KENYA: New markets sought for its growing horticulture industry

Record ID: 362340

  • Title: KENYA: New markets sought for its growing horticulture industry
  • Date: 30th August 2012
  • Summary: NAIVASHA, KENYA (FILE) (REUTERS) VARIOUS OF WORKERS CUTTING ROSES ROSES BEING PACKED LABORERS SORTING ROSES IN COLD ROOM STACKS OF ROSES PACKED READY FOR EXPORT
  • Embargoed: 14th September 2012 13:00
  • Keywords:
  • Location: Kenya
  • Country: Kenya
  • Topics: Business,Industry
  • Reuters ID: LVACE0DRM7JY61RO5MK8OH1H66PE
  • Story Text: Kenya's horticulture exports to fast-growing China are expected to overtake Europe as the leading market for the country's fruits, vegetables and flowers in the next 10 years, a senior industry official said on Wednesday (August 29).
    Stephen Mbithi, the chief executive of the Fresh Produce Exporters Association of Kenya said the industry which is one of the country's leading sources of foreign exchange, alongside tea exports and tourism says the industry is expected to record increased profits this year, thanks to above-normal rainfall.
    Last year horticulture brought in about 1.09 billion USD.
    "The overall performance of the horticultural sector in Kenya; flowers, fruits and vegetables looks good. We think that we should be looking at another 10 percent or thereabout growth. Starting with flowers we think that we should be able to hold ground from last year. There could be some marginal growth but obviously given the economic situation in Europe if it goes down by about five percent that could also be within our expectations," said Mbithi.
    The country produced 380,000 tonnes of fresh produce in 2011 but this year, Europe's woes could harm flower export earnings to that region, while a stronger local currency would also weigh.
    The Kenyan shilling has gained 1.2 percent this year due to a series of central bank hikes in the key lending rate after the currency lost 25 percent of its value to an all-time low of 107 per dollar, boosting incomes of exporters in 2011.
    "Some fundamentals have been working very well for us; one our proximity to a reasonably good market to Europe and number two the fact that Europe has been doing well for a long time. Obviously things are changing in Europe now with the Euro situation and therefore increasingly we remain concerned that maybe our main traditional market if there was a bigger impact of the Eurozone crisis then there could be a possibility that the markets are reacting in a way that is not so positive," said Mbithi.
    Kenya has actively pursued China, the world's second biggest economy for new markets for its exports including tea, while its tourism sector has targeted the Asian economic giant's cash-flush middle class to offset the downturn in visitors from its traditional market Europe, suffering from financial woes.
    Kenya exports only 2 percent of its total horticulture produce to China, but Mbithi says this could rise above the shipments of 82 percent of fresh produce to Europe in ten years.
    "We want to sell more into east Europe, Russia, Czech Republic, Poland are increasingly looking very important to us. Certainly the Russian market is growing and we are very happy with that and we are also looking East. We really want to get into China; yes China is far and you can argue that it is as far as US or even further but the advantage with China is you can sell much more," added Mbithi.
    Mbithi said the strategy for growing Kenya's market share in the Asian nation was mass production and use of sea freight.
    But east Africa's biggest economy's poor port infrastructure at the Indian Ocean port of Mombasa stands as the biggest challenge to horticulture exports to the Far East nation currently, due to the lack of cold rooms that would help preserve the perishable products.
    Mbithi, says for now, the country is relying on air freight, a more costly way to ship the produce.
    Air freight charges account for 40 percent of export costs.
    Kenya is constructing a second port of 32 berths in Lamu, north of Mombasa, at a cost of $23 billion, which is expected to incorporate fresh produce handling bays. The first phase of this port is expected to be complete by 2015.
    Mbithi saw short-term gains from the on-going drought in the United States and Russia that has seen grain prices soar, due to supply constrains.
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