Kenya's medium-scale flower exporters could shore up their earnings by selling directly to buyers rather than through the auction in the Netherlands, according to World Bank research.
Small and medium producers make up 80 per cent of Kenya's total horticulture industry, which earned the country some Sh4.4 billion ($64 million) from the sale of cut flowers, fruits and vegetables in 2006. But the research outlines how such operations might be losing out by focusing entirely on the Holland auctions.
"One of the problems in the flower sector is that medium-scale exporters sell 100 per cent of their consignment through the (mainly Dutch) auction system," says the report, Can Sub-Saharan Africa Leap into Global Network Trade? "As competition becomes increasingly stringent, support is required to identify and form linkages for medium-scale rose exporters to gain effective access into the direct sales market," it says. According to the report, Kenyan cut flowers are "over represented" at the Dutch auction, resulting in a displacement of medium exporters.
Industry estimates show that close to two-thirds of Kenya's cut flowers find their way to the Netherlands auction, from where they are bought by wholesalers for re-export to markets such as the United States and Japan. But Kenyan exports, which are often two to five days old, must compete directly with local and regional producers at the auction house. This disadvantage is aggravated by the fact that from the auction house, the consignment is redistributed to various points of sales- reducing the flowers' vase-life and their value, according to the report.
But the issue could be effectively addressed through a direct sales system that cuts down on the "farm-to-vase" time. Such a system is used, for example by most Latin American cut-flower exporters, who use firms with distribution channels that reach both wholesale and retail markets.
Business Daily
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