Is The Kenya Flower Industry Dying a Slow Death?

Once featured on the CNN as the flower garden of Europe, Kenya flower industry is easily and gradually losing its glory. Or isn’t it?

And yes, I’m speaking from a grower’s perspective because I am one. I want to give you a sneak preview, though.

Kenya has been attractive flower producer because of her favourable growing conditions, cheap skilled labour and rising demand for competitively priced flowers in the main destination markets. I assume that’s public knowledge.

No wonder in 2014 Kenya was in the top 5 countries that exported the highest dollar value worth of flower bouquet. #4 to be precise as shown below. [Source: World’s top export]

  1. Netherlands: US$4.7 billion (48.1% of total flower bouquet exports)
  2. Colombia: $1.4 billion (14.1%)
  3. Ecuador: $798.4 million (8.2%)
  4. Kenya: $698.5 million (7.2%)
  5. Ethiopia: $610.4 million (6.3%)

You don’t achieve such kind of results over-night, do you?

That isn’t all. In the same year, Kenya was among the fastest-growing flower bouquet exporter since 2010. With Lithuania taking up the number 1 spot with its 5,079% gain in value. In second place was Ethiopia (up 324.5%), followed by Germany (up 120.7 %), India (up 94%) and Kenya (up 74.3%).

Wait a minute, have you noticed that Ethiopia was the 2nd fastest growing country world-wide in the value of export?

I deliberately paid attention to Ethiopia because they are honestly giving Kenya a run for their money. Could it be that there’s something they are doing right? Or is it just an isolated case? It could be either or both, you decide.

 

Related: What Brexit Means to the Global Flower Industry

 

But then, isn’t it true that for every three cut flowers sold in Europe one is from Kenya? Of course, it’s true, but statistics change. Hard to admit but things are changing in Kenya flower industry. Whether it’s for better or for the worst, time will tell.

I vividly remember four years ago attending the 10th Naivasha Horticultural Fair (Hortifair). This is the biggest flower event that brings the industry’s stakeholders together. Those days, the event was big, better and fan.

And the government would boast how the Kenya flower industry offers employment to more than 500,000 people both directly and indirectly and it is the biggest earner of foreign exchange.

Last year, though, there was not much to write home about. Just a handful significant exhibitors with a majority exhibiting their curio items!

Really, what happened to those days when it was all merry….all bed of roses….all the way to the bank?

 

Kenya flower industry

It is everybody’s role to protect the Kenya flower industry that’s as sensitive as a flower bud

 

I bet most of you are lost as I am.

And here comes the big question

 

Who’s slowly killing the Kenya flower industry?

Partly the government, partly the legislation, partly the misinformed activists and maybe even you and I. But most significantly, the recent economic and financial turmoil in North America and Western Europe that has impacted the industry negatively since 2009.

Serious claims you might think but wait until you read it all.

 

High flower market volatility

Like I’ve mentioned before, the financial turmoil in Europe has over the recent past hit Kenya flower industry below the belt. To be specific, the Eurozone debt crisis characterised by rising level of unemployment and falling living standards meant doom to flower exporters.

That holds true because most flower buyers were more concerned with making ends meet than spending big bucks on bouquets thus affecting the industry.

 

Why I will blame the government for the death of Kenya flower industry

Infrastructure – The government is yet to show a serious commitment to tackling logistics bottlenecks that are limiting the flower transport. I look at the state of the roads that connects remote farms to the main highways and wonder whether there is a government at all. I’m not a politician, but someone has to be held accountable. Given the perishable nature of the cut flowers, something needs to be done and fast.

 

Regulators – I love and appreciate the work done by government regulators to safeguard the flower industry (AFFA-HCD, KEPHISNEMA, WRMA and PCPB). However, someone needs to remind these parastatals of their mandate. Because let’s face it, some of these parastatals are practically out of tune with the interests of exporters. During vetting for licencing, exporters are subjected to unnecessary bureaucracy. I don’t know whether it’s just me but, some of these organizations will practically punish you for their mistakes. Like when they fail to communicate important stakeholder meetings and still blame you for not attending!

Others like NEMA and WRMA should just consolidate similar mandates. Why do they each require a licence for the same water reservoir for instance? And for every water reservoir in the same farm needs a license. I just fail to understand.

 

Taxes – In my experience, there are so many different taxes paid by a flower investor in Kenya. Don’t get me wrong, I strongly support paying taxes, but I’m just saying the cost of doing business in Kenya is insanely high.

Besides, the buying currency is, in most cases, the dollar (strong) and selling currency, the euro (weak) and so many other costs, including electricity (high). Investors are pressed from bottom-to-top to find a better enabling environment. And that’s why they are all scrambling for Ethiopia. No wonder in 2014, Ethiopia was the 2nd fastest growing flower exporter.

Now we know that it’s not an isolated case and that Kenyan government should borrow a leaf from Ethiopia.

 

Could the legislation be to blame?

The new constitution has so many laws that if well implemented could drive this country into prosperity. However, I don’t know whether it’s because I’m not a lawyer, but I don’t understand the Crops Act 2013. But with what I’ve experienced, there’s an overlap of mandate between the national government and county governments and guess who’s paying the price?

You got it right. The industry.

Section 6 (1) (a) of the Crops Act, stipulates that,

 “the authority (AFFA), on behalf of the national government, shall be responsible for licensing and charging of levies and breeder royalties on all scheduled crops on condition that the total sum of the levies charged by the Authority shall not exceed ten per centum of the gate value of the produce.”

I don’t know about you, but I believe 10% is quite high and could impede progress as well.

 

Criminal Exporters and Growers

The European Union intends to put in place a closed market system and bestowing complete responsibility on the producer. However, it’s vital for producers or growers to self-regulate to avoid problems with the market. But some companies just don’t get it.

They break the regulations left, right and centre. A good example is when a company forges phytosanitary certificates to export substandard produce. When they get intercepted and banned, they still export using other affiliated companies.

 

How activism is impacting the industry

On a typical day at Aalsmeer Flower Auction in Holland, approximately 20 million stems exchanges hands. Out of this 20 million, the Kenya flower industry scoops 38% market share. That means we dance to whatever tune Europe demands us to.

And that includes the most recent campaigns and demonstrations spearheaded by a Dutch human rights group, Hivos, against Kenyan flowers. The group urges consumers to boycott produce grown in worker abusive environments. Thanks to a few rogue companies that have earned the industry a bad reputation.

Kenya is, therefore, compelled to implement the National Compliance Mechanism that seeks to bring all growers under a strict code of conduct that will see violators denied the export licence.

Good news for all employees that have suffered from brutal management systems I guess.

 

How climate change is affecting Kenya flower industry

Lastly, the elephant in the room. Climate Change.

The floricultural industry depends mostly on rainfall, and the industry has been hard hit. With too much or too little rainfall, the industry experiences a myriad of challenges ranging from pests and diseases, poor accessibility and conflicts between companies and the neighbours.

Climate change is also expected to shave off 2.6% from Kenya’s Annual GDP by 2030. After all, who isn’t affected by the climate change?

 

All hope is not lost, though.

Despite all the challenges affecting the industry, Kenyan growers have a particularly good cause for optimism. As a country, we have doubled our share of global exports over the past decade amounting to 120,000 tonnes of flowers annually.

 

Related: How to Start a Rose Flower Business in Kenya

 

The sector further received a boost in December 2014 when duty-free and quota-free access to the European Union was restored under an Economic Partnership Agreement. That’s not all the world market is slowly recovering. For instance, Rabobank projects that for the next ten years, the will be a significant growth in global floriculture production and trade.

 

Conclusion

You have to do more than just stop at reading this post. You have to share with others.

You have to criticize the stakeholders without shame or reservations, not because you are the antagonist of the industry but because you know down to the depths of your soul that what you are doing is good. That means the tenacity, the resilience and the endurance of all the stakeholders are what the industry urgently yarns.

If you and I play our part, we can make Kenya flower industry great again.

So, is the Kenya flower industry dying a slow death?

 

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One comment

  • A good piece of information and something to worry about. Any idea on the role of financial institutions?

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