Flower farms have employed additional workers in January 2021 compared to the same period last year according to a survey conducted by the Central Bank of Kenya (CBK).
According to Flower Farms Survey conducted by CBK’s Monetary Policy Committee (MPC) between January 13th-15th 2021, employment in the farms has recovered and exceeded the pre-COVID levels, averaging 113% and 87% in January 2021 and November 2020, respectively.
CBK attributes upward movement in employment to increased production in the sector which continues to recover after a sharp decline in April last year when production dropped to an average of 47% following the COVID-19 outbreak in Kenya which was announced in March the same year.
“The responding farms indicated that production levels plummeted in April, due to unfavourable weather conditions (that included hailstones), infestation of pests during the period and lower exports due to relatively higher freight costs occasioned by limited cargo space on account of the effects of the COVID-19 pandemic in key markets,” the survey indicated.
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Last year workers in the industry were left with no income as exports were halted due to coronavirus which saw demand in key markets plummet.
“All responding flower farms indicated that they have been operating since August, compared to only 56% in April and May when farms closed or scaled back operations due to reduced demand from export markets and constrained cargo space.”
Production and export levels of flowers have also recovered to an average of 90% and 95% respectively, of pre-COVID-19 levels.
Nonetheless, earnings from cut flowers which form at least 70% of horticulture exports is expected to decline year-on-year owing to the pandemic despite the recovery which has been recorded since May last year.
Kenya earned Kshs. 104.1 billion from cut flowers in 2019 compared to Kshs. 113.2 billion the previous year representing 8% decline.
However, while export orders for cut flowers are expected to remain strong, at about 97% of the normal (pre-COVID-1 9) levels for the next four months, CBK says recovery could be hurt by possibility of a second wave of COVID-19 and discovery of new variants of the virus that may result in possible lockdowns in leading markets with possible cancellation of orders.
The flower sector is estimated to employ over 500,000 people, including over 100,000 engaged directly in flower farms as employees, and impacts over 2 million livelihoods indirectly.
According to the survey, while the cargo space has increased exporters decried high cost of freight to key markets and urges the government to consider measures to support the sector, such as subsidizing cargo space services and production inputs; reduce Value Added Tax (VAT) and accelerate tax refunds.
In order to reduce costs to the sector, the responding farms urged the government to merge various regulatory bodies and reduce taxes and other charges levied by both national and county governments.
The Survey covered eight major flower farms in Naivasha and Nakuru areas and was administered to chief executives and senior managers during the period.