Valentine 2019 huge volumes but low prices.
Valentine is one of the most important day for the flower industry on which more sales exceed the rest of the seasons.
Flower farmers started their preparations months before valentine by working around the clock planting bigger acreages for the season. Good weather experienced for the better part of last year as well as this year led to increased volumes of flowers which resulted in glut
The odds worked against Kenya this time round as her biggest competitor in the region Ethiopia, had good production after experiencing relatively warm climate which usually is not the case.
December and January are relatively cold days in Ethiopia thus affecting her production making Kenya the biggest source of flowers in the region.
The market glut affected flower prices, with sales at the Netherlands auction, the largest in the world, plummeting to low numbers this round. Clement Tulezi, CEO of Kenya flower Council said that the prices for this year’s valentine were the lowest ever experienced in the industry.
The Kenyan floriculture industry is 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. Exorbitantly high freight costs as a result volumetric weight charging formula for freight that took effect from June 2018. On top of that, the freight charges that came with the extra capacity delivered during valentine’s had an effect on the return of growers.
During the month of March, Kenya shilling strengthed for the first time in 10 months, exchanged below Ksh 100 to the dollar, yielding gains for consumers who are set to feel an ease in the cost of goods and services but loading pain on exporters who got less earnings from their sales.
The bulk of Kenya’s flower sales are in Europe, meaning that payments are made in dollars as well as Euros and British pounds. The stronger shilling against the global currencies therefore means that they are earning less, although they get some relief since their import costs are in dollars and the pound is gaining against the shilling.
KFC CEO said the sector enjoys a boost in earnings when the shilling weakens against the three currencies, and vice versa. He, however, said that they hope the current round of appreciation will not have a big impact if sales volumes keep growing like was the case last year when horticulture earnings rose by 33 percent to Sh153 billion.
