Addis Ababa, Jan 19: Flower importers are shifting their focus to India and Ethiopia for cheaper flowers in the wake of rising cost of production in Kenya, the world’s largest horticultural exporter, the State of East African Report Series shows.
“Ethiopia could become more competitive than Kenya, while India could overtake Kenya in floriculture, if the challenges are not addressed in Kenya,” Mosses Ikiara, managing director of the Kenya Investment Authority (KenInvest), said.
Currently India’s flower exports are about a tenth of Kenya’s.
India exported flowers worth $59 million in 2011-12, a growth of 23.3 percent from the previous year, with projections showing revenues to double by 2015.
Ethiopia’s horticulture industry earned $265.71 million in 2011-12, up from $224 million the previous year, a 19 percent increase.
Data from the Horticultural Crops Development Authority (HCDA) shows that in 2012, Kenya’s flower exports stood at $503 million, a four percent drop from $523 million in 2011. Output increased marginally to 123,000 tonnes in 2012, from 121,000 tonnes the previous year.
Kenya may lose its position as the world’s largest horticultural exporter because of compliance bottlenecks and uncertainty over trade talks between the UN Economic Commission for Africa (UNECA) and the European Union (EU), the East African report shows.
Keninvest, the body charged with promoting investment in Kenya, says the horticultural sector, especially the cut flower business, which brings in the bulk of horticulture income, is facing threats, which could complicate its current standing as the world’s leading source market.
There are concerns that flower importers are shifting focus to Ethiopia and India, which have cheaper flowers than Kenya.
Flowers constituted the biggest share of horticultural revenue earning $212.56 million in 2012, up from $178.3 million in 2010-11.
During the last decade, the area involved in production of horticultural crops in India has increased by 32 percent – from 16,592 thousand hectares in 2001-02 to 21,825 thousand hectares in 2009-10 – whereas production increased by 65 percent from 145,785 thousand tonnes to 240,532 thousand tonnes.
Increase in production is more than twice the increase in area. This is indicative of improved productivity, which still has considerable scope for improvement.
Keeping in view the importance of the horticulture sector, the Indian government launched a centrally sponsored scheme called the National Horticulture Mission (NHM) in 2005-06. The objectives of the mission are to enhance horticulture production and improve nutritional security and income support to farm households and others through area-based regionally differentiated strategies.
Crops such as fruits, spices, flowers, medicinal and aromatic plants, plantation crops of cashew and cocoa are included for area expansion whereas vegetables are covered through seed production cultivation, integrated nutrient management, integrated pest management and organic farming.
With the implementation of NHM and other schemes, the production of horticultural crops has increased from 170.8 million tonnes in 2004-05 to 214.7 million tonnes in 2008-09.
The per capita availability of fruits and vegetables has increased from 391 grams per day in 2004-05 to 466 grams per day in 2008-09.
In Kenya, production costs have gone up by more than 30 percent over the past year, mainly due to labour, power, fuel, chemicals, fertilisers and other inputs. The sector currently pays 41 different taxes and levies to various government bodies including the Kenya Revenue Authority (KRA) and the Horticultural Crops Development Authority (HCDA).
(Hadra Ahmed can be contacted at firstname.lastname@example.org)