By John Njiraini
This week, a major flower exhibition is taking place in Atlanta, US.
The 2009 Super Floral Show to be held from June 10 to12 at the Georgia World Congress Centre in Atlanta is considered a classical opportunity for players in the flower industry to showcase their produce.
Under the theme —‘See, Touch, Smell, let your business senses come alive’ — the event is crucial for any country in quest of penetrating the lucrative US market.
Hopes by flower firms to double exports to the US from the current 30 million stems to 60 million stems by end of next year have been squashed. |
"The cancellation was a disappointment because it coincided with the show and we wanted to market ourselves through Delta," Kenya Flower Council Chief (KFC) Executive, Jane Ngige told FJ.
Though Kenya hoped to send a strong delegation of 14 companies, the last minute pullout by Delta, ostensibly due to fragile security in the region, has dealt a major blow not only to the industry, but also to the country’s economy in general.
Hopes by flower firms to double exports to the US from the current 30 million stems, according to 2008 data, to 60 million stems by end of next year have been squashed.
Indeed Foreign Affairs Minister Moses Wetangula came short of terming the move an economic sabotage, instead saying it was "unacceptable".
The Delta’s inaugural flight that never was would have marked the first direct flight to Kenya in 20 years by a US airline since the downfall of Pan American World Airways (PanAm).
For players in the different economic sectors that had strategically aligned themselves to take advantage of anticipated opportunities, the suspension of the flight indefinitely amounts to dashed hopes. "This was sad news because Delta was to take us to the next level in attracting with American tourists," said Mohamed Hersi, National Chairman of Skal International, an organisation bringing together manager of hotels and lodges.
lucrative market
As floriculture and horticulture players count their loses and rue missed opportunities, the tourism sector is apprehensive that the declaration of the country as being "vulnerable" to security scares could hurt them.
Just struggling to recover from the worst year ever when revenue slumped by 20 per cent from Sh65 billion in 2007 to Sh52 billion last year, Delta’s failure to take off throws spanners into the recovery works.
"The problems in Somalia need to be sorted out because the spill-overs are affecting us," said Hersi who is also the General Manager of Whitesands Hotel.
Last year some 46,162 American tourists visited the country through Jomo Kenyatta International Airport. This number could drop as some interpret the security concerns as a travel advisory against Kenya. Small traders, particularly those dealing with exporting curios to the US and who since 2000 have been struggling to take advantage of the African Growth and Opportunity Act are also a disappointed lot.
The cost of transporting goods to the US has made it impossible for small traders to access this lucrative market despite enjoying preferential terms. With the expiry date of the Act extended to 2015, many traders hoped the entry of Delta would have opened untapped opportunities, hopes that now have been crashed.
With the US being the second most important source market for tourists after the United Kingdom, the pace at which the sector was to recover has again been slowed down owing to the abrupt cancellation of the Delta flight.
"It’s a major set back given that the direct flights were bound to boost our horticulture industry," reckons Dr Stephen Mbithi, the Chief Executive of the Fresh Produce Exporters Association of Kenya.
That the move by the US Transportation Safety Administration to force Mbithi contends that the cancellation of the planned four-weekly flights to Kenya by Delta Airlines would be costly to an economy that desperately needs stimulus packages for speedy recovery.
So far, there are fears that some exporters to the US market could fall into financial trouble, as they are now forced to renegotiate contracts with airlines deserted in favour of Delta Airlines.
Cargo transport
These exporters were using carriers that transported their cargo via Europe and Dubai and instead opted for direct flights offered by Delta, which the believed would drastically cut d own on cost and time.
A mini survey by FJ showed that a number of exporters terminated contracts with other airlines and signed new agreement with Delta. While currently it takes 30 hours to get to the US, the new service would have brought the time frame down to 12 hours.
But caught unawares by the last minute cancellation, the exporters are now forced to embark on frantic renegotiations with their former carriers to avoid losing their markets.
"For now, we have to plan as if Delta will never come back," said Mbithi.
The revised projection is particularly bad for the floriculture and horticulture sub-sectors.
For years, the local exporters have been craving to diversify their markets beyond Europe where early this year they were hit by a depreciation of UK pound against the dollar and the shilling resulting in significant decline in earnings.
Statistics by KFC indicate the US market constitutes less than five per cent of direct exports, with Holland being the main market, accounting for 65 per cent, followed by the UK at 23 per cent.
A total of 93,000 tonnes were exported last year, earning the country Sh40 billion.
Ironically, importers in Holland re-export the flowers to the US and end up making a kill at the expense of Kenyan growers.
Although local companies would wish to export directly to the US, the long distance and exorbitant costs make it impossible and the Delta Airlines connection was a dream come true for these exporters.
These exporters relied on a single market — Europe, which saw their earnings plummet when the UK pound went on a nosedive. The pound fell to a low of Sh109 in February from Sh136 in November, last year.
The situation got worse to a point where exporting vegetables like chilly was unprofitable until in April when the exchange rate favoured them.
"Delta would have been good for the diversification of our market and offered direct links," noted Mbithi.
In retrospect, this would have helped to close the balance of trade gap that is hugely tilted in favour of the US.
