Markets & Finance

Flower exporters eye Russia market to drive up sales

flowers

Workers at a flower farm. FILE PHOTO | NMG

Kenyan flower exporters are looking at Russia to drive up sales after revenues fell significantly and output flattened out in 2012.

Data from the Horticultural Crops Development Authority (HCDA) shows that last year flower exports stood at Sh42.8 billion, a four per cent drop from Sh44.5 billion earned in 2011. This was despite output increasing marginally to 123,000 tonnes from 121,000, representing a one per cent drop over the same period.

The Kenya Flower Council (KFC), the flower industry lobby group, said that while the recent performance was decent, going forward it will be looking at expanding eastward of Europe which is seen as offering a good chance to rev up revenues, lately hit by the strengthening of the shilling against hard currencies.

“We are now the blue-eyed boys of the Russian market,” KFC chief executive Jane Ngige told the Business Daily.

KFC said that adverse weather in Colombia and Ecuador, some of Kenya’s biggest competitors, gives local exporters a free hand to sell more flowers in the traditional European market in general but in particular the relatively virgin Russian market.

“There is depressed supply due to climate change and South America has been badly affected therefore flowers from Kenya are in high demand,” said Mrs Ngige.

Russia is the sixth largest buyer of cut-flowers globally, gobbling up about $1 billion worth yearly and Kenyan exporters are already betting on the market.

The exporters are buoyed by the fact that they have comparative advantage over their South American competitors and capacity for expansion. Further, Kenyan flower exporters say that higher wages in the Latin American market besides poor weather have weakened the competitiveness of the rival.

“Kenya is becoming the main supplier for this market which was traditionally dominated by the South American countries due to proximity. Flowers from South America are more costly, forcing the country to source for supplies from other growers,” said Subati Flowers general manager Ravi Patel.

Kenya has largely concentrated on sales through the Amsterdam auction. A foray into the new market has been helped in part by the Russian and Kenyan governments.

The Ministry of Foreign Affairs and the Russian Embassy in Nairobi sent a delegation of 30 growers to the European country in August last year. This, Mrs Ngige said, helped understand the dynamics of the market such as when to sell and where to sell. For this market March 8, International Mother’s Day, is the biggest day for exporters to Moscow, bigger than Valentine’s Day.

Data from HCDA shows that overall horticulture exports in 2012 stood at Sh87.7 billion, a four per cent drop from 2011’s Sh91.6 billion. Flowers were the biggest export at Sh43 billion or 49 per cent, followed by vegetables at Sh21.5 billion (25 per cent).

(Read: Flower firms raise the alarm over dwindling growth)

Processed vegetables followed at Sh9.4 billion (11 per cent), processed fruits at Sh6.9 billion (eight per cent), fruits Sh4 billion (five per cent), and nuts Sh2.9 billion (three per cent). In 2012 horticultural earnings grew by 18 per cent to Sh91.6 billion compared to Sh77.7 billion in 2010.

Kenya supplies flowers mainly to countries in Europe that include Holland, Britain, Germany, France, and Switzerland. Dubai is also coming up as an alternative. KFC also said that it was looking at increasing sales to the US market which is dominated by Colombia.

The American market has particularly been difficult for Kenya due to lack of direct flights, meaning flowers have to pass through Europe first. Kenya is in the process of meeting conditions set by US civil aviation authorities to facilitate direct flights.

Neighbouring Ethiopia, which has aggressively invested in the flower industry, has a head-start as its national carrier already flies directly to the US.

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