New Europe lockdowns dim Kenya’s horticulture prospects


New Europe lockdowns dim Kenya’s horticulture prospects
FILE - Workers pack roses for Valentine’s Day, at the AAA Growers’ farm in Nyahururu, four hours’ drive north of the capital Nairobi, in Kenya, Feb. 1, 2016.

In Summary

  • This is as players in the industry expect the tightened restrictions effected to contain the COVID-19 pandemic to dampen the demand for horticulture produce.
  • The restrictions which largely featured from the second quarter of 2020 are now set to hit the industry where it hurts most as quarter one covering the period from January through March represents the industry’s highest earning season.
  • Besides the pandemic, players have highlighted a myriad of other challenges including a high cost of doing business from levies by the national and county governments along with tougher market access requirements.
 

The return of lockdowns in Europe has cast a shadow to Kenya’s horticulture earnings prospects in 2021 in spite of a resilient 2020.

This is as players in the industry expect the tightened restrictions effected to contain the COVID-19 pandemic to dampen the demand for horticulture produce.

The restrictions, which largely featured from the second quarter of 2020, are now set to hit the industry where it hurts most as quarter-one — covering the period from January through March — represents the industry’s highest earning season.

“With the lockdowns, it means we are going to see a depressed market demand especially in the first quarter which usually very significant especially for our flower exports,” said the Fresh Produce Exporters Association of Kenya Chief Executive Officer Hosea Machuki.

Countries such as the United Kingdom and Germany have re-introduced tougher restrictions since the turn of the year to trigger new disruptions to supply chains of key commodities such as fresh produce.

In spite of the disruptions, the sector defied the odds to deliver earnings ahead of expectations with the FPC announcing a five per cent growth in the value of exports across 2020 to Ksh.151.2 billion from Ksh.144.6 billion in 2019.

The earnings have come from a lower exportation of 306,607,286 kilograms of fruits, vegetables and flowers from 328,335,566 kilograms in 2019.

Nevertheless, the earnings have not translated to profits for exporters with the margins being diluted by higher costs especially from air freight charges which rose significantly under the pandemic.

“It is important to note that a huge chunk of this earnings went to logistics particularly air freight which means the exporters didn’t realize the profits they would have expected,” added Machuki.

Besides the pandemic, players have highlighted a myriad of other challenges including a high cost of doing business from levies by the national and county governments along with tougher market access requirements.

The players now want the government to lessen the burden on their backs including the temporary halt of the implementation of Horticulture Crops Regulations, 2020 which have proposed a 0.25 per cent levy on all horticulture exports on a free on board (FOB) basis.

The fresh produce exporters are however optimistic for better tidings in 2021 as they seek to grow and establish new markets including South Korea, China, Thailand and Mauritius.

“We are asking ourselves whether the horticulture sector which has performed should be punished,” stated Okisegere Ojepat, the CEO to the Fresh Produce Consortium of Kenya (FPC).

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Story By Kepha Muiruri
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