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Kenya's horticulture FY earnings seen up due to good rains

Reuters Translate This Article
3 September 2012

NAIROBI (Reuters) - Kenya's horticulture export earnings are expected to grow by 10 percent this year thanks to above-normal rainfall, but the eurozone's financial woes were expected to dampen demand for flowers, a senior industry official said on Monday.

Horticulture is one of the east African country's leading sources of foreign exchange alongside tea exports and tourism.

The cultivation of fruits, vegetables and flowers, earned 91.6 billion shillings in 2011. Flowers account for half of horticulture earnings.

Stephen Mbithi, chief executive of the Fresh Produce Exporters Association of Kenya, said favourable weather in east Africa's largest economy was expected to increase horticulture production by 10 percent up from last year's 380,000 tonnes.

Bad weather and falling exports in other countries has also boosted demand for Kenyan horticulture.

'Summer prices are better this year than last year partly because Egypt is not exporting as much due to the aftermath of the Arab Spring and weather patterns across the world have not been very favourable,' Mbithi told Reuters.

The debt crisis in Europe, which accounts for 82 percent of Kenya's yearly horticulture shipment, was expected to hurt demand for flowers but Kenya is hoping sales in new emerging markets can offset the loss.

'Given the economic crisis in the eurozone, if (flowers) go down by 5 percent that will be also within our expectations. So for flowers, fingers are still crossed.'

'There are some new markets, Russia is looking good. Our volume of flowers going to ... the Netherlands auction are increasingly finding their way into China and far east Asia.'

Mbithi said the stronger local currency would marginally weigh down on earnings, which had boosted incomes of exporters in 2011.

The Kenyan shilling has gained 1.2 percent this year due to a series of central bank hikes in the key lending rate after the currency lost 25 percent of its value to an all-time low of 107 per dollar.

Mbithi saw short-term gains from drought in the United States and Russia that has seen grain prices soar, due to supply constraints

'We have seen a slight increase in demand in Russia due to the drought, mainly in high-end vegetables,' said Mbithi, referring to vegetables such as tenderstem broccoli and extra fine green beans.

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