Flower rescue plan as wilting market signals mass closures

More than half of the over 200 flower exporters registered in Kenya are on the verge of closing down as the combined effect of the global financial crisis and climate change hits export markets.

On Friday, the horticultural industry held a crisis meeting that brought together the government, exporters, and input and service providers to brainstorm a collective approach to salvage the multibillion-shilling sector.

The Kenya Flower Council and the Fresh Produce Exporters Association of Kenya, the two industry lobby associations, convened the well-attended meeting under the Kenya Horticultural Council whose participants agreed they needed to work together if the industry was to last another six months.

Industry sources indicate that after a surprisingly poor Easter season, 2009 was going to be a tough year — considering that Valentine’s Day, usually the biggest sales day for flowers, turned in its worst performance in the history of the sector.

FPEAK chief executive officer Philip Mbithi said this was the most serious threat yet to the industry: “Farms are going to scale down operations for some time, at least until the crisis is over, because they are operating at 30 per cent losses.”

His counterpart at the Flower Council, Jane Ngige, was even less optimistic, disclosing that more than half of the active exporters registered with the Horticultural Crops Development Authority were likely to ship out because they could not cushion them against the crisis.

Unfortunately, these are mostly the mainly rural medium- and small-scale players who supply the summer flowers useful in preparing bouquets. Their demise would be a blow to value addition and employment, said Mrs Ngige.

At least two farms have shut down while many more who were banking on Easter will be closing in a fortnight.

And while the big exporters are still doing well and are unlikely to close shop, they are reeling under shrinking markets, reduced earnings, increasing costs of production and diminishing water supplies.

At the Friday meeting it was agreed that the industry must collectively put in place urgent cost-cutting measures because, in the event that many farms close, the surviving ones will face a more costly environment that can only be tamed by bigger numbers.

“We are looking at all possible areas where we can save money and reduce costs collectively,” said a grower and official of the Lake Naivasha Growers Association who did not wish to be named because he is not the association’s spokesperson.

Already, some exporters in the Mount Kenya and North Rift regions have joined forces to transport produce as a group to reduce costs.

And brokers along the supply chain could fall by the wayside as the industry tightens its belt.

The sector will negotiate with large importers of chemicals and fertilisers, who will deliver inputs directly to the farms at agreed rates.

“Whether the system will continue after the crisis is over is another issue but, for now, it is the only way out,” said Mrs Ngige.