Kenya’s flower sector annual production has dropped. The Kenya Flower Council (KFC) chairman Richard Fox said that, “the high cost of production has forced the slump  to 2% from 10% percent.”  He was speaking after a KFC annual general meeting held in Naivasha.

Statistics from the Kenya Flower Council between the years 1995 and 2008 indicate that the sector grew by 10% every year, but since then, the growth has been declining due to the high cost of production.  The sector is also attributing lack of remittance of VAT refunds to KFC as another factor as to why growth of the sector is going down. The Kenya Revenue Authority – KRA still owes the flower sector KES2 billion worth of Value Added Tax - VAT refunds, while still attracting KES2 million more per day in interests.

KRA chairman Marsden Madoka said that the treasury is to blame for the delay in remitting VAT refunds. However, KFC Chief Executive Officer Jane Ngige predicts a good year for flower farmers.

Kenya's economy largely relies on the agriculture sector which contributes 22% of GDP. 3% of the national GDP is from the horticulture sub-sector while 0.2% comes from the flower industry.  Last year, the floriculture industry contributed Kshs 44.5 billion to the economy. The demand for flowers in Europe has been cut sharply due to the euro crisis, despite Kenya’s flowers getting new markets Russia and Japan.