Fresh produce exporters to European Union (EU) markets are counting gains as the stronger euro boosted their earnings after it hit record-highs against the shilling.
The shilling has shed 30 per cent of its value against the euro in the past seven months — a move that has seen flower and fruit exporters gain an extra Sh30 for every unit of produce they sell to the EU.
This has cushioned the exporters from the rising dollar dominated import bill led by high commodity prices since the shilling losing streak against the US currency has been slower compared to the European one.
“We are indeed making more money today compared to last year, but part of it is being eaten by the rising input costs since we import fertilisers and agrochemicals,” said the Fresh Produce Exporters Association CEO, Mr Stephen Mbithi.
The Kenyan currency total loss against the dollar this year is 15 per cent to Sh93 compared to that of euro at 26 per cent top Sh133. Kenya sells 82 per cent of its horticultural exports in EU, leaving only 18 per cent to the dollar-dominated destinations of US, Middle East, Japan and Russia.
Currency dealers attribute the strengthening of the euro against the local currency to the weakening of the dollar against the European currency, as fears over the financial health of US prompt investors to reduce their holding of the dollar relative to other major currencies.
This is emerging as the quantity of flower exports has been rising compared to 2010.
Data from the Kenya National Bureau of Statistics shows fresh flower exports grew by 41 per cent in the first five months of the year to 43,058 tonnes from the 30,328 in the same period last year.
The shilling has traded between Sh107 and Sh134 to the euro in the eight months to August compared to a range of Sh95 and Sh109 in the same period last year. This is a pointer that the weak shilling against the euro is set to beef up the coffers of firms such as Oserian, Sher Karuturi and Homegrown/Finlay.
But the players reckon that how the flower firms cushion their sales from the import currency risks would infleunce their profitability.
“Those in the horticulture sector who are able to adapt to the current trading scenario and can withstand the shocks of currency volatility would probably have the silver lining and be able to sustain themselves into the future,” said Dipak Shah, the chief finance officer at Oserian.