Flower council bets on higher export earnings

Kenya’s flower exporters target maintaining last year’s output and earnings this year as delays in tax refunds and bad weather reduce the impact of a recovery in demand.

Flowers accounted for slightly more than half of the Sh71.6 billion ($925.6 million) earned by horticulture exports last year.

Together with fruits and vegetables, the industry was the largest hard currency earner in the country last year.

"We expect to sustain last year’s performance of about 80,000 to 90,000 tonnes worth about Sh36 billion," Jane Ngige, the chief executive of the 73-member Kenya Flower Council told Reuters in an interview on Monday.

"Much as the economy is saying to us to look for more than Sh36 billion, other indicators are also saying you need to be cautious of this," she said.

Ngige said output during the first quarter of this year fell by three per cent on the same period last year due to intense cloud cover during unseasonal rains throughout the period.

She also said an unusually harsh winter in northern Europe had disrupted trade.

"Although the markets are said to be growing there has been a bit of a difficult winter. The winter has a great impact on the business in terms of people’s ability to go and buy and also the ability to distribute the products," she said.

Ngige added the Government could also help the industry by putting in place a faster tax refund system.

"We have to deal with Value Added Tax (VAT) returns, the Government really needs to help us with that so we can improve our cash flows," she said.

Treasury said late last year it would speed up payment of overdue tax rebates, but many businesses complain slow payments deprive them of funds.

She said producers were still angling for additional markets — both geographical and products — to shield the sector from fluctuations in the main markets of Netherlands and Britain.

"There is a push for more direct sales and the growers are really going for that," she said.

Britain absorbs 23 per cent of Kenyan flowers, while Netherlands buys 63 per cent," said Ngige.

The CEO said the percentage of flowers exported to Japan and Germany had increased in recent years.

—Reuters