Kenyan horticulture earnings up 6.4% in 11 months to November
Kenya’s earnings from horticulture exports hit about $1.3 billion between January and November 2021, a 6.4 per cent increase from the $1.2 billion earned in the same period last year. Clement Tulezi, CEO at Kenya Flower Council joins CNBC Africa for more.
Thu, 09 Dec 2021 10:12:30 GMT
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AI Generated Summary
- The horticulture sector in Kenya has experienced a 6.4% increase in earnings between January and November 2021, reaching $1.3 billion, driven by strong market demand and a focus on export opportunities.
- Challenges in logistics, particularly high air freight costs, continue to impact the industry's profitability despite positive revenue growth. Efforts are underway to address logistical hurdles through engagements with airlines, freight forwarders, and the government.
- The sector remains optimistic about finishing the year on a positive note, with a significant portion of revenue coming from cut flowers. While the industry has seen an increase in export value, rising logistics expenses pose a threat to overall profitability, necessitating sustainable solutions to mitigate cost challenges.
Kenya's horticulture sector has seen a 6.4% increase in earnings between January and November 2021 compared to the same period last year, reaching about $1.3 billion. The CEO of Kenya Flower Council, Lemartou Lezzi, highlighted the success of the flower sub-sector, attributing it to the strong market demand. However, despite the positive earnings, challenges in logistics continue to pose a significant hurdle for the industry. Lezzi mentioned that while the easing of COVID restrictions improved export opportunities, issues such as high air freight costs have impacted the sector negatively. In a bid to address the logistical challenges, the council is engaging with airlines, freight forwarders, and the government to facilitate smoother transportation processes. Lezzi expressed concerns over a 25% daily export loss, amounting to over 6 million euros weekly. He emphasized the need for increased capacity and streamlined routes to major market destinations. The industry is advocating for direct flights from Nairobi to market destinations to reduce additional costs incurred during stopovers.
Despite the challenges, the horticulture sector remains resilient, with a focus on maximizing export potential and revenue generation. The council is optimistic about a strong finish to 2021, with notable earnings from cut flowers driving overall performance. Lezzi highlighted that 70% of the 145 billion shillings revenue generated by horticulture is attributed to cut flowers, underscoring the sector's strength in this category. While the industry has seen an increase in the value of exports, with earnings at approximately 145 million euros, Lezzi cautioned that a significant portion of the revenue is absorbed by escalating logistics costs. He explained that the rising air freight expenses have eaten into the profits, highlighting the need for sustainable solutions to address this issue.
In response to the logistical challenges, efforts are underway to engage stakeholders and authorities to find viable solutions. The council is in discussions with airlines and the government to increase capacity and enhance efficiency in transportation. Lezzi underscored the importance of attracting more partners and streamlining processes to mitigate export losses and maintain competitiveness in the global market. The industry is closely monitoring developments and advocating for prompt approvals for additional freight services to meet the growing demand during the festive season.
While the horticulture sector in Kenya continues to face obstacles in logistics, stakeholders remain hopeful that collaborative efforts and strategic interventions will address the existing challenges and support sustainable growth in the industry. As the year draws to a close, the sector is focused on leveraging market opportunities, optimizing operations, and enhancing resilience amidst evolving market dynamics.