Over the last years, the Kenyan flower industry has grown rapidly. It currently is the country’s top industry after remittance, tourism and tea, and Kenya Flower Council’s (KFC) CEO Clement Tulezi believes the industry to can surpass tea in the next few years. However, there are several challenges, like freight capacity and rate, Kenya’s taxation regime and the EU-tightened plant health regulations, the industry needs to overcome. The team of KFC is doing their utmost best to enable the industry to do so, engaging with all involving relevant actors for new and improved solutions and alternatives.
Clement Tulezi at the IFTEX 2019 in Nairobi, Kenya.
Kenya’s cut flower industry has grown
Currently, the Kenya cut flower industry employs 200,000 people directly and had over 1 million people supplying the industry, explains Tulezi, who is very pleased with the growth over the few last years. “When comparing the situation with 5 years ago, the industry has improved significantly in all aspects; it has become more organized and we’ve strengthened our systems on how the growers produce their products in terms of sustainability and the working conditions of the workers. More and more growers are now certified and the KFC Flowers and Ornamentals Sustainability Standard (F.O.S.S) is now one of the major standards in the world, based on Good Agricultural Practices, environmental and socio-economic principles, which ensure certified producers foster sustainable, responsible, and safe production of cut flowers and ornamentals. In the coming years, Tulezi has good hopes for the industry as he expects the industry to grow even further.
The three challenges for 2021
The Kenya cut flower industry is eager and ready to grow more, but several external factors may limit this growth, Tulezi says. According to him, the three major challenges for 2021 are freight, Kenya’s taxation regime and the EU-tightened plant health regulations. Below, each challenge highlighted and what KFC is doing to enable the industry to thrive.
Freight
Air freight is one of the major aspects that is eating in on the profits of the growers. “Fortunately, demand is there, but the lack of capacity and the increased rates are the bottleneck. Freight has always taken up quite a chunk of the costs and now, as it increased by around 20%, the growers definitely feel it.” For this reason, KFC is in close contact with freight forwarders and is also looking for alternatives to transport flowers. “One of the things we are looking at shipping flowers to Europe is by sea. Colombia succeeded shipping flowers to the US and over 50% of their produce is going by sea. Of course, they are closer to the US than Kenya to the EU, but we, with the support of major buyers and Kenyan authorities, this is a viable option. Recently, we witnessed some successful trials on some varieties by the Royal FloraHolland, which it took 28 days to ship the products from Mombasa to Amsterdam. Now, more trials across different flower types are needed. KFC is now engaging the government to provide a ‘green channel’, so that there will be no delays at the port of exit in Mombasa. The international buyers and exporters are keen and so far, the government seems to be very understanding and willing to help”
Taxation regime
Locally, the Kenyan agriculture and fresh produce industry is dealing with an increase taxes in the supply chain. “The government is not collecting enough taxes to meet its budget. It has to raise the deficit locally and through national and international borrowing; which means the introduction of several new taxes from key sectors such as agriculture, affecting many industries, including the cut flower and ornamentals industry. The increase in taxes will be on products and goods such as chemicals, fertilizers, tractors and machinery, but also on services. The recent increase in the Horticultural Crops Directorate from 10 cents per kilo of exported fresh produce to 0.25 percent of the Free on Board value has pushed this levy up to 10 times.” As a result, these taxes will negatively impact the industry. Additionally, KFC has moved to court to challenge the imposition on 1 percent Minimum Tax by the government. “The increase in taxes will constrain the expansion of our sector and we will lose investors, who will decide to go elsewhere. We are explaining to the government that it should not kill the goose that lays the eggs, but it should nurture it. We are crossing our fingers on the budget reading, coming soon, to see how taxes will further impact the industry.”
EU plant health regulations
Another challenge the Kenyan growers will be dealing with in 2021 is the tightening of the EU plant health regulations. “False Codling Moth is a pest that often occurs in roses, but also on capsicum and many other crops. The EU is currently doing 10 percent minimum checks on all Kenya's rose shipments due to the occurrence of this pest. We are worried that this may increase a couple of times if the pest continues to be detected in our produce. This will slow down the movement of the goods and extra manpower will be needed, which means extra costs for the exporters.” It is a pest many countries are dealing with, but as Kenya is the biggest exporter, we remain the main focus, he explains. KFC together with NPPO, KEPHIS and the growers and exporters are doing their utmost best to minimize the occurrence of this pest. “We are tightening the protocols and guidelines and asking growers and exporters to implement to the letter.”
Expanding markets, how’s that going?
The majority of the Kenya’s cut flowers are shipped to Europe and even though there is plenty of opportunity to expand in that continent, expanding into other continents and countries has been, and still is, an important point on KFC agenda for many years now. Over the years, Kenya entered Australia and the US, but how’s that going at the moment? According to Tulezi, there is still much to do. “We used to be one of Australia’s main suppliers of flowers, but Australia's zero pest tolerance directive that is effective since September 1, 2019, resulted in a loss of interest from many growers. We used to have 200 consignments every month and it now dropped to 70 consignments. On the positive side, due to our and the grower’s efforts, the non-compliance dropped as well, from over 80% to about 35%.
Also the supply to the US has not really took off. “In October 2018, Kenya Airways started flying flower directly from Nairobi to New York. It started with 5 flight, then scaled down to 3 freights in 2019 and dropped to zero due to the COVID-19 situation. It is still a question mark if it will go back, and at what frequency? Cut flowers are being shipped in the belly of the Kenya Airways passenger flights, about 30 tons; so, if the airline starts with one flight again, it will be a huge challenge for us to compete in the US. But we will see what the future brings.”
Positive outlook
Despite the current challenges KFC and the Kenyan growers and exporters are dealing with, Tulezi is positive. “We’ve accomplished a lot in the last number of years. We’ve made major steps and the Kenyan flower industry have become a structured industry. On top of that, recognition of Kenya as a major supplier of quality flowers has increased sharply and we have good hopes that it will continue in the future. Now, as KFC, we are doing our utmost best to continue to let this industry thrive.”
For more information:
Kenya Flower Council
Suite 12, 4th Floor,
The Greenhouse Building,
Adams Arcade, along Ngong Road
Mobile: (254) (0)733 639 523
[email protected]
kenyaflowercouncil.org