Fruit, vegetable exporters feel pinch of Brexit vote

What you need to know:

The fall of the British pound and the Euro is eating into horticulture margins for exporters.
Kenya ships horticultural exports of about 300 to 400 tonnes a day to both EU and UK, according to Kenya Flower Council’s estimations.

Kenyan fruit and vegetable exporters to the British and European markets are feeling the pinch of currency losses following the Brexit vote.

Kenya Flower Council (KFC) chief executive Jane Ngige said the fall of the British pound and the Euro is eating into horticulture margins for exporters.

This comes even when there has been no change in input prices which are dollar-denominated. The shilling has remained stable against the dollar in the past few months.

“As you have noticed, the value of the pound has been eroded and that means it is affecting our returns particularly where there has been no effort to hedge currencies. We are feeling the most impact in the fruit and vegetable businesses. The euro has also depreciated even though not as much as the pound,” Ms Ngige said.

After the Brexit vote the pound hit 31-year fall by more than 10 per cent. However, the pound rose by more than one per cent against the dollar this week following the appointment of Theresa May as Prime Minister.

Ms Ngige said the council is yet to quantify the exact losses from the currency slump.

Kenya ships horticultural exports of about 300 to 400 tonnes a day to both EU and UK, according to Kenya Flower Council’s estimations.

The Fresh Produce Exporters Association of Kenya chairman Dipesh Devra was, however, quoted by Bloomberg News agency early this week as saying that the members are losing Sh8 million a day due to currency-related losses affecting the horticulture industry.

“We still have not been able to get enough figures from the exporters; right now I think they are very busy trying to find a way around the problem but we can share them at some point later,” she said. She however said the industry was concerned that beyond the currency losses, the export market could be hit by an economic slump in the UK and Europe.

“It is yet to affect volumes but there are some concerns that if we have to charge more, and we are not competitive then demand will go down,” she said.

The Kenya National Bureau of Statistics puts the country’s estimated value of exports in cut flowers, green beans, and mangoes at Sh90.4 billion in 2015.

Ms Ngige said that some businesses had, however, hedged against the currency.