Europe's gas shortages have boosted demand for flowers from East Africa, although Kenya, a major producer, is struggling to grasp the opportunity because of freight capacity constraints.
Soaring gas prices are eating into the margins of greenhouses in the Netherlands and elsewhere in Europe. Some producers are cutting their growing seasons short to cut back on fuel use -- forcing buyers to look for alternatives.
“It's a wonderful opportunity for us and Kenya,” said Tewodros Zewdie, executive director of the Ethiopian Horticulture Producers Exporters Association.
“We generally have better labor, energy and freight costs that have brought a lot of interest, and we are expecting more,” he said by phone from Addis Ababa.
Gas Crisis Hits Food as Giant Dutch Greenhouses Go Dark
Ethiopian growers can pounce on the situation in Europe and readily export their blooms because of abundant freight space on the national carrier, Ethiopian Airlines. Not so for Kenyan producers, who supply about a quarter of the cut flowers sold in Europe. About 70% of Kenya's blooms go through Amsterdam.
A 1,000-ton-per-week shortfall in freight space that's left cold storages full has been compounded by a 10% jump in shipping costs effective Oct. 1, according to the Kenya Flower Council.
“We have the volumes, we have the demand in the market, but freight is a major issue,” Clement Tulezi, the council's chief executive officer, said by phone from Nairobi. “We are in a desperate situation. In about two weeks, we are expecting bigger demand, so if we don't have the capacity, it will be a shame.”
Kenya's horticultural exports, including fruits and vegetables as well as flowers, were worth 151.2 billion shillings ($1.37 billion) in 2020, according to industry data. Comparable Ethiopian exports were worth $530 million in the fiscal year that ended July 7.
©2021 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
