Dutch-headquartered flower auction firm, Flora Holland (FH), is set to loosen its grip on Kenya’s multi-billion shilling flower export business after the European Union agreed to restore the country to free trade list from next month.

The auction has been riding on its preferential logistical arrangements with European Union customs officials to hook Kenyan growers to its services. Under a special deal made in October when they started levying taxes on Kenya’s flowers, the EU customs officials have been piloting the use of FH reference prices in calculating taxes due on Kenya’s flower exports.

Determination of reference price is fairly simple. Every Friday, FH produces a document that states total average price per flower or plant which it then sends to each grower by e-mail. It then deducts a fixed percentage of estimated cost — representing contribution fee, auction commissions, trolley and lot levy, bucket rental, unpacking costs and waste — from the average price, resulting in the reference price.

For Kenyan growers who had began to face tax charges in EU states for the first time in October, the use of FH reference price has been quite alluring during the December peak season.

Unlike non-members who face lengthy process that includes product declaration and documentation before the actual customs calculation, freight forwarders handling such shipments only need to produce their FH reference prices for tax determination.

The use of the FH reference price for customs determination was meant to continue on pilot basis up to the end of this month, paving the way for its official adoption from January.

Approval of prices produced by FloraHolland — a key player in the Dutch market which absorbs up to 90 per cent of Kenya’s flower exports — was seen as a positive step that would draw more freight handlers keen to use the reference prices to beat logistics nightmare.

The auction that handles about 11 billion cut flower stems annually, 1.3 billion potted plants and 200,000 distribution points in Europe, has fixed cost at flat rates of 18.6 per cent on the produce of its members and 19.8 per cent for non-members.

About 70 per cent of Kenya’s flower exports still get to the rest of the global markets via the Dutch auctions despite a decade-old drive to ditch middlemen in favour of national branding and direct sales.

The Kenya Flower Council, however, said growers have been at liberty to use their own documentation and alternative methods for calculating customs value of their shipments.

“Not every grower is a member of FloraHoland. A number of them prefer to export directly without going through middlemen,” chief executive Jane Ngige told the Shipping & Logistics in an earlier interview.

Two years ago, the cooperative made headlines with a trial shipment of Kenyan roses in a refrigerated container in its bid to beat the “carbon miles” debate which threatened to lock airlifted produce out of Europe.

The co-operative society has also recently formed an entity called Q7 Air Cargo Brokers to manage logistic issues such as inspection, organisation of shipments and information exchange for its members in Kenya.

Source: Business Daily

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.