Research: Kenya Flower Trade

Research

The cut flower trade from Kenya 14th February 2018 ❃ www.gluengo.com

African roses From Kenya with love

Every February, farmers in Naivasha, Kenya, are busy picking roses and other flowers to sell for Valentine’s Day. This African country is one of the biggest exporters of cut-flowers in the world.

Floriculture is an equation between the life of a cut flower and the time required to get it to market.

Isn’t it surprising that flowers for this special day came from thousands of miles away? To make it happen, Nairobi airport has a terminal purpose-built for the export of flowers, that arrive to the main markets of Europe and US, as well as Russia, Middle-East and even Australia.

Bloody Valentine This business doesn't grant "La vie en Rose" for all

The flower industry is one of the pillars of the Kenyan economy, but with a counterpart: overexploit the soil of the population living.

Besides, the pickers of roses earn around $1.25 per day, on the threshold of extreme poverty.

The flower industry is also causing environmental damage: deforestation, low consumption water levels, increase in informal settlements (where workers live) and contamination by fertilizers and pesticides. In the face of criticism, flower growers have put in place various mechanisms to mitigate their impact, also as a way to improve their reputation.

The bouquet

MAP OF RELEVANT ISSUES - DELIVERABLE 1

Issue map

LINK TO TEMPLATE

ENVIRONMENT

SOCIETY

POLITICS

TRADE

BUSINESS

PRODUCT

25.3%

1st

GDP is sourced by agriculture (1.1% by flower industry)

African exporter, 3rd worldwide (11% global exports), after Netherlands (44%) and Colombia (15%)

500,000

38%

Kenyans rely on the floriculture industry

UE market share.

UE is the main market for Kenyan flowers followed by the US

+100,000 flower employees, mostly women (75%) having an impact on over 2 million livelihoods

Floriculture is one of the top foreign exchange earners for Kenya, generating approximately US $ 1 billion annually. It has recorded growth in volume and value of cut flowers exported every year from 86,480 tons in 2006 to 133,658 in 2016 .

Data source: Kenya Flower Council, 2017. Photo credit: africa924/Shutterstock.com

NL&UK are the top markets in Europe

Flower power

MAIN STAKEHOLDERS - DELIVERABLE 2

Types of stakeholders GLOBAL STAKEHOLDERS (GAME-CHANGERS) Stakeholders affecting not only this topic but also wider ones in the global agriculture as well as the trade between developed and non-developed countries.

Governments from the top cut-flower exporting and importing countries The European Union UN (with programs as UNDP, UNEP) International organizations (WTO, WCO, OECD, IMF, FAO, ILO,...), Financial institutions (World Bank Group, IFAD, African Development Bank,...)

Research centers

SPECIFIC STAKEHOLDERS (TOP 10) Stakeholders specifically related with the cut flower trade from Kenya and influencing it are the analysis focus. They are the key nodes.

Selection criteria RELEVANCE The capacity of the selected stakeholder to address the topic and face its challenges.

RELATION The capacity of the selected stakeholder to interact and link with others at the same or higher level.

AUTHORITY The capacity of the selected stakeholder to take binding decisions for itself and others.

REPRESENTATIVENESS The capacity of the selected stakeholder to represent an amount of people with the same interests.

IMPACT The capacity of the selected stakeholder to directly affect the topic. RISK The capacity of the selected stakeholder to quickly change its position, negatively affecting the topic/other stakeholders.

INFLUENCE The capacity of the selected stakeholder to change/modify perceptions and actions about the topic.

DIVERSITY A range of different stakeholders are analyzed.

European Parliament: INTA BERND LANGE, CHAIR (2014-CURRENT) The Committee on International Trade (INTA) is a committee of the European Parliament responsible of the EU’s Common Commercial Policy (European Commission's Directorate General for Trade is in charge of its implementation). EP has the final say on entry into force of all trade agreements.

Since 2007, EU and EAC (East African Community) have been negotiating a Economic Partnership Agreement (EPA) that requires all EAC states commit for it to take effect. The deadline for signature was missed several times, and postponed sine die. It had few consequences for EAC states but Kenya, being the only one not classified as LDC (Least developed country- not paying export taxes to the UE under the Everything but Arms preference scheme).

Kenya should have lost duty-free/ quota-free market access because the EPA was not concluded by February 2017. However, as Kenya individually signed the EPA, the country still benefits from EU market access. INTA is responsible for the dossier of the EAC-EU EPA that holds Kenya situation.

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KENYA'S SITUATION IN TERMS OF EXPORT TAXES AND QUOTA TO THE EU DEPENDS ON INTA DECISIONS

Main market

US International Trade Commission RHONDA K. SCHMIDTLEIN, CHAIRMAN (2017-2018) JASON KEARNS, NEXT CHAIRMAN FROM JUN 2018?

The United States International Trade Commission is an quasi-judicial, federal agency of the United States that determines the impact of imports on U.S. industries and directs actions against unfair trade practices, such as subsidies, dumping, etc.

The African Growth and Opportunity Act (AGOA) aimed at fostering U.S. trade with Africa, has helped encourage flower exports on a limited basis and was extended for 10 years in 2015.

USITC chairman will leave her position in June 2018. On June 26, 2017, Jason Kearns has been nominated by US President Donald Trump to serve as the next Commissioner.

More protectionist practices could lead this agency.

USITC AFFECTS EXPORTS TO THE US, THE 2ND BIGGEST MARKET FOR KENYAN FLOWERS AFTER EUROPE

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Δ Market

Kenya's Ministry of Agriculture, Livestock and Fisheries RICHARD LESIYAMPE, PRINCIPAL SECRETARY STATE DEPARTMENT OF AGRICULTURE (2014-CURRENT), PREVIOUSLY PS, ENVIRONMENT AND NATURAL RESOURCES (2013 - 2015) The Ministry of Agriculture and its State department implement regulations affecting the cut flower industry, instrumental to Kenya’s achievement of its Vision 2030 goals.

The floriculture industry in Kenya is driven by foreign capital: both the shareholders and top managers of the majority of the farms are predominantly European, not Kenyan. The Ministry of Agriculture controls import and export permits. PPP and international agreements affecting the local flower industry must be signed and/or review by it.

General control of pests is also among its functions. In 2014, Kenya suffered export restrictions on fresh products to the EU due to presence of harmful organisms/pests.

REGULATES THE USE OF KENYA'S AGRICULTURAL RESOURCES, CONTROLS PESTS AND IMPORT/EXPORTS PERMITS

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Resources

Kenya Flower Council CLEMENT TULEZI, CEO (2018) -JANE NGIGE, PREVIOUS CEO (2004-2018)KFC represents independent Kenyan cut flower growers and protectis the image of the industry in overseas markets.

KFC participated as a lobby when EU imposed taxes on Kenyan fresh products (as cut flowers) in October 2014, lifting them months later. It also encourages Kenyan producers to meet the rules of the importing nations via certifications and its own KFC Code of Practice (CoP).

In 2016, KDC, Fairtrade Africa and Workers' Rights Watch launched a Sexual Harassment Policy for Flower Farms. KFC also interacts with the Federation of Kenyan Employers (an affiliate of Kenya's Labour Ministry), trade unions as Kenya Plantation & Agricultural Workers (KPAWU) and the Lake Naivasha Growers Group, among others.

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Industry THE MAIN ASSOCIATION REPRESENTING THE LOCAL INDUSTRY, ALSO AUDITING AND SETTING CODES OF PRACTICE/ CERTIFICATIONS

Union Fleurs, International Flower Trade Association SYLVIE MAMIAS, SECRETARY GENERAL (2011-CURRENT) Union Fleurs is as international umbrella organisation for national associations. African organizations and industry leaders are among its members.

Union Fleurs is the only specialized flower-trade association lobbying with the Brexit negotiators in Brussels for the importance of securing plant and flower exports to the UK (UK is the 2nd destination market for Kenyan flowers within Europe, that are usually directly sold to the UK wholesalers and supermarkets. The Netherlands is the 1st market, where leads the auction system).

Sylvie Mamias is also leading SACAR, the Agricultural Trade Associations representing various European agricultural trade associations towards the European institutions.

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INDUSTRY LOBBY ADDRESSING THE BREXIT PROCESS (UK IS AN IMPORTANT MARKET FOR DIRECT SALES OF KENYAN FLOWERS)

Lobby

Royal Flora Holland/ Aalsmeer flower auction STEVEN VAN SCHILFGAARDE, CEO (2018-2021) The Aalsmeer flower auction is the largest flower auction in the world, selling more than 20 million flowers daily (+15% around Valentine's/Mother's Day).

The marketing channels in the industry are changing: buyers and growers are getting large and more often deal directly between one to another eliminating the auction system. Anyway it is still a global key: approximately 50% of exported flowers to the UE are sold through Dutch Auctions (KFC 2017). The price of Aalsmeer influences it on the rest of the world, new trends of flowers and colors are fixed there.

Royal FloraHolland is going through major changes. With digitalization the workforce has decreased 10% in 5 years. Former CEO Lucas Vos resigned in late 2017 and COO also announced his departure after 11 years in RFH. As a result, the CFO (previously managing an ICT company) become the new CEO in Jan 2018.

KEY AGENT FACING THE SHIFT FROM THE TRADITIONAL AUCTION SYSTEM TO DIRECT AND ONLINE DISTRIBUTION CHANNELS

LINK TO REFERENCE

Buyer/ Seller

Oserian Development Group/ Oserian flowers NEIL HELLINGS, MANAGING DIRECTOR (2015- CURRENT) It is Africa’s largest producer of roses and carnations, producing a million stems a day and employing 4400 full time staff.

It also directly trades cut flowers, beeing a leading exporter to the UK, where Oserian supplies flowers to supermarkets and big sellers ( Sainsbury’s, Morrisons, the Co-op , Aldi FairTrade- and Tesco, Asda, and Waitrose - Non FairTrade products-).

Promoted in 2015 as part of a Corporate re-structuring, the MD leads an ambitious expansion plan while facing the negative news regarding the company (Workers at Oserian complained over low wages and poor working conditions, corruption investigations after Fairtrade funds case in 2016, etc.) with social projects, and CSR practices.

THE BIGGEST PRODUCER IN THE COUNTRY, A REFERENCE IN DIRECT SALES, COULD GUIDE OTHER WITH ITS PRACTICES

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Producer

Ethiopian Horticulture Producer Exporters Association TEWODROS ZEWDIE (2013-CURRENT) EHPEA aims to make Ethiopia a leading African country exporting horticulture products, as flowers. Some of Kenya’s lead flower industry companies have become powerful intermediaries, both sourcing from and producing in Ethiopia and establishing there.

Ethiopia has pursued foreign direct investment (FDI). EHPEA works with the Ethiopian Investment Commission (EIC) and the Ethiopian Horticulture Development Agency(EHDA) for this reason. Strong interactions exist between the CBI – the Dutch Centre for the Promotion of Imports from developing countries – and EHPEA. The Ethiopian brand is not yet established in the world flower industry, but thanks to incentives for foreign investors (5-year tax exception, access to loans from the Development Bank of Ethiopia, exemption from imports and export customs duties), the flower industry is blooming (10 years ago Ethiopia was a minority exporter and now is the 5th worldwide, at the same level 9% of Ecuador).

ETHIOPIA FLOWER INDUSTRY IS ATTRACTING FOREIGN INVESTORS AND GROWING QUICKLY, COMPETING WITH KENYA

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Competitor

FSI 2020, Floriculture Sustainability Initiative TONY BRUGGINK, CHAIRMAN (2013-CURRENT) The Floriculture Sustainability Initiative was initiated with the aim to have 90% flowers and plants responsibly produced and traded by 2020 by its projects. members (supply Chain. Growers, Traders, Retailers, Standards, Banks, Civil Society organisations,...) from Europe, Africa and South-America.

Tony Bruggink, Chairman of FSI, is also Program Director at the Dutch Sustainable Trade Initiative (IDH). IDH was the convenor and one of the major donors of FSI. FSI takes part in the IDH Fresh & Ingredients program and FSI projects and start-up process are co-funded by IDH.

LINK TO BIO A HUB OF PROJECTS AND PLAYERS FROM BOTH SUPPLYING AND DEMANDING COUNTRIES FOCUSED IN RESPONSIBLE TRADE

Projects

USAID, US Agency for International Development TINA DOOLEY-JONES, ACTING MISSION DIRECTOR (2013-CURRENT) USAID has been working in Kenya for over 50 years (The UN Office was established in 1996). USAID worked with Kenya’s Ministry of Agriculture to establish national policies and helped to establish Egerton University as Kenya’s largest agricultural school.

USAID's Kenya Horticulture Competitiveness Project (KHCP), in active from 2012 to 2015 with a $34Million budget, focused to improve productivity, value-addition and marketing systems (UNDP and UNEP projects are not specific in the industry).

Previously USAID partnered with US agribusiness as giant Monsanto in projects in Kenya (Genetic Improvement of Cowpea 2003-2004, among others -Kenya banned GMO in 2012).

REFERENCE DEVELOPMENT AGENCY IMPLEMENTING PROJECTS DIRECTLY ADDRESING KENYAN AGRICULTURE COMPETIVENESS

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Int. Aid

More buds

EXTRA: OTHERS TO WATCH (PR AND COMMUNICATIONS)

Denouncing NGOs Kenyan flower producers enjoy an advantage compared to their South American and European peers since they are able to achieve large-scale production of good-quality flowers for competitive prices, but they are accused of social and environmental dumping.

NGOs depict Kenyan flower industry as a profoundly unsustainable business, both environmentally and socially (especially due critical of labour conditions ). For many flower harvesters, safeguarding their rights is primarily managed by trade unions and local NGOs, the workers speakers to international audiences and media (WWF, Worker rights watch,.).

They address specific topics (Hivos International focused in the violations of female staff, Solidarités International addresses the water conflicts, Dig Deep hygiene conditions,... ) and also call for action (In 2002 Kenya Human Rights Commission issued an ultimatum to improve working conditions and ONGs in the Ethical Trading Initiative followed menacing to boycott Naivasha-based flower producers for the same reason. In 2015 International Alert held a Valentine’s exhibition "Peace blooms" in London).

NGOS GENERATE INTERNATIONAL DEBATE ABOUT THE ENVIRONMENTAL AND HUMAN RIGHTS PROBLEMS CAUSED BY THE FLOWER INDUSTRY IN KENYA

Activism

Star florist Simon Lycett A world-renowned floral decorator and stylist, Simon appears on UK TV and radio, specially BBC programs. He addressed the Kenya Roses trade in the BBC2 documentary "The World's Biggest Flower Market" by BBC/ Endemol UK (2016). ' Member of the BFA - British Florist Association, he is active in social media (10.3k followers on Instagram, 6.4k followers on Twitter). Although not hugely followed by the mainstream public, he is a reference in the flower industry.

The Beckhams' wedding, Elton John's 50th birthday party and the wedding reception of the Prince of Wales and the Duchess of Cornwall were all florally furnished by Simon's team , that also work in charity dinners, movie sets and all kind of events for Royal Houses and some of the wealthiest people in the UK.

LINK TO BIO PORTRAYED THE EFFORT THAT GOES INTO GETTING FLOWERS FROM KENYA IN ONE OF ITS BIGGEST DIRECTS MARKETS: UK

☆Florist

Environmentalist Joan Root movie?

In 2006, the shooting of environmentalist Joan Root at her farm in Lake Naivasha, shocked the entire conservation world. She was idolized for her pioneering wildlife films and devoted herself to save the lake from the ecological ravages of flower industry.

Despite her death, her figure is still a constant reference for media and environmentalist. Besides, Mark Seal's biography of Joan Root was published

by Random House in 2009, and Working Title Films optioned the movie rights for Root's story.

The movie project is proposed but in stand-by since 2007. Its producers Title’s Tim Bevan and Eric Fellner planned to cast Julia Roberts (previously interested in Joan Root character), as stated in Cannes Film Festival that year.

IT MIGHT REACH A WIDE AUDIENCE AND GENERATE AWARENESS ABOUT THE DANGERS OF THE CUT FLOWER INDUSTRY IN KENYA

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Movie?

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GEMMA LUENGO www.gluengo.com

+34 619 694 245 gemma@gluengo.com