2022 was a very challenging year for the Kenyan floral industry. The global inflation, exchange rate, war in Russia, and high input and freight costs are putting a lot of pressure on the sector. “But we did not stop exporting. We are hanging in there and have higher hopes for 2023”, explains Clement Tulezi, CEO of Kenya Flower Council.
Clement Tulezi, Prisca Mwangi and Lina Jamwa at the IFTF 2022.
The challenges of 2022
Without having the official export statistics yet, Tulezi can already say that 2022 has been a year that generated a lower value compared to 2021. “2021 was a much better year with good demand and better prices.” According to Tulezi, there are several factors that made 2022 such a challenging year. “First of all, the demand has been low. There is global inflation, so when people need to choose where to spend their money on. This has created uncertainty on demand, and in turn, the prices have been driven downwards. And the Russian market, for example, has been a growing market, but since the war and the EU sanctions, exports from Kenya to this country (which usually went via Europe) has come to a standstill. Additionally, growers had to deal with higher costs. The availability of fertilizers and packaging material was scarce, resulting in higher prices. This is on top of the local inflation. And still, the freight costs are high, still, almost double compared to pre-covid times.”
Growers dealing with it
In order to survive, growers are cutting costs and are cutting costs and finding ways to become more efficient so that the overhead costs are not eating their profit margins too much, Tulezi explains. Bottom-line, the industry is struggling, and the high freight rates are compounding the situation.
Higher hopes for 2023
For 2023, hopes are higher. “This year, we’ve seen that the costs of fertilizers and packaging material has gone down marginally. On top of that, due to the high energy prices in Europe, we’ve seen that the volumes from European growers decreased a bit, in turn increasing the demand for Kenyan products – we are slowly becoming a source of many other kinds of flowers than roses. And when global inflation stabilizes, demand could go up a bit. Last but not least, the new government seems to be more receptive to the sector and seems to be willing to support it. After all, the flower industry is a huge sector for the Kenyan economy with huge employment for the Kenyan population.”
Efforts KFC
Kenya Flower Council is doing its utmost best to support the industry and find ways to lower costs for growers. “We are, for example, talking with the government about boosting the industry by lowering levies that growers pay and removal of some taxes on essential goods and services for our sub-sector. I believe there is a huge potential to produce more varieties in Kenya occasioned by optimum climatical conditions and transport connectivity. And in order to ship more flowers for the upcoming holidays – Valentine’s Day and Mother’s Day – we are asking the government to allow more foreign airlines because Kenya Airways does not have additional capacity to ship products when demand increases. With more operators, there will be more space, and prices are expected to go down.” Additionally, Tulezi and his team are always looking to find new markets and expand in these markets, like the US, China, and Türkiye. But they are also investigating the options of shipping flowers over sea. (In June, during the IFTEX in Nairobi, another Flower by the Sea Conference will be organized)
For more information:
Kenya Flower Council
[email protected]
kenyaflowercouncil.org
