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    Kenya flower in­dustry on a boom tra­ject­ory

    The emer­gence of new mar­kets coupled with heightened mar­ket­ing will see Kenya earn $531­mil­lion from the flo­ri­cul­ture in­dustry with in­dustry play­ers pro­ject­ing some 125, 000 tonnes of flowers will be ex­por­ted in 2014.

    "If there are no major dis­rup­tions, we ex­pect ex­port volumes to re­main steady com­pared to last year," said Jane Ngige the Kenya Flower Coun­cil (KFC) CEO in a press brief­ing. Between 2012 and 2013 flower ex­ports grew by 5 per­cent.

    However, stat­ist­ics from the Kenya Na­tional Bur­eau of Stat­ist­ics show that hor­ti­cul­ture in­come de­clined for the third time in a row last year as over­all pro­duc­tion fell. Earn­ings from fruits, ve­get­ables and cut flowers dropped to less than 1 bil­lion dol­lars in 2013.
    The coun­try earned $981­mil­lion from hor­ti­cul­ture last year, down from $1.05 bil­lion in 2012 and $1.13 bil­lion in 2011.

    The drop in earn­ings is blamed on a cold spell that af­fected mainly flowers in the second half of the year. Pro­duc­tion of cut flowers and fruits ex­per­i­enced a tough year, with ve­get­ables re­gis­ter­ing mar­ginal in­creases.

    Over­all hor­ti­cul­ture pro­duc­tion stood at 196,241 met­ric tonnes last year, down from 205,728 tonnes in 2012. As in pre­vi­ous years, flowers con­trib­uted to more than half of the pro­duc­tion. However, the quant­ity of flowers pro­duced fell by 4,538 tonnes, from 108,306  tonnes in 2012 to 103,778 tonnes in 2013.

    Earn­ings from the pro­duce in 2013 con­sequently dropped to 659 mil­lion dol­lars, from 764 in 2012. Sim­il­arly, in­come from fruits dropped to 53 mil­lion dol­lars, down from 55 mil­lion dol­lars. In the same year, Colom­bian ex­ports grew by over 20 per­cent. "This in­dic­ates that there is po­ten­tial to in­crease volumes if the right en­vir­on­ment ex­ists," Ngige said. The CEO fur­ther noted that Kenya is the third largest flower ex­porter glob­ally, after Colom­bia and Ecuador.

    She added that the European Union ab­sorbs 85 per­cent of all the flower ex­ports. "Mar­ket sur­veys have shown that even the Euro­zone fin­an­cial crisis has not af­fected de­mand for flowers,' the CEO said.

    "We are there­fore ask­ing the gov­ern­ment to con­clude the Eco­nomic Part­ner­ship Agree­ment with the EU so that flower trade is not dis­rup­ted," she said. The dead­line for sign­ing the agree­ment is Oc­to­ber. The CEO said that there is anxi­ety being cre­ated by the non- con­clu­sion of the trade talks. "Buy­ers nor­mally place or­ders one year in ad­vance and so sales are being im­pacted by the delay in sign­ing the agree­ment," she said.

    If a deal is not reached, then Kenyan flowers will at­tract im­port duty of between five and seven per­cent. "This will ef­fect­ively re­duce our com­pet­it­ive­ness as the av­er­age profit mar­gins are between eight to 15 per­cent," Ngige said.

    "It will also force the grow­ers to change their cur­rent busi­ness model so that they can ab­sorb the new taxes," she said. Ngige noted that Kenya's main com­pet­it­ors have already con­cluded trade agree­ments with the EU.

    "There are look­ing to be­ne­fit from pos­sible fal­lout between the EU and Kenya," she said.
    Kenya's floral in­dustry is well es­tab­lished. Ac­cord­ing to in­dustry data, the sec­tor em­ploys over 500,000 people both dir­ectly and in­dir­ectly and sup­ports the live­li­hoods of over two mil­lion house­holds.

    "However, the in­dustry is dy­namic and so the play­ers must en­sure they main­tain a com­pet­it­ive edge," she said. Ngige said that an­other chal­lenge fa­cing the in­dustry is the de­volved sys­tem of gov­ern­ment. "The newly formed county gov­ern­ments are under pres­sure to raise rev­enue through taxes and levies," she said.

    Ngige added that all the major pro­du­cing na­tions have agreed to sign a flower sus­tain­ab­il­ity code in order to safe­guard the in­dustry. "We are de­vel­op­ing a com­mon stand­ard to en­sure the best prac­tices are main­tained throughout the value chain. This will en­sure that final con­sumers end up with qual­ity products," she said.

    "The on­go­ing dis­cus­sion on the stand­ards should not go bey­ond 2015 given the mo­mentum of the top three flower pro­du­cers," she said. HPP Ex­hib­i­tions Pres­id­ent Dick Van Raams­donk said that Kenya is the focal point of the floral in­dustry in Africa. "However, Ethiopia and Tan­zania also have fast grow­ing but smal­ler flower sec­tors," he said.

    Raams­donk said that Kenya can in­crease its pro­duc­tion levels if it main­tains a com­pet­it­ive re­gime for the flo­ri­cul­ture in­dustry. Hor­ti­cul­tural Crops De­vel­op­ment Au­thor­ity Act­ing MD Grace Ky­allo said that Kenya's hor­ti­cul­tural in­dustry pro­duced ap­prox­im­ately 1.3 bil­lion dol­lars in 2013.

    "We are ex­pect­ing to in­crease volumes so that Kenya can in­crease its for­eign ex­change earn­ings," Ky­allo said. She said that Kenya is ex­plor­ing new mar­kets in­clud­ing Rus­sia, Japan and South Korea.

    "The Ja­pan­ese mar­ket re­quires high qual­ity but the premium price is worth it for ex­port­ers," she said. Ky­allo said that Rus­sia is also a rap­idly de­vel­op­ing mar­ket but there ex­ists a lan­guage bar­rier. She added that the gov­ern­ment is cre­at­ing an en­abling en­vir­on­ment so that in­vest­ments con­tinue to flow into the in­dustry. She said that au­thor­ity also seeks to link pro­du­cers to both do­mestic and in­ter­na­tional mar­kets.

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