14: 05: 2026
Horticultural businesses are urging policymakers to ease mounting financial pressures as rising labour, energy and input costs continue to erode profitability, even as sales remain relatively stable.
The latest quarterly Business Barometer by the Horticultural Trades Association (HTA) paints a worrying picture for the sector, revealing that significantly more businesses are falling behind profit targets than exceeding them. At the close of the first quarter of 2026, the sector recorded a net profit balance of -36%, compared with -13% for sales, underlining a growing disconnect between trading activity and financial returns.
Retailers have been among the hardest hit, posting a profit net balance of -46%, reflecting the intense margin pressures currently facing horticultural enterprises.
Year-on-year data further highlights the challenge. While retailers, growers and manufacturers reported a modest increase in sales, with a net balance of +11%, profits declined sharply to -27%. The figures suggest that escalating operational costs, rather than weak market demand, are driving the downturn in business performance.
Industry players cite higher labour costs, increased employer tax contributions, fuel price hikes and rising material costs as the main factors behind shrinking margins. Many businesses also report that adjustments to wage structures have triggered broader payroll cost increases, while weakened consumer confidence, partly influenced by global economic uncertainty, is adding to the strain.
Investment Plans Slowing
The financial squeeze is now beginning to affect long-term business planning.
Investment intentions have declined across all five tracked categories, with only 62% of surveyed businesses planning at least one investment in the coming period. This marks a notable drop from 70% in the previous quarter and 74% in the third quarter of 2025, signalling a steady downward trend.
Among businesses already missing profit expectations, nearly two-thirds say they are likely to delay, reduce or cancel planned investments.
Confidence across the sector is also weakening. Medium-term business outlook has fallen to 4.2 out of 7, while long-term confidence has slipped to 4.0, the lowest level recorded since the onset of the Covid-19 pandemic.
Signs of Resilience, But Pressure Builds
Landscaping businesses continue to show relative resilience, supported by strong short-term project pipelines. However, many report growing difficulty converting enquiries into confirmed work, suggesting that rising costs and softer consumer confidence may soon begin to weigh more heavily on demand.
The HTA says the widening gap between sales performance and profitability demonstrates that persistent cost pressures are now directly constraining business growth and limiting investment across the horticulture value chain.
HTA Chief Executive Fran Barnes said businesses are feeling the cumulative impact of multiple financial pressures landing simultaneously.
She noted that while sales remain steady, firms are not reaping the benefits as operating costs continue to rise faster than revenues.
According to Barnes, increases in employer contributions and minimum wage requirements have placed significant strain on what is already a labour-intensive sector, adding an estimated £134 million to industry-wide costs.
She warned that the consequences are becoming increasingly evident, with falling profits, delayed investment decisions and confidence levels dropping to their lowest point since the pandemic.
Call for Policy Action
The HTA is calling on government to introduce measures aimed at easing financial pressure on horticultural businesses.
Key proposals include extending energy support to the sector, reforming business rates to create a more responsive and investment-friendly framework, reducing regulatory and financial barriers to improve access to funding, and easing trade friction with the European Union.
Industry leaders warn that without targeted intervention, more businesses may be forced to scale back operations at a time when the sector should be investing in growth, innovation and job creation.
For Kenya’s floriculture industry, the findings offer a timely reminder of the importance of managing rising production costs and maintaining policy environments that support competitiveness in increasingly challenging global markets.