Flower farm yields to scent of real estate, shuts down

Monday was the last day for Magana Flowers. The giant horticulture employer in Kikuyu, Kiambu County has shut down citing insurmountable challenges.

The management said the business was taking a different direction.

Sources with deeper knowledge about the closure, however, say the company - owned by the family of former minister Njoroge Mungai - will be using the vast land for real estate development, making the farm the latest to yield to the allure of housing developments.

Magana had stood out as among the few farms in Kiambu that had resisted the allure of real estate. It is managed under Magana Holdings, which owns the assets including part of the land leased to numerous factories.

While many farms, especially coffee and tea estates, in close proximity to Nairobi have over the recent years paved way for housing projects, a few have been able to hold on to farming.

On Monday, however, the farm that gave its name to a neighbouring shopping centre closed its doors and is in the process of pulling down the greenhouses, which are said to have been sold off.

Restructuring

In a statement, the firm said it had decided to stop production of flowers, citing challenges in the industry that affected the company.

“After 25 years in the floriculture industry, Magana Flowers is restructuring its business operations,” said Chief Executive Paul Salim in a statement to employees.

“We have been privileged to see and experience not only the evolution of this industry, but also the growth and development of our employees, and to contribute to the Kenyan economy at large.”

He said the company has continuously reviewed its business strategy in line with the broader operating environment, both locally and internationally. 

“The industry has gone through significant changes which have greatly affected Magana Flowers and on review of our business, we find that it is no longer possible to continue with our business operations based on the current business model. 

“It is in this consideration that the board of Magana Flowers has decided to restructure the company’s operations by ceasing the production and export of flowers.”

The closure may have been abrupt, considering the company just rebranded last October, which in addition to a new logo, the company said it would renew its focus on direct marketing of its products as well as increased dedication to customers and other stakeholders including employees.

Mr Salim, however, said the decision had not been reached easily, given the prevailing circumstances.

“Magana Flowers remains committed to upholding its integrity in carrying out this restructuring with the utmost respect and by providing any necessary support to our employees, social partners, customers and suppliers as may be required during the transition process.”

While the Covid-19 pandemic has hit the flower industry hard, with reduced demand since March following the closure of many economies as they tried to contain the spread of the disease, it currently appears to be firmly recovering.

According to the Kenya National Bureau of Statistics (KNBS), earnings from the export of flowers grew more than 49 per cent to Sh65 billion between January and July this year compared to Sh49 billion over a similar period last year.

In the past, Magana had cited the cost of inputs as among the major challenges that it faced.

These included the cost of fertilisers and climate change, which has resulted in frequent dry spells and without a major water reservoir leaves the farm exposed.

The company declined to give the direction that it is taking but insiders, as well as former employees, said it is planning to go into real estate.

“There has been talking as far back as last year of the company using part of the land for a housing estate, though the closure still came as a surprise to us,” a former employee told Weekend Business.

“But they have treated us well since they issued the notice in July and all our dues have been settled.” 

Abandoning crops

Vast farms have over the last two decades yielded to the lure of real estate with many large as well as small farmers abandoning crops and putting up real estate projects, or selling their land to developers.

The Magana flower farm, which sits on 25 hectares, was founded by Dr Mungai in 1994 but has primarily been run by two of his daughters since his death in 2014.

It has been critical in the growth of the Magana urban centre, with most of its 500 employees living in the area and hence driving up demand for housing and other social infrastructures such as schools and hospitals.

Area residents, however, do not expect an immediate impact from the closure, with many of the flower farm workers expected to remain in the neighbourhood to look for work.

“There are numerous factories on the Magana land that employ thousands. Many of the workers could still around and seek employment there,” said a landlord, James Kinyanjui, adding that he has not received any notice by tenants to vacate.