Introduction case analysis
Case 1: Kenya’s cut-flower industry (economic dimension)
1. What are the means of production?
2. What is the economic policy of the Kenyan government?
3. Which international processes play a role?
How can production factors optimally be utilized?
- Capital (money, machines, tools)
- Labour
- Nature
Local how can goods (agriculture & industry) and services produced?
Core regions – main focus on (high-quality) services
Semi – periphery – main focus on industry
Periphery – main focus on agriculture and export of raw materials
Capital (low/medium)
Labour (intensive)
Nature (important)
Why is the services sector the biggest in GDP?
- Because in the service sector you earn that much that less people working in the services sector
make more than many people in other sectors
- Because many people work in the informal sector so that isn’t in the statistics
National what is the economic policy of the national government?
Role of the government according to the World Bank:
In a recent World Bank Technical Paper (Jaeger, 2010), it is argued that a commercial horticulture
sector needs government policies that provide an environment in which the sector can thrive. It does
not need direct intervention from the government in its activities; rather, the government should
recognise the need for a vigorous private sector as the engine of commercial growth. Five areas are
identified in which government policy can provide an active support to commercial horticulture:
- Infrastructure
,- Investment
- Institutional (reduce the bureaucratic overhead)
- Innovation
- Human capital
The Ministry of Agriculture is the lead agent in agricultural transformation in the country. The
ministry provides overall policy, regulation and operational direction.
In the 1970s the government was trying to indigenize an industry largely seen as being dominated by
foreigners
In 2012 the Kenyan government (in the draft national horticulture policy of 2012) states that the
broad objective of government intervention is to accelerate and sustain growth and development of
the horticultural industry. More specifically, policy objectives for the realisation of the broader
objective are to:•i) Facilitate increased production of high-quality horticultural produce.
•ii) Enhance provision of the sub-sector’s support services.
•iii) Promote value addition and increase domestic and external trade.
•iv) Establish and develop infrastructure to support the horticulture industry.
•v) Establish and strengthen institutional, legal and regulatory framework in the horticultural
industry.
•vi) Promote mechanisms for environmental sustainability and other cross-cutting issues.
The national horticulture policy highlighted the possibility of setting up a regional flower auction in a
bid to shift power dynamics to producers in the value chain.
International which international processes play a role in the production at local level?
- Technological developments in communication and transport
- Increasing interdependency of economic activities throughout the world, particularly via
multinational corporations and international organizations
- Changing production methods Fordism to toyotism
Leipold & Morgante
The Kenyan flower industry is the 3rdlargest flower exporter in the world (Rikken 2011), and is
Kenya’s top foreign exchange earner(Ksoll, Macchiavello and Morjaria 2009). It contributes to the
country’s status as a leading African economy and provides a source of income for many
Kenyans. The industry has however been the focus of several damaging media exposés and
academic research documenting extensive human rights and environmental abuses.
Furthermore, changes in consumer behaviour in Western countries, the major importers
of Kenyan flowers, are pressuring for a transition to more ethical business practices and
,credible accreditation. Industry stakeholders, NGO’s and accreditation bodies have therefore
taken steps to improve farm conditions. The flower industry promises to make important
contributions to Kenya’s economic development by providing rural employment, attracting
foreign investment, and improving domestic technology and infrastructure. However, for this
development to be sustainable, environmental impacts and social abuses must be addressed
effectively in order for the industry to fulfil its potential positive effects. To investigate these
concerns and the attempts to improve conditions we conducted a research trip to Kenya in August
and September 2010. We collected data through visits to farms, interviews with workers, unions
and other industry players. This research attempts to answer whether the Kenyan flower
industry can be a positive example of sustainable development. Using the theoretical
framework of sustainable development we approach the analysis through its three
components: the social, the environmental and the economic.
Key findings:
- Social:
On the social front our findings suggest that labour conditions are improving,
with accreditation bodies having a significant impact. However, wages are
significantly below a living wage, leaving workers and their families with limited or
no disposable income. Finally, trade union membership is often discouraged and
undermined.
Negative impacts are:
• Wages that are too low to live a decent life/ basic needs (food, housing, transport, education,
medical bills)
• Serious sexual harassment and discrimination
• Limits on freedom of association
• The high proportion of casual workers
• Poor health and safety conditions especially regarding pesticide spraying (bad working conditions)
Positive impacts are:
• More opportunity for work for women
• Other work conditions of other jobs in that area are lot worse
- Environmental:
Our environmental results show that increasingly more farms are looking into organic methods of
pest control and those that implement water-recycling and waste disposal systems are able to
decrease overall costs in the long run. Voluntary organisations are having some positive impact on
regulating the water level in Lake Naivasha, however reliable government regulation is necessary.
Negative impacts are:
• Unsustainable use of water resources
• Contamination of water and soil by harmful chemicals and pesticides
, • Carbon emissions produced by long-distance transport
• Destruction of wetlands and original natural habitats (land degradation)
• People don’t have access to enough and quality water
- Economic:
Economic indicators show a steady rise in the importance of the flower industry to the Kenyan
economy. However, without the necessary incentives and regulations, the benefits are likely to
be skewed towards medium and large producers and not to small-scale producers, and workers.
Rising consumer concern in Europe has pushed flower farms to join various accreditation
bodies thereby raising social and environmental standards, which will ultimately allow for a
sustained presence of Kenyan flowers in Western markets.
Negative impacts are:
• Concerns over the sustainability of export-led growth
• Impact of consumer behaviour in Europe (Kenya is really dependent on Europe)
• Corruptness (political)
• Conflicts within the country (political)
• Profit is not going to Kenya
• Area is growing because of the job opportunity so they don’t have enough services (hospitals,
schools, housing)
• If you lean too much on 1 market than its vulnerable for the economy when the demand is low so
there is too little diversity
Positive impacts are:
Positive impacts:
• Jobs because of the flower farm (and there is a high unemployment rate in Kenya)
• Creates bond internationally (political)
• The contribution of the flower industry to Kenya’s economy
Western consumer pressure combined with trade union action has had a significant impact in
improving workers’ working conditions and environmental control. Together with growing
credible involvement of accreditation groups in increasing emphasis on social and environmental
standards of flower farms, water extraction can be made sustainable, the impact of harmful
chemicals can decrease and wages increase. However, the percentage of farms complying to
accreditation standards may still be too low to ensure sustainability of the whole industry.
Government incentives should encourage more farms to join accreditation bodies and Fairtrade
schemes and as well as improved coordination with trade unions.
