Category: "Horticulture"

Flower farms relocate to Ethiopia

December 14th, 2006

Flower farms relocate to Ethiopia

New Vision Uganda
Thursday, 14th December, 2006

Two flower-exporting farms are in final stages of relocating to Ethiopia because of investment incentives offered there, sources have said.

A grower said, “SAI and Xpressions flower farms are in advanced stages of relocating to Ethiopia. SAI’s is on five hectares, while Xpressions’ is on 10. The farms export 40-60 million rose stems annually.
Flower farms relocate to Ethiopia
“They have been to Ethiopia a couple of times. Shyam Sundar, the managing director of SAI, has secured 100ha there.”

The source said mid this year, Xpressions closed their sister farm, African Agro Industries on the Kampala-Masaka highway.
Efforts to get comments from the directors of the two farms were futile because they were out of office and their mobile phones off.
Jacques Schrier, the chairman of the Uganda Flower Exporters Association (UFEA), expressed disappointment over the news.
“Ethiopia offers better investment incentives, but I did not know that some of our members would relocate,” he said.

The pending relocation comes in the wake of the Government’s request to UFEA to submit a suitable investment incentives package for investors in the floriculture sector.

Schrier said the Government is to blame for the mess in the sector that brings in over $36m (sh64.2b) revenue annually.

“We submitted a five-year strategic plan and a proposal on incentives in 2003. Up to now, we have not received any response. Increased production costs, high freight charges and the new labour laws make it difficult for us to compete with other growing countries,” he added.

According to a document given to the flower growers by Steven Humphreys, the head of USAID’s Agribusiness and Trade Expansion Activity in Ethiopia, he said the project was offering development funds, training and market research.

This is on top of land, long-term loans with low interest rates, support grants, a 10-year tax holiday, basic infrastructure and subsidised air freight charges the Ethiopian government is offering to investors.

Humphreys is a former employee of the USAID-funded Investment in Developing Export Agriculture (IDEA) project that kickstarted the floriculture industry in Uganda.

Clive Drew, the managing director of the USAID-funded Agriculture Productivity Enhancement Programme (APEP) in Uganda, also expressed disappointment over the developments.

He said, “It is absurd for one to devastate what has been put in place. The Government has frustrated the growers by not granting them incentives. It has remembered to close the gate when the horse is already out.”


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Ethiopia: Sher Ethiopia Sparks Flower Shipping Price War

October 10th, 2006

Sher Ethiopia Sparks Flower Shipping Price War

Addis Fortune (Addis Ababa)
October 10, 2006

By Issayas Mekuria

The growing floriculture export and transport business is in a tug of war between two transport facilitators.
Ethiopia Flower Business Booming

A price war was sparked between Ethio Horti Share Company and Sher Ethiopia Plc after an email message was sent by Sher to 77 growers announcing new cargo services to Europe. The email said that the company would begin leasing an airplane to transport flowers and vegetables to Luik, Belgium starting October 5, 2006.

The floriculture industry which had only two flower growers as early as six years ago has grown in leaps and bounds to a total of 90 companies out of which 46 have started to export their flowers to the European market.

Ethio Horti Share Company was formed with a five million Birr capital by 30 of these flower growers in October 2004 to broker and facilitate the transportation of flowers to their export destinations.

During peak floriculture seasons, Ethio Horti charters planes and charges a reduced shipping cost of 1.40 dollars to 1.50 dollars a kilogram. In normal circumstances, when sharing cargo space with other sectors, the company charges between 1.58 dollars and 1.70 dollars a kilogram.

The biggest share of flower transportation out of the country has always been using Ethiopian Airlines. And Ethio Horti renewed an agreement last week with Ethiopian to transport the floriculture exports for the next few years at the usual rates.

But now, Sher announced in its email that it will offer a fixed rate of 1.65 dollars per kilogram to any local flower grower, clearly undercutting Ethio Horti prices outside peak season.

Moreover, Sher mentioned in its email message that it will start its own operations flying with a leased Boeing 747 from Dutch based Lauden Airways. With Sher, payment will only be expected once the flowers are sold in Europe. The shipping charge will be deducted from the hard currency sale proceeds (industry experts told Fortune that the shipping cost is about 40pc of total proceeds).

But Although Sher Ethiopia guarantees its fixed price for a year, Eyob Estifanos, Air Transport and Planning department head with the Ethiopian Civil Aviation Authority told Fortune that Lauden, Sher's transporter, is only licensed for one month.

"They cannot be allowed to operate after this period," said Eyob.

Indeed, according to Eyob, the license for Lauden (and for Sher's new service) was only offered as a stop-gap measure for the peak flower shipping season. But the email from the company clearly infers that the service should be understood as long term.

Gerrit Barnhoorn, general manager of Sher Ethiopia, disagreed with Eyob when approached by Fortune on the one month license issue. "It has not yet been decided," he said, refusing to comment further.

One anonymous flower grower told Fortune the Ethiopian Airlines and Ethio Horti's prices fluctuate making Sher Ethiopia's fixed price an interesting proposition.

Moreover, the grower said Ethio Horti flies flowers to Brussels, Belgium and then transports them to Amsterdam, causing inconvenience, especially for perishable products like flowers. Sher Ethiopia's service, if in fact becomes one, would transport the flowers directly to its own specilaised transporters, according to the Sher email.

Solomon Sibhatu, board chairman of Ethio-Horti, conveyed his displeasure at the new competitor.

"Ethiopian has done a great deal to support the sector," he said, "and we can not take it for granted what it has done, even losing up to one million birr a day in the early days of the industry. The permission granted to Sher to ship flowers should not have been given. There is more than enough air cargo available."

Sher Ethiopia Plc was founded in 2005 by three shareholders, Gerrit Barnhoorn, Peter Barnhoorn and Joost van Klink. It is located in the Zewai area, 163Km from Addis Abeba, on a 450ht plot. Sher develops farms and sells greenhouses to flower growers, charges them on a nine years instalment basis.

Sher Ethiopia's first air shipment to Belgium was scheduled to depart Thursday, October 7. It has been postponed, said company staffers, till October 10. Gerrit Barnhoom could not confirm the new schedule.

The Ethiopian government and the Ethiopian Horticulture Producers and Exporters Association have projected to export 20,000tn of floriculture and vegetable products during the six months peak season, amounting to 40 - 50 million euros. Last year, the country exported floriculture products worth of 21 million euros.


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Flower firms threaten to move to Ethiopia

September 11th, 2006


The East African Standard
Tuesday September 12, 2006
Flower firms threaten to move to Ethiopia

By Karanja Njoroge

Investors in flower farms around Naivasha are threatening to relocate their business from the country due to poor infrastructure and insecurity.

File Photo Ethiopian Flower Farm BBC Photo
Some of the flower farms in the area have already started investing in Ethiopia, claiming that new farmers are enjoying favourable economic terms there.

As a result, panic has gripped workers at the multi-million shilling industry due to fears of massive lay offs after possible relocations and declining profits in the international market.

Sher Agencies, a leading world producer of rose flower, has already acquired a large tract of land in Ethiopia. The firm produces 600 million stems annually.

Better road network

According to Human Resource Manager Mr Martin Kamwaro, Ethiopia is offering them a 10-year tax holiday.

File Photo Ethiopian Flower Farm BBC Photo

"The country has better road network and has a well equipped security system," he said.

However, despite expanding their business to Ethiopia due to the conducive conditions, Sher Agencies has ruled out closing down their investment in Kenya.

Currently, Kenya is the leading producer of cut flowers to the European Union, supplying 31 per cent of the total export to the market. Until recently, the country’s horticultural industry was poised to overtake tea and tourism as the leading foreign exchange earner.

"Horticulture contributes 12.8 percent of the 24 per cent that Agriculture contributes to the Gross Domestic product (GDP)," says the secretary of the Workers Rights Watch, Edward Indimuli.

Poor infrastructure

Kijabe Limited, another leading farm, is believed to have sold off their flower farm and sought greener pastures in Ethiopia. Two other Dutch Investors at the Three Point farm are among those who have relocated to Ethiopia, heightening fears that others could follow suit.

Naivasha has more than 37 flower farms with an estimated workforce of over 40,000 people. Speaking during a tour by a parliamentary committee on health, housing, labour and social welfare, the investors voiced concern over poor infrastructure and rising insecurity, saying that they might consider relocating if the problems are not addressed.

Sher Agencies Chief Executive, Mr Gerrit Barnhoon, said they were incurring heavy expenses due to the poor state of the Naivasha- Mai Mahiu road.

"We are incurring heavy losses due to frequent breakdown of our vehicles and delay of our produce in reaching at the market," he said.

Rising insecurity

The farmers appealed to the committee to liaise with the Ministry of Transport to allow them to use the Nakuru-Nairobi highway temporarily.

"Despite flowers being bulky, our lorries rarely exceed nine tons, which is convenient for our roads," he said.

Barnhoon decried the rising insecurity in the area, saying it was causing anxiety among the leading investors due to frequent attacks.

The security situation, he said, was scaring away potential investors and it should be urgently addressed. His Oserian counterpart, Mr Ron Fasol said bad publicity was hurting the multi- million-flower industry.

"We are doing a lot of disservice to our flower industry which is one of the world leaders," said Fasol.

Poor working conditions

While other countries are busy promoting their fast growing flower industries, he said, their Kenyan counterparts were painting it in bad light.

"We are doing a lot to our workers to uplift their living standards and protecting the environment," he said.

He called on the committee to rein on flower farms giving the sector a bad name due to poor working conditions.

Responding to the investor’s complains, the committee chairman, Mr Zebedeo Opore, said his committee will present their grievances to the Government.

Country stands to lose billions

The committee will petition the Transport Ministry to allow them use the Nakuru-Nairobi highway as a stopgap measure.

"We are going to raise the issue with relevant ministry to ensure your problems are addressed," said Opore.

The committee expressed concern over the relocation, saying it would hurt the industry.

"The country stands to lose billions of shillings if the trend of relocation continues and the issue has to be urgently addressed," said Opore.

He praised the flower industry for improving the working conditions in the multi- million sector. However, he said, the housing condition for the farm workers was not up to required standards, and called for their improvement.

Source: The East African Standard


Ethiopia provides favourable economic terms and better infrastructure.

Bad times for Kenya's flower sector

The East African

Here are some excerpts from The East African

Besides the drought and a strong shilling aside, the threat from Ethiopia continues to haunt the industry. This comes in the wake of the relocation by some flower farms to Ethiopia on the grounds that it provides favourable economic terms and better infrastructure.

Sher Agencies, the leading producer of flowers, has invested heavily in land in Ethiopia. According to the firm's human resource manager, Martin Kamwaro, Ethiopia is offering them a 10-year tax holiday. The company has developed a 300-hectare farm, which is the biggest in the country.

"The country has a better road network and a much safer security situation," said Mr Kamwaro.

He, however, said Sher Agencies will not close down its Kenya operation.

Kijabe and Nini Ltd are also believed to have sold their flower farms and moved to Ethiopia. Two Dutch Investors at the Naivasha Flower Business Park have also relocated.

According to figures released by the Horticultural Crops Development Authority, flower export earnings fell from Ksh22 billion ($297.2 million) to Ksh18 billion ($243.2 million) by July in Kenya

Read Complete Report

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Special Section: Ethiopian Horticulture Sector

From archives

Flower Export Earnings Up 73 Percent

August 9th, 2006

Flower Export Earnings Up 73 Percent

The Daily Monitor (Addis Ababa)
August 8, 2006
Posted to the web August 9, 2006

By Hayal Alemayehu

Flower export earnings during the ended Ethiopian fiscal year picked up by over 73 per cent (to top 22 million US dollars) compared to the amount same commodity has earned the country the previous year.

According to the Ministry of Trade and Industry, earnings secured from flower exports during the reported period have increased by 9.3 million US dollars against that of the previous year.

The country's flower exports, which are expected to hit annual revenue of over 100 million US dollars in few years time, have registered a remarkable four-fold increment in earnings within the last three years alone, according to Customs Authority's figures.

During the reported year, the country's overall export earnings have also soared over one billion US dollars for the first time, where flower exports contributed to five per cent of the overall growth registered in revenues, according to Ministry of Trade and Industry.

The total amount of export earnings in the stated period has witnessed a 23 percent increment (189.6 million USD) from the county's export performance during the pervious year.

Of the major commodities attributable to the marked growth in the country's export earnings; pulses, oilseeds and spices has contributed the lion's share of 43 percent, where earnings these commodities fetched in the reported period has surpassed that of the previous year by 82.4 million US dollars.

Among the other items which helped boost the country's export performance in the reported period are gold and coffee , which respectively, saw a 20.5 million and a 31 million US dollars increase in earnings over the previous year.

The country's exports in the stated period have reached to over a 100 nations around the globe, where Asian countries took the lead in importing Ethiopian goods followed by Europeans.

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More Ethiopian Business News

Flower farming blooms in Ethiopia

May 25th, 2006


Flower farming blooms in Ethiopia
By Amber Henshaw
BBC, Addis Ababa

Rows and rows of rose cuttings fill a vast warehouse in Alem Gena, a small town about 30km from the Ethiopian capital, Addis Ababa.

They are being grown into small plants ready to be sold on.

The flower industry is blooming in Ethiopia

Ethioplants is owned by Dutch flower grower Felix Steeghs who moved here in September.

He saw the potential in Ethiopia's new flower market and was sick of the violence that he and his colleagues faced in Kenya - Africa's current biggest flower producer - where he had worked for eight years.

"We were living in Naivasha - if you count all the Europeans you might get 150 to 200 people, and I think within 12 months there were 10 attacks on white people of which 5 were fatal," he says.

Felix started off in Ethiopia with 5,000 square metres, but he hopes to have doubled that by August, and says there is plenty more room for growth.

British businessman Ryaz Shamji agrees: "I'm actually convinced Ethiopia has tremendous potential," says Ryaz, who started production at his flower farm, Golden Rose, in 2000.

He now produces 24 million roses a year but wants to increase that to 36 million.

"The industry has grown from 40 hectares productive to 250 hectares productive in the last three years, and is likely to hit 400 hectares productive by the end of this year," he says.

Ecological worries

Floriculture already earns Ethiopia $20m a year.

But environmentalists are concerned that growers are using chemicals which are damaging the environment and making workers ill.

"The major concerns are social concerns - working rights and decent working conditions and environmental concerns," says Negusu Aklilu, co-ordinator of Ethiopia's Forum for the Environment.

Pollution and the use of chemicals worry campaigners

"For example, if you take the pesticide issue, pesticides are about workers' conditions and also about the environment."

The Ethiopian government is keen to encourage investors, offering them a five-year tax holiday and duty-free import of machinery.

The government is also working with the environmentalists. Dr Tewolde Birhan, head of Ethiopia's Environmental Protection Agency, says the government has introduced a new law.

"The intention is to control pollution and it has three steps, as in all countries," Dr Tewolde says.

"Environmental impact assessment before you start your job; environmental auditing regularly to make sure you aren't polluting the environment; and if you are unable to prevent pollution, you close down."

Players in the industry like Felix Steeghs and Ryaz Shamji support these measures, realising that having everything regulated and above board can ensure Ethiopia's flower industry a blooming future.

Story from BBC NEWS:


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