May Issue 2 2011

The Global Competitiveness of Flower Industry in East African Region Video Conferences to kick off
The World Bank jointly with Kenya Flower Council, the EU All ACP Agricultural Commodities Trust Fund Program (EU AAACP), and the African Caribbean Pacific has organized a series of interactive Video Conference (VC) seminars that will elucidate challenges facing the Flower Industry in East African Region (Kenya, Tanzania, Uganda, and Ethiopia). The five VCs will address global competitiveness of the flower industry in the East African Region, the impact of agro-bacterium (Agrobacterium tumefaciens) and other soil borne diseases on production of roses, the impact of climate change and multiple taxies and levies on the industry, and role of Strategic Environment Assessment in the establishment of sustainable flower farms. KFC is the coordination office.
The objective of the seminars is to accord stakeholders the opportunity for sharing experiences on challenges and achievements in the flower industry in East African Region. The seminars will also draw a rare comparative analysis on the global competitiveness of the flower industries in East African Region, Ecuador, India and Columbia. In addition, the seminars present stakeholders with an opportunity to develop synergies for tackling regional problems affecting the flower industry. Presentations by technical experts will not only give the participants a deeper understanding of challenges facing the regional flower industry but will also elucidate how such challenges are or have been addressed in other parts of the world. It is also envisaged that the seminars will give the regional flower industry the prerequisite visibility to attract international collaborations in research, support from the regional economic blocks, and exposure of local capacity within the region.
Video Conference Topics
The Global Competitiveness of Flower Industry in East African Region will be highlighted through five (5) video conference seminars between May and December 2011. The first VC will start on Monday 16th May, 2011. The topics include:
1. 16TH MAY 2011- The impact of climate change on the global competitiveness of horticultural production in the East African Region – opportunities for effective interventions and or adaptation projects with special emphasis on flower production.
2. 7TH JUNE 2011 – The impact of Agrobacterium tumefaciens and other soil borne disease causing agents of economic importance in production of roses.
3. 2ND AUGUST 2011 – The impact of taxies and levies on flower industry global competitiveness.
4. 20TH SEPTEMBER 2011 – The role of Strategic Environment Assessment in the establishment of sustainable flower farms.
5. 29TH NOVEMBER 2011 – A comparative study on the global competitiveness of the East African flower industry including Ethiopia, Ecuador, India and Columbia.

Regulatory reform at the local level workshop
In October to November, 2009 the World Bank Group sponsored a team of nine investment climate reform champions from Kenya to attend peer to peer learning events in the United Kingdom and the Netherlands. This tour was aimed at giving opportunity to the delegates to interact with their counterparts on the areas of better regulation and creation of a conducive investment climate for businesses. The key areas covered included inspection and local government regulatory reforms to support private businesses.
Local Better Regulation Office (LBRO), a UK Government body set up to carry the UK’s regulatory reform agenda at the local level was one of the host.
As a follow-up to the above learning tour, the LBRO came to Kenya and facilitated a workshop on 3rd-5th May 2011 at the Intercontinental Hotel, Nairobi, sponsored by the Investment Climate Advisory Services, World Bank Group. The Kenya Flower Council (KFC) attended the workshop among other Consultants.
According to a research done in Kenya, the inspection burden is high translating to people paying more taxes, lack of business competitiveness, and reliance by the city council on permits charges and fines for running the local authority.
Other key issues included:
1. Understanding the need for regulation; environmental protection, labour safety, fair trade, consumer safety and economic prosperity.
2. Different efficient approaches to regulations.
3. Reducing the number of inspections while increasing compliance among the business community. Regulations should not be driven by collections of fines. Local authorities and other regulators should have a reliable source of funding to run their councils, not fines.

Recommendations given by the LBRO team
Many of the government achievements are through good regulation and inspections should be well planned

Conclusion:
The workshop was an excellent learning process and very relevant to regulatory reforms especially for the local authorities. Much of the exposure from the UK team is actually what is on going in the private sector self regulation. With the implementation of the skills learnt during the three day workshop by the local authorities in partnership with the private sector, Kenya looks forward to competitive business.

SME EXPO and Conference 2011
Small & Medium Entrepreneurial Resource Centre- SME-RC in conjunction with Maple Management EA has organized the 2nd edition of the SME Expo and conference 2011, scheduled to take place from 2nd to 4th June 2011 at KICC.
Following the success of SME 2010 with over 80 exhibitors & and more than 3500 visitors, this year’s event promises to be bigger and better with both local and international participants. The Fair 2011 shall be a business empowerment forum for individuals with Small to Medium size businesses and aspiring business owners, Start Ups & the General Public.
Small & Medium Resource Centre (SMERC) is a capacity building centre working with mainly SMEs & Various industry stakeholders with vetted interest in working, empowering & growing SMEs into sustainable Successful companies.
The list of potential exhibitors includes;
– Banks
– Micro finance institutions
– Organizations with business opportunities in service/product delivery.
– Government & parastatals
– Insurance firms.
– Companies with products relevant to SMEs.
– Business consultants.
– Agri businesses.

Log on to www.smeafrica.net for more information.

Focusing on needs: the EU reshapes its import Scheme for developing countries
The European Commission plans to concentrate its import preferences on those developing countries most in need. It will limit its Generalized System of Preferences (GSP), with which it grants specific tariff preferences to developing countries in the form of reduced or zero tariff rates or quotas, to approximately 80 countries to take into account the emergence of more advanced developing countries which are now globally competitive. At the same time the Commission seeks to encourage more countries to respect core international conventions on human rights, labour standards, environment and good governance in the GSP+ scheme which grants additional trade concessions for trade-vulnerable countries.
The GSP will allow these countries to participate more fully in international trade and generate additional export revenue. It also encourages its trading partners to respect core international conventions on human rights, labour standards, environment and good governance.

“Global economic balances have shifted tremendously in the last decades. World tariffs are at all-time low. If we grant tariff preferences in this competitive environment, those countries most in need must reap the most benefits. Trade and development go hand in hand and tariff preferences are a small part of our wider agenda to help poorer economies scale up their presence in global markets”, said EU Trade Commissioner Karel De Gucht in a press release.

Key elements of the proposal include:
1. Concentrating GSP preferences on fewer countries.
Whilst the generous product coverage and preference margins would remain unchanged, a number of countries would no longer be eligible to benefit, including:
– Countries which have achieved a high or upper middle income per capita, according to the internationally accepted World Bank classification (such as Kuwait, Russia, Saudi Arabia and Qatar).
– Countries that have preferential access to the EU which is at least as good as under GSP – for example, under a Free Trade Agreement or a special autonomous trade regime.
– A number of overseas countries and territories which have an alternative market access arrangement for developed markets.
– The final list of beneficiary countries will only be identified at the end of the ordinary legislative procedure, based on data of the last three years.
2. Reinforcing the incentives for the respect of core human and labour rights, environmental and good governance standards through trade by facilitating access to the GSP+ scheme which grants additional, mostly duty free preference to vulnerable countries.
– The vulnerability criterion is one of two economic conditions a country needs to fulfill in order to be eligible for GSP+. Under the current proposal, it will be opened to allow more countries to benefit. By joining GSP+ they will be required to respect core international standards. Countries will be able to apply for GSP+ at any time, instead of once every 1.5 years.
– Potential GSP+ beneficiaries are obliged to commit to effective and full cooperation with international organizations regarding the respect of international conventions, which is the second economic criterion required in order for GSP+ to apply. The burden of proof for the implementation of international conventions will now be with the countries concerned. GSP+ will have strengthened controls and monitoring, and more robust procedures for the temporary suspension from the scheme.

3. Strengthen the effectiveness of the trade concessions for Least Developed Countries (LDCs) through the “Everything but Arms” (EBA) scheme. Reducing GSP to fewer beneficiaries will reduce competitive pressure and make the preferences for LDCs more meaningful. The EU’s EBA scheme is already unmatched by any other developed country.
4. Increasing predictability, transparency and stability.
The system will become open-ended, while it is currently subject to review every three years. This will make it easier and more attractive for EU importers to purchase from GSP beneficiary countries. In addition, procedures will become even more transparent, with clear, better defined legal principles and objective criteria. The proposals will be debated in the Council and European Parliament with a view to having the reformed GSP in place on 1 January 2014 at the latest.
Background
Trade has been a powerful engine of growth for many countries, lifting hundreds of millions out of poverty. EU trade policy has been designed to help this process. Since 1971, the EU schemes such as the GSP have allowed developing countries to pay lower import tariffs on some or all of their exports to the EU.
In 2009, imports that received GSP preferences were worth €60 billion, which represents 4% of total EU imports and 9.3% of the total EU imports from developing countries. Under the revised scheme, imports that will receive GSP preferences are estimated at €37.7 billion.
The current GSP scheme covers three elements:
– The general GSP arrangement which provides import tariff reductions for 176 developing countries and territories.
– The special incentive arrangement for sustainable development and good governance (known as GSP+). This arrangement offers additional preferences to support vulnerable developing countries in their ratification and implementation of international conventions in the field of human and labour rights, sustainable development and good economic governance. The
– Current GSP+ scheme covers 15 beneficiaries.
– The Everything But Arms arrangement which provides for complete access (duty-free and quota-free) to the EU market save for arms and armaments for the 49 Least-Developed Countries as defined by the UN.
The GSP scheme is implemented over cycles of ten years in order to take into account changing trade patterns. The present cycle began in 2006 and will expire in 2015. The scheme is implemented through successive Regulations applying for 3 years. The current GSP scheme is established by Council Regulation (EC) No. 732/2008, which entered into force on 1 January 2009 and will expire on 31st December 2011. The Commission has put forward a “roll-over” Regulation, extending the present system until the end of 2013, to avoid GSP lapsing while the institutions discuss the new GSP proposal. The “roll-over” Regulation was approved by the European Parliament on 24 March 2011, by the Council on 14 April and should be published in May.
For more information:
See the memo on the new proposed GSP regulation
http://trade.ec.europa.eu/doclib/html/147892.htm
Complete text of the proposal of the new GSP regulation
http://trade.ec.europa.eu/doclib/html/147893.htm
Background on the current GSP scheme:
http://ec.europa.eu/trade/wider-agenda/development/generalised-system-ofpreferences/

Ethiopia to vastly increase its flower exports
Ethiopia is already the second largest flower exporter on the African continent, but if its government is to have its way, that is only the beginning. In fact, the Ethiopian Horticulture Producers-Exporters Association (EHPEA) is looking to triple the amount of foreign exchange it receives from flower exports by the year 2014, the organization states.
The country had estimated revenue of 160 million U.S. dollars from the flower trade last year, and is looking to up that total to over half a billion dollars by 2014, an EHPEA spokesman indicated. The amount of arable land under cultivation is expected to roughly double over the coming five years, while foreign financiers are being lured with appeals to an attractive investment climate.
“The government has a development and transformation-strategic plan for the next five years”, Chairman of the EHPEA Tsegaye Abebe pointed out. The package will, among others, include tax benefits, duty free imports and low interest loans to help spur innovation and investment.
Since the introduction of commercial flower farming in the early Nineties, Ethiopia has demonstrated cumulative growth in the flower export sector. Expectations for this year are very high as well, with a potential growth rate of 25 percent as compared to last year.
The key markets for the Ethiopian flowers are the Netherlands, Germany, the UK, Scandinavia and Russia. Outside of Europe, Japan and the Middle East and are also significant importing regions.
Sources: www.ezega.com, Professional Florist


Flower sales at FloraHolland decrease in April

The April flower sales at FloraHolland had two faces. The supply of Chrysanthemum and Lillies was lower than in April last year. Prices were high due to the good demand from Russia. In general, there was pressure on the flower prices due to the warm weather in Germany and the Netherlands, which made many citizens, decide to go out for Easter.
This was not good for the prices. Supply of roses was higher than last year when transport got hindered by the ash cloud from Iceland. All this the flower turn-over in April 5% lower than in the same month last year. The supply was 8.5% higher and the average price went down by two eurocents to €0.165.
Source: flower focus

Selling Flowers Dropped Due To Carriage and ATPDEA
According to the Association of Flower Producers and Exporters (Expoflores), on the eve of World Mother’s Day in the United States, first destination of Ecuadorian flowers, exports dropped about 5%, while in Europe it rose 15%.
Last year, the U.S. imported about 5,772 tons of flowers, overtaking Europe that received 2,048 tones. So far in this year, the figure decreased by 5,492 t. for the United States and 2,358 tones for the European Bloc.
These figures are attributed mainly to non-extension of the Andean Trade Preference System (ATPDEA, in English), the increase of costs in carriage and the value in the sale, according to Arturo Velasteguí, an analyst of the guild.
Source: Diario El Universo – Ecuador Times

IFTF gets all the room it needs
The second edition of the International Floriculture Trade Fair, planned for early November, is going to be even bigger this year, after last year’s initial success. The organizers have been allowed by local Dutch authorities to add on a fourth event hall, significantly increasing the space which the expo has at its disposal.
An unexpectedly high demand for exhibition space at the trade fair had made the need for extra accommodation especially urgent, as all three currently available halls had been fully booked. Under the new agreement however, an additional 10000 square meters can be added to the existing 13000, making space limitations a thing of the past.
As of this year, the IFTF Expo combines with the Horti Fair exhibition and the FloraHolland Trade Fair to form the ‘International Hortiweek’. All three events take place in the first week of November and coordinate much of their activities.
The IFTF will once again be held at the Expo Haarlemmermeer in Vijfhuizen, the Netherlands. The fair is one of the largest floriculture events in the country, catering to all segments of the industry and drawing many international visitors.
Sources: IFTF, Horti Fair & FandWB.com

Germany to ‘hunt for the Golden Flower’
The chrysanthemum flower is celebrating its 50th anniversary this summer, leading the Dutch Flower Council to come up with a creative promotional campaign: German consumers can go on a virtual hunt for the ‘Golden Flower’ – the chrysanth’s nickname – in the coming months. Whoever cracks the involved code can win a genuine bar of gold, worth no less than € 3.500!
A vast media presence will accompany the quest: clues as to the code’s nature can be garnered through local radio stations; newspapers; the website, as well as the florist. Every such medium will provide the seeker with a question regarding the chrysanthemum, the correct answer to which will result in a part of the code being sought after.
Where exactly the promotional team is keeping the code-protected safe, containing the gold bar, stashed, will remain a mystery until the last day of the campaign week. On that day the final clue will be given, allowing the code to finally be cracked.
The campaign will go on for a week, in every one of the five German cities where it has been planned: Bremen, Karlsruhe, Leipzig, Bamberg and Koblenz. Bremen will be the first city to undergo the mystery quest, from May 23 to 28 to be exact, followed by the rest in the subsequent months.
A similar campaign has been planned for the Netherlands in the near future, although its exact character remains unclear as yet.
Sources: Fachverband Deutscher Floristen & Vakblad voor de Bloemisterij florint

California Flower Farmers Seek Consumer & Congressional Support
Mother’s Day is the number one holiday for California’s flower farmers. Yet, due to the impact of long term federal trade policy, the majority of flowers purchased in the U.S. this Mother’s Day will have been imported from South America (most notably Colombia and Ecuador). That’s why consumer and Congressional campaigns are underway to promote California Grown Flowers as America’s Flowers, which account for approximately 80 percent of domestic grown flowers.
The Andean Trade Preference & Drug Eradication Act (ATPDEA), a trade preference program established for these countries in 1991, has dramatically impacted the ability for domestic flower farmers to compete in an increasingly competitive global marketplace, which has resulted in approximately 75 percent of flowers sold in the United States now being imported from South America. We are holding our own in California, with almost 20 percent of national sales produced by our cut flower farms.
In addition to encouraging consumers to “buy local” by asking for California Grown flowers this Mother’s Day, California’s farmers are asking Congress to intervene on their behalf while the Administration negotiates a permanent free-trade agreement (FTA) with Colombia.
“California has experienced significant farm and production loss as a result of current trade preferences,” explained California Cut Flower Commission CEO/Ambassador Kasey Cronquist. “We can’t afford further erosion of a vital industry that could be lost to this pending trade agreement with Colombia.”
A recent economic impact report, The Flower Factor [http://www.ccfc.org/ccfc-media/economic-impact-report], indicates that California’s cut flower industry has an annual impact of nearly $10.3 billion on the state’s economy. Ninety-two cents of every dollar earned is returned back into the economy, helping to create jobs, fuel other businesses and generate taxes that support local communities.
A group of California flower farmers recently met with members of Congress in Washington DC to raise their concerns about the pending FTA with Colombia. Thanks to the efforts of Representatives Lois Capps (D-CA), Darrell Issa (R-CA), Sam Farr (D-CA) and Brian Bilbray (R-CA) and Senator Dianne Feinstein (D-CA), both Senators and 39 Members of Congress sent a letter to President Obama reminding him of the adverse impacts facing California’s flower farmers as the Administration prepares the FTA for Congressional approval. They also urged that the Obama Administration support a new transport and logistics system for our cut flower farmers. Likewise, members of Congress have turned to their constituents for similar support this Mother’s Day.
“California flower growers produce the finest flowers in the world, but they’re being squeezed out of the market by producers in foreign countries,” said Rep. Thompson. “Although local growers are working aggressively to remain competitive, we can all do more to promote our state’s flower industry. On Mother’s Day, support your local flower growers by buying fresh-cut California flowers for your loved ones.”
Source: California Cut Flower Commission

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