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The export value of cut flowers and cuttings from Ethiopia has shown a steady rise up to more
than USD 200 million in 2009 (EHDA and EHPEA, 2011).With a good mix of incentives and
active facilitation, the Government of Ethiopia took a non-existing flower sector and developed
it into millions of dollars from the export sector with more than 85,000 jobs created. The sector
is very high on the priority of the Government of Ethiopia, and so the suitable land for investors
has been prepared, creating a better business operating environment, as well as facilitating
adequate cold chain and logistics investments to ensure produce reaches regional and global
markets in an efficient manner.
Based on existing market positions in international trade statistics, three specific regions were
selected as target markets for further development: European Union, Middle East and Regional
Markets in East Africa (EHDA and EHPEA, 2011). In terms of total value of Ethiopian
vegetable exports, the European market has gained a third position after the regional African
markets and the Middle East. Existing Ethiopian producer/exporters are all well linked to the
European importers, either through strategic alliances or based on ownership structure of
vertically integrated companies that control the value chain from primary production to the
supply to retailers. European importers look at new sources like Ethiopia through the lens of
global sourcing programs: they want to serve customers with year-round programs against
competitive prices with outstanding quality. This provides new sources like Ethiopia with
opportunities in terms of supply windows (advantageous seasonality) or price/quality
competitiveness.
2.2.2 Rwanda
Rwanda’s climate and topography are very suited to production of a r
ange of fruits, vegetables
and flowers. A broad band of cool and humid terrain in the west is suited to European-style
fruits and vegetables, including beans, peas, cauliflower, mushrooms, citrus and strawberries.
The warm and humid central-south is ideal for tropical fruits such as banana, passion fruit and
pineapple. The warm and dry north-east is suited to groundnut, sunflower and pulses. In
summary, Rwanda enjoys the same agro-climatic advantages for horticulture as other East
African countries with some additional natural niche advantages due to the diversity of its
topography (Booth et al, 2012).
The Government of Rwanda has identified horticulture as a “jobs
-
intensive” and “investment
-
attracting” sector. An estimated 1.5 million are employed in hortic
ultural production, handling
and marketing in Rwanda. According to (UNCTAD XII Publication), Rwanda produced some
4,633 tons and earned the country over Frw 775 million in 2007. This performance more than
doubled the following year when 13,723 tons were produced fetching receipts of Frw 3.159
billion (Plunnkett, 2008). The performance of horticulture sector has significantly improved
over the past years. One of the main impetuses behind Rwanda’s interest in exporting cut
flowers is the example of nearby Kenya, which in the past 15 years has become a leading
supplier of cut flowers to the European market (Plunnkett, 2008). Unlike the case of major
staples, yields for fruit horticulture in 2009 were already within the regional band
–
between
Kenya and Ethiopia at the top end and Uganda and Tanzania at the bottom. This was before
much investment had taken place in improved planting materials or methods. The government
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considers this as indicative of an extraordinary potential for growth. Rwandan horticulture
seems well placed to benefit from the current revival in global demand for horticultural
products (from China, India and the Gulf more than from Europe) as well as in sub-regional
markets (Congo) and domestically. (Booth et al, 2012).
Most Rwandan horticultural exports go to small retail shops in Europe
targeting African
population resident there, not to the chain supermarkets requiring the Global GAP standards.
(Plunnkett, 2008).
The government hopes to lure investors into the sector and it equally sought
to allay investment fears regarding issues of quality and standardization. Last year (2011),
Rwanda had only three products that merited quality standards but this year the products have
increased to 40. That is a sign of good progress and will continue to ensure that more products
meet the required standards (UNCTAD XII Publication).
The government has supplied some of the infrastructural conditions for Rwanda to become a
global player in horticulture, and has generally played an active facilitating role. It has
constructed a cold storage facility at Kigali airport and a flower park is under construction.
(Booth et al 2012) notes serious problems hitting the sector which among others are small size,
scattered land dedicated for production and lack of high yielding varieties. Other problems
include inadequate post-harvest infrastructure and facilities such as pack houses, cold rooms,
cold trucks, just to name but a few. This is coupled with high transport costs (freight cost and
road transport) and high
costs for packaging materials as there’s no local manufacturer.
Currently, however, commercial horticulture in Rwanda is constrained by series of problems
of market coordination. For the time being, assured production volumes are low. There is a
good deal of work to be done with groups of small-scale producers and their cooperative
structures to establish the right expectations and incentives for producing at high volumes with
the necessary quality standards. Rwanda has already experienced a temporary ban on exports
to the EU because of a failure to comply with sanitary and phyto-sanitary standards. Getting
the industry started on the cultivation side is transaction-intensive, and both the technical and
the commercial learning costs are high. Until this is resolved, storage and transport facilities
will be under-utilised, resulting in unit costs which cannot beat the competition (Booth et al,
2012).
The tentative solutions include mapping land and marshlands for horticultural production and
providing farmers high yield seeds. Already around 15 hectares have been identified for East
African growers to grow avocados whose international demand is very high. As for seeds,
Rwanda agricultural board is helping to produce several resistant breeds but some imports are
also being made from Kenya and Uganda especially for avocados and mangoes. Under the six-
year (2012
–
2017) action plan for the sector, the government plans to construct a modern pack
house with a capacity of 20,000 tones per day in Kigali at a cost of $500,000. It also plans to
construct 30 collection centres at a cost of $1 million, and purchase post-harvest equipment, a
move that is expected to reduce post-harvest losses from 40 % to about 10 % and improve the
quality of export produce. "Currently Rwanda has inadequate post-harvest infrastructure and
facilities. Four cold trucks will be put in place in partnership with the private sector on a 50-50
cost sharing arrangement. The sector is plotting to resort to high yielding varieties of fruits to
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produce at least 147,551 tons by 2012 and increase this to 188,317 tons by 2017, this however
will require some US$ 1.4 million dollars. The country has estimated the needs to increase
vegetable production and it will require some 10,000 hectares and mobilize farmers to increase
area under production (e.g. marshlands, irrigated land and greenhouses). Between 2012 and
2017 the horticulture sector will actually require over US$ 28 million, a hefty but worthy
budget, looking at the potential it holds in the long run. Yet, the whole sector is actually looking
at implementing at least 1,500 projects in 2012 alone and 2,500 projects by 2017. This will
require establishing a Horticulture Investment Fund worth US$ 15 million. Exporters are
looking forward to development of the cargo sector. The structural challenges such as
maintaining supply as well as organizational will be addressed by exporters through organizing
themselves in to a strong cooperative which would give them the ability to export in volumes
and being able to hire cargo planes easily. Aside from the demands by exporters to avail cargo
services, prominent airlines have expressed their wish to invest in cargo services as the market
continually grows.
“Risk and cost
-sharing for airfreight is in consideration where government
pays the difference of freight prices in comparison with the tariffs of Kenya and Uganda
(UNCTAD XII Publication).
Rwanda has started on the process of international certification by Global G.A.P (a key
reference for Good Agricultural Practice (G.A.P.) in the global market) with 29 co-operatives
(involved in horticulture) but the target is to have at least 50 co-operatives certified by 2017 to
help the exporters to penetrate international markets. Through an array of interventions
including agricultural extension agents, land consolidation and tax incentives for value addition
are expected to encourage participation (UNCTAD XII Publication).
2.2.3 Kenya
Horticulture is among the leading contributors to the Agricultural GDP at 33% and continues
to grow at between 15 and 20% per year. The horticultural industry is among the leading
foreign exchange earners and contributes enormously to food security and household incomes
to a majority of Kenyan producers who carry out one form of horticultural production or
another. Of the total horticultural production about 96% is consumed locally, while the
remaining 4% is exported; yet in terms of incomes, the export segment earns the country huge
amounts of foreign exchange (National Horticulture Policy, 2010).
The total horticultural production is close to 3 million tones making Kenya one of the major
producers and exporters of horticultural products in the world. Europe is the main market for
Kenyan fresh horticultural produce with the main importing countries being United Kingdom,
Germany, France, Switzerland, Belgium, Holland and Italy. Other importing countries include
Saudi Arabia and South Africa (EPZA, 2005).
Over the last several years Kenya has steadily increased her production and share of the world
market for fresh fruits, vegetables and cut flowers. The industry has had remarkable growth,
with exports climbing steadily from 200.6 thousand tons in 1999 to 346.1 thousand tons in
2003 (EPZA, 2005). The sub-sector contributes more than 10% of total agricultural production
and employs approximately 4.5 million people countrywide directly in production, processing
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and marketing while 3.5 million people benefit indirectly through trade and other activities.
The sub-sector contributes positively to wealth creation, poverty alleviation and gender equity
especially in the rural areas. It contributes to the Kenyan economy through income generation,
creation of employment opportunities for rural people and foreign exchange earnings, in
addition to providing raw materials to the agro-processing industry (HCDA, 2009).
It is stated in the National Horticulture Policy that Kenya is strategically placed to serve as the
hub of air traffic for Eastern and Central Africa. The country has a relatively well developed
air transport industry with three international airports, four domestic airports and over 400
aerodromes and airstrips. The horticultural industry can greatly benefit from the available and
increasing advancement in air transport facilities in the country and the region by transporting
high value of horticultural produce to local and regional markets.
The Horticultural Crops Development Authority (HCDA, 2009) further narrates that, a well-
developed and dynamic private sector has profitably marketed a wide range of horticultural
products to diverse international markets. Government intervention in this area has been mainly
facilitating the sectoral growth through infrastructure development, incentives and support
services. Structural and macroeconomic reforms, plus the introduction of more liberal trading
environment has also provided a major boost to the country’s horticultural prospects
. The
Horticultural Crops Development Authority is a parastatal established by the Government
under the Agricultural Act 1967 with the aim of developing and regulating the horticultural
industry. The organization does this through the provision of technical and marketing services
to farmers and other stakeholders in the horticulture industry.
The horticultural industry earned the country Kenya shillings 71.6 billion in 2009 from exports
and an estimated KES 153 billion from the domestic market. Despite the success, still agro
processing, packaging and quality standards in the domestic market are not fully developed.
There is need to invest in better production methods, post-harvest care and quality to improve
consumer acceptance of produce in the local market. There are still several factors hindering
the potential of the industry. These include multiple taxation regimes, low incentives in terms
of local market prices, high costs of inputs, water, energy, and air freight, and a generally
unregulated environment leading to produce poaching and lack of quality control for local
produce (National Horticulture Policy, 2010).
The justification for the provision of the National Horticulture Policy (2010) in Kenya follows
the increasing emergence of serious challenges both locally and internationally and it has been
developed to provide sustainability and further spur growth in the industry. The policy also
aims at addressing challenges due to inadequate and inappropriateness of the extension
services, collapse of extension institutions and low budgetary allocations; limited use of
modern science and technology in production; inadequate quality control systems, a multiple
number of taxes at both national and local level in the form of cess without correspondingly
providing the requisite services. Such taxes have contributed to a reduction of the net farm
incomes and created distortions in marketing structures without necessarily improving the
revenue for local authorities; low availability of capital and limited access to affordable credit
to finance purchase of inputs and capital investment; Inadequate market and marketing
Documents you may be interested
Documents you may be interested
