Exporters in developing countries, particularly African producers of perishable goods, were badly affected by the closure of European airspace following the eruption of Iceland’s Eyjafjallajokull volcano on 14 April 2010. Europe is the prime market for African horticultural exports, such as cut flowers, and the full impact caused by the seven-day disruption to airfreight is only now being understood.
The effects can be seen in the quantity of cut flowers exported to the Netherlands, the largest flower market. In the week beginning 12 April, 84.7 million cut flowers were imported into Europe while in the week beginning 19 April just 46.5 million were supplied, according to the Dutch Flower Auctions Association (VBN). The quantity of gypsophila flowers (which is 100% imported, largely from Kenya) was 2,83 million stems priced at €0.16 in the week beginning 12 April, compared to 1,38 million stems priced at €0.34 in the week beginning 19 April - a 45% decrease in supply and 109% increase in price in just one week. By the week commencing 26 April, the total quantity of gypsophila that reached the Dutch auctions was up to 3.63 million stems at a price of €0.25 per stem, indicating that the situation had returned to normal.
This crisis illustrates how natural disasters have highlighted the vulnerability of airfreight transport and those who depend on it. According to Eurostat, total airfreight shipped into and out of the 16 euro-zone countries increased to 9.8 million tonnes in 2008 from 3.1 million tonnes in 2000. The European Union has suggested that it may compensate the airline industry but no such explicit suggestion has been made to producers in African countries.
Exports of horticultural produce are the largest source of foreign exchange earnings in Kenya and last year the industry was worth over US$ 900 million, or one-fifth of the Kenyan economy. During the airspace closure a daily loss of US$ 1 million was reported. Jane Ngige, Chief Executive Officer of the Kenya Flower Council, said that 500,000 livelihoods in the flower market were affected.
In order to cope, producers and exporters had to readdress budgets, reschedule programmes on farms and put day labourers on temporary leave. Small-scale farmers who fund their operations through bank loans will begin defaulting on payments and will impact their ability to get funding for next season, according to Philip Mbithi, Chief Executive of the Fresh Produce Exporters Association of Kenya. On 21 April, 1,000 tonnes of flowers were flown toSpain and transported by road to Paris and Amsterdam. “This cuts 60% off our profit margin, but it is better than nothing,” said Mr Mbithi.
In 2009, the horticultural industry in Ethiopia was valued at US$ 150 million and employs about 50,000 people. More than 80% of flower exports are destined for Europe and, according to Tsegaye Abebe, Chairman of the Ethiopian Horticulture Producers and Exporters Association, a loss of US$ 2.36 million has been reported due to the flight ban.
The Ethiopian Horticulture Producers and Exporters Association and the Ethiopian Horticulture Development Association said that 100 tonnes of flowers dispatched to Europe were returned after reaching Egypt. An additional 80 tonnes of roses were ruined while waiting for shipment.
In 2008, Uganda’s cut flower sector was worth more than US$ 28 million and the fruit and vegetable sector more than US$ 5.5 million. The Ugandan Export Promotion Board reported that losses of US$ 4 million were incurred during the flight ban.
The National Organic Agricultural Movement of Uganda reported between 80 and 150 tonnes of organic perishable goods were not dispatched. Some of the produce was sold to local markets, sometimes at a rate lower than the cost of production. Mashamba, a local fruit and vegetable exporter, donated 50 tonnes of fruit and vegetables to local orphanages.
Flower exports are worth about 400 million South African rand (US$ 54 million) a year and some 70% are destined for the European market.
Although the South African flower export market was not hit as hard as other East African countries, Rene Schoenmaker, Chairman of the Flower Growers Association, said the local market was flooded with flowers that would not normally have been sold in South Africa. “This has been bad for local prices and about 5,000 flowers have had to be destroyed as a result,” he said. As at 20 April, losses of about R2.4 million (US$ 325,000) were incurred in the flower sector.
According to the Tanzania Horticulture Association, the horticulture sector generated about US$ 140 million of foreign exchange in 2008 – ten times the value it created in 2002. Horticulture exports to markets abroad totalled 92,250 tonnes, mainly cut flowers, with 70% shipped to Europe
Jacquiline Mkindi, Executive Secretary of the Tanzania Horticultural Association, said that there was a daily loss of around €250,000 (US$ 330,000) due to the non-shipment of flowers and day labourers also saw a shortage of work.
Weekly exports of flowers and vegetables to Europe total between 120 and 150 tonnes and 95% of Zambia’s cut flower exports are destined for the Netherlands. The flower and vegetables industry was losing about US$ 150,000 a day due to the European airspace closure.
Colin Rhoda, head of the Zambia Export Growers Association, reportedly said that all export produce would have to be thrown away because “we rely totally on airfreight services out of Zambia”.
Dutch Embassy in Lusaka, Zambia. www.netherlandsembassy.org.zm/en/trade.html
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