A farmer tends his passion fruit bushes at Perkerra irrigation scheme in Marigat, Baringo Central District. Exports of the fruit to the EU declined in the first quarter. Photo/File
Quarter one vegetables sales in the European market dropped after a ban on a pesticide said to cause cancer took its toll on exports.
European Union bureaucrats have rejected French beans and passion fruits from Kenya, saying they had exceeded the set 0.02 parts per million limit allowed in production using dimethoate.
“There was a 26 per cent reduction in the volumes of vegetables produced because of the standards. A dry spell preceding the current rains also affected volumes,” said Stephen Mbithi, the CEO of Fresh Producers and Exporters Association of Kenya (FPEAK), the umbrella body for small and medium-sized producers.
The situation was made worse by deteriorating economic conditions in the eurozone.
In January, the Agriculture Ministry effected a voluntary ban on the chemical after the EU, which accounts for up to 80 per cent of fruit and vegetable sales and 42 per cent of flowers linked its excessive use to cancer.
The chemical is popular with small growers. The ministry and other government departments have not provided alternatives to the chemical.
Fresh produce accounts for only five per cent of export volumes but 30 per cent of revenues meaning the medium-term impact could be profound.
“Fresh produce grew 17 per cent in value but there was a six per cent drop in tonnage because of the drought and rejection at the key markets because of falling standards due to continued use of the banned chemical substance,” said Dr Mbithi.
Overall, sale of 381,000 tonnes of fruits, vegetables and flowers realised Sh91.3 billion in 2011, a 17 per cent increase to become Kenya’s second highest income earner after tea which generated Sh109 billion.
Flowers generated Sh44 billion, on the back of a 14 per cent increase in volume and 30 per cent increase in price, buoyed by a weak shilling.
“Fruits also grew at nine per cent to bring in Sh10.2 billion. The small processed canned fruits recorded a seven per cent growth in volumes. Macadamia nuts was higher at 10 per cent,” added Dr Mbithi.
In April, the shilling stabilised at a mean rate of 83.19 compared to 82.8 in March and 83.17 in February.
In March, the shilling stabilised at a mean rate of 82.8 to the dollar, a slight reduction from February’s average of 83.17.
“We made more money due to higher price per unit kilogramme. The market prices were up,” said Dr Mbithi.
But with reports of zero growth in the eurozone economy in the first quarter, an improved performance from a 0.3 per cent contraction in the final quarter of 2011 is sending mixed signals.
“Europe is in a recession and people are not buying our flowers. The demand for flowers is lower and traditional buyers opt for more basic items. Demand for exports has softened,” said macroeconomist Mbui Wagacha.
Economists at CitiGroup London say the euro zone is not likely to recover any time soon, with unemployment levels reaching 10 per cent as contraction in manufacturing and companies freeze plans to invest.
Industry’s sales are pegged on sterling pound or the euro while input costs are based in dollars. Exporters say a mean rate of 83/85 or higher is good to meet rising labour and other domestic costs.
This means that relative stability of the shilling during the first quarter and the summer conditions in Europe and wet weather coupled with market diversification to Russia and Japan could boost the sector’s fortunes especially with increased flower sales.
