Kenya's flower industry under pressure

By Mapitsi Phukubje, Johannesburg Bureau, AND,  http://business.andnetwork.com

Kenya’s flower industry is for the first time in 30 years experiencing a 15% decline in profits.

The country's Horticultural Crops Development Authority released figures stating that the flower export earnings dropped from $297.2 million to $243.2 million by July this year.

It is also expected that more losses are anticipated following an unusual long warm summer in Europe, which will affect export, reported The East African.

According to The East African, the drop in profits is largely attributed to a strong shilling and the severe drought that hit the country earlier in the year.

Flower exporters have urged the government to intervene in stabilizing the shilling to cushion exporters against foreign exchange swings.

The Central Bank of Kenya has, however, maintained that the shilling's value will be determined by market forces.

Another major factor weakening the industry is a threat from Ethiopian flower sector.

Most farmers from Kenya have relocated to Ethiopia on the grounds that it provides favourable economic terms and better infrastructure.

A leading flower producer, Sher Agencies is one of the companies that invested in land in the horn of Africa. The company’s human resources manager said his company has developed a 300 hectares farm, which the biggest in Ethiopia.

Homegrown, a leading exporter also expressed the concern that Kenya is losing markets to countries with cheaper production costs which include Morocco, Tunisia, Senegal, Zambia and Malawi.

Kenya is the leading producer of cut flowers to the European Union, supplying 31% of the total export to the market.

The minister of trade and industry, Mukhisha Kituyi, told local media that the flower industry is expanding at a rate of 200 hectares a year and it is the largest foreign-exchange earner in the country after tourism and tea.