The possibility of the horticultural industry stagnating in coming years has forced Kenya to start looking for new markets. According to the Kenya Flower Council chief executive, Ms Jane Ngige, the country’s earnings and production capacity have reached a level of stability and are likely to stay there if Kenya does not scout for new markets.

“We have sort of reached a plateau and we project the sector to stabilise at this level, but there’s aggressive pursuit of new markets to push the sector higher and also to increase our competitiveness,” Ms Ngige explains.

She said that last year’s production was relatively good despite the eurozone crisis, but both earnings and volumes declined marginally compared to 2011. According to statistics from the Horticultural Crops Development Authority (HCDA), Kenya earned Sh89.87 billion from export of flowers, fruits, and vegetables last year, down from Sh91 billion realised in 2011. Of these, cut flowers accounted for more than half the export revenues at Sh64.9 billion, with rose flowers accounting for Sh39.4 billion of total revenue.

The total capacity of the three produce categories — flowers, fruits, and vegetables — dropped by 4.9 per cent to 205.7 million kilogrammes compared to 216.2 million kilogrammes reported in 2011, but volumes are projected to rise this year due to expected good rainfall. Industry stakeholders, however, say they are exploring new markets, mostly outside the traditional European zone, where the country also faces stiff competition from other producers.

According to Elgon Limited director Bimal Kantaria, the industry is eying new customers in Russia, Eastern Europe, and Dubai following strong emergence of other global producers targeting the US and Europe, Kenya’s traditional main market. Elgon Limited deals in the supply of inputs for horticultural produce. At the moment, increasing rivalry from countries like India, China, Colombia, and Ecuador has eaten into Kenya’s market share, especially in Europe, which accounts for about 90 per cent of the country’s total exports and has taken sector players back to the drawing board to come up with strategies to pursue new markets. Last year, the dip in earnings for the sector was compounded by recession in most European countries, which eroded purchasing power as the countries resorted to austerity measures to avoid sinking further into debt.

According to the National Horticulture Policy document released by the Ministry of Agriculture in June 2012, the African market also presents a good opportunity for Kenya’s horticultural products.  “In the African region (Uganda, Tanzania, Sudan, Ethiopia, Somalia, South Africa, and Egypt), Kenya was between 2006 and 2010 a marginal net importer in terms of volume but a significant net exporter in value of exports,” stated the document. Kenya’s exports to these African countries were valued at Sh30.5 billion, which is six times the value of imports of Sh4.8 billion from the region. Horticultural production for the domestic market has a fair share of challenges, with continued influx of similar products from regional markets.

Source: Hortibiz/Daily Nation