Outlook for 2012
The potential growth in 2012 for the floriculture industry is promising despite the challenges from external factors. Last year, the sub-sector recorded significant improvement with increased production of flowers since the demand was high despite the low prices.
With only months remaining to the general elections, the industry is facing major challenges emanating from concern over the economic status of countries in the global market in addition to the economic challenges here at home.
We understand that growth of the economy has slowed down due to the high costs of inputs in all productive sectors in particular, fuel, high bank interest rates on borrowing and also the depreciation of the shilling against the US dollar, Euro and other major currencies. This is perhaps the reason why there have been rising cases of industrial unrest.
The climate in 2011 was favourable with plenty of rain. Hopefully 2012 will be better year weather wise. Although Last year’s validated statistics for the sector are not yet out, floriculture sub-sector recorded significant improvement between by 19% percent in value from 50 billion in January to August 2010 to 59 billion in the same period of 2011.
However, the sector may face challenges in productivity as result of the impact of climatic change, stringent market standards requirements and also undue anxiety as a result of delay in the determination of the EAC EU EPAs. Other challenges will be in delayed VAT Refunds, aggressive NGO campaigns based on social accountability. Additionally the industry will face complexities arising from continuing implementation of the New Constitution, particularly the institutionalization of the Country Governments.
Never the less the KFC will endeavor to make its contributions in generation of information that will inform improvement of productivity together with the members and our development partners. Key will be enhanced tools for lobbying; enhanced responsible growing amongst all growers and an industry wide carbon sinks.
By: Jane Ngige (Mrs) – Chief Executive Officer, KFC
Kenya flower industry Carbon Emission project
The flower industry in Kenya is in the process of setting up a pooled carbon credit scheme. The industry is looking at counting all trees planted by each farm to form a “flower industry forest” and front the numbers as a single carbon sink.
The process of auditing existing clean energy schemes is ongoing with a view to replicate these in all farms to collectively earn credits that would be ploughed into more activities so that in the final analysis, the entire industry can lay claim to being a major player in climate change intervention measures.
The Ministry of Environment is already working with two growers on a pilot scheme to convert farm waste into biogas, and if successful, the firms- Simbi Roses in Thika and PJ Dave in Kitengela will be used as models to replicate the concept in others.
Currently, funding for the project has been identified from the European Development Fund and is awaiting its disbursement to start the process of developing Carbon Emission Intervention projects. Once the programme, is successful, Kenya will reaffirm the position that flowers produced in the country emit less carbon despite being airlifted to the markets. Never the less, the industry is keen to be part of the global solution to mitigate carbon emissions.
London 2012 Olympics
The London 2012 Olympics are scheduled to start from July 25th to 12th August 2012. The Ministry of Information and Communication has formed a National steering committee to spearhead Kenya’s preparation towards the event. Kenya will mount a ‘Kenya House’ to show case Kenya’s business and investiment potential from both the public and private sectors.
Participating organizations will have an opportunity to showcase their offering to the world during the Olympics.
The Kenya Flower Council has been invited by the committee to attend a breakfast meeting where they will present the Kenya House concept to both the public and the private sector.
The Olympics Games are regarded as the world’s most important sports competition. These games present an ideal opportunity not only to present the country as home to athletics champions but also promote it terms of investiment opportunism, trade, tourism and exports.
Hortec 2012 to be postponed to a later date.
HORTEC 2012 scheduled to take place from 14th to 16th March 2012 has been postponed till further notice. Hortec was started in 1994 as an opportunity for suppliers to exhibit to the many established growers in the region. It was also a key opportunity for the new comers to the business to find their way! It has been remarkably successful in this task with many exhibitors participating year after year.
Oreon EPZ licensed to drive a pyrethrum project
Orion Export Processing Zone Ltd has been licensed to undertake a value addition project on pyrethrum which will help farmers get good returns. The World Bank and PTA Bank have shown interest in partnering with Orion in developing the region’s pyrethrum industry.
The Kenya government will offer a 10-year tax free holiday for the project and will target markets like Uganda, Tanzania, Rwanda and Burundi.
Orion will install equipment worth $2.5 million at the Athi River Export Processing Authority probably this year. There are over 500,000 small scale farmers in East Africa.
Agribio Group acquires Lex+
The Dutch flower and plant breeder Agribio Group acquires Lex+, the roses breeding company of Lex Voorn. With this acquisition Agribio Group obtains becomes the only global player with the top 3 cut flowers in portfolio. For Lex+ this acquisition leads to a faster development of new promising varieties through market driven innovations by combining the Research & Development departments and a stronger growth due to the integration with the roses assortment of Bartels Roses, also being part of Agribio Group.
The acquisition of Lex+ is an important step for Agribio Group in further expansion of its global position in flower and plant breeding. Lex+, ‘The Rose Factory’, is worldwide known for its high quality roses varieties, with among others the well-known Avalanche+. Lex+ retains its brand name within Agribio Group. Lex Voorn will remain as breeder, Martin de Rooij remains with Lex+ as director.
Agribio Group, a global player
Agribio Group is active in 56 countries and trades over one billion cuttings per year. The company is a global top-3 player in terms of vegetative breeding and propagation of plants and flowers. The Agribio Group includes top breeding companies such as Fides, Japan Agribio. Barberet & Blanc and Bartels Stek and Roses. The company has 2,400 employees and annual sales of around 85 million euro.
Lex+, ‘the Rose Factory’ is a company known for its innovative and high quality products. Lex+ runs an extensive assortment that can service the most important production centers worldwide. With well-known brand names as Avalanche+ the company has achieved a strong position on the global market.
Dutch export of flowers and plants increased by 2 %
Dutch exports of flowers and plants increased by about 2 % in 2011 to € 5.2 billion. This is based on provisional figures and announced by Herman de Boon, president of the association of Dutch exporters of flowers and plants VGB.
The Dutch exports to Russia increased by 30 % and passed the first threshold of € 200 million. This growth is in contrast to Germany, the most important Dutch export market. The export to this market went down by 2 % to around € 1.6 billion. Given the current economic situation in the main export markets, the VGB is expecting little or no export growth in 2012. “At most we book a very small plus in some countries,” says De Boon. He expects the consolidation in the sector, which manifested in recent years, will continue in 2012.
The VGB expects a further growth of imports of cut flowers mainly from countries outside Europe. The VGB also expects an increase of direct purchases by traders from growers, which means less trade at the auction clocks. In 2011 the direct purchase increased by 11 %. Incidentally, the payment is usually made through auctions or at least to its member growers. The purchases at the auction clock fell by 5 % last year.VGB is the sector of domestic, import and export wholesale of flowers and plants. Its members represent 65 percent of sales in that industry.
Ciccolella takes over Dutch exporter Springflower
Ciccolella Holding International (CHI), a company entirely controlled by Ciccolella SpA, entered into an agreement to take over the Springflower export activities, which includes flowers and plants export. The perspective is a potential integration.
This agreement is fully consistent with the Ciccolella vision to build market leadership through partnerships and external acquisitions that improve our market presence and competitive strength, also generating cost efficiencies from integration.
Springflower Holding is a Dutch group of companies trading flowers and plants based in Aalsmeer with leading market positions in Scandinavia, Germany and France. Consolidated revenues amount to about € 50 million per year. Movrie is the subsidiary of Springflower, focused mainly on serving supermarkets and chain stores. Hiljo is the subsidiary focused on the total service to wholesalers and smaller chains, from Scandinavia to central and southern Europe. Summer Flower is the subsidiary providing large quantities at very competitive prices.
Ciccolella is one of the largest players in trading flowers and plants on the European market with a turnover of € 346 million in 2010; it is active in both the retail and wholesale segments of the market. Its parent company is listed at the stock exchange of Milan. The Group strategy foresees a further development and diversification of the production and trading activities, and an integration of the agricultural cultivations with the production of energy from sustainable sources, favoring the sustainability of the production and the respect for the environment.