Since September 2008 the world has been confronted with a world financial crisis. The crisis - also known as the credit crunch - inevitably has implications for the global horticultural sector, with no exception to the Tanzanian flower industry.

In Tanzania horticulturalists who have been badly hit by the global economic recession can now breathe a sigh of relief after the US government had granted to= Tanzania USD 37.7 million (over 50.2bn).

The Tanzania Horticultural Association Executive Secretary, Ms Jacqueline Mkindi said horticultural producers expect part of the grant to ease their financial challenges especially in order to service bank loans.

This funding comes at a right time and will help us address key issues we have always wanted to address such as upgrading levels of smallholders farmers and link them to the market, Ms Mkindi said.

She said the US grant would also help build capacity of smallholder horticultural producers in Mbeya and Iringa regions.

Last week, the visiting US Deputy Treasury Secretary, Mr Neal Wolin said part of the grant will be allocated to TAHAís members who employ over 10,000 people and earn the country USD 50 million (over 65bn/-) annually through exports.

With flowers being a luxury product and therefore a vulnerable commodity in times of recession, there is a substantial impact of the credit crunch on the horticultural sector.

The most important reason for the decrease of consumption is the loss of trust with consumers and, as a result, a decline of the demand. Dutch newspaper Het Financieele Dagblad reports less export of flowers, flower bulbs and pot plants from the Netherlands.

The export to the Netherlandsí three main clients - France, Germany, and the UK - has declined with an average of 7 percent or more, according to the Dutch agricultural press Agrarisch Dagblad. Particularly the export to the United Kingdom - the country hardest hit by the credit crunch - is suffering severely with a 20 percent decrease.

This trend has also been reported in Tanzania where the flower industry is facing problems because of some European buyers going bankrupt due to the crisis.

The prices have also dropped to very low levels that some growers find it unnecessary to ship because the prices offered do not even cover freight charges.

ìTanzanian horticulture will be sustained through support for the Tanzania Horticulture Association and its mostly female smallholder members as well as assistance to cash-strapped exporters who need to restructure loans in order to keep employment, the Secretary Wolin said.

The global recession has taken its toll on the countrys budding horticultural industry which has seen prices for flowers nose dive by up to 50 percent this year. Cut flowers which are mainly exported to Europe and North America experienced falling demand as consumers in the West counted the costs of the worst recession since 1930s world economic depression.

ìFrom October 2008, prices on average have declined by 30- 50 percent as compared to the previous year and as for flowers certain varieties and lengths have had zero demand,î Mkindi said in a statement earlier this year when TAHA made a formal request to the government to help with convincing banks to reschedule servicing of bad loans.

Local flowers which are very popular among Western lovers whose demand reaches peak position during Easter and Valentineís Day festive days, recorded the worst performance this year.

Some farms in the countryís northern horticulture hub were forced to scale down their operations for some time because of losses averaging between 30-40 percent.

Falling export volumes also affected Tanzania Airfreight Project, which is a USAID funded direct Kilimanjaro International Airport to Europe and North American shipments of horticultural products.

Secretary Wolin said through United States Agency for International Development, an additional USD 10 million (approx. 13bn/-) will be made available to local banks to provide credit and financing options for agribusinesses which will include over 1,000 small and micro-enterprises.

President Jakaya Kikwete and Finance and Economic Affairs Minister, Mr Mustafa Mkulo paid tribute to President Barack Obamaís administration and promised to ensure that Washingtonís aid which include close to USD 700 million Millennium Challenge Account grant is well utilized.

The Millennium Challenge Account money will soon start flowing to Tanzania and I want to assure you that it will be spent accordingly,î Mr. Mkulo said soon after the signing ceremony for the grant held at State House in Dar es Salaam recently.

Under the MCA, projects to address poverty, rural infrastructure, water supply and capacity building will be financed in what is dubbed the largest single commitment by Washington to an African country covering the next five years.

In the same vein, the Arusha-based Eco Agri Consultancy Services has embarked on biological pest control projects to fight insects that are threatening flower production in the region.

The Eco Agri Consultancy Services has teamed up with a Dutch firm Koppet to introduce 'phytoseilus persimilis' insects, a natural predator to spider mites, which have caused havoc on horticultural farms in Arusha.

Horticultural farmers are said to be losing up to USD 500,000 a year due to spider mites that feed on flowers.

The prevalence of the destructive insects has impacted on the quality and quantity of flower yields. Mr Wilfred Mushobozi, the firm's director said in Arusha recently that the 'phytoseilus persimilis' insects would feed on the flower-eating pests.

He said the insects were being reared abroad and would soon be flown into the country to be introduced in flower farms to fight pests.

Some workers from selected farms have been trained on the technology while the Government has already given a permit to import the insects from the Netherlands.

According to Mr. Mushobozi, the project would start with three horticultural farms near Arusha before spreading to others.

There are more than a dozen farms near Arusha and Moshi, which cultivate flowers in green houses. The cut flowers are exported to overseas markets, mostly through Amsterdam.

But because of the spider mites, some flower farms incur losses of between USD5,000 and USD 7,000 per hectare each year, officials have said.