Market News

Flower earnings drop Sh9 billion


Oserian Flower Farm workers in the past. FILE PHOTO | NMG

Earnings from horticulture dropped by Sh9 billion in the nine months to September pointing to reduced annual earnings.

Figures from the Kenya National Bureau of Statistics (KNBS) show the earnings dropped from Sh115 billion in corresponding period last year to Sh105 billion.

The move implies the government will also earn less foreign exchange from the produce owing to depressed income in one of the top three foreign exchange earnings.

The cut-flower export remains the largest earner of horticulture, contributing more than 70 percent of the total fresh produce in annual earnings.

Flowers made the bulk of the earnings in 2018, bringing in Sh113 billion with fruits emerging second by raking in Sh27 billion followed by vegetables at Sh12 billion. Earnings from horticulture last year grew by 33 percent from Sh115 billion in the previous year on account of high demand and good international prices.

Total earnings hit Sh153 billion in 2018, making it number three in contribution to forex inflows after diaspora remittance (Sh272 billion) and tourism (Sh157 billion) in 2018.

The sector has in the recent months been subjected to strict phytosanitary measures as some major buyers move to enforce higher requirements before allowing exports from Kenya.

For instance, Australia this year imposed a zero tolerance on pests policy on all the produce destined to that market, a move that has seen a decline in export quantities as farmers and traders hold some of their consignment for fear of being intercepted.

The sector was also affected by the imposition of 16 percent Value Added Tax on pest control products and pending tax refunds estimated at Sh3.5 billion, which Kenya Flower Council argues has increased the cost of production, making Kenya’s produce uncompetitive in the international markets.

The government is working towards expanding the export market for the horticultural products besides the primary European markets that account for 40 percent of Kenya’s export.

The new markets to complement the traditional European market include China, and lately the US, following the commissioning of the direct flight between Kenya and the United States.