Business & Economy News & Analysis

Time for a global flower auction in Kenya

Time for a global flower auction in Kenya
  • PublishedAugust 10, 2018

The booming Kenyan floriculture sector, which exports to over 60 countries worldwide and provides a comfortable living to over two million Kenyans, has gained a global reputation for excellence. But is still relies on selling at the Dutch auctions. Bobby Kamani argues that the time is ripe for the industry to follow the tea and coffee sectors and establish its own global auction.

Kenya’s economy relies largely on the floriculture sector. It is estimated that in Kenya, the livelihood of more than 500,000 people, including over 100,000 flower farm employees, depends on the floriculture industry, thus impacting over two million livelihoods.

While Kenya only commenced exporting cut flowers in the early 1980s, today it is a major exporter to the European Union (EU). About 38% of all cut flower imports into the EU come from Kenya, with the main EU markets being Holland, UK, Germany, France, and Switzerland. In 2017, the floriculture industry earned KES82.25bn whilst exporting a consolidated amount of almost 160,000 tons of cut flowers. Kenyan flowers are sold in more than 60 countries. The current Kenya Flower Council membership is responsible for close to 80% of the national volume of flowers exported.

The industry continues to attract investors due to a solid infrastructure, favourable climate, global positioning of Kenya as a commercial hub and a very productive workforce. It comprises large, medium and small-scale producers who have attained, and managed to maintain, high management standards and have invested heavily in value addition. 

The industry’s success has been through the adoption of modern technology in production, precision farming and marketing. On the global front, a growth of 5% is anticipated every year for the next five years and to achieve this, Kenya is going to have to continue investing in order to accomplish such an unparalleled expansion in the growth rate.

Presently, approximately 50% of all exported flowers are sold through the Dutch Auctions, although direct sales are growing. In the UK, supermarkets are the main outlets. Over 25% of exported flowers are delivered directly to these multiples, providing an opportunity for value addition at source through sleeving, labelling and bouquet production.

Enviable market confidence

It is a prime area of concern that whilst the industry has grown exponentially, the industry is still relying on selling cut flowers in Aalsmeer, Netherlands at the Dutch Flower Auction. It is high time that the Kenyan floriculture industry, along with the Kenya Flower Council, launched its very own Kenya Flower Auction. Global flower buyers and consolidators should be invited to visit the beautiful country whilst also engaging in the flower auction.

The Kenyan tea and coffee industries have had their very own auction houses in Kenya for a considerable time. The Kenyan tea auction was founded in 1956 and has had its base in Mombasa since 1969. The Nairobi coffee exchange has been around since 1934. 

With tea, coffee and cut flowers being such integral parts of our economy, it would only make sense that we have a Kenyan flower auction in an area most well-known for growing flowers – Naivasha or Nairobi, for example.

The industry has achieved great milestones despite the numerous challenges it has had to face. It has shaped itself into a unique brand, going by the number of international buyers expressing interest and the growing volumes it continues to trade in international markets. 

It is indeed impressive to see how seriously the industry has taken self-regulation, which has contributed massively in restoring and building market confidence. This, combined with sustainable practices like green energy initiatives, integrated pest management practices and workers’ welfare, has been a spur to an even more vibrant and globally competitive sector.

While there are still some hiccups across the value chain – like the cost of doing business and improving sector relations – we continue to have hope that such issues will be addressed as we go along.  

One of the aims of Clement Tulezi, the CEO of the Kenya Flower Council, is to seriously push for bilateral discussions between government and private sector players on lowering the cost of business, primarily in the spheres of energy, taxation and transport. The launch of Kenya’s very own flower auction would most definitely assist the country in overcoming these hurdles.

Going forward, the industry will continue benchmarking itself against other producer countries. Information thus gathered will be useful in formulating strategies, to capture prospects of expansion in current and emerging markets. Kenya, however, needs to become more self-sufficient in order for the industry to grow and to become a force to be reckoned with in new global markets. NA

Written By
New African

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