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Economy

Corona to cut farm exports by Sh150bn

Kenyan farmers are set to lose up to Sh51 billion from the decline in exports in four months of Corona restrictions
Kenyan farmers are set to lose up to Sh51 billion from the decline in exports in four months of Corona restrictions. FILE PHOTO | NMG 

Kenyan farmers are set to lose up to Sh51 billion from the decline in exports in four months of Corona restrictions, experts have predicted, worsening earnings outlook of key agricultural commodities.

Bernard Kiarie, chief executive at the African Alliance Kenya said agricultural exports (horticulture, tea and coffee) which were collectively earning Sh21.4 billion monthly last year are currently down to about 40 percent. That translates to an annualised loss of Sh150 billion.

“The situation will be dire in 2020 in case of an underwhelming production. This will result in the need for additional resources from the central government at a time when competing needs are on the rise,” Mr Kiarie said.

Low demand in the European market had already pushed the flower industry to the edge from as early as late 2019 with Finlay’s signalling closure of its two farms employing about 1,000 workers, Karuturi laying off more than 3,000 workers while Oserian Farm was to fire 400 staff.

At the moment, freight costs have shot up over the Covid-19 period to levels between Sh450 and Sh700 per kilogramme from Sh130 to 330/kg in January.

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“Although we have seen a slight pick-up in demand for horticulture in the European market, of 3,500 tonnes per week from lows of 1,300 due to the pandemic, emerging issues that include increase in freight costs and insufficient cargo capacity will be counterproductive,” Mr Kiarie said.

According to Okisegere Ojepat, the chief executive of Fresh Produce Consortium of Kenya, cargo carried in the bellies of passenger flights accounts for about 40 percent of cargo exports.

However, for the remaining 60 percent airlifted via cargo freights, where flights would carry an average of 1,400 tonnes, the volume had shrunk to about 360 tonnes a week.

The various flower auctions in Europe, which have since closed down in Covid-19 containment measures, cancelled orders, cutting Kenya’s exports.

In a note to investors, the African Alliance warned that the impact of Covid-19 could have serious implications on forex earnings from agriculture due to low demand in the above key destinations and production disruptions locally due to transportation challenges.

Agriculture is also at risk by ravages of locusts and floods that have wreaked havoc across the country. The earnings from the main agricultural exports stood at Sh256.8bn in 2019.

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