Kenya\'s export of horticultural commodities

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PUBLIC ADMINISTRATION AND DEVELOPMENT, VOI. 11,257-261 (1991)

Kenya’s export of horticultural commodities MORTON OWEN SCHAPIRO Williams College, USA

and STEPHEN WAINAINA Central Bureau of Statistics, Kenya

SUMMARY As a result of the government’s encouragement, the volume of fresh horticultural exports from Kenya rose almost 25-fold between 1968 and 1986, becoming a major source of foreign exchange. This has happened without sacrificing the production of coffee and tea, small landholders, and the nutritional needs of the population. Despite continuing problems, this success has been achieved largely because of the government’s careful attention to research, training, monitoring and other essential activities. Equally important has been government restraint, particularly avoiding excessive interferencewith the market mechanism.

INTRODUCTION Horticulture deals with the growing of fruits, vegetables, and flowers. While horticultural commodities have been grown in Kenya since the 1950s, the government only began to allocate resources for research and export promotion programmes in the late 1960s. As a result of the government’s encouragement, production increased from 1,476 metric tons of exports, worth about US $440,000, to 36,211 metric tons, worth about US $39.4 million. Between 1968 and 1986, the volume of fresh horticultural exports rose almost 25-fold. By 1986 it was the third largest source of foreign exchange among agricultural exports and accounted for over 3 per cent of the value of all exports, as against 0.3 per cent in 1968. As of 1987, an estimated 4.1 per cent of Kenya’s arable land was being used in horticultural production. Nearly half of this land was used for fruit trees and plants, 37 per cent for vegetables, and 13 per cent for nuts. Over the years, the range of products has increased, while the composition of exports has changed in response to market prices. Cut flower exports, which hardly existed prior to 1972, currently account for about 40 per cent of the industry’s export earnings. Kenya is now the world’s fourth largest Morton 0. Schapiro is Professor of Economics, Williams College, Williamstown, Massachusetts 01267, USA. Stephen Wainaina is a Senior Administrator with the Central Bureau of Statistics in Nairobi, Kenya. An unabridged version of this article can be found in R. Bheenick et al. (1989) Successful Development in Africa: Case Studies of Projects, Programs, and Policies. World Bank EDI, Washington D.C.

027 1-207519 1/030257-O5$05.00 0 1991 by John Wiley & Sons, Ltd.

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exporter of flowers, including more than 50 varieties. Flower production continues to be centered in the highlands around Nairobi, on large commercial foreign-owned estates with easy access to the airport. However, there is evidence of increasing participation by smaller landowners. Some of the original fears of sceptics (that only large estates would benefit; that coffee and tea, Kenya’s primary sources of foreign exchange, would be neglected; and that horticultural production for export would diminish locally available food, intensifying malnutrition), have proven unfounded. Except for flower production, where eccwmies of scale in production, transport, and marketing are critical, the vast majority of production comes from small-scale producers. Horticultural production has not displaced coffee or tea. Both large-scale commercial enterprises and small landholders have used semimarginal areas for horticultural production to supplement their other sources of income. Because an estimated 90 per cent of horticultural crops are consumed locally, they have improved the basic nutrition of both rural and urban populations, particularly those benefiting from the employment and income effects of the business. While exports have grown by 8.7 per cent annually, local consumption is growing by 5.6 per cent. This trend should continue as the government expects horticultural production to expand more rapidly (6.0 per cent annually) than agriculture (5.1 per cent annually) during the remainder of the century.

BACKGROUND In the 1960s, Kenya was largely dependent on two export crops, coffee and, to a lesser extent, tea. In addition to the dependence on a few crops, the country was faced with a rapidly growing population, excessive rural-urban migration, and regional inequities. In recognition of these problems, the government viewed the horticultural development plan (initially proclaimed in 1969) as potentially: Increasing the productive use of land without depleting land resources. Generating income, especially for small-scale landholders. - Increasing foreign exchange earnings. - Expanding domestic food production, thereby raising nutritional levels and reducing the need for expensive food imports. -

These goals were realistic for a number of reasons. While Kenya has a scarcity of highly productive farm land, it does have quantities of marginal land suitable for horticulture; and it usually has an ample supply of underemployed agricultural workers available for the labour-intensive requirements of horticultural production. Horticulture was especially attractive to small-scalefarmers, anxious to find profitable products other than coffee and tea. The government realized early on that there were a number of obstacles to successful expansion of the horticultural sector, including irrigation expenditures, extension services, infrastructure weaknesses, and a shortage of air cargo space. Kenya also needed to overcome a great deal of external competition from such countries as Pakistan, India, Israel, Ivory Coast, Morocco, and South Africa. However, Kenya has certain competitive advantages. In comparison to other Afri-

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can countries, its government has been progressive and stable. Its climate (similar to California’s) makes it possible to grow tropical, semitropical, and temperate fruits and vegetables, for which there is a large demand during the European winter. Its towns are well distributed within a relatively small area. Also important is Nairobi’s central location and its use by many world airlines, serving a well-developed tourist industry, attracted by the country’s exceptional climate, beaches, and game parks. The expanding urban and tourist population helps to maintain substantial internal demand for high quality horticultural produce. Another advantage Kenya has is the existence of a large group of African Asians who have become United Kingdom residents. These immigrants were actively seeking new trading opportunities and naturally turned to their contacts in Kenya. Thus, they became export agents, skilled in collecting the produce from the farmers and arranging for its transport and sale abroad. There were, in addition, large-scale enterprises with interests in many parts of the world, thereby enabling such perishable products as flowers to reach European shops within 48 hours of being picked in Kenya.

GOVERNMENTAL ASSISTANCE

The success of the horticultural programme comes from the willingness of the government to limit its role to that of guide, including setting production plans and targets, reinforcing private incentives, providing infrastructure, facilitating research and training efforts, encouraging marketing, solving problems, and maintaining quality control. Thus, the government has based its programme on a recognition of the continued benefits of private ownership, only moving into areas where the private market is lacking. During the late 1960s, the government appointed a working group on horticulture consisting of government representatives, producers, processors and other people concerned with the industry. This working group identified problems, opportunities, and strategies. Among its recommendations were: the enlargement of existing horticultural centres and the establishment of others; the expansion of training to meet the needs of specialists, field staff, and farmers; the development of supervised credit schemes and extension services; the gathering and improvement of statistical information; the revision of the existing export grading and quality control system; and the enlargement of wholesale markets. The Horticultural Crops Development Authority (HCDA), which was established in 1967, was given the primary responsibility for carrying out these recommendations. Among its most useful activities have been: 1. The licensing of all exporters of horticultural produce. 2. The allocation of air cargo space. 3. The standardization of containers. 4. The establishment of warehouses for smallholders in different areas. 5 . The development of a marketing information system along with the International Trade Center. 6 . The guidance of the Ministry of Agriculture’s efforts to meet the industry’s extension and research needs.

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7. The facilitation of production and marketing efforts. HCDA’s operating funds have come primarily from taxes levied on fresh horticultural exports, thereby requiring the largest contribution from those who benefit most from its services. While HCDA agents collect produce from many farmers for sale locally in urban wholesale markets or for export, it has so far avoided attempting to fix prices, thereby allowing market incentives to flourish. The government’s role in marketing consists mainly of quality control and the dissemination of information. In maintaining the quality of exports and enforcing regulations, HCDA undertakes preshipment inspections at the airport. This monitoring function is extremely important because of the danger of producers trying to sell substandard products, thereby affecting the reputation of Kenyan produce. Its supply of information is also crucial, particularly for small exporters with no other source of regular market information. Another task of the HCDA is to oversee the allocation of cargo capacity which it does in consultation with carriers, cargo agents, charter operators, and the Ministry of Transport and Communications. A good working relationship has developed between the HCDA and the Ministry of Agriculture. The Ministry has itself (through its Crop Division) undertaken important research. It has also provided the manpower and funds for research and planning, while also obtaining funds from external sources, such as the Food and Agricultural Organization (FAO). Many countries have contributed bilateral assistance for horticultural research and production, agricultural training, irrigation, water development, cooperative societies, and other projects. While direct public assistance has been rather small, the government has spent large amounts on improving the infrastructure essential for horticultural exports, including expanding the road network and constructing a new airport near Nairobi. The government is also involved in the distribution of seeds through agents of the Kenya Green Growers Union and through the cooperative movement. Research and training may be the most important of the government’s activities. The National Horticultural Research Station, which occupies 1,350 acres at Thika, combines research, training of personnel for extension services, and educational courses for agricultural officers and managers of government nurseries. The station is responsible for farmer training centres and research substations throughout the country, each of which is equipped with various teaching aids, demonstration plots, and equipment relevant to horticulture. In addition to its research and training activities, the station distributes about 20,000 fruit plants every year.

CONCLUSION A number of problems have to be resolved for horticultural production and exports to continue to rise as rapidly as they have so far done. The most serious have to do with air cargo space. While the government obliges all airlines stopping in Nairobi to reserve 20 per cent of their holds for Kenyan exports and to charge a relatively low freight rate, it depends largely on the availability of regularly scheduled passenger flights going to Europe. Because of the unreliability of these flights (which are affected by how well tourism is doing), a greater use of cargo charters is called for. Another possibility

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being experimented with for exports to the Gulf region is the sea freighting of fresh produce. However, Kenya currently has neither regular shipping services nor the facilities needed to transport fruits and vegetables. Another problem is the practice of small-scale producers using inferior seeds from their own harvests or from unsupervised private nurseries. The solution being considered is to make more available to small landholders the necessary working capital and other incentives for high quality production. At the same time, airport inspections must be improved. Currently, only 2 per cent of all flower exports are inspected. About 25 per cent of all produce is currently wasted as a result of packing, transportation, and handling problems. The major urban wholesale markets and the Nairobi airport have insufficient storage and preservation facilities. There are also legitimate complaints about the unsatisfactory road network and the lack of packaging materials and refrigerated vehicles. Because of unreliable sources of supply, processing firms often operate well below capacity. While the HCDA has done a commendable job in facilitating horticultural production, it lacks funds and personnel to fully carry out its production, marketing, regulation, research, and training functions. Diseases need to be studied more carefully. More researchers, technicians, and assistants should be trained. Farmers are finding that their responses to changing market demands are putting more pressure on extension services for information and assistance than can be supplied. They also need more help with irrigation and with labour needs when the harvesting of produce (particularly flowers) coincides with coffee picking. Despite these problems, together with growing competition from other countries, the future looks bright for horticultural production in Kenya. This is partly because of the government’s determination to continue sponsoring research, training, monitoring, and other essential activities. However, equally important has been government restraint-avoiding a large bureaucratic structure and the temptation to interfere significantly with the market mechanism. While some countries could achieve greater success in horticultural production, they could all benefit from observing the constructive role played by the Kenyan government.

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