Iceland?s Volcano Eruption Deals a Blow to Kenya?s Horticulture Exports

KenyaThe volcanic eruption in Iceland that has crippled air transport in Europe since last week is costing Kenya?s horticulture industry tens of millions of dollars in lost sales. Prospects for continued losses are great, as a vast cloud of ash keeps flights grounded.

Stephen Mbithi, chief executive of the Fresh Produce Exporters Association of Kenya, says farmers already have been forced to throw away millions of export-quality flowers because storage facilities at the Jomo Kenyatta International Airport, the country?s main airport, were filled to capacity. Up to $12 million in flowers and produce has been lost since Thursday and some 5,000 farm workers have been temporarily laid off, he says.?

On Friday, the Nairobi-based Daily Nation reported that the cargo center at the airport was holding at least 500 metric tons of flowers, worth an estimated $2 million (150 million Kenya shillings). At the time, more flowers were expected to arrive from farms, where packing houses were also full. Flower exporters said they were losing up to $2 million a day in earnings due to flight cancellations.?? Jane Ngige, chief executive of The Kenya Flower Council, says even if flowers being held in storage manage to be shipped out, they likely will not arrive in Europe at the premium quality for which Kenya is known. That could depress prices, she says.

??We are faced with the possibility of not selling the flowers even when they finally arrive in Europe because of lowered quality,? the Daily Nation quoted her as saying.?

Kenya?s currency traded lower on Monday, falling to 77.50/60 shillings to the dollar early in the day from Friday’s close of Sh77.30/40. Traders expected it to lose more ground as the horticulture sector continues to be hit by flight cancellations to Europe.

The horticulture industry is one of Kenya?s top foreign exchange earners. Kenya flowers, mostly roses, account for 35 percent of Europe?s cut flower imports. The industry this year suffered its worst first-quarter in two years, the result of a prolonged winter in Europe and poor Valentine season sales. Official data puts the industry?s earnings at just 6.2 billion shillings in the first two months of the year, down from 9.4 billion in the same period a year ago.

Farmers are hoping that a rebound in Europe?s economy would improve the industry?s performance. Those hopes may fade, however, if the economic fallout from the massive disruption in air transport proves significant.