Kenya's flower industry is facing a growing crisis as the escalating Middle East conflict disrupts global air cargo routes, driving up freight costs, delaying shipments, and putting thousands of jobs at risk. With millions of dollars in losses already recorded and supply chains under severe strain, the sector is warning of deeper economic fallout unless urgent measures—including the release of pending VAT refunds—are taken to support exporters.
Strategic importance of the Middle East
The Kenya Flower Council (KFC) is closely monitoring the escalating conflict and its far-reaching implications on global logistics and Kenya's floriculture industry—one of the country's leading foreign exchange earners and a critical source of livelihoods. While geographically distant, the conflict is already having direct and significant consequences on aviation routes, cargo capacity, and supply chains that underpin Kenya's flower exports.
The Middle East plays a dual and indispensable role in Kenya's floriculture industry, serving both as a key export market and as a vital global logistics hub. The region accounts for between 10 and 15 percent of Kenya's flower exports, with major destinations including the United Arab Emirates and Saudi Arabia. Beyond direct trade, Gulf countries act as critical transit corridors linking Kenya to Europe and other global markets. Five Gulf countries alone contribute approximately 13.35 percent of export value, estimated at USD 722.9 million, while Gulf-based airlines carry a significant share of global air cargo, particularly for highly perishable products such as flowers.
Severe disruptions to air cargo and logistics
Since the onset of the conflict, the aviation and logistics landscape has been severely disrupted. Air cargo capacity on some routes serving Kenya has declined by up to 30 percent, while globally an estimated 18 to 20 percent of air freight capacity has been taken offline. These disruptions have resulted in shipment delays of up to 48 hours, alongside widespread flight cancellations, rerouting, and rescheduling.
At the same time, freight costs have surged sharply, with exporters now facing rates of up to USD 5.30 per kilogram. These increases are driven by longer flight routes, rising fuel prices, and additional war-risk surcharges, with some key trade corridors experiencing cost spikes exceeding 20 percent.
Significant financial losses
The combined effect of reduced capacity, delays, and increased costs has already translated into significant financial losses for the industry. Over the past three weeks alone, Kenya's flower exporters have lost an estimated USD 4.8 million (KES 220 million). Of this, approximately USD 2.1 million represents flowers that perished before reaching the market, while USD 2.7 million reflects reduced prices resulting from delayed arrivals and compromised quality.
Farms heavily dependent on Middle Eastern markets have experienced revenue declines of up to 75 percent, and if the situation persists, weekly losses could exceed USD 1.3 million.
Ripple effects on Europe and global markets
Although Europe remains Kenya's largest export market, it is not insulated from the current crisis. The disruption of Middle Eastern airspace—an essential corridor for Africa–Europe cargo flows—has forced airlines to reroute flights, resulting in longer transit times, reduced reliability, and increased operational costs.
Freight rates on Europe-bound routes have risen sharply, in some cases by more than 20 percent. Globally, exporters in certain regions are experiencing cargo declines of up to 37 percent, underscoring the scale and interconnected nature of the disruption.
Impact on quality, competitiveness, and viability
Kenya's flower industry is uniquely vulnerable to such disruptions due to the highly perishable nature of its products. Even short delays significantly reduce shelf life, lower auction prices, and increase rejection rates in destination markets.
The current delays of up to 48 hours are therefore having a direct and measurable impact on product quality and competitiveness. At the same time, rising freight costs are eroding already thin margins, threatening the economic viability of growers, particularly small and medium-sized enterprises.
Broader economic implications
The floriculture sector is a cornerstone of Kenya's economy. In 2024, the industry generated approximately USD 835 million in export earnings and supports hundreds of thousands of jobs directly and indirectly.
Disruptions to the industry therefore extend beyond exporters, affecting foreign exchange earnings, employment, and rural livelihoods across the country.
Outlook if disruptions persist
If the conflict continues, the outlook remains challenging. Air freight capacity is expected to remain constrained, with the possibility of rates doubling or even tripling on affected routes. Alternative options such as sea freight remain largely unsuitable due to extended transit times of 10 to 15 additional days.
The situation increasingly mirrors the logistics disruptions experienced during the COVID-19 pandemic, characterized by tight capacity, volatile pricing, and operational uncertainty.
Industry response
In response, the Kenya Flower Council is working closely with exporters, airlines, freight operators, and government agencies to mitigate the impact. Efforts are focused on approvals of ad hoc air capacity and direct flights, prioritizing available airfreight capacity for perishable goods, identifying alternative cargo routes, and strengthening real-time coordination of logistics information.
While these measures are helping to ease some immediate challenges, they cannot fully offset the structural constraints currently affecting global supply chains.
Urgent call to government: Release VAT refunds
In light of the current crisis, the Kenya Flower Council calls on the Government of Kenya to urgently expedite the release of pending VAT refunds owed to flower exporters.
At a time when the industry is grappling with rising costs, reduced cargo capacity, and market uncertainty, delayed VAT refunds are severely constraining cash flow across the sector. VAT refunds for the industry currently stands at KES 10 billion. These funds are critical working capital needed to sustain operations, pay workers, maintain production, and meet export commitments.
The floriculture sector supports hundreds of thousands of livelihoods, and timely release of VAT refunds will provide immediate liquidity relief, enabling companies to continue operating and safeguard jobs. Failure to act risks business closures, job losses, and long-term damage to one of Kenya's most important export sectors.
Conclusion
While the Middle East conflict is not affecting flower production in Kenya, it is severely disrupting the logistics backbone that sustains the industry. Without timely intervention and coordinated action, the pressure on exporters, workers, and the broader economy will continue to intensify.
The Kenya Flower Council remains committed to working with all stakeholders to safeguard the sustainability and global competitiveness of Kenya's floriculture industry.
For more information:
Kenya Flower Council
[email protected]
kenyaflowercouncil.org
