Kenya’s global market share of horticulture on the decline

Kenya has lost a chunk of its global market share in horticulture in the last five years, a new study shows.

Despite a jump in exports of fruits and vegetables from 100,000 tonnes in 1997 to 350,000 tonnes in 2013, Kenya’s global market share fell to 1.23 per cent last year. In 2008, its global market share was 1.28 per cent, notes Global Competitiveness Study by USAID and the financial transactions and reports analysis centre of Canada released this week.

Over-reliance on tea and flower exports as well as poor export value per hectare are to blame for the contraction, the report notes.

“Kenyan exporters tend to heavily rely on two or three markets, implying need for diversification,” it says.

Out of the $355 million (about Sh33 billion) worth of horticulture Kenya exported last year, $255 million of it went to the European Union.

Over-reliance on Europe

The report ranks Kenya as the largest African horticulture exporter to the EU with a 16 per cent market share. However Ghana, South Africa and Egypt export more to the Middle East, signifying Kenya’s over-reliance on Europe.

Interestingly, despite Kenya being ranked as the largest horticulture exporter in sub-Saharan Africa, arid countries in the North and the Middle East not only export more per capita but beats Kenya in terms of export value per hectare.

Produce per capita

Take Israel for instance. In 2012, the desert country, the size of Tsavo National Park, exported $559 worth of horticulture per capita. Egypt and Morocco, both arid countries, exported goods valued at $132 and $69 per capita respectively while Kenya shipped just $8 worth of produce per capita.

Overall, potatoes, mangoes, avocados and fresh peas exports have been growing steadily in the last 10 years due rising demand in Europe and Gulf markets.

French beans, passion fruits and onion exports fell due to competition from Latin America as well as unreliable supply locally.

“Despite a huge potential in avocado and passion fruit exports especially in Europe where the crop does not grow due to weather patterns, production of these crops is led by small holders whose scale of production cannot benefit the value chain,” notes the report.

“Although there is a capacity to produce all-year-round, production of passion fruits has been tied to the rainy season leading to premature harvesting in order to meet demand which is hurting Kenya’s prospects.”

Cost of inputs

The survey also found that compared to its rivals, the cost of farm inputs in Kenya is high while funds spent on agriculture are less than half that of regional competitors. In addition, local farmers get the lowest credit from banks compared to their counterparts in the region.

“Only six per cent of commercial banks in Kenya are lending to the agricultural sector, which is the lowest in the region.”

“The cost of crop production is also relatively high and despite the strength of the private seed sector, seed availability remains a problem in Kenya with most farmers getting seed through export companies who have exclusive contracts with seed companies.”

The report adds that Kenyans use far less fertiliser than the global benchmarks while crop protection chemicals in the country are over three times the cost in Tanzania and twice the cost in Peru in South America.

To succeed, Kenya needs to work on branding and co-ordinate farmers to comply with export market requirements, director for the study, Mr Ian Chesterman, told Smart Company. “There is huge problem in Kenya’s marketing strategy when one of your signature export crops is called French beans.”

“There are no promotional strategies of Kenya as a brand in the global horticulture market and farmers rely on the existing distribution channels, which are not enough and interestingly none of the produce is marketed as uniquely Kenyan.”

Mr Chesterman cited transport costs and time taken by Kenyan products to reach the market as other key challenges.

“It costs as much to transport a container from Nairobi to Mombasa as from Mombasa to Rotterdam,” he noted.

“Because of this, many farmers rely on air transport, which is expensive and you cannot compete in the fruit produce export market, for example, unless you use sea freight. But getting a container to Mombasa is painfully slow and expensive,” he said.

Growing demand

However, the report projected export market potential based on growing demand in 50 major countries in Europe, North America, Asia and the Middle East that Kenyan farmers could exploit.

High value crops required in these areas include potatoes, onions, French beans, mangoes, avocado, passion fruits and fresh beans.

In order to reach these markets, smallholder farmers have been advised to form Saccos and cooperatives.