Kenya’s Export of Cut Flowers to the European Union: A Constant Market Share Analysis

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue IV, April 2019 | ISSN 2454–6186

Kenya’s Export of Cut Flowers to the European Union: A Constant Market Share Analysis

Mathew Kipkoech Bartilol, Sharon Jebiwot Keror, Harrison Kimutai Yego*
Department of Agricultural Economics and Resource Management, Moi University, Kenya
*Corresponding Author

Abstract: – Kenya is one of the leading exporters of cut flower export products to the European Union market. It is the most important market for Kenya’s horticultural produce. This paper explores at length the market shares and lack of export growth of Kenya’s cut flower exports to the European Union market using a Constant Market Share Analysis methodology. This study used annual time series data from 2001 to 2014 of cut flower exports to the 28 member countries of the EU market. The growth in exports of cut flower products from Kenya to the European Union during the period under study was chiefly due to market share effect. The absence of export growth in cut flower products was attributed to commodity composition effect since the market distribution effect revealed that export products from the country did not attain much with respect to the expanding global markets.

Key words: Constant Market Shares, Market share, commodity composition, Market distribution, Competitiveness

I. INTRODUCTION

The agriculture sector is the mainstay in the Kenyan economy contributing 30 percent of the GDP and accounts for 80 percent of the employment (Kenya Economic Survey, 2014). As per the Kenya Economic Survey report of 2014, the leading subsectors in 2014 were Dairy, Tea, and Horticulture in that order. Horticulture is one of the major farming activities in Kenya, providing food, income, and employment for the rural population while feeding the ever-growing urban population. Furthermore, horticulture plays a key role in small-farm development.
Floriculture is one of the fastest growing subsectors in the agriculture sector and is key in achieving the Kenya vision 2030. In 2014, the subsector contributed KES 59.9 billion accounting for 30 percent of the domestic value of horticulture (HCDA, 2014). This was a 7 percent increase in value as compared to KES 55.95 billion realized in the year 2013. Kenya’s export volume has recorded the highest growth in volume and value of cut flowers exported every year from 2010 to 2017 as shown in fig 1. Exports has exhibited an upward trend in value from 35.5 billion shillings in 2010 to 54.6 billion shillings in 2014 while volumes increased from 120,221 metric tons in 2010 to 136,601 metric tons in 2014 (fig 1).
Kenya became a key exporter of floricultural products into the EU markets for the first time in 1999. The EU is the major market for Kenya horticulture exports. Non-EU exporters of horticultural products are facing minimal profit margins due to the highly competitive and the already saturated market. There is also the progressive introduction of regulations and other measures to the non-EU exporters that have made the previous easy access to the market more difficult and resulted in new costs being imposed on the suppliers. These measures cover areas such as traceability and non-tariff barriers (sanitary and phyto-sanitary standards). The objective of this paper is to investigate Kenya’s market share of cut flower exports to the EU-28 using Constant Market Share Analysis approach.

Read More