- Industry will be 'doing OK' if it matches 2014 shipments
- Weaker shilling resulting in higher dollar-based costs
Kenya’s flower exports may stall this year as wet weather curbs production and costs increase because of the weakening shilling, the Kenya Flower Council said.
Shipments totaled 54.6 billion shillings ($519 million) in 2014 and the industry will be “doing OK” if that level is matched this year, Jane Ngige, the council’s chief executive officer, said in an interview Sept. 11. Kenya supplies about 38 percent of the cut flowers sold in Europe, according to the council. Horticulture exports generated $928 million last year, one of the East African country’s biggest foreign-exchange earners alongside tea and tourism revenue, Kenya National Bureau of Statistics data shows.
“The first half of 2015 has been a difficult year,” Ngige said. “The weather has been strange. We are yet to see what that has done to the volumes.”
While most of Kenya’s flowers are grown in greenhouses or under nets that protect the crop from heavy rains, wetter weather can make the flowers more susceptible to diseases, Ngige said. The industry is bracing for the onset of the El Nino weather phenomenon, which the Kenya Meteorological Department says will probably bring “above-average” rainfall to the country in the fourth quarter.
“El Nino is likely going to affect production” by damaging infrastructure or leading to diseases associated with increased moisture, Ngige said.
Kenya and other producers such as Colombia and Ecuador boosted exports in recent years because of their ability to achieve large-scale production of “good-quality” flowers at competitive prices, according to Rabobank. That’s reduced the dominance of the Netherlands, the world’s biggest cut-flower exporter, whose market share dropped to 52 percent in 2013 from 58 percent a decade earlier, it said in a January report. Total global exports of flowers more than doubled to $21.1 billion in 2013, from $8.5 billion in 2001, the lender said.
The Kenyan shilling’s drop against the dollar has weighed on the Kenyan flower industry, Ngige said. The currency has weakened 14 percent against the dollar in the year to date.
“All our procurements except the wage bill are done in dollars,” Ngige said. The shilling’s depreciation “translates to very difficult news.”
Kenya is also facing increased competition in the region from Ethiopia, which has become Africa’s second-biggest flower exporter, after Kenya, Ngige said.
“They are doing very well, they are learning a lot of lessons from Kenya,” Ngige said. “Where Kenya is today, the years of investments in terms of knowledge, marketing prowess, it’s hard to dislodge” Kenya’s market share.
The shilling was down 0.2 percent at 105.66 per dollar by 1:28 p.m. in the capital, Nairobi, on Tuesday.