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Countries' Horticulture Projections



In the last five years, the Ethiopian floriculture industry has become the second largest flower exporter in Africa after Kenya.Revenues generated from the sector are increasing year after year. According to a recent report, the country earned 170 million USD from horticulture export in the first 9 months of 2013. Their main customers are Europe, Middle East, Asia and Americas with efforts being made to expand export destinations and engage foreign investors in the sector.

The government of Ethiopia is also providing incentives to support the sector. The Ethiopian Ministry of Agriculture has revealed that the government is supporting the
about 120 commercial farms in the country

According to a Research conducted by the Horticulture Development Council of Tanzania (HODECT), by 2021 Tanzania's horticulture sector will increase its current level of roduction and export by ten times. One million Tanzanians are expected to be directly employed in the sector.

The research also pin-points the main obstacles of the sector, which are reported to be inadequate promotion, limited access to long term financing, land policy and infrastructure
marketing system.

The report commended Ethiopia's growth in the sector. "Ethiopia has demonstrated
how right incentive package can catalyze investment and growth in horticulture," it reads.

Kenya has good favorable climatic condition. Beside, it has good investment policies, institutional support, improved infrastructure and communications technology, as well as
developed banking and services sectors, that have contributed immensely to the growth of horticulture.

Data from the Kenya National Bureau of Statistics shows that month-on-month receipts of horticulture exports hit a two year low in July 2013, bringing home $58.4 million, compared with $91.9 million in the same period last year.

Data from the Horticultural Crops Development Authority (HCDA) shows that in 2012, Kenya's flower exports stood at Ksh42.8 billion ($503 million), a four per cent drop from
Ksh44.5 billion ($523 million) in 2011. Output increased marginally to 123,000 tonnes in 2012, from 121,000 tonnes the previous year.

Flower producers have been eyeing the Asian market, taking advantage of increased direct flights to South Korea and China. "We have reached a plateau, and we project that the
sector will stabilise at this level, but there is an aggressive search for new markets to increase our competitiveness," said Jane Ngige, Kenya Flower Council chief executive officer.

The cost of production in Kenya has increased greatly, against a minimal rise in cut flower
prices. A rose stem has risen from $0.13 to $0.14 in the past five years. Data from KenInvest shows that the cost of fertilizer rose 153 per cent to $0.44 per kg by the end of 2013, from $0.17 per kg in 2008. In the same period, power tariffs rose 27 per cent while the cost of chemicals per litre has increased by 55 per cent; monthly cost of labour has risen 65 per cent.

The production costs have gone up by more than 30 per cent over the past year; mainly on labour, power, fuel, chemicals, fertilisers and other inputs. The sector currently pays 41 different taxes, licences, permits and levies, to various government bodies, including the Kenya Revenue Authority (KRA) and the HCDA. The cost of compliance is also expected to go up with the new devolved government system proposing to introduce a cess on farm produce.

Uncertainty has hit the sector over delays by the EAC in concluding trade talks with Europe, with the window for negotiating a new deal set to expire October 2014. If the deal is not finalized Kenya's horticultural products will be attracting 5-8 per cent import duty in Europe.

When Kenya's flower export volumes and revenues are falling, India and Ethiopia are
recording a fast growth in numbers, helped by low cost of production and favourable business and weather conditions.

Currently, India's flower exports are about a tenth of Kenya's. India exported flowers worth
$59 million during 2011-12, a growth of 23.3 per cent from the previous year, with projections to double the revenue by 2015. In the last decade, the area for production of horticultural crops increased by 32 percent. This is indicative of fast growth.


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