Global crisis hurting Kenya exports

January 26, 2009
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, NAIROBI, Kenya, Jan 26 – Over 70 percent of Kenya’s horticultural produce meant for export is being sold in the local market due to the reduced purchasing power of many Europeans.

Fresh Produce Exporters Association of Kenya Chairman Hasit Shah said on Monday that Europe, which is the largest destination of Kenya’s cut flowers, has been hard hit by the on going global financial crisis which translates to reduced export volumes.

“We are being forced to sell most of our flowers in the local market. This is because the credit crunch has really affected our (European) customers who can no longer afford to buy them,” he explained.

Mr Shah also added that although the sale of fruits and vegetables was booming, the depreciating shilling against major world currencies was hurting the growers.

“The market for vegetables is excellent but the downside is that the exchange rates are completely working against us. The Pound and the Euro have collapsed yet the cost of inputs has not come down yet,” he complained.

Mr Shah’s admission that Kenya’s cut flowers were not doing too well in the international market is in contradiction with the Kenya Flower Council (KFC)’s view that the local horticulture industry would not be negatively affected by the crisis.

In December last year, the Council’s Chief Executive Officer Jane Ngige argued that although the economic recession had affected the purchasing power of many developed economies particularly America and Europe, people were still spending on such commodities as flowers.

“Flowers are emotive; they give a ‘feel-good’ feeling especially at a time when Europeans and Americans are facing a hard time due to the economic downturn,” she told Capital Business in an interview in December.

The recession now threatens the jobs of over two million people who are employed in the sector, which fetched the country Sh70 billion in 2007 after exporting 403,000 metric tonnes of horticultural produce.

Mr Shah spoke during the ground breaking ceremony for the construction of a European Commission funded laboratory at Kenya Plant Health Inspectorate Service (KEPHIS) Headquarters, which will enable it (the Inspectorate) to check Kenya’s horticultural products comply with the EU sanitary and phyto-sanitary requirements.

Head of the European Commission Delegation to Kenya Eric Van Der Linden said the Sh330 million complex would further enhance Kenya’s competitive edge in horticulture produce through more accurate testing results.

“Once KEPHIS certification for the export consignment is obtained, the exporter no longer bears delays through inspection requirements and fees at the port of entry into the EU,” he observed.

The construction of the complex is part of the EC’s funded Horticultural Produce Phytosanitary Certification and Quality Assurance (HORTICAP) project which was launched 2007.

Under the program, the EC is also supporting KEPHIS’s ambition to increasingly reach out to smallholders to ensure they access the lucrative export market.

Currently, smallholder production accounts of 80 percent of fruit and vegetable exports and about four percent of flower exports.

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