KENYAN FLOWER FARMS embrace DIVERSIFICATION to stay afloat

By Bob Koigi

As Kenyan flower farms continue to grapple with high production costs, exorbitant energy and freight charges, multiple taxes and lack of incentives in a highly competitive market which have made the business of flower growing uncompetitive, the growers are looking at diversifying into other more profitable ventures such as housing, hospitality, herbs, fruits and vegetables.

The sector that is estimated to employ over 500,000 people, including over 100,000 engaged directly in flower farms as employees, and impacting over 2 million livelihoods indirectly has had a turbulent period. The situation has been exacerbated by the impacts of COVID-19 which has seen production plummeting forcing companies to downsize, reduce export volumes, relocate to favourable markets, merge or get acquired or in the worst-case scenario close shop.

But for the innovative ones, the plan has been to continue with flower production while looking at alternative ways of shoring up revenue and staying afloat. This has included moving into other prime and promising areas like horticulture and real estate.

Oserian Development Company Limited, now under Bohemian Flowers Limited, one of the largest Kenyan growers and exporters of flowers, used to produce on average 1 million stems of roses every day.

In 2018, Oserian embarked on a plan to diversify its commercial activities.

“Consequently, the Farm has been subdivided and change of use amended to Industrial, Commercial and Residential uses in support of the diversification plans.

The new strategy will ultimately see the expansion of these amenities in support of the diversification which will see the creation of an industrial park which will be known as Two Lakes Industrial Park. In addition the company has already created Two Lakes Flower Park and Two Lakes Business Park – both of these are already up and running with tenants in situ.

In order for the business to be better able to focus upon these diversification plans, the company recently contracted out all its flower packing operations and similarly put all the non-rose crop production on a Contracted basis.” the firm said in a statement.

The company further said that agriculture remained part of its DNA and in addition to the continued growing of Roses, the Farm was diversifying into growing other non-flower crops.
Subati Group, formerly known as Subati Flowers Ltd entered the Kenyan market in 2007 and managed to be a grower and exporter of over 100 varieties of spray and single head roses.
In 2016 the farm decided to diversify its agri portfolio by setting up a herb farm located in Kibwezi, 300km South of Nairobi. It currently produces over 15 different types of herbs including chilies in 25 hectares of covered greenhouses. Each greenhouse has an automated fogging system to control the humidity and temperatures within.

Subati now exports packed herbs to Europe, UK and Russia with the highest quality standards and global certifications. This, even as it continues with the flower business.
PJ Dave one of Kenya’s leading growers and exporters of high-quality roses has been in the business for about 20 years. In order to increase its revenue streams, it has diversified into horticultural produce among them mango, passion fruits, pineapple, tree tomato.

Desire Flora nestled in Kajiado County had to diversify its operations introducing an array of horticultural crops to supplement its revenue from the sale of flowers. “We have a large tract of land, and we adopted planting cabbages, onions, tomatoes, capsicums among others basically to get a foothold in the local market and it has of been of great help keeping us going forward,” said Rajat Chaohan the General Manager.

With the sector having been traditionally battered by a cocktail of woes among them high cost of inputs, multiple taxes, high freight charges, labour and energy charges that have made the business of flower growing unsustainable, industry experts predict that the ultimate survival strategy for most of the flower farms would be to invest in alternative sources of revenue generation as the flower business had plateaued in terms of growth and revenue and the competition from other flower producing countries had made flower business uncompetitive.

“The COVID-19 pandemic has further exacerbated the matter as production dwindles and demand volumes drop. With the traditional threats of pests and diseases and effects of climate change complicating an already volatile situation, the flower growers are at a precarious position. Those who have been innovative enough have embraced diversification, which is the silver bullet that will shield most of the farms from collapse. But the onus is also on government to step up its resolve and create an enabling environment for the private sector to flourish considering that floriculture is one of the top foreign exchange earners of the country’s GDP,” said Harun Kioko an agricultural economist at the University of Nairobi.