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 Kenyan 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 extra 30% 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. 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.
“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. Kenya sells 82 per cent of 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.
Data from the Kenya National Bureau of Statistics shows fresh flower exports grew by 41 percent 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.
“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.