Africa Economy: Kenya's horticulture exports rise in 2014 despite EU tax

Kenya's horticultural exports increased marginally in 2014 despite introduction of duty by the European Union (EU), which was, however, later dropped.

Kenya's cut flowers, fruits and vegetables annual exports increased to 924 million U.S. dollars in 2014 from 916 million dollars the previous year, according to new data from Kenya National Bureau of Statistics (KNBS) received on Friday.

The slight rise in earnings brings smiles to Kenyan farmers whose exports faced a ban in mid 2014 due to increase in chemical residue in their produce.

The farmers also had to grapple with introduction of taxes on their produce following the lapse of Economic Partnership Agreement (EPA) in October between East Africa Community (EAC) nations and the EU.

The new agreement was, however, signed on December 25 last year and Kenya's exports are once again exempted from duties by the EU.

During the period October to December 2014, it is estimated that Kenya's exporters paid duties of up to 11 million dollars.

Under the new EPA, EAC in exchange will open up to 80 percent of its market to products from Europe in the next 15 years. Of the three produce, flowers accounted for the largest exports and increases as compared to 2013.

The East African nation exported 114,762 metric tonnes (MT) of flowers worth 658 million dollars last year, the KNBS data showed. This was a considerable increase from 103,779MT of cut flower exports worth 615 million dollars in 2013. And most of the flowers were exported in the period February to May, where Kenya shipped out 10,000MT of flowers every month.

The Kenya Flower Council (KFC) had estimated that in 2014, the country would produce and export 125,000 tonnes of cut flowers that would fetch 531 million dollars. However, while the East African nation did not hit the tonnage, but it surpassed expected earnings by 127 million dollars.

KFC CEO Jane Ngige notes that cut flowers performed well in 2014 despite the EU tax.

Kenya is one of the largest suppliers of cut flowers to the EU with a 31 percent market share. The major market is Holland at 69 percent, where Dutch wholesalers buy flowers for re-export to the U.S. and other nations.

Of the flowers, roses make up 74 percent of Kenya's exports. Coming in second are carnations which are mainly sold in Britain, Germany and France.

The East African nation's fruit exports during the period in review stood at 60 million dollars, up from 49 million dollars. The rise in earnings resulted from increased imports which stood at 35,149MT, up from 31,107MT.

However, as cut flower and fruit exports rose, earnings from vegetables plummeted significantly. Kenya earned 206 million dollars in 2014 from the produce, after exporting 70,334MT, down from 77,172MT that raked in 252 million dollars in 2013, noted the KNBS. Endi