June 2010
This article draws on recent news articles to describe the immediate economic impact of the volcano on Kenya’s gourmet-vegetable and cut-flower industry, before exploring some of the longer term implications for international trade.
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Volcano costs Kenya $3 million a day Food and flower mountains
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Burden on British retailers
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Food security
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Food miles – frivolous or fair?
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Just-in-time global production line
“Volcano, volcano, volcano”, grumbled Ronald Osotsi, whose $90 a month job scrubbing baby courgettes and French beans was under threat. “That’s all anyone is talking about.” He was sitting on a log outside a vegetable processing plant in Nairobi next to other glum-faced workers eating a lunch of fried beans.
The New York Times told Ronald’s story on 19 April 2010 a few days after the dramatic eruption of Iceland’s Eyjafjallajokull volcano. It claimed that election-driven riots, the September 11 terrorist attacks, and prolonged drought have all left their mark on agriculture in Kenya, but the industry had never suffered like this.
This case study draws on recent news articles to describe the immediate economic impact of the volcano on Kenya’s gourmet-vegetable and cut-flower industry, before exploring some of the longer term implications for international trade.
Volcano costs Kenya $3 million a day
“It’s a terrible nightmare” said Stephen Mbithi, chief executive of the Fresh Produce Exporters Association of Kenya. The pickers are not picking. The washers are not washing. Temporary workers have been told to go home because refrigerated warehouses at Jomo Kenyatta airport are stuffed with ripening fruit, vegetables and flowers.
No-one was prepared for a relatively small volcano in a sparsely populated area of Iceland causing a flights ban in Europe and significantly affecting international trade and business. Least of all Kenya, which flies two million pounds of fresh produce out of the country every night – that’s the equivalent to 10 Boeing 747s of cargo space. Eighty two percent of this goes to Europe and more than a third goes solely to Britain.
The flights ban directly resulted in:
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5,000 Kenyan workers being laid off, causing hundreds to default on loan repayments
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2,000 tonnes of vegetables and 1,000 tonnes of flowers rotting in the airport
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Kenyan horticulture, the top foreign exchange earner and a critical piece of the national economy, losing £3 million a day.
Kenya’s main earnings, 2009
Source: Daily Nation, 17 April 2010
No local market
Courgettes and flowers are not something the average Kenyan buys. Most of the vegetables for export, including peppers, green onions, carrots, broccoli, and asparagus are grown in the Rift Valley. From here, they are taken in lorries to Nairobi where they are washed, chopped and shrink-wrapped. Some packages are labelled ‘stir-fry’ which, The Daily Nation, Kenya’s daily newspaper, claims few East Africans have ever heard of.
Food and flower mountains
Kenyan farmers were forced to destroy tonnes of perishable food destined for the UK. Eight-feet-tall heaps of perfectly good sugar-snap peas and pre-packed fruit salads, for example, were dumped in the back of pick-up trucks, most of it going for cow food. Thousands of roses, lilies and carnations were thrown straight from the field onto compost heaps.
For several days, The Daily Nation (17 April 2010), wrote about charities turning up at packaging companies to collect waste food. Some of the UK’s biggest supermarkets, however, did not allow Kenyan packaging companies to give away excess produce with their labels on it. This led to scenes, like the one described in The New York Times, of a man wearing a lab coat and mesh hair net tearing open plastic bags of vegetables, each worth a couple of dollars, and shaking out the contents for two nuns from a nearby orphanage.
British supermarkets played down the effects of the flight ban. Three days passed before Waitrose said it was running low on papayas, and Marks and Spencer’s admitted it was experiencing shortages of some flower bouquets.
Approximately 15,000 tonnes of fresh produce is imported into Britain everyday, two thirds of which is fruit and veg. The proportion that is air freighted, according to the BBC (20 April 2010), is a mere 1%, and includes exotic and out-of-season fruit and vegetables.
Gourmet-vegetables and cut-flowers imported from Kenya are among the imports that perish fastest. As Grant Liddell, retail Director of Uniserve Group Logistics Company, told TheTelegraph (21 April 2010), “You can’t ship exotic fruits, flowers or fish by sea. That’s why they’re called perishables!”
Smaller British businesses were more vocal about the financial burden on retailers. Ian Lloyd, a wedding florist from Cheshire, told the Telegraph newspaper (21 April 2010) that he was waiting anxiously for deliveries of orchids and heliconias from Kenya. “Purple has been the colour this season” he said, “but if you’re a bride and you have your heart set on purple orchids, you might be disappointed”.
Four days into the crisis, however, larger retailers started to put contingency plans into action – bringing vegetables and flowers from Kenya into the UK via flights to Spain, and lorries to Amsterdam and London. This added 60% to transport costs and significantly cut the products’ shelf life on reaching the supermarket. Tesco claimed it did this to support poor farmers in Kenya.
Grounding most of Europe’s air travel for several days had a ripple effect throughout the world.
The most direct casualty was the airline industry. The International Air Transport Association (IATA) estimated that airlines collectively lost £130million per day
The Japanese car giant, Nissan, suspended several production lines due to the shortage of parts from Ireland
The clothing industry faced a back-log as stocks sat in boxes around the world. In China, 10 million kilos of textiles and garments for UK fashion shops waited in warehouses
The lack of airport refrigeration facilities in Ghana was a big blow to pawpaw and pineapple farmers who sell to Europe
Eight airports were temporarily shut down in North Africa, among them Tangier and Casablanca. These incurred losses related to passengers, fuel, parking, security, airport shuttle buses and taxes. Burkina Faso, for example, lost $65,884
The events in Kenya have refuelled ethical debates about food security. Kenya now grows so much food for export that it imports extra food for its people. Yet, it remains one of the poorest countries in the world, ranked at 148th in the Human Development Index, with a GDP per capita of less than $1,000 a year.
Farm workers and factory production line staff are expected to work long hours in harsh conditions for low wages. In 2007, a Guardian article told of exceptionally harsh conditions in the Kenyan village of Karagita, where many flower farmers live. There were few drains, no rubbish collection service and poor housing, with two families sometimes sharing one room.
The Geography in the News article ‘Fast Food Farmers’ describes how during the Valentine’s season, heightened demand for flowers in Europe results in work shifts increasing beyond their usual 15 hours a day. British supermarkets, it claims, make sure they do not accidentally over order farm produce, by emailing Kenya at midnight with instructions to increase or decrease production quotas for the next day.
The article explains how living with perpetual workplace insecurity takes it toll on Kenyan farmers, who are expected to ‘drop everything’ and respond to the whims of British customers. It concludes with practical actions British consumers can do to ensure a greater proportion of profits reach Kenyan producers, such as buying fairly traded goods and getting involved in the Trade Justice Movement.
Food miles – frivolous or fair?
Events have also brought the issue of food miles to the fore. Moral reasons for supporting farmers in poorer countries have been challenged by those who think it is frivolous and unsustainable to fly out-of-season vegetables or flowers in from Kenya. The Observer Food Monthly magazine headline, for example, boldly asked – ‘The ash cloud means the Kenyans and many other suppliers can’t get their air-freighted produce to the UK. But in the long run is it all for the best?’
Several other reports argued that the disruption should encourage us to return to eating seasonal, home-grown produce and that the environmental cost of flying out-of-season and exotic perishable items half way across the world is simply unsustainable.
Research by the International Institute for Environment and Development (IIED) however, found that Kenya uses less carbon-intensive farming methods because produce is grown with sunlight, not heat-lamps. It estimates that air-freighting from Africa accounts for 0.1% of Britain’s total carbon emissions, whereas about 65% of emissions relating to food are caused by transport within Britain.
The Soil Association, Britain's largest organic food association, said it will continue to put its stamp of approval on products sent by air, but only if the food sales help poor farmers. It adds that UK producers use copious amounts of energy to grow the same foods, and manual production methods and lo-tech irrigation systems in Kenya do little to impact on the environment.
The volcano has highlighted how our ‘just-in-time’ or ‘lean’ global production line, and our modern taste for out-of-season fruit and vegetables from exotic climes, is acutely sensitive to any disruption. One natural event, albeit an unusual one, did not just disrupt European life by shutting down most of its air transport. It did, in effect, shut off Europe from the world, and shut off economically peripheral regions, like East Africa, from the core.
It begs the questions – How will our world respond to more events like this? Is globalisation so entrenched that it would survive? Or, are natural disasters moving us towards a more regional world and a less global one?
It is interesting that one of the industries least affected by the volcano is electronics. Digital data continued to flash around the world at the speed of light, unaffected by volcanic eruptions, with cities like Bangalore in India continuing to flourish.
For all our communication technologies, The Independent (20 April 2010) asserts, “We are human beings after all, and cannot hug someone over a video link”. Can we depend entirely on IT? Or, do we need face-to-face trading connections to make the world go round?
It is important to recognise that the economic impact of this volcano on Kenya is not all negative. As a result of the chaos the business community says it will design more robust systems of production and distribution. And, the likely outcome of this is the emergence of more efficient systems, more suited to the needs and desires of manufacturers and customers.
However, nature is reminding us that these plans, systems and schedules need to be flexible enough to sometimes give way to a planet that runs on its own clock.
As Vanessa Rossi, the Chatham House senior economic fellow told the BBC (20 April 2010), “The problem is it is incredibly hard to predict what will happen. Even the geologists can’t tell us”