KENYA HORTICULTURE COMPETITIVENESS PROJECT (KHCP) KENYA S INTRA-AFRICA TRADE IN HORTICULTURE

Transcription

1 KENYA HORTICULTURE COMPETITIVENESS PROJECT (KHCP) KENYA S INTRA-AFRICA TRADE IN HORTICULTURE August 211 This publication was produced for review by the United States Agency for International Development. It was prepared by Fintrac Inc. under contract number EDH-I--5-7-

2 Fintrac Inc. US Virgin Islands 377 Kronprindsens Gade 72 St. Thomas, USVI 82 Tel: (34) Fax: (34) Washington, D.C U Street NW, Suite 33 Washington, D.C. 29 USA Tel: (22) Fax: (22) USAID Kenya Horticulture Competitiveness Project (KHCP) Piedmont Plaza, Wing A 3rd Floor on Ngong Road Nairobi, Kenya Nairobi, Kenya Tel: , , Fax:

3 KENYA HORTICULTURE COMPETITIVENESS PROJECT (KHCP) KENYA S INTRA-AFRICA TRADE IN HORTICULTURE August 211 The author s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.

4 CONTENT EXECUTIVE SUMMARY INTRODUCTION Study Objectives and Scope of Work Study Approach and Methodology Main Challenges BALANCE OF TRADE: IMPORTS Versus EXPORTS OF MAJOR PRODUCT CATEGORIES Overall comparison Processed Vegetables Processed Fruit Flowers Fresh Vegetables Fresh Fruit Markets IMPORT ANALYSES EXPORT ANALYSES Fresh Vegetables Carrots and Turnips Asian Vegetables Fresh Beans Irish Potatoes Fresh Fruit Passion Fruit Mangoes Avocados Pineapples Processed Vegetables Mixture of Spices Tomato Products Processed Fruit Mixture of Juices Grapefruit Juice Pineapple Slices and Juices Jams Passion, Blackcurrant and Other Fruit Juices Floriculture Miraa CONCLUSIONS AND RECOMMENDATIONS REFERENCES... 49

5 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 ACKOWLEDGEMENT AND DISCLAIMER This study was commissioned by the USAID Kenya Horticulture Competitive Project (KHCP) in 21, as part of the efforts to facilitate value chain coordination, marketing and trade promotion. USAID-KHCP would like to thank all the horticulture stakeholders including the Ministry of Agriculture, Ministry of Trade, KNBS, FPEAK, HCDA, KARI, KENFAP, KEPHIS, KFC, KNBS, EPC, KACE, Tegemeo Institute, PCPB, and private sector consultants who participated during the study and particularly for finding time to discuss pertinent issues relating to the country s horticultural industry. A wide range of respondents from both public and private sectors were met during the study and it is not possible to thank each and every one of them. Every effort was made to accurately report on the information and data provided by the various respondents; the views expressed in this report, however, are not of USAID or the US government. 5

6 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 LIST OF ACRONYMS AND ABBREVIATIONS ASDS CGR DRC EPC EPZ FOB FPEAK GDP GOK HCDA KACE KARI KENFAP KEPHIS KFC KHCP KHDP KNBS KRA Ksh MOA MT PCPB USAID Agricultural Sector Development Strategy Compound Growth Rate Democratic Republic of Congo Export Promotion Council Export Processing Zones Free on Board Fresh Produce and Exporters Association of Kenya Gross Domestic Product Government of Kenya Horticulture Crops Development Authority Kenya Agriculture Commodity Exchange Kenya Agriculture Research Institute Kenya National Federation of Agricultural Producers Kenya Plant Health Inspectorate Service Kenya Flower Council Kenya Horticulture Competitiveness Project Kenya Horticulture Development Program Kenya National Bureau of Statistics Kenya Revenue Authority Kenya Shillings Ministry of Agriculture Metric Ton Pest Control Products Board United States Agency for International Development 6

7 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 EXECUTIVE SUMMARY This study analyzes the horticultural trade between Kenya and other African countries including Uganda, Tanzania, Sudan, Ethiopia, Somalia South Africa and Egypt. It consolidates and analyzes data published by the KRA Customs Service for the period to quantify and identify trends in trade of fresh and processed horticultural products. The data analysis is complemented by qualitative information gathered from border stations, field visits and inputs from horticulture industry players from both private and public sectors. The horticultural products were classified for comparative analysis into six categories: processed fruit, fresh fruit, processed vegetables (including spices), fresh vegetables, flowers and miraa (khat) which is captured for the first time as an important horticultural crop grown by smallholders. Over the 5-year period of the study, Kenya exported horticultural products valued at Ksh 31 billion ($428 million) six times the value of imports (Ksh 4.8 billion). Exports increased at an annual rate of 14.3 percent from Ksh 3.9 billion in 26 to Ksh 6.8 billion in 21 while imports increased at a rate of 26.2 percent from Ksh.6 billion in 26 to Ksh 1.4 billion in 21. The average value of annual exports over the past three years was Ksh 6.98 billion ($94 million). In terms of income generation for Kenyan smallholders, the products with greatest opportunities for growth in African markets are mango, passion fruit, potato and high value vegetables. These crops are of strategic importance since, as well as providing cash income, they also contribute significantly to the nutrition and household food budgets of producers. Production constraints exist for each of the crops which need to be addressed for Kenya to continue its impressive record of export growth to regional markets. Kenya s exports of fruit juice are strong and growing. It is the market leader in East Africa and could become dominant in other Africa markets. Exports of fresh passion fruit to Uganda and fresh mango to Tanzania have also increased significantly over the past three years due to favourable climatic conditions and suitable varieties. Kenya is well positioned to expand production of the three main tropical fruits mango, pineapple and passion fruit. A competitiveness study of the African market for Kenyan processed fruit products is recommended. Exports of specific fresh vegetable products (e.g. Carrots to Uganda, Asian vegetables to South Africa and possibly recent sales of high value vegetables) have gradually increased since 26. Kenya may be able to transfer its strong skills in global exports of high quality fresh produce to the increasingly affluent African markets. A market demand and competitiveness study is recommended to understand factors behind the increased exports with a view to facilitating enhanced investments and expansion in a sustainable manner. Processed vegetable products were the highest value export category in 21 but with the lowest growth rate over the five years. Further analysis of the contributing factors and investment particularly focusing on increasing the proportion of Kenyan-grown ingredients is required in this diverse of range vegetables to reverse the trend. Potato imports from Tanzania appear to be increasing while production of potato in Kenya has declined. Since Irish potato is the second most important food crop after maize in Kenya, 7

8 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 an analysis of the potato value chain is needed to identify production factors such as bacterial wilt which are reducing yields and lowering Kenya s competitive position as a regional supplier. The main market destinations for Kenyan exports by value were Somalia (64 percent), Uganda (1 percent), Tanzania (8 percent) and South Africa (5 percent). Miraa (Khat) accounted for more than 9 percent of exports to Somalia. Overall, miraa is Kenya s biggest export product in terms of value at 54 percent of total export value, followed by processed vegetables (15.5 percent) and processed fruits (12.4 percent). In volume terms, processed fruits are the leading export product category at 37.5 percent of total exports, followed by fresh vegetables (17.9 percent) and fresh fruit (16.5 percent). Processed fruits contributed 37.5 percent and 12.4 percent of the volume and value respectively of exports during the 5-year period. Kenya exported processed fruits worth Ksh 3.8 billion, more than four times the value of imports (Ksh.8 billion). Exports of processed fruit increased at a growth rate of 33 percent from Ksh.4 billion in 26 to Ksh 1.2 Billion in 21. Fresh vegetables contributed 18 percent and 8.3 percent of the volume and value of exports respectively with a growth of more than 52 percent in value. During the period Kenya imported fresh vegetables worth Ksh 1.1 billion compared to Exports worth Ksh 2.5 billion. Kenya is a net exporter of carrots, Asian vegetables and high value fresh vegetables but a net importer of potato and onion. Fresh fruits contributed 16.5 percent and 1.2 percent of the volume and value of exports respectively, with a growth rate of 22.5 percent in value. Passion fruits comprised 44 percent of the fresh fruits of which 67.4 percent were exported to Uganda. Mangoes comprised 32.4 percent of fresh fruits exports of which 97.8 percent was exported to Tanzania. Between 26 and 21 Kenya imported fresh fruits valued at Ksh 2.1 billion and exported fruits valued at Ksh.4 billion. Processed vegetables accounted for 13 percent and 15.5 percent of the volume and value of exports respectively, with a growth rate of 7.7 percent in value. During the review period, Kenya imported products worth Ksh.5 billion and exported products worth Ksh 4.7 billion. Flowers contributed 3.8 percent and 8.3 percent of the volume and value of exports respectively, with cut flowers and cuttings comprised the main export products accounting for 9 percent of which 44 percent of the volume was exported to South Africa. Kenya is a net exporter of flowers to the region in both value and volume. Miraa (Khat) contributed 13.7 and 54 percent of the volume and value of exports respectively with a growth rate of 9.7 percent in value. Somalia was the main export destination with new market opportunities in Mozambique among others. Total export value was Ksh 16.5 billion. This study has shown that collection and analysis of market data can identify new opportunities for increasing Kenya s exports of horticultural products. Improvements have been made to the national market information systems in recent years but more work is needed. Improved data collection/management and market analysis will identify new opportunities that can contribute to the development of a coherent strategy for growth of the industry. This may include determination of the cost of production for various horticultural products 8

9 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August INTRODUCTION Kenya s horticultural sub-sector contributes 33 percent of agricultural gross domestic product and 38 percent of national export earnings (ASDS 29-22; GOK 29), making it one of the leading generators of the country s foreign exchange. Fresh fruits and vegetables, including root crops, contribute about 15 percent of the national diet and are the main source of essential micronutrients for low income households. Horticulture crops are also the raw materials for a strong agro-processing industry which provides alternative markets for smallholders and new opportunities for rural employment. These impressive figures mean that the industry is a critical sub-sector in terms of household income generation, foreign exchange earnings and food security at household and national levels. The Government of Kenya (in the Draft National Horticulture Policy) estimates that the subsector directly and indirectly employs more than 6 million men, women and youth. Its importance is recognized by Government in the Agriculture Sector Development Strategy (ASDS) (29), which forms the current blueprint for sector strategy towards the achievements of national goals as enunciated in Kenya Vision 23. Previous studies have proposed that the domestic market consumes percent of the total national production of fruit and vegetables. The balance is exported to both regional and extra-regional markets. The study, Kenya s Domestic Market for Fresh Fruit and Vegetables, conducted by USAID- KHDP (24) estimated that the bulk of locally produced vegetables (9 percent), fruit (97 percent) and herbs and spices (87 percent) are consumed domestically. This study concluded that the country exports only a very small proportion, estimated at a weighted average of 6 percent 1, of total domestic production of fruit and vegetables. It also reported that over 9 percent of flowers produced in the country are exported mainly to the EU markets, with the rest shared between the domestic and regional markets. Although export markets account for only 4-6 percent of the total volume of fresh produce grown (excluding flowers), export crops have relatively high value and may account for up to 1 percent of farm gate sales (USAID-KHCP). In 21, the sub-sector earned Ksh 77.7 billion ($944.6 million) in horticultural exports of which 9.3 percent was generated from the region. Formal exports have been growing at 1-15 percent per annum in recent years (HCDA) and demand for Kenyan produce appears to be growing in EU and other markets, including the fast-growing countries of Africa. It is also generally accepted that a largely unrecorded proportion of produce sold on the local market finds its way on to regional markets either through cross-border trade of fresh produce or after processing into a range of added-value products. This report focuses on the scale, growth rates and potential of trade with other African countries, especially Kenya s closest neighbors in East Africa. 1.1 STUDY OBJECTIVES AND SCOPE OF WORK Exports of horticultural products are well documented and reported on a regular basis by HCDA, MOA and national trade associations, but these analyses largely focus on extra-regional markets. Imports of horticultural products are fully documented in KRA customs records but have not previously been subjected to systematic analysis. The overall purpose of this study is to fill the critical knowledge gap left by previous reports on the domestic market and extra-regional trade that have largely overlooked the potential for increasing trade with regional markets across Africa. The specific objectives of the study were to: 1 Fruits account for 66% of volume produced while vegetables account for close to 34%. 9

10 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Disaggregate, consolidate and tabulate KRA customs data for regional imports and exports of horticultural crops and processed products during the period 26-21; Identify import and export trends; Compare the balance of trade in exports and imports; Explain significant trends and anomalies in the data through field observations and trade consultation; Recommend potential policy and technical interventions that could strengthen Kenya s trade balance with particular emphasis on opportunities and threats to smallholder producers. The countries included in the analysis are those African countries that have significant existing trade links or the potential for rapid growth in trade and include Uganda, Tanzania, Sudan, Ethiopia, Somalia and South Africa. 1.2 STUDY APPROACH AND METHODOLOGY The study collected and collated information from three main sources: Literature review of relevant sector-related reports from various public and private sector institutions including MOA and others; Field and office interviews with key informants from public and private sector institutions; Collation of horticulture related import/export data by year from KRA Customs department. Statistics collected and published by the KRA customs service provided the primary source of data for the study. These give comprehensive import and export data for the value and quantities of trade in all significant horticultural products. They were validated where possible with primary data on fresh produce from phytosanitary records maintained by KEPHIS and export data collected by HCDA. Neither of these agencies covers all fresh exports nor provides data on processed products. Explanation and analysis of trends and apparent anomalies in the data was carried out through field visits to border posts and interviews with traders complemented by data collected, analyzed and recorded in various internal and external reports by USAID-KHCP over the five-year period of the study. The conclusions were further validated with information provided by marketing companies and other horticulture sub-sector players, public and private sector institutions including FPEAK, HCDA, KARI, KENFAP, KEPHIS, KFC, MOA, KNBS and PCPB among others. For comparative analysis, horticultural products are analyzed and classified throughout this study in six major product categories: Processed fruit Fresh fruit Processed vegetables (including spices) Fresh vegetables Flowers 1

11 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Miraa (khat) The data is presented and discussed in four chapters. The first chapter describes the methodology. Chapter two compares aggregated data for imports and exports. Chapter three presents detailed data on imports. Chapter four addresses exports in detail, and chapter five provides conclusions and recommendations following from the study. 1.3 MAIN CHALLENGES Although every effort was made to correct and explain the data, some inaccuracies and unexplained figures remain, however it is unlikely that these will affect the overall conclusions that can be drawn from the analyses. The following specific challenges were encountered during the study: Lack of recorded informal cross-border trade data for both exports and imports. It is generally recognized that a significant portion of overall trade is unrecorded especially between Kenya, Uganda and Tanzania. Inaccuracies in data recording caused by human error Misclassification of some products as horticultural produce including dried beans and peas, which were lumped together with fresh vegetables. Miraa (khat) is a major export with no official classification, which was included in customs data for both processed vegetables and foliage (flowers) at various times. Re-exports cannot be accurately disaggregated from exports originating in Kenya for export products such as fruit juice, cloves and vegetable seeds. Exports through EPZ are ambiguous in terms of destination markets, even though the KNBS Statistical Abstract categorizes EPZ under African destinations for domestic exports. Understatement of unit value of products such as mango exports to Tanzania. 11

12 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August BALANCE OF TRADE: IMPORTS VERSUS EXPORTS OF MAJOR PRODUCT CATEGORIES The original reason for carrying out this analysis was to contribute to a longer term study on Kenya s competitive position for horticultural products relative to other countries in East Africa. Following discussions with export companies it was extended to include South Africa which offers the biggest market outside of Kenya in sub-saharan Africa and is also the only country producing export quality horticultural products on the same scale as Kenya. Expansion of trade within Africa is generally believed to have great potential in the future and the data below are intended to place this perception in perspective. 2.1 OVERALL COMPARISON Over the five-year period of the study, Kenya was a marginal net importer in volume terms but a significant net exporter as measured by the total value of exports (Figure 1). The value of horticultural exports was estimated at Ksh 3.5 billion ($428 million) six times that of imports (Ksh 4.8 billion, $ 68 million). However, the volume of imports was about 8 percent more than exports. Clearly, Kenya is exporting high value products and importing relatively low value commodities. In recent years, the trend appears to be towards Kenya increasing its net exports in both volume and value, although this does not apply to all products (Figures 2 and 3). Exports increased at an annual rate of 14.3 percent from Ksh 3.9 billion in 26 to Ksh 6.7 billion in 21, while imports increased at a rate of 26.2 percent from Ksh 551 million in 26 to Ksh 1.4 billion in 21. The average value of average annual exports over the past three years was Ksh 6.98 billion ($94 million). The main market destinations for Kenyan exports are Somalia (64 percent of value when miraa (khat) is included), Uganda (1 percent), Tanzania (8 percent) and South Africa (5 percent). Miraa, accounts for more than 9 percent of exports to Somalia whereas other markets are supplied with a wider range of fresh and processed fruit and vegetable products. (See below section 4). Figure 1: Regional Cumulative Trade in Horticultural Crops and Products Regional Trade $ Millions MT(') $ $428 Cummulative Imports Cummulative Exports

13 Million (Ksh) MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 2: Kenya s Regional Exports versus Imports by Volume (MT) 7, 6, 5, 4, 3, Exports Imports 2, 1, Figure 3: Kenya s Regional Exports Versus Imports by Value (Ksh) 9, 8, 7, 6, 5, 4, Imports Exports 3, 2, 1, Total import volumes as shown in Figures 1 and 2 are highly influenced by massive volumes of low value fresh vegetables imported during the pre- and post-election periods of When these atypical figures are taken out, the underlying volume and growth rates of imports and exports are similar (Figure 2). If miraa (khat) is included as a horticultural crop, it is Kenya s biggest export product in terms of value at 54 percent followed by processed vegetables (15.5 percent) and processed fruits (12.4 percent). In volume terms, processed fruits are the leading product category at 37.5 percent followed by fresh vegetables (17.9 percent) and fresh fruit (16.5 percent). Individual product categories are reported in more details below. 13

14 Million Ksh MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August PROCESSED VEGETABLES Kenya is a significant net exporter of processed vegetables with the trend in net exports having increased from 1,375 MT in 26 to 1,984 MT by 21 with significant fluctuations in the past five years, representing a relatively low growth rate of 9.6 percent over the review period (Figures 4 and 5). The anomalous peak in export values registered in 28 was caused by an exceptional increase in exports recorded as processed vegetables to Somalia. This could be due to demand from UN personnel in Somalia or a misclassification of miraa (khat). Exports of processed vegetables comprise a wide range of products. However, the main products include mixtures of spices accounting for 45.1 percent of total cumulative volume of exports during the period and tomato sauce. The main imports include cloves, vegetable seeds and ginger accounting for 25.1 percent, 19.6 percent and 17.4 percent of processed vegetable imports respectively. Re-exports to the region after processing are a feature of this trade. Figure 4: Kenya s Regional Export Versus Imports of Processed Vegetables (MT) 7, 6, 5, 4, 3, Exports Imports 2, 1, Figure 5: Kenya s Regional Exports versus Imports by Value for processed Vegetables (Ksh) 2,4 2,1 1,8 1,5 1, Exports Imports

15 MT Million Ksh Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August PROCESSED FRUIT Exports of processed fruit, mainly juice, have grown faster than any other products since 26 (Figures 6 and 7) increasing from 6,721 MT in 26 valued at Ksh 373 million to 15,993 MT valued at nearly Ksh 1.2 billion by 21, a compound growth rate of 33 percent in value. Mixed juices are a major product line, leading in both value and volume and include both home-grown and imported ingredients. Figure 6: Kenya s Regional Exports versus Imports by Value for Processed Fruit (Ksh) 1,2 1, Exports Imports Processing companies believe there is great potential for Kenya to increase exports of processed tropical fruit juices especially passion fruit and mango. Increase in the production of yellow passion fruit using the recently developed sweet yellow varieties, which have lower production costs and higher yields than the traditional purple type, is needed. Kenya equally has great potential for processing mangoes, and production of several varieties that have proven qualities for juice extraction is increasing. Figure 7: Kenya s Regional Exports versus Imports of Processed Fruit Products (MT) 18, 16, 14, 12, 1, 8, 6, 4, 2, Exports Imports 15

16 Million Ksh Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Kenya s market dominance of fruit juice in East Africa is supported by well-developed industrial and manufacturing facilities compared to neighboring countries and a strong and growing production base, especially for mango and pineapple. However, some respondents interviewed during the study expressed concern that growth is not guaranteed citing several specific threats. High and increasing costs of doing business in Kenya compared to the rest of the neighboring countries attributed to high electricity and water; non-tariff related costs imposed by local government inspections and the Nairobi City Council health department; and levies imposed by both national and local government institutions. General personal safety concerns; For example, one fruit juice manufacturer indicated that night-shift workers have to be escorted to their homes due to insecurity. High and increasing cost of labor including a recent 21 percent increase in the statutory daily wage. Counterfeiting of branded products; In this regard, one fruit juice processor showed the team several bottles of fruit juices that they had confiscated from jua kali manufacturers. Competition from expansion in processing capacity in neighboring countries. Uganda, for example, is now processing a significant portion of fruit juices, especially passion fruit. 2.4 FLOWERS Exports of floriculture products, including planting material as well as flowers, are small in quantity but high in value. Kenya has been a consistent exporter of flowers to the region, and exports have increased from a very low base by approximately 13.3percent annual growth rate from 82 MT in 26 to 1,352 MT in 21. Imports are negligible. Figure 8: Kenya s Exports versus Imports of Flowers by Value (Ksh) Imports Exports 2.5 FRESH VEGETABLES In value terms, Kenya is a marginal net exporter of fresh vegetables with a steep rise recorded in 21 which could reflect new demand for Kenya s high quality range of pre-packed vegetables (Figure 9). From 26 to 21, Kenya was a net importer of fresh vegetables in volume terms, importing more 16

17 MT Million Ksh Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 than three times the volume of fresh vegetable exports in the same period although much of this was due to emergency food imports around the election period of (Figure 1). Figure 9: Kenya s Exports versus Imports by Value for Fresh Vegetables (Ksh) 1,5 1,2 9 6 Exports Imports Figure 1: Kenya s Regional Exports versus Imports of Fresh Vegetables (MT) 5, 45, 4, 35, 3, 25, 2, 15, 1, 5, Imports Exports *The high figures in 28 were a result of increased exports of fresh beans of which may include a misclassification of miraa (khat) Respondents gave several reasons for Kenya s relatively weak sales of fresh vegetables to regional markets compared to its success in supplying these products to international markets. Kenya may be a high-cost producer relative to the neighboring countries such as Tanzania and Uganda. Cross-border traders believe that this is because there is usually minimal to no use of purchased inputs (mainly fertilizers) in Tanzania and Uganda because their soils are still relatively fertile compared to Kenya. Others pointed out that labor costs are high in Kenya compared to the other two countries. The study team was not able to confirm this, 17

18 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 and there is need for more investigation in the form of value chains comparative analysis of production costs between the three countries. There are good and stable climatic conditions in Uganda (adequate and well-distributed rainfall) and a dispersed nature of horticultural production in Tanzania (production over a wider geographical area), factors which could give the two countries a competitive edge over Kenya. Kenya has a large and growing domestic market that consumes much of what is produced domestically and therefore there is little incentive to export to the neighboring countries where the average purchasing power is much lower. Non-tariff barriers (including police road blocks and local government fiscal charges) on the Kenyan side, from the point of supply to the cross-border, discourage intra-regional exports. The strength of the Kenya Shilling relative to the Uganda and Tanzania shillings give traders from these countries incentives through foreign-exchange gains. A significant portion of transporters/traders who bring horticultural produce into Kenya from the neighboring countries (mainly Uganda and Tanzania) do so only as a means of meeting all or part of their transport costs while coming to buy other general merchandise in Kenya, especially for manufactured products. 2.6 FRESH FRUIT Fresh fruit is the only product category for which Kenya is a significant net importer in both volume and value (Figures 11 and 12). However, the imports are largely apples, pears, citrus, grapes and other temperate or sub-tropical fruit, which cannot be grown competitively in Kenya. During the period 26-21, Kenya s cumulative exports of fresh fruit to the region amounted to 21,896 MT worth an estimated Ksh million ($5.3 million). During the same period, the country imported fresh fruit amounting to 48,921 MT worth approximately Ksh 2.1 billion ($29.5 million). The only way to address this deficit would be to increase production and exports of high value tropical fruit. This is happening to a very limited extent. For example, passion fruit exports to Uganda have grown significantly. 18

19 MT Million Ksh Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 11: Kenya s Exports versus Imports by Value for Fresh Fruit (Ksh) Exports Imports Figure 12: Kenya's Regional Exports versus Imports of Fresh Fruit (MT) 16, 14, 12, 1, 8, Exports Imports 6, 4, 2, MARKETS The main market destinations for Kenyan exports are Somalia (64 percent of value), Uganda (1 percent), Tanzania (8 percent) and South Africa (5 percent). Miraa (khat), Kenya s highest value export product, accounts for more than 9 percent of exports to Somalia whereas other markets are supplied with a wider range of fresh and processed fruit and vegetable products. Overall, miraa is Kenya s biggest export product in terms of value, followed by processed vegetables and processed fruit. In volume terms, processed fruit is the leading product category followed by fresh vegetables and fresh fruit. 19

20 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Table 1: Main Export Destinations in the Region Uganda South Africa Tanzania Somalia Others PRODUCT/ CATEGORY Qty (MT) Value (M Ksh) Qty (MT) Value (M Ksh) Qty (MT) Value (M Ksh) Qty (MT) Value (M Ksh) Qty (MT) Value (M Ksh) Qty (MT) Value (M Ksh) Fresh vegetables 12, , ,.8 1, ,8.5 1,59.1 5, ,66.2 2,522.1 Fresh fruit 8, , , , Flowers , , , , ,535.2 Miraa (khat) ,2. 16, , ,539.3 Processed vegetables 7,14.6 1, , ,68.3 1, , , ,74.8 Processed fruit 16, ,12.6 2, , , ,21.7 1, , ,781.4 Total 44, , , , , , , , , , , ,495.7 % of Cumulative Total 29.1% 1.3% 7.5% 5.1% 21.% 8.1% 17.5% 63.8% 24.9% 12.6% 1.% 1.% 2

21 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August IMPORT ANALYSES Total cumulative intra-regional imports during the review period, amounted to approximately 167,499 MT with an estimated FOB value of Ksh 4.8 billion (US$ 67.6 million) (see Table 2 and 3). The overall growth of imports over the review period was approximately 18.6 percent which is marginally higher than growth of exports that recorded 17.4 percent over the same period. Fresh vegetables (mainly fresh beans and onion) accounted for the largest share of 57.3 percent of total cumulative volume and recorded growth estimated at 8.7 percent CGR. The main products and sources remained generally constant over the past five years: Fresh vegetables: Fresh Irish potatoes and onions came from Tanzania and peas and beans from Uganda. Imports were erratic depending on shortages caused by election violence and drought in Kenya Fresh fruit: Apples and pears from South Africa with Egypt accounting for the larger share of imports for oranges followed by South Africa and some passion fruit from Tanzania in 21. Imports grew continuously. Processed fruit: Juices were the main products imported with mixtures of juice predominating, followed by passion fruit, apple and citrus juices. Of the mixtures, Uganda was the main supplier (5%) followed by Egypt (24%) and South Africa (21%). Egypt supplied 7% of passion fruit and blackcurrant juice imports and South Africa 3% (Table 6a). Processed Vegetables: Tanzania and Zimbabwe were the main sources of vegetable seeds imports accounting for 61 percent and 3.3 percent respectively. Tanzania was the only source of cloves meant for re-export while tomato sauce imports were mainly from Egypt (88.1 percent of total cumulative imports). In volume terms, fresh vegetables accounted for the bulk of imports (57.3 percent) during this five year period, of which a majority of the imports occurred in as a result of the post-election crisis that disrupted production. Fresh beans, onion and potato accounted for a high portion of vegetable imports (see below). Fresh fruit accounted for 29.2 percent of total cumulative volume. Table 2: Kenya s Imports of Horticultural Products from African Countries (MT) PRODUCT % of Fresh Vegetables 6,144 22,789 44,458 13,999 8,586 95, % 8.7 % Fresh Fruit 5,471 7,657 9,59 11,454 14,75 48, % 28.1 % Processed Fruit 1,74 2,734 3,198 3,752 4,345 15,13 9. % 41.8 % Processed Vegetables 1, ,363 1,654 1,4 6, % -3.3 % Flowers % % Total 14, , , , , , % 18.6 % Source: Customs Department/KRA and Compiled by KHCP CGR 21 USAID-KHCP, August 211

22 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Table 3: Kenya s Imports of Horticultural Products from African Countries (Millions) PRODUCT % of Fresh Fruit , % 31.3 % Fresh Vegetables , % 41.9 % Processed Fruit % 47.4 % Processed Vegetables % 17.9 % Flowers % % Total ,46.2 1,75.8 1, , % 26.2 % Source: Customs Department/KRA and Compiled by KHCP Over the five-year period imports of both fresh and processed fruit increased. Imports of all products except flowers grew annually (Figures 13 and 14). Processed fruit exhibited the fastest growth during the review period resulting from agro-processing demand for concentrates of citrus fruit and temperate fruit that cannot be grown competitively in Kenya. Strong growth in imports of fresh fruit (28.1 percent CGR) was mainly due to temperate fruit and citrus from South Africa and Egypt, with some passion fruit from Tanzania, most likely to meet both export demands and the expanding domestic market (Table 4). Demand for yellow passion fruit for processing may also be a factor. Imports of fresh vegetables appear to be high but when extraordinary imports of fresh vegetables during the election in late 27 and post-election violence in 28 are taken into consideration, their underlying value is less and the growth rate below that of fresh fruit (Table 5). Figure 13: Kenya s Regional Imports of Horticultural Crops and Products (Ksh) CGR 7 Million (Ksh) Fresh Fruits Fresh Vegetables Processed Fruits Processed Vegetables Flowers

23 MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 14: Kenya s Regional Imports of Horticultural Crops and Products (MT) 5, 45, 4, 35, 3, 25, 2, 15, Fresh Vegetables Fresh Fruits Processed Fruits Processed Vegetables Flowers 1, 5, *The high imports (volume) of fresh vegetables in 28 was a result of post-election crisis which disrupted production zones and imports were made to meet specific orders Table 4: Kenya s Regional Imports of Fresh Fruit (Million Ksh) PRODUCT % OF Apples , % Oranges % Grapes % Passion fruit % Pears and Quinces % Mandarins % Lemons % Peaches % Others % Total , % Source: Customs Department and Compiled by KHCP Table 5: Kenya s Regional Imports of Fresh Vegetables (MT) PRODUCT % OF Fresh Beans. 11, , , % Onions and Shallots 4, , , ,96.1 4, , % Tomatoes 1,93. 4,225. 2, ,858. 1, % Fresh Peas , , , % Potatoes.. 1,54. 5, , % Frozen leguminous Vegetables % Others ,15.4 1, , % Total 6, , , , , , % 23 USAID-KHCP, August 211

24 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Source: Customs Department and Compiled by KHCP Table 6: Kenya s Regional Imports of Fresh Vegetables (Millions Ksh) PRODUCT % OF Fresh Beans % Onions and Shallots % Fresh Peas % Tomatoes % Potatoes % Frozen Leguminous Vegetables % Others % Total , % Source: Customs Department and Compiled by KHCP Table 6a : Kenya's Regional Imports of Processed Fruits (Million Ksh) PRODUCT % of Mixture of Juices % 46.8% Passion Fruit Juices CGR % 84.4% Apple Juice % 48.3% Citrus Fruit Juice % 82.5% Orange Juice % 45.7% Jams % 3.6% Grape Juice % -9.6% Grape Fruit Juice % 68.8% Pineapple Juice % 175.1% Others % 12.2% Total % 47.4% Source: Customs Department & Compiled by KHCP 24

25 Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August EXPORT ANALYSES Over the period 26-21, Kenya exported a cumulative total of 153,88 MT worth an estimated Ksh 3.5 billion or $428.3 million. Of the total volume of exports, processed fruit accounted for approximately 57,65 MT or 37.5 percent of total volume of exports, followed by fresh vegetables (17.9 percent), fresh fruit (16.5 percent) and miraa (khat) (13.7 percent). Overall, Kenya s regional exports recorded a 17.4 percent CGR over the review period having increased from 19,655 MT in 26 to 37,394 MT in 21. Fresh vegetables exports recorded the fastest growth estimated at 37.8 percent CGR during the period, followed by fresh fruit (31.7 percent), processed fruit (24.2 percent), flowers (13.3 percent) and processed vegetables (3.3 percent). Miraa exports recorded a -9.2 percent compound growth rate. The importance of various horticultural export products and the main destinations during the period were as follows (Tables 7 and 8, Figures 15 and 16): Processed fruit: Mixture of fruit juices accounted for the largest share of processed fruit with cumulative volume of 47.5 percent in exports. Tanzania was the single largest destination of processed fruit with mixture of juice exports accounting for 47.6 percent. The other destinations included Uganda with 21.2 percent and Mauritius with 8.6 percent. Sudan and Uganda experienced huge market growth with CGRs of 59.3 percent and 5.7 percent respectively. Fresh vegetables: Carrots and turnips (29.3 percent) accounted for the largest share in fresh vegetable exports which could be attributed to high demand from the hospitality industry in Uganda. This was followed by Asian vegetables (23.8 percent) and Irish potatoes (11.8 percent). Uganda and South Africa were the single most important destinations for carrots and Asian vegetables respectively accounting for 98.8 percent and 63.2 percent of the fresh vegetables export. Fresh fruit: Passion fruit accounted for 44 percent of the fresh fruit exports of which 67.4 percent went to Uganda. Mangoes comprised 32.4 percent of cumulative exports of fresh fruit, which 97.8 percent were exported to Tanzania. Miraa (khat): Miraa exports ranked fourth in terms of total cumulative volume of exports and ranked highest in terms of total cumulative value having attained close to Ksh 16.5 billion ($231.7 million). The main export destinations for miraa were Somalia followed by Djibouti though there are other emerging markets in the region such as Mozambique and Malawi. Processed vegetables: Uganda and Tanzania accounted for the larger proportion of total cumulative exports of processed vegetables. In addition, Tanzania was also a major export destination for tomato sauce accounting for 14.1 percent of total cumulative exports. Flowers: Among the flowers sub-category, cut flowers and cuttings comprised the main export product accounting for 9 percent, of which 44 percent of the cumulative volume was exported to South Africa. 25 USAID-KHCP, August 211

26 MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 15: Kenya s Regional Exports of Horticultural Crops and Products (MT) 18, 16, 14, 12, 1, 8, 6, 4, Processed Fruits Fresh Vegetables Fresh Fruits Miraa Processed Vegetables Flowers 2, Table 7: Kenya s Exports of Horticultural Products to African Countries (MT) PRODUCT % OF CGR Processed Fruit 6,72.9 9, , , , , % 24.2 % Fresh Vegetables 2, , ,63.7 6,73. 8, , % 37.8 % Fresh Fruit 1,68.4 1, ,537. 1, , , % 31.7 % Miraa (khat) 5, ,6.7 4, , ,55. 21, % -9.2 % Processed Vegetables 2, , , , , , % 3.3 % Flowers , , , , % 13.3 % Total 19, ,28. 31, , , , % 17.4 % Source: Customs Department and Compiled by KHCP Table 8: Kenya s Exports of Horticultural Products to African Countries (Million Ksh) PRODUCT % OF Miraa (khat) 1, ,5.6 4,38.2 3,863. 2, , % 9.7 % Processed Vegetables , , % 7.7 % Processed Fruit ,12.1 1, , % 33. % Flowers , % % Fresh Vegetables , , % 52.2 % Fresh Fruit % 22.5 % Total 3, , ,95.5 6, ,677. 3, % 14.3 % Source: Customs Department and Compiled by KHCP CGR 26

27 Million (Ksh) Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 16: Kenya s Exports of Horticultural Crops and Products to African Countries (Excluding miraa - khat) 2,5 2, 1,5 1, Processed Vegetables Processed Fruits Flowers Fresh Vegetables Fresh Fruits *The very high values in 28 are a result of processed vegetables of which could include miraa (khat) ( a misclassification). 4.1 FRESH VEGETABLES Fresh vegetable exports to the region grew at a compound growth rate of 37.8 percent during the period, from 2,233 MT in 26 to 8,63 MT in 21. Over the same period, the total value of exports to the region increased by a CGR of 52.2 percent, since growth in unit prices surpassed that of volumes exported. Kenya s regional exports of fresh vegetable in order of volume include; carrots and turnips (29 percent), Asian vegetables (23.8 percent), Irish potatoes (11.8 percent) and fresh beans (8.5 percent) (Tables 9 and 1, Figure 17 and 18). Table 9: Kenya s Exports of Main Fresh Vegetable Products to the Region (MT) % OF CGR PRODUCT Carrots and turnips , ,12.6 3, , % 86.5 % Asian vegetables , ,.3 6, % 2.6 % Irish Potatoes , , % 47.9 % Fresh Beans , , % 23.2 % Onions and shallots , % 9.7 % Fresh Peas , % 34.5 % Frozen Potatoes % -18. % Others , ,49.2 3, % 47.4 % Total 2, , ,63.7 6,73. 8, , % 37.8 % Source: Customs Department and Compiled by KHCP 27 USAID-KHCP, August 211

28 MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 17: Kenya s Regional Exports of Fresh Vegetables (MT) 4, 3,5 3, 2,5 2, 1,5 1, Carrots and turnips Asian vegetables Irish Potatoes Others *21 figures for Asian vegetables may have included miraa (khat) being misclassified Table 1:Kenya's Exports of Fresh Vegetable Products to the Region (Million Ksh) PRODUCT % OF Asian vegetables , , % 54.5 % Fresh beans % 15.2 % Carrots and turnips % 77.3 % Irish potatoes % 52.9 % Onions and shallots % 33.5 % Fresh Peas % 8.5 % Frozen Potatoes % -8.9 % Others % 46.9 % Total , , % 52.2 % Source: Customs Department and Compiled by KHCP CGR 28

29 MT Millions (Ksh) Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Figure 18: Kenya s Regional Exports of Fresh Vegetables by Value (Ksh) 1,4 1,2 1, 8 6 Asian vegetables Fresh beans Others CARROTS AND TURNIPS Carrots and turnips represent the largest share of fresh vegetable exports, with a five-year total of 8,98 MT. This is nearly a third of recorded vegetable exports. Total carrot and turnip exports increased from 285 MT in 26 to 3,443 MT in 21, an 86.5 percent compound growth rate (Table 11). The main export destination was Uganda, which accounted for approximately 98.8 percent of the total. In the last three years (28-21) volume of exports to Uganda has increased by more than 4 times suggesting that Kenya s favorable production conditions for temperate vegetables may be a comparative advantage for the future. Figure 19: Main Export Destinations for Carrots and Turnips (MT) 4, 3,5 3, 2,5 2, Uganda Others 1,5 1, USAID-KHCP, August 211

30 MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Table 11: Main Export Destinations for Carrots and Turnips(MT) DESTINATION % OF Uganda 28. 1, ,. 3,39. 8, % 86.5% Aircraft and Ship stores % 1.3% Seychelles % -. South Africa % -. Somalia % 235.9% Sudan % -4.5% Comoros %.- Total , ,12.6 3, ,98. 1.% 92.% Source: Customs Department and Compiled by KHCP CGR ASIAN VEGETABLES Asian vegetables accounted for the second largest fresh vegetable export to the regional market. Kenya exported a total of 6,576 MT during the review period. Exports increased from 945 MT in 26 to 2, MT by 21 representing a 2.6 percent compound growth rate. South Africa (63.2 percent) was the single largest destination followed by Somalia (14.9 percent), Uganda (4.2 percent) and Sudan (3.7 percent) (Table 12). Figure 2: Main Export Destinations for Asian vegetables 1,2 1, 8 South Africa Somalia Uganda Sudan Others *There was massive export of Asian vegetables to Somalia in 21 which could be as a result of the increasing level of international community to the country or misclassification of miraa (khat). 3

31 MT Kenya s Intra-Africa Trade in Horticulture USAID-KHCP, August 211 Table 12: Main Export Destinations for Asian Vegetables(MT) DESTINATION % OF South Africa , % 8.3% Somalia %. Uganda % -56.4% Sudan % -41.4% Seychelles % -42.6% Aircraft & Ship stores % -28.9% Others % -26.8% Total , ,.3 6, % 2.6% Source: Customs Department & Compiled by KHCP CGR FRESH BEANS A total of 2,345 MT of fresh beans were exported to the region during the period. This accounted for 8.5 percent of the total cumulative fresh vegetable exports. Over the same review period, the country imported a cumulative total amounting to 46,51 MT. The volume of exports increased from MT in 26 to 1,36 MT by 28 before declining to MT in 21 representing a compound growth rate of 23.2 percent. The principal export destinations include Somalia (38.6 percent), South Africa (26.6 percent) and the Sudan (24.7 percent). Figure 21: Main Export Destinations for Fresh Beans (MT) 1, Somalia South Africa Sudan Others *In 28 the was sudden jump in the fresh bean volume of exports to Somalia of which could be some vegetables going to international community or miraa (khat) exports being misclassified. 31 USAID-KHCP, August 211