First results of COLEACP’s COVID-19 survey – Kenya

Over the past two weeks, COLEACP has been asking businesses in ACP countries to share their experiences of the COVID-19 crisis and to let us know what support is most urgently needed. Our online survey will be repeated at the end of each month in order to measure the evolution of the impact of the pandemic over time, and companies that were unable to take part in the first round are encouraged to contribute in future. We will let you know when the survey is open again at the end of April.

The objective is to gather first-hand information on the impact of COVID-19 on operators of horticultural businesses, and assess how support from COLEACP and other partners could best be redirected as a response.

We will continue to update our statistics in light of further responses. Next week’s newsletter will contain a more comprehensive review of all the countries that are taking part in the survey.

This early report analyses the preliminary findings from horticultural companies in Kenya – so far, 19 companies (29%) have responded to the call. Preliminary results indicate that the major impacts are on logistics; on companies’ ability to maintain their outgrowers/suppliers and employees; and on financial management. Two-thirds of Kenyan survey respondents saw a loss of more than 50% of initial projected revenue for March 2020.

Regarding exports to the UK and the EU (especially the Netherlands and France), drastically reduced airfreight capacity, doubled airfreight costs and increased transit times mean that fine vegetables (French beans, snow peas, sugar snaps, baby corn) are particularly impacted; sea freight is less affected so far.

Operationally, companies are looking at laying off casual workers (40% reduction among survey respondents in March) and placing some permanent staff on paid/unpaid leave. For March, survey respondents reported their combined use of outgrowers decreased by nearly half (47.5%) Almost 100% of businesses (the exception being one large company) are not able to guarantee a market for their small-scale suppliers, many are unable to pay their outgrowers (37%), and even more are already scaling down on new planting schedules, which will have an impact on future supply and missed revenue and livelihoods for outgrowers in the coming weeks/months.

Key themes in terms of financial management are reduced cashflow due to declining orders and increased costs; limited access to credit; inability to pay creditors on time; creditors reducing the length of payment terms; the need to service asset finance loans while vehicles and equipment are lying idle; banks freezing loans, especially for import/export businesses; difficulty in paying staff, suppliers, and taxes; and increased production costs.

Predicted longer-term impacts throughout 2021 and beyond will result from reduced planting, current limitations on extension services, accumulated debt, loss of trained workers, loss of traditional supply bases (outgrowers), and loss of clients due to damaged confidence as a result of undersupply (79% of survey respondents have been unable to honour existing contracts due to logistical challenges directly linked to the COVID-19 crisis). Companies are exploring options for other local and regional markets, diversifying to other crops and processed produce, and looking for equipment to automate planting and processing and thus limit the gathering of people while ensuring continuity of activities – if the necessary finance can be found.

Regarding the needs for COLEACP support, respondents were particularly interested in tangible and practical support on COVID-19 related procedures for farming operations (84% of respondents) and packhouse operations (79%). Other topics highlighted included contingency planning for fresh produce operators (68%); human resources management in times of crisis (63%); negotiation skills to get more out of existing partnerships (58%); cashflow management (58%); and adapted communication towards employees and suppliers (53%).

COLEACP will organize information-sharing and capacity-building for staff on the topics that companies have identified.