1. Role of Standards in Kenya’s Horticulture Sector Spencer Henson University of Guelph Canada

2. Key Messages…. Standards continually evolve over time Standards continually evolve over time Collective impact of standards Collective impact of standards Interaction between public and private standards Interaction between public and private standards Need to consider impact of standards in the wider context Need to consider impact of standards in the wider context Standards can be a threat to established supply chains Standards can be a threat to established supply chains Standards can create strategic opportunities Standards can create strategic opportunities

3. Outline Context Context Kenyan fresh produce exports Kenyan fresh produce exports Standards regime: Standards regime: European Union European Union Compliance strategies: Compliance strategies: Public sector Public sector Private sector Private sector Strategic responses Strategic responses Conclusions Conclusions

4. Context Trends in agricultural exports: Trends in agricultural exports: Shift from basic commodities Shift from basic commodities Export diversification Export diversification Increase in exports of fruit and vegetables Increase in exports of fruit and vegetables Increased role of non-traditional crops Increased role of non-traditional crops Linked to contract production: Linked to contract production: Large-scale Large-scale Small-scale Small-scale

5. Average Annual Growth Rates for EU Imports of vegetables, 1990-2000 Vegetable Total Imports Imports from Third Countries Tomatoes3.01.4 Carrots2.40.2 Potatoes1.0-1.9 Onions-0.40.3 Green peas 9.811.1 Green chillies/Peppers 5.47.2 Green beans 5.28.6 ‘Minor’ vegetables 2.54.8

6. Context Trends in agricultural exports: Trends in agricultural exports: Shift from basic commodities Shift from basic commodities Export diversification Export diversification Increase in exports of fruit and vegetables Increase in exports of fruit and vegetables Increased role of non-traditional crops Increased role of non-traditional crops Linked to contract production: Linked to contract production: Large-scale Large-scale Small-scale Small-scale

7. Kenyan Exports of Horticultural and Floricultural Products, 1980-2002

9. EU Imports of Green Beans, 1986-2000

10. Evolution of Kenyan Fresh Vegetable Exports Up-market off-season vegetables Asian vegetables Non-traditional vegetables Prepared products

11. Drivers of Change in the Kenyan Fresh Vegetable Export Sector Push Transport costs Transport costs Decline in margins Decline in margins Increased supply-base Increased supply-base Supply chain consolidation Supply chain consolidationPull Novel products Novel products Value-added products Value-added products Supply continuity Supply continuity Quality standards Quality standards Supply standards Supply standards

12. Comparative Freight Rates for Fresh Green Bean Exports, 2003

13. Drivers of Change in the Kenyan Fresh Vegetable Export Sector Push Transport costs Transport costs Decline in margins Decline in margins Increased supply-base Increased supply-base Supply chain consolidation Supply chain consolidationPull Novel products Novel products Value-added products Value-added products Supply continuity Supply continuity Quality standards Quality standards Supply standards Supply standards

14. Standards on Fresh Vegetable Exports to the European Union StandardPublicPrivate PhytosanitaryX HACCPX Microbial contamination X TraceabilityX Good agricultural practice XX Pesticide residues XX Social welfare X Quality grades XX

15. Evolution of Hygiene Standards in the UK UK Food Safety Act 1990 Private hygiene standards Collective retailer hygiene standards Third party certification

16. Evolution of EU Standards on Pesticides Predominantly Member State controls Evaluation of existing approved pesticides Establishment of Maximum Residue Levels Good Agricultural Practice standards

17. Evolution of EU Phytosanitary Standards Member State controls Notification pests Rapid alert system Border inspection Approved Third Country authorities

18. Evolution of EU Quality Grades Limited EU grades Private quality standards Certificate of conformity Third Country approved authority

19. Enforcement Regimes Border inspection Border inspection Surveillance Surveillance Regulatory actions Regulatory actions Private inspection Private inspection Third party certification Third party certification

20. Stringency of SPS Requirements for Fresh vegetables in Alternative Markets

21. Challenge Facing Fresh Vegetable Exporters Compliance Compliance Control Mechanisms Cost Cost

22. Compliance Strategies: Public Sector Phytosanitary surveillance Phytosanitary surveillance Plant health certification Plant health certification National standard National standard

23. Compliance Strategies: Private Sector Industry code of practice Industry code of practice Development of human capital Development of human capital Facility development Facility development Backwards integration Backwards integration Intensified extension Intensified extension Out-grower control systems Out-grower control systems

24. Supply-Base for Fresh Vegetable Exports from Kenya, 2002

25. Role of Small Producers in Kenyan Exports of Fresh Vegetables

26. Compliance Strategies: Private Sector Industry code of practice Industry code of practice Development of human capital Development of human capital Facility development Facility development Backwards integration Backwards integration Intensified extension Intensified extension Out-grower control systems Out-grower control systems

31. Off-Setting Responses Integration Integration Premium markets: Premium markets: Countries Countries Customers Customers Value-addition Value-addition Crop diversification Crop diversification

32. Kenyan Exports of Fresh Vegetables by Destination, 1990 and 2002 Very High Medium LowLow High

33. Off-Setting Responses Integration Integration Premium markets: Premium markets: Countries Countries Customers Customers Value-addition Value-addition Crop diversification Crop diversification

34. Kenyan Exports of High-Care Prepared Vegetables, 1997-2002

35. Off-Setting Responses Integration Integration Premium markets: Premium markets: Countries Countries Customers Customers Value-addition Value-addition Crop diversification Crop diversification

36. Kenya Exports of Fresh Beans and Peas, 1991-2002

37. Conclusions Kenya faced a range of public and private standards Kenya faced a range of public and private standards Standards evolve within existing challenging business environment Standards evolve within existing challenging business environment Response to standards largely within private sector Response to standards largely within private sector Standards used as a means to strategic gain Standards used as a means to strategic gain Challenges for small-scale sector Challenges for small-scale sector