Flower output has stagnated in the past four years as producers grow anxious over a weakened global economy and failure to conclude talks on trade pacts with Europe and East Africa started six years ago, the Kenya Flower Council has said.
The lobby said that production of flowers had flattened since 2010, hurting the prospects of an industry that remains one of Kenya’s leading foreign exchange earners.
“In the last four years, the industry has experienced less than two per cent growth compared with 10 per cent in the 1990s with the annual export of cut flowers sitting at a close to around 120,000 tonnes,” chief executive Jane Ngige said.
The growers said that the inconclusive trade talks have affected planning with most of them cutting back on investments. The pacts are expected to replace the current preferential trade deals that the World Trade Organisation (WTO) had rejected. Kenya is particularly under pressure to sign Economic Partnership Agreements (EPAs) with Europe or risk massive disruptions to the economy.
The five East African Community (EAC) member states signed an interim trade deal with Europe in 2007 to guarantee duty and quota-free access to EU market after the expiry of the non-reciprocal trading arrangement based on a WTO waiver granted in 2001.
But years later they are yet to agree on a new trade platform with several self-set deadlines to conclude the negotiations being breached due to a lack of consensus.
Should Kenya miss out on the EPAs, its trade with Europe would revert to the less generous terms under the General System of Preference where some of its products which it has been exporting to the market at zero duty attracting charges between 8.5 and 15.7 per cent.
Other EAC members could, however, still find a lifeline under Everything But Arms initiative, which covers least developed countries. Kenya is not in this category.
Technocrats in East Africa claim Europe is partly to blame for delayed conclusion of EPA talks after it introduced issues such good governance in tax areas.
The EU, however, denies the claims and has since threatened to terminate the interim offer signed in 2007 — a move that would deny the preferential market access terms to countries that shall have not signed full EPAs with it by January 2014.
KFC chairman Richard Fox said that an economic downturn in the EU posed a threat to the Kenyan flower industry.
“It is encouraging that the sales in terms of tonnes have not fallen significantly since 2008 when the recession commenced but as we have experienced, prices have flat lined at best against the rising cost of production,” he said.
Mr Fox urged the government to step-up its lobbying for a review of favourable trading protocol with other key markets such as Russia and other Eastern European Countries and launching of direct flights to the US.