Kenya’s flower growers were hoping the new direct Nairobi–New York service would help them break into the United States market, but the route has not been structured to carry enough cargo to make that happen.
The report shows that Kenya Airways launched the flights in October and chose to prioritise passengers, leaving only five tonnes for cargo. That has frustrated exporters who had seen the route as a possible alternative to heavy dependence on Europe.
The Kenya Flower Council says the US market is not yet attractive enough for the sector. Its chief executive, Clement Tulezi, said: “There is nothing for Kenya in the US market for now.” He added that even a dedicated cargo service would face a return-leg problem because Kenya imports from the US are mostly bulk machinery, cereals and aircraft that are shipped in.
Most of the available cargo space has already been taken by Export Process Zones-based textile and apparel manufacturers, which remain Kenya’s main exports to the US under the Africa Growth and Opportunity Act.
Kenya still earns less than $10 million a year from the US flower market, according to the report, giving it less than one per cent of that market. Colombia controls about 70 per cent, while Ecuador holds around 20 per cent, helped by proximity.
At home, the industry is under pressure from several fronts. These include a fertiliser importation crisis, higher input taxes, delays in tax refunds, strict phytosanitary rules in the European Union, new fumigation demands from Australia, and growing competition from Ethiopia, Rwanda, Uganda and Tanzania.
Nehemiah Chepkwony, the interim head of the Horticulture Crops Directorate, said Kenya is still trying to protect its core markets while looking for new ones in Asia. “Although Kenya cannot continue depending on the EU for sustainability, we are protecting our key markets and seeking new ones in Asia,” he said.
The sector exported 450,000 tonnes of cut flowers in 2017, with the EU accounting for 66 per cent of the market. Other important destinations include Japan, Australia and China, while exporters are also pushing into Russia, Turkey, South Korea and India.
China is a particular focus after President Uhuru Kenyatta signed a horticulture export deal with President Xi Jinping during the China International Import Expo. Kenya currently sends about 4,000 tonnes of flowers to China each year.
Export earnings have remained strong despite the strain. Last year, the country made $796 million from flower exports, up 12 per cent from $687.4 million the previous year. In the first eight months of this year, the sector brought in $746.6 million, compared with $539.8 million in the same period in 2017, according to Kenya National Bureau of Statistics data.
Even so, the industry says the gains are fragile. About 65 per cent of Kenya’s flowers are sold through the Netherlands, the world’s largest flower auction, where the products lose their identity and are branded by buyers rather than producers. Kenya wants direct sales to rise from 35 per cent to 50 per cent so that the Kenyan flower brand is more visible.
Land under flower cultivation has grown to about 4,000 hectares from 3,000 hectares in recent years, but growers say the expansion is being overshadowed by policy and cost pressures. Mr Tulezi warned that “the long term survival of the industry is at stake because we have a feeling the government does not care about the industry but only cares about the taxes it generates.”
He said 60 per cent of sales come during Christmas and Valentine Day in February, but the shortage of soluble fertiliser could leave farms short of volumes for those peak seasons.
The Kenya Bureau of Standards has introduced 100 per cent inspection of all soluble fertiliser shipments entering the country as part of the fight against counterfeits. Industry players say the global norm is pre-shipment inspection, not full inspection at the port. Mr Chepkwony acknowledged the problem, saying: “Flower farming depends on specialised fertiliser and the decision by Kebs is affecting the industry badly. We are working on resolving it.”
The report says Kebs does not have the internal capacity to inspect the volume of shipments, leaving imports that arrived at the port of Mombasa five months earlier still uncleared.
Growers are also facing the impact of a 16 per cent value added tax on crop protection products such as pesticides. The industry says the tax will raise production costs and make Kenyan flowers less competitive. Before the tax, it cost about $0.21 to produce one rose flower on average; with the tax, that figure is expected to rise to $0.36. Kenya previously sold a kilogramme at $0.3, compared with Ethiopia’s $0.28 per kg.
Tax refund disputes with the Kenya Revenue Authority have also dragged on for years. Some flower firms are owed as much as $500,000, while others say they have not been refunded since 2013.
On the export side, the European Union continues to tighten phytosanitary requirements, forcing farms to reduce chemical use and turn to more expensive biopesticides and integrated pest management.
Competition from Ethiopia is another concern. Tulezi said: “Ethiopia is coming up well thanks to government subsidies but we are still 30 per cent ahead in volumes,” adding that it may take Ethiopia another 10 years to catch Kenya.
Ethiopia’s growth has been helped by available land, cheap labour, government incentives and logistics support from Ethiopian Airlines. Its cut flower industry now earns about $300 million annually, and the government is targeting about $1 billion in the medium term.
For Kenya, the message is clear: the US route has not solved the cargo problem, and the industry remains squeezed between rising costs, delayed refunds, tighter rules and stronger regional rivals.
