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February 28, 2011

Kenyan flower industry yet to fully recover from 2010 disruptions

by Suleiman Mabatiah

Kenya’s flower exporters are cautiously optimistic that the prospects for their industry will improve during 2011 after disaster struck in the form of volcanic ash and adverse winter weather conditions in 2010. But prices will be lower as the global economic recession still weighs heavily on their primary market, the European Union.

In 2010, the industry faced enormous challenges. Volcanic ash in April and bad winter weather in December depressed cut flower sales by 15 percent, compared to 2009.

Kenya is globally the main exporter of cut flowers to the European market and the third largest exporter worldwide after the Netherlands and Columbia. The East African country is also the leading cut flower exporter among African developing countries. According to the Kenya Flower Council, 65 percent of exported flowers are sold through Dutch auctions, although direct sales are growing.

The council highlights that the industry has recorded strong growth in volume and value of cut flowers exported every year; 10,946 tons in 1988 compared to 86,480 tons in 2006 and 117,713 tons in 2009. The industry provides between 50,000 to 60,000 livelihoods directly and over 500,000 indirectly.

Statistics from the council show that the Kenyan flower industry suffered losses of 1.5 to two million dollars a day when 400-500 tons of cut flowers could not reach the market in 2010. Some 500 workers were laid off.

The industry has reportedly been optimistic that 2011 holds the potential for recovery. But Kenya Flower Council chief executive Jane Ngige is aware that the continuing economic woes in its key market could, just like the weather, affect the industry’s performance in 2011.

"When the ability of consumers to buy is curtailed, it certainly bruises the industry," Ngige acknowledged. "Reduced returns will translate into loss of revenue and, of course, jobs. Hopefully this will not be the case."
Demand for luxury goods such as flowers declined in Europe when the global economic and financial crisis first bit at the beginning of 2008, causing flower prices to immediately drop by between 15-30 percent.

Julius Riungu, farm manager at Timaflor, said that the industry expects prices to drop further this year. The company has increased the acreage planted with flowers to counter the possible fall in prices.

The farm has a total workforce of 1,060 people, of whom 60 percent are men and 40 percent women. "If workers have to be sent home due to the recession, flowers could become bushes, worsening the situation," he said at the farm.

Timaflor trains its workers to form savings and credit cooperatives to save money.

Susan Makena joined the farm in Oct 2010 and is assigned to flower pruning. "I left the hotel industry for the flowers. The money earned has enabled me to help my extended family that is poor. I also use the cash to pay school fees for my children," she said, adding that dismissal would mean "death" to her.

For Martin Dyer, general manager at Kisima Farm, the previous year’s calamities in the euro zone were a blessing, competitively. "We were lucky that we were able to take our flowers to Europe in time as we used other routes to get there. The prices had increased by then, due to the supply problems," Dyer explained.

With his farm’s high quality, "big head" roses, he hopes to weather the continuing effects of the recession: "The small heads flood the market. Price- conscious customers should go for the best: the big heads."

Not all workers are equally happy. Cecilia Wanjiku, who has four children, complained that the earnings at Kisima Farm are not enough to meet all her needs but she has no other option as work is scarce.

"Instead of being idle, I opted for casual work at the flower farms. Idleness leads to vices such as stealing to earn a living," she said during a lunch break at the farm. She and the other workers clock five to eight hours a day. Most women interviewed said they use their earnings to pay school fees and buy food.

Dyer is optimistic that no job cuts will be required at Kisima Farm. 

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