Horticulture exports set to soar as airlines cut freight charges
More in Business
Rwanda has over the few years intensified efforts geared at increasing exports, particularly for the non-traditional trade products like flowers, vegetables and fruits. These efforts have, however, been met with various challenges including high fees of transporting cargo charged by airlines and other logistical issues such as lack of cold facilities along the value chain.
High freight charges and other logistic issues are among the top barriers hindering the country’s initiatives aimed at boosting export volumes and value of horticulture produce because they make the products less competitive on the global market, according to sector players.
Horticulture exporters say they are at times forced to reduce their shipments because of the high freight charges of up to $3 (Rwf2,520) per kilogramme.
These issues could soon be history following an initiative by the National Agricultural Export Board (NAEB) and some airlines which will see fares slashed by almost half, according to Epimaque Nsanzabaganwa, the NAEB horticulture division manager.
In an exclusive interview with Business Times, Nsanzabaganwa said the export body was engaging airliners with the view of providing price waivers to sector exporters.
The official is optimistic that the initiative is essential if the country is to increase horticulture and other agro-exports besides encouraging more businesses to engage in export trade and helping make the sector profitable and sustainable.
“We have been engaging some of the airlines on the issue of freight costs and we are happy that SN Brussels and KLM Royal Dutch Airlines have agreed to slash the fares,” he said.
Exporters will now pay $1.5 (about Rwf1,260) per kilogramme from about $2.7 (about Rwf2,260) per kilo, which is a reduction of $1.2 (about Rwf1,008) per kilogramme.
Nsanzabaganwa noted that affordable freight and other logistical costs play a crucial role in helping to make Rwanda’s horticulture and other export goods more competitive.
“With affordable freight charges, exporters will be able to negotiate more supply contracts which will eventually boost volumes and productivity of the horticulture sector,” he said.
According to Vainney Kabera, the managing director of Freshpak Limited, high cargo freight costs eat into exporters’ profits and discourage firms from engaging in export business.
“High airfreight fees have for some time affected the sector’s competitiveness but also discouraged many exporters, added Donatille Nibagwire, the managing director of FLORIS Export Company in Kigali.
RwandAir’s London flights
Meanwhile, the exporters say the introduction of direct flights to Gatwick, London by the national carrier RwandAir this month is the key milestone that could change the dynamics of trade between Europe and Rwanda.
Sources at RwandAir say the airline has pledged to charge competitive price of about $1 (Rwf840) per kilo which, according exporters will greatly spur export volumes and production.
“This will boost export volumes and ultimately promote trade between Rwanda and the United Kingdom,” said Emmanuel Twahirwa, a Kigali-based exporter.
RwandAir’s inaugural Kigali-Gatwick flight is scheduled for May 26.
Addressing other challenges
The export body says it been dealing with other challenges, including post-harvest handling and packaging, to bolster horticulture business in the country. “We are also investing heavily in cold chain facilities to ensure quality,” Nsanzabaganwa added.
The export body recently unveiled a multimillion modern facility at NAEB headquarters in Gikondo where firms can prepare and package their produce for export.
The 40 tonnes capacity facility is expected boost quality and help exporters reduce post-harvest losses.
In addition, NAEB is encouraging diversification and has introduced new varieties to boost the sector’s competitiveness. “We are looking at market demand and climate adaptability to be able to roll out more varieties, especially in the flower industry,” Nsanzabaganwa said, adding that they are looking to exploit new markets in the Middle East and West Africa for Rwanda’s horticulture produce.
Shungo Harada, the managing director of Bloom Hills Rwanda, a Japanese flower export firm based in Musanze District, said there is need to introduce more species if the flower sector is to be competitive and profitable.
The country is counting on horticulture, including the Gishari Flower Park in Rwamagana District to boost the sector.
The park is currently being run by Bella Flowers, a government firm. The country targets to increase flower production to 44,000 tonnes per annum or $140 million worth of export receipts by 2020.
Bella Flowers exported over three million stems of roses by end of March, and targets three tonnes of flower exports per week by end of this year, according to officials.
Overall, the flower industry in Rwanda has been growing at a low rate of about 5 per cent over the past years in terms of increased areas under flower production.
Floriculture was identified by government as a sector that could quickly-improve the country’s export revenue.
The flower sector was projected to bring in about $220 million (Rwf166.1 billion) by 2017, according to NAEB’s Rwanda Floriculture Development report for 2013. This is, however, not possible given the slow pace at which the sector is growing and the numerous challenges that have kept away would be investors.
However, with right interventions the sector has huge potential to boost the export industry to help reduce the country’s trade deficit. The flagship Gishari Flower Park project still has 65 hectares of land yet to be developed. Bella is currently using 35 hectares of the 100-hectare initiative.
In a related development, NAEB is currently mapping land that is suitable for horticulture as it seeks more investors. The agency is targeting a total of 2,000 hectares that will be dedicated to export-oriented production by 2018.
New efforts to increase fruit production
NAEB is investing in expansion of fruit production by developing quality planting material and facilitating farmers in production of avocados, mangoes and pineapples.
Efforts to address fruit shortage include increasing planting material through establishment of new nurseries for citrus and mango in gazetted RAB stations and in some selected farmer’s fields, according to NAEB.
The National Institute of Statistics of Rwanda (NISR) estimates that Rwanda exported over 3.6 million kilogrammes of fruits, including avocado, ripe bananas, oranges, pineapples, passion fruits, mangoes, strawberry, macadamia nut during the 2015-2016 period worth $1.3 million. However, this was less than the more $1.7 million export revenue earned over the previous year.