Why horticulture exports are no bed of roses

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Mariam Soumaré, Community Engagement Specialist, World Economic Forum

• The Valentine’s Day holiday has become a billion-dollar industry creating opportunities for large and small businesses worldwide.
• Trade in horticultural goods such as flowers, which are central to the holiday, provide a source of livelihood for many farmers in the Global South.
• But global supply chains remain complex, limiting the development of the horticulture trade and its ability to reach its full potential.

Nothing symbolizes Valentine’s Day more than freshly cut flowers. Whether you celebrate the holiday or not, for many businesses, it’s a make-or-break season.

For Valentine’s Day 2023, the US National Retail Federation forecasts a national expenditure of $25.9 billion with top gifts including candy, greeting cards and flowers. Access to these products is driven by trade – a timeless activity that has lifted millions out of poverty and continues to do so.

The complex supply chain structure of horticulture products

Flowers and many other horticulture products tend to be processed in a cold supply chain to increase their shelf life. The export journey typically involves handling by multiple parties: farmers, logistics operators, customs authorities, phytosanitary (plant health and disease) inspection agencies, repackaging providers and more. This has to be undertaken in a fast and coordinated manner to ensure a fresh delivery to the retailer. Any disruption in the chain could result in wastage or additional costs for the exporters.

In Uganda, for example, the horticulture sector is among the top five export revenue earners with an annual growth rate of 13%. However, cumbersome inspection processes prevent exports from reaching their full potential. In fact, just 20% of these products ever make it to overseas markets. While inspections are necessary to ensure safety, security and revenue collection, if no efficient risk-based plan is established, goods will go through involved inspection processes which can lead to post-harvest losses and lost revenue. On average, a typical inspection process ranges between three to five hours at the packhouses and between four to six hours at the airport. By the time the goods reach their final destination, the exporter would have dealt with a dozen agencies in addition to processing several forms and certificates.

As many emerging economies benefit from the export of horticulture products, any waste and additional costs tend to impact the livelihood of farmers. In Kenya, for example, the horticulture industry is one of the largest earners of foreign exchange and more than half of the exports are produced by smallholder farms. Given the existing challenges farmers face, on-the-ground efforts are needed to help them integrate into the global horticulture value chain in an inclusive and sustainable manner.

Addressing the challenges of the horticulture supply chain

While elaborate inspection processes allow countries to protect human, animal and plant lives by avoiding the spread of pests and other diseases, they remain overly costly, cumbersome and time-consuming. To address such challenges, members of the World Trade Organization negotiated the Trade Facilitation Agreement (TFA) which contains provisions for expediting the movement, release and clearance of goods, including goods in transit.

Drawn from international best practices, the TFA provides a useful framework for governments to ensure border safety while facilitating trade. For example, the Ugandan government has partnered with the Global Alliance for Trade Facilitation to review and re-engineer the sanitary and phytosanitary inspection process of horticulture products to reduce the time and cost of compliance in line with the TFA. The Alliance is a public-private partnership led by the World Economic Forum, the International Chamber of Commerce, the Centre for International Private Enterprise and GIZ. In Uganda, the Alliance project is implemented by Swisscontact.

Beyond time and cost savings, the project is expected to boost the welfare of MSMEs (micro, small and medium enterprises) – a significant employer of women who make up approximately 70% of the horticulture sector’s workforce and own 30% of its businesses. However, female participation is mainly concentrated in low-paying, unskilled jobs such as weeding, harvesting, sorting, packing and labelling flowers. When they do engage in trade, it tends to be informal, which can expose them to various forms of discrimination and harassment.

Given these challenges, Alliance projects take a gender-sensitive approach to ensure female inclusion. To amplify the impact of such work, complementary efforts are needed on the ground to help women reap the benefits of trade. The International Trade Centre, for example, is implementing various projects aimed at providing women entrepreneurs with the necessary resources, expertise and networks through the SheTrades Initiative.

The need for greater cooperation

Despite ongoing efforts, the reality is that trade challenges are numerous and cannot be solved by one actor. In addition to market-entry barriers, horticulture farmers and exporters in many countries face other “before-the-border” challenges ranging from lack of finance or credit to a lack of equipment or access to education. Solving these problems requires greater collaboration between public and private entities across various industries and value chains.

Such cooperation is particularly necessary now with many sectors on a journey to becoming more inclusive and sustainable. These transformations are often complex and require multi-stakeholder efforts to unlock innovative solutions for farmers to realize trade gains while considering sustainable development objectives. In the agriculture sector, innovative solutions such as ePhyto are facilitating market access while promoting paperless trade.

By providing access to an array of international goods and services, trade brings holidays such as Valentine’s Day to life. However, more work is needed to ensure trade is streamlined and the benefits accrue to the most vulnerable populations. On this Valentine’s Day, in addition to cherishing your loved ones, take some time to reflect on how your industry can contribute to inclusive and sustainable growth.