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.

The standards of FLP, its audit principles and its checklist comply with the FFP benchmark document. To market their produce as well under FFP the actual 38 FLP growers, coming mainly from Ecuador and Germany, only have to register their company with FFP. “With this benchmark FLP has opened additional marketing channels for its certified producers,” explains Gertrud Falk, president of FLP. The growing assortment of FFP cut flowers and plants is awaited eagerly by the international trade. “With this new approved certification program, the FFP ‘umbrella’ consumer label in the meantime works together with 6 certification programs, equal to the FFP standard” says Regina Dinkla, executive manager of FFP.

Certifications meeting the FFP standard
The FFP standard is based on the ICC (the International Code of Conduct of social responsible and environmental friendly flower production) and environmentally equal to MPS-A. Worldwide there are several certification programs focussing on sustainable aspects. Fair Flowers Fair Plants’ aim is to have a general consumer label for different b-to-b certifications. Over the past years various certification programs have been compared to the FFP standard and in the meantime accepted as approved certification schemes for FFP participation.
These are: MPS Socially Qualified, Fiore Giusto, Kenya Flower Council Silver Code of Practice, Forest Garden Products, Control Union Fair Choice and Flower Label Program.

Flower Label Program
FLP has been the first label implementing the ICC. Being a multi-stakeholder association, FLP’s strength is the close contact to it’s producers, traders and flower consumers. Besides certification and marketing, FLP offers workers trainings and has recently published material on workers’ rights for all workers of it’s Ecuadorian farms.

Source: FFP

A hundred years on, FloraHolland is a still-growing, internationally-active auction company: each day, the cooperative sees 8,000 Dutch and foreign growers delivering their flowers and plants; 2,500 professional customers (including many exporters and wholesalers) doing their purchasing; and a staff of well over 4,000 come to work. The auction has a turnover of 4.1 billion euros and sells more than 12 billion flowers and plants a year, making it a significant contributor to the Dutch economy.

So big but still a cooperative
Despite their ever-growing reach and scale, these flower auctions remain cooperatives. In other sectors of the Dutch economy, too, the number of cooperatives is currently on the rise — which goes to show the strength of this form of organization, even in harder times.

Of FloraHolland’s 8,000 suppliers of flowers and plants, 5,000 are members of the cooperative. Together, these individual entrepreneurs are the owners of the auction company, electing nine flower and plant growers from among their own number as the Cooperative Board, and — assembled as the General Members’ Meeting — having the final say in the running of the cooperative.

The aim of the cooperative, which is a nonprofit venture, is to obtain the best possible prices for its members’ flowers and plants, for the lowest possible operating costs.

Auction clock in constant development
The first generation of mechanical auction clocks bears little resemblance to today’s virtual clocks. Yet their purpose and operation remain unchanged: to bring together supply and demand for flowers and plants each day in a focused and transparent manner, in order to elicit the best market price currently available, at the moment that the downwards auction price is stopped with a sale. The technology of these clock systems has been in constant development over the past century. Even in 2011, the auction clock — now projected overhead or remotely accessed — remains a vital sales tool. The future of the auction clock will see ongoing investment not only in digital sales technologies but also in mediating (via FloraHolland Connect) direct transactions for flowers and plants.

Increasingly international
Roughly 85% of the total auction sales is exported by trading companies, to approximately 140 countries. The most important customers are in Western Europe, particularly in Britain, France and Germany. The strongest growth markets for Dutch flower exporters are the Central and Eastern European states and Russia.

Both in the Netherlands and in export markets, flowers and plants grown abroad are increasingly being sold alongside Dutch products, making FloraHolland flower auction — which imports from 60 countries — a commercial and logistics hub. As the largest auction organization in the world by a long way, the cooperative brings together international supply and demand.

Source: FloraHolland

Importing fresh flowers through Belgium was, and still is, easier, due to the availability of night flights, handling benefits, lower costs, and smoother customs procedures and phytosanitary checks.

For as long as they last, the advantages are worth the effort (see figure).

Source: ProVerde

“Kenya risks taxation on its exports to Europe by virtue of economic strength if the trade talks stall”, Mr Bernard Rey, head of the European Delegation told players in the horticulture sector. “EAC should realise the risks of the current situation of uncertainty. Burundi, Rwanda, Tanzania and Uganda, all are least-developed countries, will enjoy duty-free quota access to the EU markets even if the EPA (economic partnership agreement) is not signed,” Mr Rey
said. “But Kenya will risk seeing tariffs imposed on a good number of exports to Europe including horticulture products”.

The EU said it was concerned that negotiators from the East African team are yet to respond to its latest move to relax their position over the terms that need to be met for a new trade pact with East Africa to be concluded, frustrating the talks.

The region —under the EAC bloc— has been negotiating the contents of EPAs with European Commission since 2007 — the deadline that World Trade Organisation gave its members to scrap all the non-reciprocal preferential trade agreements such as the ones Europe used to extend to its former colonies.

For Kenyan exporters, this legal void has created a lot of uncertainty. They cannot tell for how long the European Commission will continue to extend the preferential trade relations. And even as those preferential terms last, exporters are well aware of the enormous risk they are exposing themselves to since there is no treaty to turn to in case of a dispute. “Growers are looking to the EU being an important destination for the Kenyan products to hasten the negotiations and provide assurance that whatever happens, Kenya, under special circumstances, will not be worse off,” said Kenya Flower Council in a statement.

Source: Business Daily

But what was the actual result for the supermarkets and what was the real result according to the figures? Following a good annual tradition Marketing Map prepared their report.

At the top of the Belgian distribution market the same trio is in control. Colruyt, Carrefour (including Champion) and Delhaize together control more than 70% of the market. Colruyt remains the market leader, whilst Delhaize overtook the duo Carrefour-Champion and became second (+0,4%).

And despite deserving attempts of their competitors it does not look like quick changes in the offing. Aldi with a critical mass of 450 shops is closest, but the hard discounter experienced a decrease in turnover last year for the first time in its history. It was only -0.5% and the chain achieved a cumulative increase in turnover of 2% in 2011 again. The complete Belgian hard discount sector (being Aldi and Lidl) has a market share of 16.8%.

Source: Retaildetail.eu (11/7/2011)

The European Commission must, however, first carry out impact assessments to weigh up the feasibility and potential costs of applying the rule to unprocessed foods. Another novelty will be the introduction of compulsory nutritional values. According to the new regime, the energy content and amounts of fat, saturated fat, carbohydrates, sugars, protein and salt must all be stated in a legible tabular form on the packaging together and in the same field of vision. All this information has to be expressed per 100g or per 100ml. It may also, in addition, be expressed per portion. It should also become easier for consumers to inspect whether a product contains allergenic substances as they will have to be highlighted in the ingredient list. The new rules also state that information on allergens must be given for non-packaged foods, for example on food sold in restaurants or canteens.

Member states may decide how the information is to be made available to consumers. Consumer groups positively welcomed the new rules even though they expressed dismay at the exclusion of alcohol – a big lobbying industry. “Why doesn’t the alcohol industry do it? If it’s such a natural product why is it such a big secret,” said Marianne Skar, from European Alcohol Policy Alliance. European Health Commissioner John Dalli said plans to include alcohol in the new legislation could still be in the pipeline. “On alcohol, I believe we will be making our own studies to see whether we can come to an arrangement to have some type of nutrition information on alcoholic beverages,” he said. Traceability of Europe’s food became a major issue during the recent E. coli outbreak.

Source: Times of Malta.com

2010/11 Production
The 2010 fruit crop in Poland amounted to 2.7 million tons, which was 25 percent lower than in the previous year. Tree fruit crops were lower by 29 percent (including 30 percent fall in apples) and berry fruits by 3 percent. Only raspberry, chokeberry, and high bush blueberry crops were higher than in 2009. Production of field vegetables fell by 12 percent to 4.25 million tons. The biggest losses were reported for onions, cabbages, carrots and cauliflowers. Production of vegetables under cover decreased by 4 percent and is estimated at 760,000 tons. Decrease of the production in Poland resulted from unfavorable weather conditions for crop husbandry during the whole 2010/11 growing season. Fruit preserve production decreased by 10 percent to 730,000 tons. Total production of soft juices, nectars, and fruit and vegetable drinks decreased to 1.55 million tons in 2010/11 from 1.59 million tons in 2009/10. Production of concentrated soft fruit juice decreased more than 25 percent and is estimated at the level of 35,000 tons. The highest drop was reported for concentrated apple juice (by approximately 33 percent) and concentrated cherry juice (by 75 percent). Production of concentrated apple juice is estimated at the level of 140,000 tons and cherry juice at only 3,500 tons. Production of concentrated strawberry juice decreased by 40 percent to only 4,000 tons, and concentrated raspberry juice fell by 20 percent to 1,900 tons. In 2010/11 production of concentrated red currants juice decreased to 3,000 tons from 3,200, and production of concentrated chokeberry juice decreased to 4,500 tons from 5,000. Only production of concentrated black currant juice increased from 12,500 to 13,000 tons. In 2010/11 frozen fruit production decreased by 5 percent (to 310,000 tons), mainly due to decrease of strawberry, tart cherry, plum, red currants and gooseberry. Production of frozen black currant has been reported stable, and frozen raspberries noted 5 percent increase.

In 2010/11 vegetable preserves production remained flat at approximately 1 million tons; only the production of dry vegetable and tomato concentrate production was reported to be lower.

2010/11 export and import
Institute of Food Economics reported that 2010/11 export of nearly all fruits, vegetables and preserves was lower than in the 2009/10 season. Only the export of cucumbers, tinned vegetables and dried vegetables was reported to be higher. The total export of fresh fruits and vegetables in 2010/11 amounted to approximately 1 million tons, compared to 1.4 million tons in 2009/10. The deciding factor was the lower export of apples and onions. Export of fruit and vegetable preserves decreased by 14 percent to 1.06 million tons (1.23 million tons in 2009/10). The largest reduction (36 percent) was reported for fruit juice concentrates (to 170,000 tons). Frozen fruit export decreased by 6 percent to 270,000 tons. Frozen vegetable export fell by 10 percent to 300,000 tons. The import of so called exotic fruit and preserves was lower (mainly reserved for concentrated citrus juice). Import of nearly all vegetable products increased (mainly onion, cruciferous vegetable, and tomato concentrate); however decreases were noted for cucumber, lettuces, pickled vegetable and canned corn.

In 2010/11, both export and import prices of most fruit, vegetable, and their preserves increased year over year. As a result, incomes from exports increased by 5 percent (equivalent to EUR 1.67 billion) while the import value of the whole product complex increased by 14 percent (equivalent to EUR 1.79 billion). The negative balance of foreign trade balance for this complex, however, turned negative (EUR 127 million); in comparison to a 2009/10 positive balance (EUR 11 million).

Source: USDA Gain Report (8-7-2011)

The market research workshops are designed to be practical and focus around individual and group exercises to complement the short blocks of theory.

Among the topics dealt with in the workshop are:

• What is market research, primary & secondary research, desk & field research
• Market research process
• Online and offline market information sources
• Free market information sources on the internet
• What are market access requirements, and where to find them
• Search engines, portals & directories
• Finding buyers through online sources such as online business directories, trade associations and E-marketplaces
• Market Research Strategies
• Interview techniques

Source: ProVerde

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