The World Bank, in cooperation with the Kenya Flower Council (KFC), organised a series of video conference-based seminars on topics pertaining to competitiveness in the floriculture industry. The 5th seminar, held on the 29th of November 2011, covered the issue of global competitiveness of floriculture production in the East Africa Region. Representatives from Ethiopia, Kenya, Tanzania and Uganda participated in the videoconference.

ProVerde was asked to prepare an issue paper on the competitiveness of the Kenyan flower industry and by extension the East African producer’s compared to other global producers and exporters. The paper provided an important contextual and experiential learning point for the other countries involved in the videoconference. Results from the study were presented and discussed during the conference.

The paper provided insight into:
- The developments in the global flower industry over the last 10 to 15 years, targeting the EU market. Highlighting experiences and lessons learnt from leading exporting countries.
- A bird’s eye view of the policy and policy guidelines that are operational in the major flower growing countries was given.
- Driving forces for horticultural development were identified. Incentives which really promoted the development of industries in the leading exporting countries are brought to light.
- Existing SWOT analyses of the Kenyan flower industry were reviewed, taking into account results of the preceding videoconferences and lessons learnt in other leading countries.
- Finally, the paper provided recommendations to strengthen the position of the Kenya flower industry for further growth in the next 10 years.

Already a top 5 EU flower supplier, Ethiopia steps up its market drive

Ten years ago, Ethiopian flower exports were virtually non-existent. Today, the country ranks among the European Union’s top 5 fresh-cut flower suppliers and floriculture has become one of the nation’s main foreign exchange earners. Economic woes in 2009 and the effects of the ash cloud in 2010 caused a minor shakeout, but about a hundred growers have emerged from these storms stronger and more eager than ever to consolidate and expand on their export position by stepping up their market drive, improving efficiency and diversifying product ranges.

As far as the flower industry is concerned, the worst of the economic recession seems to be over. Though prices may not climb back to pre-crisis levels, the 2009 slump seems to be a thing of the past, with EU imports steadily rising. Trade figures on the whole suggest the global flower market is rebounding and the mood in the market is one of cautious optimism.

Catching up on Kenya
In Ethiopia, the hard times floored some companies, but also produced a seasoned export sector whose impressive growth since 2000 can no longer be passed off as a fluke. Ethiopia now holds a firm position among the Top 5 EU suppliers – along with Kenya, Ecuador, Colombia and Israel – and an impressive second place among Dutch auction suppliers.

The share of Ethiopian flowers in EU imports doubled from 6% in 2005 to 12% in 2010. Statistics suggest Ethiopia is steadily catching up on Kenya. Kenyan flower exports, like those of Ethiopia, grew robustly over the last decade, however, Kenyan growers appear to have suffered more from the crisis. In 2009, Kenyan exports were down 7% compared to the preceding year, while Ethiopia exported 34% more to the EU. What’s more, preliminary figures suggest similar developments in 2010.

Lean, mean and market-driven
The Ethiopian growers who survived 2009 and 2010 are well aware that long-term success will not come easy. With support from various national and international institutes, these growers are bracing themselves for rigorous self-improvement programmes. Their key growth opportunities, they recognise, lie in becoming leaner and meaner and relentlessly market-driven. This means adopting continuous improvement programmes on the farms to streamline business processes, cut costs and raise the quality of every last detail. It also means developing product ranges according to market preferences, as well as getting online and connecting with the ongoing virtualisation of the flower trade.

Source: Excerpt from article in HortiMagazine (March 2011) “From Newcomer to Recognised Supplier” by Milco Rikken, ProVerde

Growing flowers and other agri commodities in East African nation of Ethiopia appears to be catching up with more and more Indian entrepreneurs. After Karuruti Global made headlines for getting control over hectares of land in the country for its agri business, there are others who are slowly building their presence like Neha International Ltd.

The Hyderabad-based firm promoted by G Vinod Reddy has struck a deal to acquire 49.99% stake it didn’t own in Oromia Wonders PLC, a floriculture unit located in Ethiopia, for an undisclosed amount. With this acquisition, Neha International through its wholly owned arm Globeagro Holdings (acquired in February 2008 that made it one of the largest exporter of roses from Ethiopia to Japan) will own 99.99% in Oromia Wonders PLC.

The company that started business in mid-90s, entered Ethiopia around five years ago. It has sold off farm in Pune and shifted key operations to the African nation where it has two set of land for floriculture as well as foodgrains.

It has expanded beyond being a supplier of flowers to Europe besides Middle Eastern markets in Saudi Arabia, Qatar and UAE. It is now aiming to generate value with cultivation of rice and pulses besides wheat and oil seeds.

It started operations in a phased manner on 4,000 hectares on lease in Ethiopia and in June this year disclosed it has acquired 10,000 acres in Ethiopia through its wholly owned subsidiary as part of diversification into agriculture.

For the 12 months ended June’10, the firm had consolidated revenue of Rs 55 crore with net profit of Rs 13 crore. Growing profitability is also reflected in its stock performance with the scrip zooming almost 11 times over the last one year. At latest traded price of Rs 239 per share, the company has a market cap of around Rs 333 crore.

Companies like Neha International and Karuturi are banking on conducive climate for agriculture in Ethiopia that also offers incentives for investors besides providing a base to target markets in Middle East ad Europe.

Source: VCCircle

Following the success of the previous training activities and upon request of the Ethiopian flower sector, CBI organised four Master Classes as a key activity of CBI’s 2009 floricultural training programme in Ethiopia. The programme was developed in close cooperation with EHPEA and focused on different aspects of flower export marketing.

In the course of the Master Class training series, participants wrote a concise export marketing plan. The structure of the export marketing plan was used as the framework for the special topics covered in the training programme: Corporate Social Responsibility (CSR), post-harvest and logistical requirements, market research in the flower business, getting the best price on the auction, and internal and external communication and client orientation.

The four Master Class sessions were organised in early May, mid June, mid September and early December of this year. CBI trainers included Milco Rikken (ProVerde) who was in charge of coordination and execution, as well as Dana van Hes (E4 Consulting), Jeroen van der Hulst (Flowerwatch), Maarten van Schie (OTV Wageningen) and Maarten van Woerden (Helicon).

The training series was carried out in close collaboration with EHPEA, the Ethiopian Horticulture Producers Exporters Association and the Royal Netherlands Embassy in Addis Ababa.

Below you find a selection of photos of the fourth Master Class Flower Export that was held last Thursday 3 and Friday 4 December in Addis Ababa, Ethiopia. The training activity was organised as part of the CBI/EHPEA training programme for flower exporters in Ethiopia.

On Thursday 3 and Friday 4 December, the fourth and final Master Class Flower Export 2009 will be held in the Global Hotel in Addis Ababa, Ethiopia.

During the training, participants will finalise their work on their individual Export Marketing Plan (the last segments being the action plan and management responsibilities). We will also look into a number of internal communication related subjects like vertical and horizontals communication lines in the farm and change management.

A full block will be used to look into the subject “How to choose the right varieties”. An average rose plant economically produces flowers for about 3 to 5 years. Then the mother plant will be uprooted and replaced. Choosing varieties is one of the critical strategic choices a (rose) grower has to make. The choice depends both on production and market criteria and should be in line with the overall identified marketing strategy. During the training session, important criteria for variety selection are discussed (production vs. market issues). Participants are shown how Product Life Cycle (PLC) analysis can be used as a tool to assist them in choosing the right variety. A number of case studies have been prepared to bring the theory of PLC analysis into practice.

The trade companies of the Dutch Flower Group (DFG) have nominated ten growers for the Dutch Flower Award 2009, amongst which an Ethiopian lily and Costa Rican foliage farm. The award will be handed out on Thursday, October 15th during the FloraHolland Trade Fair in Aalsmeer (formerly known as the Aalsmeer Market).

A total of ten growers have been nominated in the categories flowers, plants and imports. DFG introduced the award eight years ago to put suppliers with exceptional qualities in the spotlight.

This year, the Ethiopian lily farm Langano Lily is one of the nominated companies. Langano Lily is member of the Klaver Lily Group. The Klaver Lily Group decided to start this new business establishment in Ethiopia because of the rising gas prices and the high labour- and investment costs in the Netherlands. Due to the good investment climate in Ethiopia, it is better possible to control the rising costs.

ProVerde would like to congratulate Tekabe Samuel of Langano Lily who participated in the CBI/EHPEA workshop, which was held on 21-22 September in Addis Ababa. The workshop on “External & Internal Customer Orientation” focused on the characteristics of the European flower market channels and understanding customer requirements.

Other nominated farms are:

Category imports:

• Protealinhas from Portugal (protea)
• Langano Lilies from Ethiopia (lilies)
• Helechos de Cuero from Costa Rica (leather fern, tropical foliage)

Category flowers:

• L. en A. Vreugdenhil (chrysanthemum, lilies, antirrhinum)
• Holstein (gerbera)
• Kwekerij Porta Nova (roses)
• Mopabloem (tulip)

Category plants:

• Chris Endhoven (cyclamen, helianthus, platycodon)
• KP Holland (kalanchoe, spathiphyllum, anthurium, phalaenopsis, curcuma)
• Oriental Growers (Lucky Bamboo, bonsai, ficus ginseng)

Authorities at the state-owned Development Bank of Ethiopia have begun contemplating rescheduling the debt repayment period of flower farms based on the farms’ current performance.The current new thinking of the authorities is an outcome of DBE’s credit team’s assessment of the flower farms, a top official of the bank told Capital.

The credit team authorised by the bank to investigate the challenges of the flower sector came up with results that identified quality problems with the flower farms, a lack of managerial supervision and other factors that resulted in poor market performance. The team also criticised the bank’s credit requirement for this specific sector and recommended a way out from the crisis.

The assessment result is now in the hands of DBE’s management and with the Horticulture Development Agency so that the latter can resolve the identified challenges of the sector. “We are currently advising the farms to plant seeds so that they can grow quality flowers,”deputy head of the agency told Capital. Quality products are marketable on the international markets and earnings are better than from exports defined by quantity, he explained. There are 37 flower farms that entered into the sector after getting loans from DBE some five years ago; however, some are currently unable to fully service their debts, which total one billion birr.

Their failure pushed the bank to seize some farms a year ago and hold an auction for five of them; however, no interested buyer emerged. This led the bank to hire experts and to begin administering at least three of them.

The flower sector is now one of the country’s most valuable export industries, regardless of many farms’ incapability to service their debts. The government has a responsibility in considering the current challenges of the sector as it did some years ago to draw investors into the sector, an agro-economist told Capital.

Agricultural and food items, like coffee, cereals, milk, meat, fruits and vegetables, were Ethiopia’s basic export items. There were very few farms engaged in horticultural production until 2001. However, in 2006, Ethiopia was the second largest exporter of large roses to Dutch floral auctions, after Kenya, and the third largest supplier for small roses, after Kenya and Uganda, according to reports obtained from EHPEA.

Source: Capital (28 Sept 2009)

Below you find a selection of photos of the third Master Class Flower Export and the Workshop External and Internal Customer Orientation. Both training activities were organised as part of the CBI/EHPEA training programme for flower exporters in Ethiopia.

New technology for Ethiopian horticulture producers and exporters was introduced during the workshop at the Hilton Hotel on Thursday, September 3 by Australian company, Peakfresh Pty Ltd.

Present at the workshop were Tsegaye Abebe, chairman of the Ethiopian Horticulture Producer Exporters Association (EHPEA), Solomon Sibhatu, managing director of Menagesha Flowers, and Getachew Muleta, marketing and logistics officer of Dire Flowers. There were also the representatives of the Australian company.

The workshop, organized by EHPEA, was to facilitate the use of long sea freight transport for Ethiopian producers by using the new product which could keep flowers and vegetables fresh for up to 21 days.

The new product is a special plastic bag that works by removing ethylene gas, which is released by most fruits and vegetables after harvest; the exposure to this very gas accelerates aging and ultimate deterioration.

The new bags use an organic mineral to remove ethylene gas and prolong the life and freshness of the produce. The bags also have pores through which the damaging gases produced by the fresh produce escape. And it has been successfully tried in Colombia and Ecuador.

The technology will allow exporters to keep the flowers and vegetables fresh for a long time, enabling them to use cheaper transport by sea, cutting transportation cost by 40 to 50pc, after adding the 0.70 dollar cents cost of the plastic bag. The exporters pay 1.85 dollars per kilogram of flowers using air transport.

“Within three months we will make trial voyages and if effective, we will ask the company to have a branch or an agent in Ethiopia,” said Tsegaye.

At the workshop, samples of preserved flowers were displayed, and the attendants of the workshop had the chance to inspect the bags.

“It is a very important product, especially for vegetables which have more weight than flowers,” said Solomon, Menagesha’s managing director.

Three shipping companies: Messina Line of Italy, Mersk Line of Denmark, and Ethiopian Shipping Lines (ESL) all welcomed the product. The two foreign companies had been trying to work out deals with exporters to give them refrigerated container service for shipping their products. Mersk had already, made a trial voyage from Djibouti and Rotterdam carrying frozen strawberries. ESL which does not have refrigerated containers, offered only to provide technical advice and support by using its network with its partners around the world.

“We can even use the plastic bags for very sensitive flowers types in an air trip,” said Getachew, Dire’s marketing manager. He was packaging a sample using the plastic bag at the flower field during his exchange with Fortune.

“The long trip will not affect our market”, he said and added that environment friendly customers would appreciate the new product and the transportation by sea explained Tsegaye.

Source: Addis Fortune (6 Sep 2009)