that was once producing 70 per cent of the world's pyrethrum and that had a stable American market let it go is the scandal of our times.

We know from history that the United States used to buy 80 per cent of Japanese pyrethrum but after the First World War, it turned to Kenya. It is also known that the need for non-plant-based synthetic insect repellents and insecticides for American troops arose during the Second World War, when Japan and Japanese-controlled countries withheld sales. More than 20,000 potential repellent/insecticide compounds were tested during this period, including the now banned DDT, the first modern synthetic insecticide.

Organic pollutants

But since 1996, the US has been pushing for the controlled use of dichlorodiphenyltrichloroethane (DDT) and other persistent organic pollutants used around the world, meaning that pyrethrum is a crop to watch. But we have not taken advantage of these developments and the industry has hopped from one scandal to the next. And even with all the scandals that followed the destruction of the Pyrethrum board nobody has been asked to account.

The intellectual property, patents, that was with PBK is worth billions of shillings. They have been the custodian of this dossier, as they used to call it, of more than 1,000 patents that describe the composition of pyrethrin and that are the basis of production and registration of all pyrethrin-based products in the whole world. Yet, we cannot make sense out of it. I hope that somebody has not sold it for a song.

‘Mighty thief’

In 2009, Naivasha MP John Mututho expressed the same fears over this dossier in Parliament: "If that dossier is stolen by the people I hear are so hungry, particularly from the agriculture sector, we are going to create one mighty thief. This is somebody who is going to steal an asset worth tens of billions of shillings from these poor farmers". Somebody should check the safety of that "dossier".

When fire gutted the factory, an insurance company paid PBK some Sh230 million and they channeled it through a bank where the board had an overdraft of Sh100 million. The balance of that money was used to buy machinery, which has been stored in their yard for several years. The problem with PBK is that they have been relying on obsolete technology designed in 1930s and that, according to experts, produces more waste than product. This is the same issue with sugar factories.

Secretly sold

But what was considered waste from this pyrethrum factory was stored and secretly sold to some privateers because it is rich in pyrethrin. Some people use it to manufacture mosquito coils.

Again, the Nakuru stores were full of raw pyrethrum and as farmers got frustrated, they started uprooting the crop. And because it had a monopoly, the government would not allow competitors to buy the same from farmers. By 2005, Parliament was told that PBK was holding 200,000 metric tonnes of pyrethrin, a botanical insecticide. A parliamentary team was told that PBK was refusing to sell the same product to Indian industrialists.

Kenya used to have some of the best varieties of pyrethrum but the country has now been overtaken by Tasmania. The Kenyan varieties today yield less pyrethrin per hectare than anywhere else in the world. While Kenya's yield is 1.2 per cent, Tasmania has managed to yield 2.5 per cent pyrethrin content.

Following the Stockholm Convention, the 2004 global treaty to protect human health and the environment from chemicals that remain intact in the environment for long periods, pyrethrum has re-emerged as the product of choice.

Last year, the American ambassador to Kenya, Kyle McCarter, told me that investors from the United States are willing to buy as much as Kenya can produce. This means that we have a ready market and perhaps we can now take advantage of the Free Trade Agreement, which is under negotiation – but only when we end corruption and bad manners at the management level.

At the moment, the more than 300 retirees at the PPCK have appealed to President Uhuru Kenyatta to help them get their Sh2 billion pension arrears, which they say they have not been paid for the past seven years.

Use synthetics

It all started with an excuse. In 1978, there was a shortage of pyrethrum in the world market and the users started to turn to synthetics. Then in 1980, Kenya's traditional market of the US was hit by a massive heatwave that killed people and insects as temperatures soared to 45° C.

As the industry appeared to be going down, and as if pyrethrum would vanish, the architects of vice saw a chance to take advantage of the emerging confusion.

Kenya could not sell its pyrethrum to the traditional market at a time when the production had increased by 60 per cent. Thus during the 1980-81 period, the pyrethrum sales dropped from 9,992 tonnes to 7,000, leaving Kenya with a surplus of 8,700 tonnes unsold.

No pay

It was the first time that the Pyrethrum board was unable to pay farmers – and this became the practice. Choice farms became the target of grabbers, hence the question: what is wrong with us? Why would a country that once boasted of having the world standard pyrethrum extract parameter run down such an industry?

By now, if indeed we would not have run down the pyrethrum industry, we would be the global exporter of mosquito coils, repellents, insecticides, treated mosquito nets and many more. We have the potential to become the exporter of all these without any competitor. But look at us!

By now, Nakuru and its pyrethrum environs would have many industries courtesy of the sector. You can imagine the thousands of people who would be employed here given that Kenya has patents to the commercially accepted methods for analysis of pyrethrins.

Sad memories

But in our desire to grab the properties of the Pyrethrum board, coupled with the age-old loot-and-run culture, we left hundreds of farmers frustrated and any mention of the word “pyrethrum” makes them rekindle memories of the money they lost.

The Pyrethrum board, as it was known, could not even make sense of its 800-acre Oljororok farm, which became the bastion of thieves cutting down trees and fences. At times, some of these parcels were leased out to individuals, who would suffer at the hands of the PBK, which took the dried flowers, refused to pay and demanded to be supplied.

Pyrethrum has a long history in Kenya from the colonial days the country used to import a paraffin solution from Japan for insecticidal purposes. After Kenya started growing its own, pyrethrum was used by coffee farmers against pests such as capsid bugs. Some formulas were developed and Kenya, thanks to some of the pioneer scientists, still holds some of them.

Association born

There was a projection since the January 18, 1933 meeting at Nakuru Hotel when colonial farmer Captain Gilbert Walker told 12 growers that Kenya will develop a viable industry. This is how the Kenya Pyrethrum Growers Association was born and Nakuru became the capital of pyrethrum farming in Africa.

These farmers approached the governor and asked him to form an agency with exclusive rights to buy the pyrethrum from farmers and sell it in any market. This is how the notorious Pyrethrum board came about. In 1936, rules were issued that all growers should register with the board, and the Njoro Plant Breeding Station was mooted in 1937.

Extraction plant

During the Second World War, the Ministry of Supply built an extraction plant in Nairobi but it was never used. And after the war ended, the American market turned to DDT but a chemical and entomology lab was built in Nakuru and it spearheaded research on pyrethrins. A new extraction plant, owned by the growers, was set up in Nakuru and the work of the Board was to look at the needs of consumers and formulate insecticides containing pyrethrum.

The number of insects that have grown resistant to synthetic insecticides has led to new demands for pyrethrum throughout the world.

It is today a shame that we have let go of all that. History will not be kind to us as we continue to say that pyrethrin is being eaten by rats.

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@johnkamau1