Role of Standards in Role of Standards in Kenya’s Horticulture Kenya’s Horticulture

SectorSector

Spencer HensonSpencer Henson

University of GuelphUniversity of Guelph

CanadaCanada

Key Messages….Key Messages….

Standards continually evolve over timeStandards continually evolve over time Collective impact of standardsCollective impact of standards Interaction between public and private Interaction between public and private

standardsstandards Need to consider impact of standards Need to consider impact of standards

in the wider contextin the wider context Standards can be a threat to Standards can be a threat to

established supply chainsestablished supply chains Standards can create strategic Standards can create strategic

opportunitiesopportunities

OutlineOutline ContextContext Kenyan fresh produce exportsKenyan fresh produce exports Standards regime:Standards regime:

European UnionEuropean Union Compliance strategies:Compliance strategies:

Public sectorPublic sector Private sectorPrivate sector

Strategic responsesStrategic responses ConclusionsConclusions

ContextContext

Trends in agricultural exports:Trends in agricultural exports: Shift from basic commoditiesShift from basic commodities Export diversificationExport diversification

Increase in exports of fruit and Increase in exports of fruit and vegetablesvegetables

Increased role of non-traditional cropsIncreased role of non-traditional crops Linked to contract production:Linked to contract production:

Large-scaleLarge-scale Small-scaleSmall-scale

Average Annual Growth Rates Average Annual Growth Rates for EU Imports of vegetables, for EU Imports of vegetables,

1990-20001990-2000VegetableVegetable Total ImportsTotal Imports Imports from Imports from

Third Third CountriesCountries

TomatoesTomatoes 3.03.0 1.41.4

CarrotsCarrots 2.42.4 0.20.2

PotatoesPotatoes 1.01.0 -1.9-1.9

OnionsOnions -0.4-0.4 0.30.3

Green peasGreen peas 9.89.8 11.111.1

Green Green chillies/Pepperschillies/Peppers

5.45.4 7.27.2

Green beansGreen beans 5.25.2 8.68.6

‘‘Minor’ vegetablesMinor’ vegetables 2.52.5 4.84.8

ContextContext

Trends in agricultural exports:Trends in agricultural exports: Shift from basic commoditiesShift from basic commodities Export diversificationExport diversification

Increase in exports of fruit and Increase in exports of fruit and vegetablesvegetables

Increased role of non-traditional cropsIncreased role of non-traditional crops Linked to contract production:Linked to contract production:

Large-scaleLarge-scale Small-scaleSmall-scale

Kenyan Exports of Horticultural Kenyan Exports of Horticultural and Floricultural Products, 1980-and Floricultural Products, 1980-

20022002

0

50000

100000

150000

200000

250000

300000

3500001980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

US$ '000

Kenyan Exports of Horticultural Kenyan Exports of Horticultural and Floricultural Products, 1980-and Floricultural Products, 1980-

20022002

0

50,000

100,000

150,000

200,0001980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

US$'0

00

Other fresh/ processed fruit & vegetablesCut flowersCanned pineapple

EU Imports of Green Beans, EU Imports of Green Beans, 1986-20001986-2000

0

20,000

40,000

60,000

80,000

100,000

120,0001986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

Tonnes

Intra-EU Trade Imports From Third Countries

Evolution of Kenyan Fresh Evolution of Kenyan Fresh Vegetable ExportsVegetable Exports

Up-market off-season vegetablesUp-market off-season vegetables

Asian vegetablesAsian vegetables

Non-traditional vegetablesNon-traditional vegetables

Prepared productsPrepared products

Drivers of Change in the Drivers of Change in the Kenyan Fresh Vegetable Kenyan Fresh Vegetable

Export SectorExport SectorPushPush

Transport costsTransport costs Decline in marginsDecline in margins Increased supply-baseIncreased supply-base Supply chain Supply chain

consolidationconsolidation

PullPull Novel productsNovel products Value-added Value-added

productsproducts Supply continuitySupply continuity Quality standardsQuality standards Supply standardsSupply standards

Comparative Freight Rates for Comparative Freight Rates for Fresh Green Bean Exports, Fresh Green Bean Exports,

20032003

0

0.5

1

1.5

2

Morocco Senegal Egypt Kenya Zambia

US$/K

g

Drivers of Change in the Drivers of Change in the Kenyan Fresh Vegetable Kenyan Fresh Vegetable

Export SectorExport SectorPushPush

Transport costsTransport costs Decline in marginsDecline in margins Increased supply-baseIncreased supply-base Supply chain Supply chain

consolidationconsolidation

PullPull Novel productsNovel products Value-added Value-added

productsproducts Supply continuitySupply continuity Quality standardsQuality standards Supply standardsSupply standards

Standards on Fresh Vegetable Standards on Fresh Vegetable Exports to the European UnionExports to the European Union

StandardStandard PublicPublic PrivatePrivate

PhytosanitaryPhytosanitary XX

HACCPHACCP XX

Microbial Microbial contaminationcontamination

XX

TraceabilityTraceability XX

Good agricultural Good agricultural practicepractice

XX XX

Pesticide residuesPesticide residues XX XX

Social welfareSocial welfare XX

Quality gradesQuality grades XX XX

Evolution of Hygiene Evolution of Hygiene Standards in the UKStandards in the UK

UK Food Safety Act 1990UK Food Safety Act 1990

Private hygiene standardsPrivate hygiene standards

Collective retailer hygiene standardsCollective retailer hygiene standards

Third party certificationThird party certification

Evolution of EU Standards Evolution of EU Standards on Pesticideson Pesticides

Predominantly Member State controlsPredominantly Member State controls

Evaluation of existing approved pesticidesEvaluation of existing approved pesticides

Establishment of Maximum Residue LevelsEstablishment of Maximum Residue Levels

Good Agricultural Practice standardsGood Agricultural Practice standards

Evolution of EU Phytosanitary Evolution of EU Phytosanitary StandardsStandards

Member State controlsMember State controls

Notification pestsNotification pests

Rapid alert systemRapid alert system

Border inspectionBorder inspection

Approved Third Country authoritiesApproved Third Country authorities

Evolution of EU Quality GradesEvolution of EU Quality Grades

Limited EU gradesLimited EU grades

Private quality standardsPrivate quality standards

Certificate of conformityCertificate of conformity

Third Country approved authorityThird Country approved authority

Enforcement RegimesEnforcement Regimes

Border inspectionBorder inspection SurveillanceSurveillance Regulatory actionsRegulatory actions Private inspectionPrivate inspection Third party certificationThird party certification

Stringency of SPS Requirements Stringency of SPS Requirements for Fresh vegetables in Alternative for Fresh vegetables in Alternative

MarketsMarkets

0

25

50

75

100

UK

superm

ark

et

Aust

ralia/

N

ew

Zeala

nd

UK

whole

sale

mark

et

Conti

nenta

lEuro

pe

Mid

dle

East

Challenge Facing Fresh Challenge Facing Fresh Vegetable ExportersVegetable Exporters

ComplianceCompliance

Control Control MechanismsMechanisms

CostCost

Compliance Strategies:Compliance Strategies:Public SectorPublic Sector

Phytosanitary surveillancePhytosanitary surveillance Plant health certificationPlant health certification National standardNational standard

Compliance Strategies:Compliance Strategies:Private SectorPrivate Sector

Industry code of practiceIndustry code of practice Development of human capitalDevelopment of human capital Facility developmentFacility development Backwards integrationBackwards integration Intensified extensionIntensified extension Out-grower control systemsOut-grower control systems

Supply-Base for Fresh Supply-Base for Fresh Vegetable Exports from Kenya, Vegetable Exports from Kenya,

20022002

Exporter farms

Small-scale out-growers

Medium-scale outgrowers

Large-scale out-growers

Role of Small Producers in Kenyan Role of Small Producers in Kenyan Exports of Fresh VegetablesExports of Fresh Vegetables

0

10

20

30

40

50

1980 2000

% e

xport

s

Compliance Strategies:Compliance Strategies:Private SectorPrivate Sector

Industry code of practiceIndustry code of practice Development of human capitalDevelopment of human capital Facility developmentFacility development Backwards integrationBackwards integration Intensified extensionIntensified extension Out-grower control systemsOut-grower control systems

Off-Setting ResponsesOff-Setting Responses

IntegrationIntegration Premium markets:Premium markets:

CountriesCountries CustomersCustomers

Value-additionValue-addition Crop diversificationCrop diversification

Kenyan Exports of Fresh Kenyan Exports of Fresh Vegetables by Destination, 1990 Vegetables by Destination, 1990

and 2002and 2002

0

10

20

30

40

50

UK

superm

arkets

UK w

holesale

UK A

sianveg

etables

Contin

ental

Euro

pe

Australia./N

ewZelan

d

%

1990 2002

Very High Medium LowLow High

Off-Setting ResponsesOff-Setting Responses

IntegrationIntegration Premium markets:Premium markets:

CountriesCountries CustomersCustomers

Value-additionValue-addition Crop diversificationCrop diversification

Kenyan Exports of High-Care Kenyan Exports of High-Care Prepared Vegetables, 1997-Prepared Vegetables, 1997-

20022002

0

1000

2000

3000

4000

5000

1997 1998 1999 2000 2001 2002

Tonnes

Off-Setting ResponsesOff-Setting Responses

IntegrationIntegration Premium markets:Premium markets:

CountriesCountries CustomersCustomers

Value-additionValue-addition Crop diversificationCrop diversification

Kenya Exports of Fresh Beans Kenya Exports of Fresh Beans and Peas, 1991-2002and Peas, 1991-2002

0

5,000

10,000

15,000

20,0001991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Tonnes

French beans Runner beans Snow peasSnap peas Garden peas

ConclusionsConclusions

Kenya faced a range of public and Kenya faced a range of public and private standardsprivate standards

Standards evolve within existing Standards evolve within existing challenging business environmentchallenging business environment

Response to standards largely within Response to standards largely within private sectorprivate sector

Standards used as a means to strategic Standards used as a means to strategic gaingain

Challenges for small-scale sectorChallenges for small-scale sector