Kenya flower industry under competition

Nairobi – Kenya’s flower industry was for the first time in 30 years experiencing a 15 percent decline in profits, blamed mainly on bad weather, currency volatility and increased competition from the rest of Africa, according to the country’s Horticultural Crops Development Authority. The authority released figures stating that the flower export earnings dropped from $297.2mn to $243.2mn by July this year. More losses were anticipated following an unusually long summer in Europe, which would affect exports, reported The East African. The drop in profits was largely attributed to a strong Kenya shilling and the severe drought that hit the country earlier in the year. Flower exporters have urged the government to intervene in stabilising the shilling to cushion exporters against foreign exchange swings. The Central Bank of Kenya has, however, maintained that the shilling’s value would be determined by market forces. Competition threat Another major factor weakening the Kenyan industry was a threat from Ethiopian flower sector. Many Kenyan farmers have relocated to Ethiopia on the grounds that it provides favourable economic terms and better infrastructure. A leading flower producer, Sher Agencies, was one of the companies that invested in land in Ethiopia. The company’s human resources manager said his company has developed a 300ha farm, which was the biggest in Ethiopia. Homegrown, a leading exporter also expressed the concern that Kenya was losing markets to countries with cheaper production costs like Morocco, Tunisia, Senegal, Zambia and Malawi. Kenya was the leading producer of cut flowers to the European Union, supplying 31 percent of the total export to the market. The minister of trade and industry, Mukhisha Kituyi, said that the flower industry was expanding at a rate of 200ha a year and it was the largest foreign-exchange earner in the country after tourism and tea. He did not comment on possible measures that could be put in place by Kenya to make it more favourable to investors in the sector.