Address bottlenecks stifling flower industry

Friday June 17 2016

Elgon Kenya Limited Director Bimal Kantaria during a past Farmers Award.

Elgon Kenya Limited Director Bimal Kantaria during a past Farmers Award. According to Mr Kantaria, The flower industry supports an estimated two million people through direct and indirect employment and last year earned the country some Sh56 billion in foreign exchange. PHOTO | ROBERT NGUGI | NATION MEDIA GROUP 

By BIMAL KANTARIA
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Last week, the global flower fraternity gathered in Nairobi for the annual International Flower Trade Show.

The three-day showcase of arguably the world’s best flowers attracted buyers of the multi-billion-shilling produce from all continents to Kenya where growers had staged a magnificent mix of all types, colours and sizes.

When one looks at a stem or a bouquet of flowers, few think about the process that delivers a two-week shelf-life product to a house in China. In industry circles, this is called the value chain, from farm to the shelf.

The flower industry supports an estimated two million people through direct and indirect employment and last year earned the country some Sh56 billion in foreign exchange.

Investment into the sector is estimated at more than Sh100 billion. The organiser of the expo, Dick Raamsdonk of HPP Netherlands, said Kenya is in a class of its own in the flower business and that the Nairobi version of the international flower shows is headed to becoming the biggest globally.

The beauty of the flowers at the show, the diversity of produce and visitors from all over the world, the foreign exchange earnings and the billions of investments are indicative of a rosy sector. Until you speak with the players and the mood changes.

The Kenya Flower Council reports a growing anxiety by growers as the cost of business erodes profit margins.

Other flower growing countries have waged a trade war with Kenya to break our dominance in a market that has ‘matured’ in terms of supplies leaving little room for expansion at producer level.

Ethiopia naturally comes to mind when competition is mentioned in this industry considering the neighbouring country’s government has taken a deliberate policy to support its flower growers to develop its industry.

While Addis Ababa is supporting its growers, our producers are lamenting lack of adequate state propping as seen in the multiple taxes paid to the national and county governments and delays in VAT refunds.

PLATFORM SUPPORTIVE OF THE FLOWER SECTOR

A number of growers say the business is no longer a profitable undertaking under the current business cost regime requiring urgent measures to cushion producers against unhealthy competition from countries with less costly systems.

The crunch in credit has made it difficult for the value chain to operate smoothly given that the sector is a heavy capital consumer whose success depends on speedy and timely delivery of the required products and services due to the seasonality and timeliness of the end product that is perishable by nature.

Under the prevailing circumstances, it is important the private sector and government agree on a platform that is supportive of a sector that gives Kenya national pride as was seen at the just ended flower show.

It is said that Kenya is where Netherlands was 20 years ago, and if we are not careful, we could be where Netherlands is now (no longer a major producer) in 20 years and Ethiopia will be where Kenya is today – a major producer.

But we still have every reason to celebrate the industry. The flower industry has come of age, in a 30-year journey that has seen it now take pole position in major markets globally.

It has been a long, sometimes trying journey but it has birthed the brand Kenya flower, a flower that competes globally on grounds of quality; a flower responsibly grown.

The Economic Partnership Agreement (EPA), between the European Union and East African Community member states, which defines terms of trade since 1975 is up for signing by August 1.

Should it not sail through, Kenyan flowers and by extension the horticultural produce would be slapped with taxes that would make it hard to access the 28-member state union.

For a country that prides itself in having horticulture as one of the largest foreign exchange earners and job creators, it matters that we get the EPAs signed and ratified. Industry players have expressed interest that there is political will power among the East African member states to beat the deadline, we look forward with bated breath, because having put systems and processes in the industry in place the future of the country is rosy.

The writer is the managing director, Elgon Kenya