This archive report was first published on 30 October 2019.
Published on October 30, 2019, a CNN report praised Kenya's flowers for their vibrant colors and high quality, attributing the country's success to its sunny climate and excellent transportation links to Europe.
However, the industry is now in turmoil, threatening to undermine its global reputation and economic significance. In 2018, the industry generated Sh113 billion and indirectly employed over 500,000 people.
Finlays Kenya, a leading flower farm, announced last week that it would close its two farms in Kericho County by Christmas, citing stiff competition and increasing costs as the main reasons.
Finlays General Manager Stephen Scott attributed the decision to decreasing demand in the European market, staggering labor costs, unfavorable weather conditions, and weakening exchange rates.
'It is no secret that in the last 18 months, the flower industry has been facing severe challenges. As a result, the directors have made the decision to close Chemirei and Tarakwet farms earlier than initially communicated,' Mr. Scott said.
The closure of the farms will affect 2,000 employees and has sparked concerns about the impact on the local economy.
'I don't know how that area will look like in eight months or a year later. The shops, the schools, and the people there. It is not merely the question of numbers laid off,' said Mary Kinyua, a director at Oserian and vice-chairperson of the Fairtrade International Board.
Industry players are calling for support from the government, rather than just imposing taxes, to help the industry recover.
At the center of the industry's woes is the delayed reimbursement of value-added tax, which stands at Sh6 billion, accumulated since 2013.
'One company is owed as much as Sh800 million in VAT reimbursements. We cannot expand in this kind of environment,' said Kenya Flower Council chief executive Clement Tulezi.
Devolution has also squeezed the firms between the county and national government administration, imposing multiple regulations, taxes, and fees.
'A flower grower now pays up to 42 levies,' Mr. Tulezi said, warning that the proposed 2019 Crops (Food Crops) Regulations and the 2019 Crops (Horticulture Crops) Regulations would further burden the industry.
Industry players are also concerned about the impact of Brexit on the industry, with the UK accounting for about Sh20 billion worth of Kenyan flower sales.
Already, Kenya has reached a 'verbal' deal to continue trading with Britain under preferential terms, but industry players fear that this arrangement is shaky.
Under the deal, the UK has committed to provide duty-free, quota-free access to imported Kenyan goods.
The latest hurdles to hit the flower industry are the stringent rules introduced by Australia, a key emerging market now valued at Sh3 billion, requiring zero pest tolerance on imports.
Landing restrictions at Schiphol Airport in the Netherlands are also denting the local flower industry.
Agriculture Principal Secretary Hamadi Boga says the government is open to dialogue with the flower industry stakeholders.
'The most important thing is to continue talking. There are always opportunities to engage,' he said.
