Logistics Update AfricaNovember-December 2019
Logistics Update Africa organized the fourth edition of Flower Logistics Africa 2019 on October 23, bringing together flower industry leaders from all over the world to Nairobi, Kenya.
Deliberating on the overall theme 'Making Flower Trade Sustainable: Economically, Environmentally and Digitally', the conference brought together key stakeholders - growers, shippers, logistics services providers, airline and airports.
In keeping with the theme, the topics of discussion revolved around the impact of the African Continent Free Trade Agreement (AfCFTA) on the business, building cold chain capacity for African exports, the need for visibility through digital transformation and exploring innovations in packaging.
Extending a welcome to the delegates, Jacob Bwana, commercial manager cargo, Kenya Airports Authority (KAA) shed light on some of the challenges that KAA faces in terms of lack of quality infrastructure, lack of open skies in the continent, and transportation of good across borders for final deliveries. “When we have discussions of growth, it’s imperative to talk about development as well. When I talk of development, we are looking at quality. Growth is growth, but quality comes at the centre stage of everything. We have to move to the next level where we put quality ahead of all our handling and logistics services along the supply chain right from the growers up to the end-users,” said Bwana.
While speaking on the impact of the implementation of AfCFTA on African flower trade, Clement Tulezi, CEO, Kenya Flower Council (KFC), mentioned that for a long time, Kenya has over-relied on the European market. “I believe that we can diversify into other markets and become competitive even if we have other people who are present in those markets. We believe in the quality of our products, and with better promotion and entry into those markets, we are able to make headway,” he said. Tulezi expressed optimism in the growth of the flower trade, overtaking tea as the biggest business in Kenya. He also stressed on the need for innovation in the business.
In October, a multinational flower company Finlays announced that it would close two farms by December 25 due to the increasing cost of business. Tulezi also offered a view on the closing of some farms due to over-supply and decreasing demand. “It’s a reality because we are dealing with business. Business is about the bottom line. It based on cost production which is extremely high here. It is almost 1.6 percent of what our competitors in Ethiopia are producing. When we send the product in the market we are not as competitive as we want [to be]. Last year there was an interesting scenario wherein Ethiopia the rains did not come in time, and then suddenly there was rain and over-production. Ethiopia over-supplied to the market. Because of the high volumes, the prices dropped.
This is what we have experienced since Valentine’s Day this year. If you look at the value of our flowers in the traditional European markets, it has fallen. Statistics show that the value has fallen to below 9 billion Kenyan Shillings. The prices falling is not just for Kenya, but across the world. We are dealing with inherent challenges and that’s why you see farms like Finlay's closing. The cost of labor is very high. In Kenya, we have more skilled labor than our neighbors, but it comes at a cost.”
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