Kenya’s top export earners fail to rake in enough cash
A flower farm in Kenya. Kenya’s major export crop was hit by a tax imposed by the European Union. PHOTO | FILE
What you need to know:
Kenya's export earnings from top cash crops plummeted last year as the country’s currency continued to perform dismally against the dollar.
Kenya also lost its number one position as the world’s largest horticulture exporter to Europe due to tougher food safety measures and its high cost of production, which saw flower importers looking to India and Ethiopia for cheaper flowers.
Kenya's export earnings from top cash crops plummeted last year as the country’s currency continued to perform dismally against the dollar.
The drop in the performance of top foreign exchange earners was blamed on erratic weather patterns and suppressed external demand, which led to reduced exports especially in horticulture.
Kenya had projected a 10 per cent drop in earnings from its flower exports in 2014 attributed to the European Union’s decision to impose an 8.5 per cent tax on the exports pending its reinstatement on the list of those eligible for duty-free access to the EU market.
Kenya also lost its number one position as the world’s largest horticulture exporter to Europe due to tougher food safety measures and its high cost of production, which saw flower importers looking to India and Ethiopia for cheaper flowers. The European market accounts for 40 per cent of Kenya’s horticulture exports.
“The drop in horticultural earnings has significantly slashed farmers’ incomes and put thousands of jobs on the line. The stalemate with the European Union contributed to the drop in trading volumes in the horticultural sector, we now hope that with the signing of the agreement that the tariffs will be eased,” said CEO Kenya Flower Council, Jane Ngige.
“We lobbied tirelessly for the reinstatement of Kenya to Market Access Regulation and we believe that in 2015, the industry will now enjoy a timely reinstatement even as exporters warm-up for Valentine’s Day 2015, the flower industry’s peak season,” Ms Ngige added.
In 2015, the industry will be looking at growth and expansion. “We can now concentrate on production; with the reduction in fuel prices, we expect our cost of production to come down, especially on air and road transportation, which we rely on to reach our markets,” Ms Ngige said.
“This year, we also expect the government to complete the northern and southern bypasses that will ensure easy access to the airport, which will make our product delivery timely and efficient. It will be a big plus for the industry.”
Only coffee saw an improvement in 2014 with earnings from exports rising 17 per cent to $254.2 million due to improved production and higher prices, earning the farmers an average of $212 per 50kg bag.
At the close of the 2013 coffee year, the total coffee sold both directly and at the auction was 41,876 metric tons which earned farmers $145 million at an average price of $176 per 50 kilogramme bag.
“We managed to secure four new export markets in the 2013/14 season. Besides our traditional European and USA markets, we expanded to Turkey, Bulgaria, Seychelles and Zambia. We expect to produce 45,000 tonnes of coffee in 2014/15, fetching $150 million from an estimated average price of $200 per bag,” the Coffee Board of Kenya said in a statement.
Tea prices have been under pressure globally as other countries have increased output and exports. Top grade Kenyan tea, which fetched a maximum price of $4.45 per kg in 2013, was fetching an average of $3.40 as at December 2014.
Data from the Kenya National Bureau of Statistics showed that as at May last year, earnings from tea had dropped 17.6 per cent to $421.2 million while those from horticulture fell from $393.6 million to $383.6 million.
In 2014, fruit exports grew by 38.7 per cent in value compared with the same period in 2013 to rake in $46.2 million. Vegetable farmers experienced a 10 per cent decline in sales, with the tonnage dropping from 57,000to 51,351 as the EU implemented tough standards.
Fresh Produce Exporters Association chief executive Stephen Mbithi said the outlook for the industry in 2015 is positive especially after the EU agreement.
“We are looking at a favourable weather forecast that should see us maximise on production. The reduction in fuel prices is also positive for us because it will greatly reduce transportation costs. Our members have also familiarised themselves with the EU regulations, so we don’t expect a lot of penalties and issues this year,” Mr Mbithi said.
