Horticulture seen to hit Sh30bn on high output

Horticulture earnings are projected to rise by Sh30 billion this year on the back of the easing cost of living crisis in Europe. FILE PHOTO | NMG  

By GERALD ANDAE More by this Author

Horticulture earnings are projected to rise by Sh30 billion this year on the back of the...

easing cost of living crisis in Europe, a strong euro and improved production locally.

Exporters in the industry project better prospects this year as most of the European economies stabilise following last year’s upheaval caused by the Russia-Ukraine conflict that nearly paralysed global trade.

Horticulture earnings dipped by Sh12 billion last year, marking one of the sector’s worst performances in a decade. Returns from fresh produce dipped to Sh120 billion in 2022 from Sh132 billion previously.

Read: Europe's inflation cuts Sh12bn horticulture income

“So far we have witnessed good rains that will improve production, coupled with a strong euro and easing tension in Europe will boost our earnings by at least Sh30 billion this year,” said Okisegere Ojepat, chief executive, of Fresh Produce Consortium of Kenya.

The common currency has gained by 12 percent against the shilling this year, exchanging at Sh148.16 per unit, up from Sh131.26 at the beginning of January

Horticulture exporters to Europe are paid in euros, and those to the UK using the pound, which has gained by 13.3 percent against the shilling since January.

Speaking on the sidelines of a meeting organised by Absa on Wednesday, Mr Ojepat said the horticultural sector was caught in the middle of the Russia-Ukraine war last year and a severe drought that impacted production on farms after rains failed for a fifth consecutive time.

Mr Ojepat said this year farmers will earn more as exporters are predicting more returns because of the prevailing good business environment.

The sector wants the government to hasten the process of refunding their value-added tax, which now amounts to Sh5 billion. They say this will help in boosting their revenue following a bad season last year.

The war between the two countries started at the end of February last year, taking a toll on the European economy as it eroded consumers purchasing power.

Last year, the average consumer price growth in the Eurozone — a group of 19 countries which use the euro as a common currency — climbed to 8.35 percent compared with 2.4 percent a year earlier.

Kenyan exporters had complained that the runaway inflation was eroding consumer purchasing power in the Euro area and the UK, the main destinations for cut flowers, fruits and vegetables.

Read: UK assures Kenya on horticulture

The inflation pressure in Europe saw consumers direct their income on essential goods such as energy and food, cutting expenditure on luxury goods such as flowers.

Flowers remain a key revenue earner in the horticulture sector, accounting for over 60 percent of the total export returns on fresh produce.

Europe is the largest market for Kenya’s fresh farm produce, buying nearly three-quarters of the country’s horticultural exports.

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