Kenya Bets on High Season to Double Flower Exports Amid Rising Taxes and Stringent EU Standards

Kenya’s flower industry is poised for a significant boost as the sector prepares for the high season, with flower exports expected to double in the coming months. According to the Kenya Flower Council (KFC), the sector, which is a crucial contributor to Kenya’s economy, is looking to overcome the challenges posed by rising taxes and stringent European Union (EU) standards to achieve this growth.

Currently, Kenya exports approximately 6,000 metric tonnes of flowers per month, mainly to the EU, which serves as the primary market for Kenyan flowers. However, as the high season approaches, exports are projected to increase to 12,000 metric tonnes per month, driven by demand for the Christmas and Valentine’s Day periods. Clement Tulezi, CEO of the Kenya Flower Council, expressed optimism about the sector’s potential despite the obstacles it faces.

“Currently, we are doing 6,000 metric tonnes per month, and we expect this to double by November when the high season kicks off,” Tulezi said during a press briefing in Naivasha. He highlighted the sector’s resilience and its significant contribution to Kenya’s economy, generating Ksh 110 billion in foreign exchange annually.

However, the road to achieving these targets is fraught with challenges. One of the major issues facing the sector is the increasing number of taxes imposed by both national and county governments. According to Tulezi, the flower industry is currently burdened with 52 different taxes, which significantly impacts profitability and competitiveness.

“Currently, we are paying 52 different taxes to the two levels of government despite the economic impact we have in the country by earning Ksh 110 billion through exports,” Tulezi noted. He also pointed out the government’s failure to refund over Sh10 billion owed to farmers through Value Added Tax (VAT) refunds, further straining the sector.

The high cost of flower production in Kenya compared to neighboring countries like Ethiopia is another concern for industry stakeholders. Kenyan farmers are currently paying around $2.7 per kilogram of flowers, whereas their counterparts in Ethiopia pay only $1.9 for the same weight. This price discrepancy puts Kenyan flower exporters at a competitive disadvantage, especially in markets where price sensitivity is high.

In addition to the financial challenges, the sector is also grappling with environmental and regulatory issues. Rising taxes and levies, coupled with stringent EU standards, have had a significant impact on the flower industry. Chris Kulei, Chairman of the Kenya Flower Council, emphasized that the Council is actively engaging the government to address these emerging challenges.

“The rising numbers of taxes and levies coupled with stringent standards by the EU have a major effect in this critical sector, and we are engaging the State on the same,” Kulei said. He expressed optimism about the sector’s growth prospects, noting that the flower industry directly employs over 200,000 people, thus playing a crucial role in Kenya’s socio-economic landscape.

The situation is particularly dire for small-scale farmers, who are disproportionately affected by the rising costs and regulatory burdens. Disha Copreaux, CEO of Redland Roses, highlighted the plight of small-scale farmers who are struggling to cope with new charges and stringent standards. She also noted the emergence of a new pest that has further complicated production and export processes.

“There is a new pest that has affected production and exports to the EU, and these, plus rising taxes and unpaid VAT refunds, have a negative impact on the farmers,” Copreaux said. Despite these challenges, there is a concerted effort by the Kenya Flower Council and other stakeholders to navigate these hurdles and ensure the continued growth of the sector.

As Kenya enters the high season, the flower industry’s ability to double its exports will be a critical test of its resilience and adaptability. While the challenges are formidable, the sector’s strong foundations and strategic engagement with the government offer hope for a brighter future.