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Flower sector faces collapse as Covid-19 hits main markets

Saturday March 21 2020

Clement Tulezi

Kenya Flower Council CEO Clement Tulezi briefs the press on Thursday on the impact of Covid-19 on the flower industry. PHOTO | DIANA NGILA | NATION MEDIA GROUP 

STEVE OTIENO
By STEVE OTIENO
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About a million people who directly or indirectly depend on the country’s flower industry are facing an uncertain future in the wake of the coronavirus pandemic.

With over 30,000 temporary workers already sent home and 40,000 permanent staff on annual leave, the Kenya Flower Council fears that should the pandemic not be contained, the industry would collapse.

“We have been losing Sh20 million per day due to the coronavirus outbreak. This is a very huge amount, which makes it very difficult for us to operate,” Clement Tulezi, the Kenya Flower Council CEO, said.

The industry, whose value stood at Sh120 billion in 2019, may shrink to half its value at the close of 2020 should the current situation continue for the next five-to-six weeks, according to Mr Tulezi.
He added that the likelihood of wage cuts and the laying off of a huge portion of the permanent workers is high.

VALENTINES' DAY

Poor sales during Valentine’s Day, where only half of the targeted sales were made, and the expected low demand on Mothers’ Day in May owing to the coronavirus lockdown effected in numerous countries, have already posed a big challenge to the industry.

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Europe’s total lockdown has exacerbated the situation due to the fact that most of the flower output from Kenya is exported to the continent.

“Almost the entire market has collapsed. Currently, there is no demand for flowers in Europe. And 70-75 per cent of our exports go to Europe and this has greatly disrupted the supply chain,” said Mr Tulezi.

A majority of the remaining 30 per cent of the market is catered for by the US and Asian economies such as China, United Arab Emirates and Japan.

The total lockdown announced by the US has increased pressure on the flower industry. Stakeholders are now worried over the numerous embargoes set by client states.

Cases have been reported of flower exports being shipped and destroyed as was the case in The Netherlands.

September last year saw the council initiate plans to increase exports to Russia and hopes were high that this would be accomplished this year. However, this projection has so far been curtailed.
Mr Tulezi called on the government to step in and salvage the situation before things get worse.

RESPONSIBLE

“It is time for the government to prove how responsible it is and that it cares for the businesspeople and show that it appreciates their role to the nation. It should honour the tax refunds, close to Sh9 billion that it owes us. The government should expedite the release of this money to the industry,” the chief executive said.

He added that the money would go a long way in stabilising the industry for a couple of weeks.

The Flower Council also called on the government to consider income tax relief for the workers in the industry, corporate tax, the tax charged on input and machinery as well as other levies. They also want the government to allow freight handlers to continue operations unhindered.

“The supply chain is complex. For us to inspire confidence in the market, we have to send positive messages. Though we are going through a difficult time, there is hope,” Mr Tulezi said.

Stakeholders in the industry are afraid that should the government announce a lockdown, freighters may not come to Kenya, something that will pose a big threat to their highly perishable goods.
So far, freighters transporting flowers to the markets have agreed to consolidate the goods to maintain their value.