A not-so rosy VALENTINE Growers cite tough business climate and good weather

Good weather for the better part of last year and an increasingly tough business climate have conspired to put a damper on this year’s Valentines Day for Kenya flower growers and exporters who say the prospects aren’t looking too rosy.

As opposed to the last two years, last year, the country experienced relatively good weather which necessitated uninterrupted year-round flower production. “Even nights which are usually cold were relatively warm last year which facilitated optimum flower growth. So now everyone growing flowers have a lot of them,” said Aldric Spindler, the Executive Director of Ruiru based Redland Roses Limited.

As a result there is a market glut which is now affecting flower prices, with sales at the Netherlands auction, the largest in the world, plummeting to record numbers this Valentines.

“I have just been checking the prices in the Netherlands auction and there is so much supply of flowers there the prices have really gone down. Infact the prices this Valentines are the lowest they have ever been for the longest time,” Clement Tulezi the CEO of Kenya Flower Council said.

Yvonne Tirop, the Marketing and Business Development Manager at Sian Roses while speaking to Floraldaily publication said this year’s Valentines was exceptionally challenging.

“There has been favorable weather conditions in Kenya and Ethiopia resulting in very good production, poor prices in the last quarter of 2018 led many growers to flush their crop in anticipation for good Valentine’s prices contributing also to the above normal production levels,” she said.

“In the previous years it has been possible to achieve good prices translating to about a cent per centimeter. This year red roses Valentine’s prices  at

the auction have been just normal and not interesting at all. The prices have not gone up in the last week of January as they usually do,” she added.

Competition from Columbia and Ecuador, Kenya’s largest competitors has also reached fever pitch. The two countries that have traditionally mastered the marketing and networking art at the global scene continue to dominate the auctions. “Kenya flowers however remain among the most preferred due to their good growing conditions whether in the auctions or direct markets,” Mr. Tulezi added.

But the Kenyan floriculture industry is equally struggling with a punitive business environment that has seen growers experience tough times despite the sector being one of the biggest foreign exchange earners for the country. The recent fertilizer delay at the port of Mombasa owning to a new regulation by the Kenya Bureau of Standards that requires re inspecting all consignments at the port of entry as it seeks to tame proliferation of counterfeits almost grinded the flower farms to a halt with majority of them being forced to pay extra for demurrage fee of up to Sh2million a day. “We were in massive problems because we rely on that fertilizer for flower production. We started exhausting the reserves and were staring at closing business. The demurrage charges were also too high and had not been projected for,” said Mr. Spindler.

And then there is the recently introduced 16 per cent VAT on pesticides that continues to affect the margins of the growers. According to Mr. Tulezi, the export markets are very strict about good agricultural practices and would not entertain even a single pest. And while the country continues to blaze the trail in the adoption of biological pest controls, pesticides will ultimately have to be used. “So you can imagine a grower struggling with high fertilizer and pesticides costs, prohibitive cost of energy, delayed VAT refunds and the high freight costs due to the volumetric weight charging formula that was introduced in 2018 and you have a picture of how tough it has become to grow flowers in Kenya,” Mr. Tulezi said.

Growers in a bid to recoup the margins pass on these extra charges to consumers and in a competitive market like the Netherlands auction where supply has dwindled demand, countries like Ethiopia and Columbia that enjoy government incentives are able to sell their produce at prevailing market prices even at their lowest. For Kenyan flowers sellers, this would mean making a loss.

And despite low consumption by the local market, Valentines remain one of the seasons the industry bets on to shore up sales. This year however the industry predicts low prospects compared to previous years as the cost of living soars. “Flowers in Kenya have always been treated as a luxury. The prevailing tough economic times have people worried about their next meal so flowers are not a priority for them. This year especially we are not quite betting on the local market because times are even harder,” Mr. Tulezi said.

Dismas Musyoka, a flower vendor at City Market who has been in the business for the last ten years is not optimistic of good sales this Valentines. “By early February we start receiving orders from offices and customers. This year business is shockingly low I have 20 per cent less orders than I received last year by this time. It is going to be a tough one,” he said.