Challenges to the blooming Kenyan flower industry, what we know so far

Located in the tropical region, Kenya's climate provides an ideal environment for flower cultivation. This blooming horticulture sector positions the country as a key player in the global fresh produce market.

In fact, Kenya is currently the leading exporter of cut and ornamental flowers in the continent exporting and selling across 60 destinations.
According to Clement Tulezi, the CEO of the Kenya Flower Council (KFC), up to 40 per cent of all roses sold in the European Union are sourced from Kenya making the floriculture sector the country’s top foreign exchange earner and a cornerstone of international trade.

“The industry’s resilience and pivotal role in global flower supply chains is remarkable despite the obvious challenges facing the agriculture in the country,” said Tulezi during the International Floriculture Trade Expo (IFTEX) press conference held in Nairobi on Monday last week.

He expressed confidence in the floriculture industry’s progress given the changes which have occurred in the span of the last 10 years aimed at shaping the sector.

Last year, cut flowers export fetched the country Ksh73.45 billion a drop from Ksh104.25 the previous year as a result of decline in export volumes which declined from 202,850 tonnes in 2022 to 116,270 tonnes last year, indicates the latest figures from the Horticultural Crops Directorate (HCD).

Challenges facing Kenya’s floriculture

The above figures depict a sector with potential to grow above the limits but faced with some key challenges of which some have been around for many years posing considerable threat to its expansion to new markets.

“Key obstacles encompass high government taxation, legal challenges such as tariffs and trade barriers, as well as compliance and regulatory hurdles involving sanitary and phytosanitary measures (SPS), EU standards, and EU plant health regulations,” said Tulezi.

Sustainability challenges include adherence to Good Agricultural Practices (GAP) and social and governance standards. Climate change poses issues related to greenhouse gases (GHG) and carbon
footprint.

“We are also currently facing logistical challenges arising from high freight costs and the threat of attacks on shipping vessels in the Red Sea by Houthi rebels in addition to cold chain management
struggles that include packaging and post-harvest losses.”

Taxation

According to the KFC chief, taxation and regulation policies pertaining to the floriculture sector need to be relooked at and improved.

“Today, floriculture remains a highly taxed industry in Kenya further eating on profit margins of players involved in the entire value chain. In fact, both at county and national level, floriculture companies are imposed with over 46 taxes averagely by the end of the year, this is too much,” lamented Tulezi.

Cess fees, for instance, a form of tax charged on goods when they move across county borders, has been a problem that has in the recent past sought the intervention of the lobby group.

“I am happy to report that we have sorted this issue with some of the counties which had remained adamant in charging the fee despite court orders being against it,” he said.

According to him, there is a misconception that those involved in the flower trade earn a lot of profit while in the real sense the profit margin is very small owing to the production and logistics expenses involved. “If this profit is also reduced heavily by taxes, as we have witnessed, dealers are usually left with nothing.”

Another is Value Added Tax (VAT) refunds by the government to flower dealers which has accrued for years now totaling to Ksh12 billion backlog hutting producers’ operations and expansion plans.

“We are urging the government to prioritise VAT refunds to the flower producers to enable them meet their financial needs,” said Tulezi.

The industry is also facing high tariff charges in the new emerging markets in and outside the continent.

He mentioned about 7 new markets such as India, China, Korea, and Russia among others where tariff charges are quite high limiting expansions.

“We are keen to explore these new markets for the benefit of our producers and the country but their percentage tariff charges are real drawbacks. We urge the government through the envoys to help with bilateral talks and bargain for non-reciprocal arrangements with these countries,” said Tulezi.

However, he mentions of the suspension of eight percent duty for cut flowers applies across the world which will be a big win for major flower growing regions in Kenya including other countries in the region such as Ethiopia, Rwanda, Tanzania, and Uganda.

“We appreciate the tax relief by the UK government that will see us move more volumes into the market and cement our trading relationship with the UK,” he said.
The duty suspension will remain in place for two years from 11 April 2024 to 30 June 2026.

Pests and diseases

Kenyan growers face additional hurdles due to EU plant health regulations. The False Codling Moth, a pest affecting roses, capsicum, and various crops, has led to interceptions. While there are recent improvements, maintaining this progress is crucial to avoid further market sanctions.

“In this,” said Tulezi, “We are working closely with the Kenya Plant Health Inspectorate Service (KEPHIS) to look at the post-harvest processing, and how we can manage the pest in a better way.”

It is also because of the SPS that the Australian market for the country’s cut flowers has been shrinking due to biosecurity measures which were introduced in March 2018 after high volume of live pests were detected in cut flowers exported to the country.

In 2019, KFC estimates indicates that the country used to export an average of 170 tonnes of cut flowers to Australia monthly, earning about $24 million annually but these volumes have since decreased due to the pests and diseases challenge.

“Australia used to be a growing market with huge potential and the shrinking volumes is something we are all concerned about.” Speaking on the same, Dr. Isaac Macharia, plant inspector at KEPHIS said Kenya used to send 250 consignments to Australia weekly but this has reduced to 72 a week due to SPS concerns raised by the market that include thrips, mites, aphids and oxalis weed identified in the produce.

“Some of these pests are very difficult to identify by just looking at the flowers but just a single one identified can cause the rejection of a whole consignment and the subsequent loss of the market,” said Macharia.

As a result, he added, the regulator in collaboration with the industry stakeholders have been holding capacity building initiatives to boost the producers’ knowledge about the pests and control mechanisms.

“We have solutions ranging from chemical to biological methods, which we advise farmers to consider.

Emerging techniques like utilizing pheromones in fly traps are proving beneficial for both farmers and the environment,” he said.

In addition, the government has built two fumigation facilities at the Jomo Kenyatta International Airport (JKIA) for bromine and another two for phosphine at the point of exit to help in elimination of the pests before export.

“We also have some small-scale farmers who possess their own fumigation facilities, but there is a need for bigger and more of these facilities at exit points,” he said.

Red Sea crisis

Posing great challenge to Kenya’s plan to transit 50 percent of fresh produce exports from Kenya from air to sea freight by the year 2030 is the current Red Sea crisis which has compelled growers and exporters to seek alternative shipping routes such as the Cape of Good Hope.

The Red Sea shipping crisis, which Yemen-based Houthi rebels triggered in response to the ongoing armed conflict between Israel and Hamas-led Palestinian militant groups, poses significant challenges to global trade and supply chains.

“Vessels are being redirected to evade attacks, causing transit times to rise by 30% and resulting in shortages of critical commodities such as wheat and aluminum. Ocean freight expenses have surged by 250%, adding strain on shippers, while port congestion exacerbates logistical challenges,” said Tulezi.

The Red Sea, situated south of the Suez Canal, serves as a vital conduit for global trade and container traffic, representing approximately 12% of worldwide trade and 30% of container traffic. The canal is the shortest route from Asia to Europe, reducing fuel consumption and transit times for shipping companies.

According to a study, The Red Sea Crisis Explained by PANGEA, an international freight network, the alternative routes have led to higher transit times, commodity shortages, increased freight costs, port congestion, and inflation.

“Despite this,” said Tulezi, “We are still determined to shift 50% of annual flower export from air to sea by 2030.”

Recent floods

Adding on logistics challenges is the recent floods that have rocked different transport sectors in the country, the JKIA included.

According to Tulezi the flower exporters have lost huge sums of money due to the sorry state of the country airport.

“Over the last one week, the industry has made losses up to about Ksh15 million just with the flooding we saw at the airport that caused leakages,” he said.

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