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Flower farmers see silver lining in euro crisis

FINANCIAL STANDARD
By - | Jun 26th 2012 | 2 min read
By - | June 26th 2012
FINANCIAL STANDARD

By FREDRICK OBURA

As key foreign exchange earning sectors take a beating from the Eurozone crisis that has brought some European countries on their knees, flower farmers are counting on this misfortune to increase exports.

Players in the sector, that was initially expected to see reduced earnings from Europe markets due to the crisis, said reduced travel by Europeans has resulted in increased spending on flowers.

The European sovereign debt crisis has made it difficult or impossible for some countries in the Eurozone to re-finance government debt. Greece, Italy, Portugal and Spain are some of the countries widely reported to be locked up in the financial burden.

Slight improvement
“In the first quarter of this year, our industry recorded slight improvement in earnings compared to a corresponding period last year,” said Jane Ngige, the Chief Executive Officer of the Kenya Flower Council.

“The sector is likely to further benefit from the crisis with volumes exported expected to significantly improve by the end of the year.”

“In most cases, especially when such problems occur, many cut on their holiday travel expenses,” says Ms Ngige.

“We saw it during the global financial crisis in 2008 when many cut on holidays opting to spend the little back at home. The bulk of the money was used in buying flowers,” she said.

“We expect the same situation to apply during this crisis, there is raw hope that the export will be steady throught the year,” she says in an interview.

Major exporter
Kenya is currently the major exporter to the European Union, contributing over 35 per cent of all flower sales.

The main European Union markets are Holland, United Kingdom, Germany, France, and Switzerland.
In the first quarter of this year, the sector earned Sh12.6 Billion, a slight improvement from Sh12 Billion earnings in the same period in 2011.

Fresh Produce Exporters Association says farmers should not celebrate soon as the crisis seems to be moving from one stage to the next.

“We have not seen much decline in exports since December last year, the prices are steady and volumes exported have remained the same,” says Stephen Mbithi, the Chief Executive Officer, Fresh Produce Exporters Association.

“I don’t expect much growth in the year, the crisis is ongoing and it might affect our fortune if it gets worse,” he says.

“When people start losing jobs, many will cut on luxury and this is the time when our industry will be hard hit,” he says.

Dr Mbithi says already some flower farmers have started cutting on their expansion strategies for fear of the worse from the crisis.

Watching the crisis
“The industry continues to watch the crisis cautiously with a good number already freezing on expansion.”
“Farmers are not opening up additional farms for flower cultivation, they are watching the crisis with keen interest,” he says.

 

 

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