Vert LTD is a horticultural company based in Machakos, Kenya that specializes in growing and exporting fresh produce specifically for the European market. The company sells fine vegetables (French beans, snow peas, sugar snaps) to the EU market. In addition, they have started to process mangoes into pulp for national and regional markets since last year.
Jane gives us an update on the current market situation for its fine vegetables.
From a logistical perspective, there is a significant capacity shortfall due to the high number of cancelled flights (passenger flights), while freight costs have increased for the remaining cargo capacity. Only Saudia Charter is taking produce from JKIA to Amsterdam, where shipments are then trucked to various destinations in Europe. Moreover, road transport within the EU (e.g. from Amsterdam to Belgium or Scandinavia) has become more complicated due to the availability of trucks and border controls.
At the market level, Jane noticed a reduction in demand in the EU because her customers in Denmark, Germany and Norway were selling mainly to wholesalers, restaurants and caterers. Only two customers out of the nine continue to buy fresh produce from her. One of them is Starfruit, which supplies Delhaize in Belgium. In this period, the company has an estimated demand of 1.5 tons per day (9 to 10.5 tons/week). This demand has been reduced over the last three weeks to 1.2 tons for 4 to 5 days/week, hence a total of 4.8 to 6 tons/week, i.e. 47% reduction. Moreover, the company will miss out on the run up to Easter, traditionally a period of high demand for Kenya’s fine vegetables for which growers planted several weeks ago.
In terms of employment, the company has a high rate of permanent staff, that is only topped up with casual laborers during peak periods. Jane is reviewing the company’s contingency planning on a weekly basis. This Monday, the company has already had to lay off 7 people, including the newly recruited general manager (who had been working for the company since last summer). About 50% of the permanent staff is encouraged to take paid holidays.