CONTENTS - Export-Import Bank of India

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					CONTENTS


                                                           Page No.
Acronyms and Abbreviations                                         5
List of Tables                                                     9
List of Exhibits                                                  11
List of Boxes                                                     13
Executive Summary                                                 15
1.     Introduction                                               33
2.     Production and Consumption                                 40
3.     World Floriculture Trade                                   59
4.     Trade Channels in Flower Industry                          80
5.     Case Studies                                           108
6.     Indian Floriculture Industry                           138
7.     Outlook and Prospects                                  175
8.     Challenges and Strategies                              196
9.     Conclusion                                             219
References                                                    222
Annexure
I.     Main Special Occasions in Europe Having Influence      223
       on Floricultural Trade
II.    Flower Usage by Season - Japan                         226
III.   Special Occasions in USA Influencing Flower Trade      227
IV.    Agri Export Zones                                      228




 Project Team:
 Mr. S. Prahalathan, General Manager, Research & Planning Group
 Ms. Sumana Sarkar, Manager, Research & Planning Group




                                                                       3
ACRONYMS AND ABBREVIATIONS



ACP         Countries in Africa, Caribbean and Pacific
AGOA        African Growth and Opportunity Act
AEZ         Agri Export Zone
AIPH        International Association of Horticulture Producers
APEDA       Agricultural & Processed Food Products Export Development
            Authority
ATPA        Andean Trade Preference Act
oC          Degree Celcius
CAGR        Compound Annual Growth Rate
CARIFORUM   Caribbean Group of States
CBI         Centre for the Promotion of Imports from Developing Countries,
            The Netherlands
CIF         Cost, Insurance and Freight
COMESA      Common Market of Eastern and Southern Africa
CSR         Corporate Social Responsibility
DFC         Dubai Flower Centre
DGCIS       Directorate General of Commercial Intelligence and Statistics
DIY         Do-it-Yourself
EU          European Union
EAC         East African Community
EAF         East African Flowers
EBA         Everything But Arms
ECA         Ethiopian Customs Authority
EPA         Economic Partnership Agreement
EPZ         Export Processing Zone
EOU         Export Oriented Unit
EUR         Euro
EFPEA       Ethiopia Floriculture Producers & Exporters Association
oF          Degree Fahrenheit




                                                                        5
FDI      Foreign Direct Investment
FLP      Flower Labelling Programme
FFP      Fair Flowers Fair Plants Label
FOB      Freight on Board
GMP      Good Manufacturing Practice
GTP      Good Trade Practice
GSP      Generalised System of Preferences
Ha       Hectare
HCDA     Horticultural Crops Development Authority, Kenya
IT       Information Technology
ICC      International Code of Conduct
ILO      International Labour Organization
IPM      Integrated Pest Management
ISO      International Organization for Standardization
ITC      International Trade Centre
ICIPE    African Insect Science for Food and Health
IFAC     International Flower Auction Centre
iFLORA   Indian Flowers and Ornamental Plants Welfare Association
KFC      Kenya Flower Council
KRA      Kenya Revenue Authority
KAIC     Karnataka Agro Industries Corporation
KARI     Kenya Agricultural Research Institute
KIFA     Kunming International Flora Auction
KEPHIS   Kenya Plant Health Inspectorate Service
LDC      Least Developed Countries
Mn       Million
MT       Metric tonnes
MFC      Model Floriculture Centres
MFN      Most Favoured Nation
MPS      milieu programma sierteelt
MAFF     Ministry of Agriculture, Forestry and Fisheries of Japan
MAIDC    Maharashtra Agro-Industries Development Corporation Ltd.
NHB      National Horticulture Board
NASS     National Agricultural Statistics Service
NAFTA    North American Free Trade Agreement
NABARD   National Bank for Agricultural and Rural Development




6
PLC     Product Life Cycle
R&D     Research & Development
RMB     Ren-min-bi
RFID    Radio Frequency Idenfication
SHG     Self Help Groups
SFRI    State Forest Research Institute, Arunachal Pradesh
TFA     Tele Flower Auction
TREO    Tax Remissions for Exports Office, Kenya
TIDCO   Tamil Nadu Industrial Development Corporation
UK      United Kingdom
UN      United Nations
UAE     United Arab Emirates
UAS     University of Agricultural Sciences, Bangalore
US$     United States Dollar
USA     United States of America
UPOV    Union International pour la Protection des Obtentions
USDA    United States Department of Agriculture
VAT     Value Added Tax
VBA     Aalsmeer Flower Auction
VBN     Vereniging van Bloemenveilingen, Nederlands
VON     Veiling Oost Nederland
WTO     World Trade Organization
WIFA    Western India Floriculture Association




                                                                7
                                 List of Tables
Table                           Title                                       Pg. No.
No.

2.1     World Area under Production and Production values of                   41
        flowers and pot plants
2.2     Cut Flower Production in Select European Countries                     43
2.3     Floricultural Production Area and Growers in the United States         44
2.4     Floriculture and Nursery Farm Area in Canada                           45
2.5     EU Consumption of Cut Flowers and Foliage, 2002-2006                   50
2.6     Consumption of Pot Plants in the EU, 2002-2006                         51
2.7     Per Capita Flower Consumption in 2006                                  52
2.8     Cut Flowers Species Sold at the Netherlands Auctions, 2002-2006        53
2.9     Wholesale Trade of Floriculture Products in USA,                       55
        2004-2007
2.10 Wholesale Trade of Cut Flowers by Species in                              56
     2006 and 2007 in USA
3.1     Top Exporting Countries (2007) of Floriculture Products in the         62
        World by Value
3.2     Leading Exporters of Cut Flowers and Foliage in the World by           65
        Value (2007)
3.3     Leading Exporters of Live Plants, Bulbs and Cuttings by                67
        Value (2007)
3.4     Leading Importers of Cut Flowers and Foliage in the World              69
        by Value (2007)
3.5     Leading Importers of Live Plants, Bulbs and Cuttings by                71
        Value (2007)
3.6     Top Tropical Flowers Sold at the Dutch auctions                        74
3.7     Top 20 Summer Flower Species Sold at the Dutch Auctions                75
4.1     Characteristics of Main Types of Retail Channel in Europe              91
4.2     Comparison of Wholesale Markets in Japan and the Netherlands           97
4.3     Factors Influencing Producer Prices of Cut Flowers and Foliage         98
4.4     Average Annual Prices of Select Fresh Cut Flowers at                   99
        Netherlands Auctions 2005-2007 in Euro cents, per stem
4.5     Wholesale Prices of Select Cut Flowers and Foliage (US$ per unit)     101
        in the USA




                                                                                      9
 Table                            Title                                      Pg. No.
 No.

 5.1     Characteristics of the Dutch Flower Industry                          110
 5.2     Turnover of Dutch Auctions Related to Flowers and Plants              115
         (including imports) 2005-2007 in EUR (million)
 5.3     The Features of the Dutch Flower Auctions                             116
 5.4     Flower Production in Israel                                           119
 5.5     Major Flower Exporters to Europe in Sub-Saharan Africa                121
 5.6     Key Features of the Kenyan Flower Industry                            121
 5.7     Characteristics of Ethiopian Flower Industry                          128
 5.8     Ethiopian Flower Industry: Cost Orientation as Percentage of          129
         Total Sales
 5.9     Average Price of Ethiopian Cut Flower                                 130
 6.1     Area and Production of Flowers in India (2000-2008)                   139
 6.2     State-wise Production of Flowers in India (2005-06 to 2007-08)        142
 6.3     Break-up of Floriculture Exports from India                           151
 6.4     Top Ten Importing Countries of Floricultural Products from India      153
 6.5     Main Flower Producing Areas in Andhra Pradesh                         158
 6.6     Flowers Exported from West Bengal                                     159
 6.7     Main Flower Producing Areas in Haryana                                160
 6.8     Most Prominent Flower Growing Areas in Rajasthan                      162
 6.9     Production and Yield of Floriculture Products in 2006 - 07 in the     163
         State of Sikkim
 6.10 Retail Prices of Select Essential Oils in the World                      168
 6.11    List of Operational Agri Export Zones for                             172
         Floriculture Development
 7.1     Changing Consumer Behaviour and Impact of Flower Demand               179
 7.2     Growth in Terms of Value in Top International Markets of              188
         Cut Flowers and India’s Export Share in These Markets, 2003-07
 7.3     Potential Flowers and Foliage Plants for Cultivation in India         191
 7.4     Select Flower varieties with Potential for Natural Dye Extraction     194
 8.1     Factors Affecting Location of Floricultural Investment                199




10
                                List of Exhibits
No.                            Title                                      Pg. No.

2.1    Wholesale Trade (by Value) by Plant Category of                       56
       Floricultural Crops, 2007, in USA
3.1    Exports of Floriculture Products in the World                         60
3.2    Share of World Exports of Floriculture Products by Value,             60
       by Region, 2007
3.3    Share of World Imports of Floriculture Products by Value,             61
       by Region, 2007
3.4    Export Share of Various Floricultural Products                        63
       Classified as per HS Classification: 2007
3.5    Share of Top Cut Flower Exporters in the World by Value (2007)        64
3.6    Share of Leading Exporters of Live Plants, Bulbs and Cuttings         66
       by Value (2007)
3.7    Share of Top Floriculture Products Importers in the World by          68
       Value (2007)
3.8    Share of Top Cut Flower & Foliage Importers in the World by           68
       Value (2007)
3.9    Share of Leading Importers of Live Plants, Bulbs and Cuttings         70
       by Value (2007)
3.10 Imports of Floricultural Products by the EU by Value (2007)             73
3.11   Share by Value of Various Floricultural Products Imported             78
       by USA - 2007
3.12 Cut Flowers Import in Japan                                             79
4.1    The Flower Chain                                                      81
4.2    Consumption Purposes of Flowers                                       85
4.3    Product Life Cycle (PLC) in Own Use Segment                           86
4.4    Distribution Network of the Cut Flower Trade in Europe                87
4.5    Distribution Structure of Young Plant Material                        92
4.6    Distribution Structure of Finished Plants                             93
4.7    Distribution Channels for Fresh Cut Flowers in the United States      94
4.8    Distribution Channels for Preserved Flowers in the United States      94
4.9    Distribution Channel for Imported Flowers in Japan                    96
5.1    Distribution Channel of Flowers in The Netherlands                   112
5.2    Kenya’s Cut Flower Cluster Value Chain                               123




                                                                                  11
 No.                            Title                                     Pg. No.
 5.3   Kenya’s Cut Flower Cluster Map                                       125
 5.4   Kenya Cut-Flower Cluster Diamond                                     125
 5.5   Vertically Integrated Rose Supply Chain in Ethiopia                  131
 5.6   Development in China’s Ornamentals Marketing and                     133
       Production Systems
 5.7   Growth of China’s Total Annual Export Value of Ornamentals           134
       1990 to 2007
 5.8   Export Share of Ornamental Plant Varieties in China 2007             134
 6.1   Production Trend of Flowers in India                                 140
 6.2   Major Loose Flower Producing States (2007-08)                        140
 6.3   Major Cut Flower Producing States (2007-08)                          141
 6.4   Floriculture Exports from India                                      150
 6.5   Composition of Floriculture Exports from India                       150
 6.6   Composition of Cut Flower and Foliage Exports from India             151
 6.7   Region-wise Export of Indian Floricultural Products                  152
 7.1   Distinctly Transformed Floriculture Market Segmentation              179
 7.2   Evolving Marketing Segments in Floriculture Industry                 180
 7.3   Export Performance of Floriculture Products from India and           186
       Potential Markets
 7.4   Comparison of India’s Export Performance in Select Asian Markets     189
 7.5   Seasonal Opportunities for Trade in Flowers                          190
 8.1   Relation of Vase Life of Flowers with Temperature                    200




12
                                   List of Boxes
No.                               Title                                     Pg. No.

1        The Auction Clock                                                      88
2        International Code of Conduct (ICC) for the Production of            106
         Cut Flowers
3        FLORAHOLLAND: The Largest Flower Auction in the World                 117
4        Flower Auction Centres                                               148
5        Floriculture Projects in Nagaland                                    166
6        Region-wise Zone Compatibility                                       173
7        Potential of Processes to Affect Quality of Flower Throughout        201
         the Supply Chain
8        Integrated Cold Chain Model                                          207




        The following symbols have been used in the report:
…       to indicate that data are not available;
        to indicate that the figure is zero or that the item does not exist
    –   between years or months (e.g., 2004 – 05 or April – March) to
        indicate the years or months covered,
./.... including the beginning and ending years or months
/       between words or years, indicates ‘and’
    Minor discrepancies between constituent figures and totals are due to rounding




                                                                                     13
EXECUTIVE SUMMARY



     Post globalization, floriculture      manpower; and marketing factors,
has become one of the important            such as adequate logistic and
commercial activities in Indian            supply-chain infrastructure, and
agriculture. Floriculture activity has     knowledge of the destination
evolved with a potential to generate       markets.
remunerative self employment
                                                The market structure in
among small and marginal farmers,
                                           floriculture trade, which for a long
and help earn the foreign exchange
                                           time involved auctioning at flower
for the country.
                                           auctions in the major consuming
     Floriculture activity can be          countries, has been gradually
defined as cultivation/production and      undergoing change towards direct
marketing of flowering and foliage         sales with more and more products
plants, garden-bedding plants, cut         being sold directly to supermarkets
flowers and greens produced both           and specialized wholesalers. The
under conventional methods and             trend, currently, is also towards
controlled conditions mainly for           sustainable floriculture production
export. Floriculture products mainly       and trade. The supply chain in
consist of cut flowers, pot plants, cut    floriculture, thus, combines
foliage, seeds bulbs, tubers, rooted       commercial quality, environmental
cuttings and dried flowers or leaves.      quality and social quality in the
The important floricultural crops in the   product propositions.
international cut flower trade include
Rose, Carnation, Chrysanthemum,            WORLD PRODUCTION AND
Gerbera, Gladiolus, Gypsophila,            CONSUMPTION
Orchids, Anthurium, Tulip, and Lilies.
                                           The world production of floriculture
    The floriculture industry is           is growing at an average rate of 10
characterized by several key               percent per year. There are
success factors, which include             currently, over 50 countries that are
production factors such as good            active in floriculture production on
physical conditions, appropriate           a large scale. In terms of
planting material and technologies,        production value, the Netherlands,
and productive and skilled                 the United States, Japan, Italy,




                                                                             15
Germany and Canada are the              Fresh cut flowers and foliage
largest producers of cut flowers        accounted for around 49.1 percent
and plants. With China and India        (US$ 8.31 billion), and live plants,
having majority of the world acreage    bulbs and cuttings accounted for
under cut flowers and plants            50.9 percent (US$ 8.60 billion) of
production in the world, the Asia-      total floriculture products exported
Pacific region has the major share      in 2007. Developed countries in
(77 percent) in the total world area    Europe, America and Asia account
under floriculture production.          for more than 90 percent of the total
                                        world trade in floriculture products.
    Europe, USA and Japan are the
                                        Roses contribute around 70 percent
major consumers of floriculture
                                        of the total cut flower industry trade.
products. Flower consumption in the
                                        The Netherlands continues to
United States is relatively low as
                                        dominate the world floriculture
compared to Western Europe;
                                        industry, accounting for 49.6
however, the consumption has been
growing consistently. In case of cut    percent (US$ 8.56 billion) of world
flowers, per capita consumption in      floriculture exports in 2007.
Japan is the highest, followed by       Colombia is the second largest
Europe and USA. Germany is the          exporter of floricultural products in
biggest consumer, followed by the       the world with a share of around
UK, France and Italy.                   6.5 percent (US$ 1.12 billion).

     Flowers are generally used as a        With an annual average growth
media of expression and to add          rate of around 10 percent, world
aesthetic value. Thus, the markets      exports are expected to reach US$
are segmented as per the purposes       25 billion by 2011.
they are intended while purchasing.          Germany (US$ 2.59 billion) was
Flowers are mostly purchased for        the largest importer, followed by the
gifting in special occasions, such as   United Kingdom (US$ 1.89 billion),
Mother’s Day and Valentine’s Day,       USA (US$ 1.81 billion), the
social occasions such as religious      Netherlands (US$ 1.55 billion), and
events and funerals, and for personal   France (US$ 1.43 billion). Europe as
use. However, consumption patterns      a region is the world’s leading
vary with countries and occasions.      importer of flowers and foliage.
                                        Roses are the most popular flowers
WORLD FLORICULTURE TRADE                imported by Europe. Other flowers
The global exports of floriculture      imported by Europe include tropical
products     stood    at    about       flowers, summer flowers and
US$ 17 billion in the year 2007.        Orchids.




16
     Japan is the largest importer of     imported flowers. However, in the
floricultural products in the Asian       recent years, trade through
region. India was ranked 16 th            wholesale or direct sale channel has
amongst world exporters of                been on the rise.
floriculture products, and its share in
world exports was negligible at           PROFILE OF SELECT
around 0.82 percent (US$ 141              COUNTRIES
million), in 2007.
                                          The Netherlands
Flower Trade and Trade                    The Netherlands is the largest cut
Channels                                  flower producer in Europe. In the
The international flower trade is         years 2003-2007, the production
governed by several codes of              value of flowers and pot plants in
conduct, besides the phytosanitary        the Netherlands increased by 10
obligations of the importing              percent annually, amounting to
countries. These include, the Dutch       Euro 3,901 million in 2007. The
milieu programma sierteelt (MPS           profitability of the Dutch floriculture
programme) addressing environ-            sector is higher than that of any
mental quality issues, which have         other Dutch agriculture sector.
become almost mandatory in the            Dutch flower firms are also
direct trade channels and                 characterized by hi-tech production
prominent in the auctions. Other          techniques and high quality of
such codes of conduct include:            planting materials. Auction is the
Flower Labelling Programme,               main distribution channel of
(FLP), Fair Flowers Fair Plants           floricultural products in the
label, (FFP), and UPOV -                  Netherlands. The Dutch auctions
Protection of new varieties – for         play a dominant role in the
protection of Breeder’s rights. All       distribution of flowers, not only in
such codes of conduct and                 Europe, but in the world in general.
regulations are pertinent to flower       It is the home to the largest flower
suppliers including growers,              auction in the world (FloraHolland).
packers, processors and shippers,         Around 60-70 percent of imports of
along the farm-to-market value            floricultural products in the Europe
chain, with special significance to       go to the Dutch auctions. The
those      marketing       produce        Netherlands is the most important
internationally.                          player in the trade of cut flowers
   The trade channel for flowers          and foliage in the Europe as well
mainly comprise of auctions and           as in the world. It is the largest
wholesale. Auctions have been the         exporter and importer of cut flowers
most important trade channel for          and foliage in the world.




                                                                              17
USA                                      Israel
Due to increase in imports,              Israel’s cut-flower industry is
production area under floriculture       regarded as one of the most
products in the USA is significantly     advanced flower industries in the
decreasing. The total production         world by virtue of the technologies
area under floriculture crops            used in production of large varieties
declined by 2.5 percent in 2007          of flowers in the desert-like
compared to 2006. The flower             conditions. Flowers and ornamental
industry in the United States is         plants account for 8.0 percent of
undergoing        a     period    of     Israel’s total agricultural production.
consolidation. The large operations      Israel’s flower sector is relatively
account for 96 percent of the total      small by international standards, but
value of floriculture crops. Annuals     is highly profitable. Flowers are
and perennials are the largest           Israel’s leading agricultural export
selling items accounting for 32          item (29 percent). Israel ranked 12th
percent of the total floricultural       amongst world exporters of
sales in the USA in 2007. The            floriculture products and its share
wholesale value of sales of              in world exports was around 1.5
floricultural products in 2007 was       percent (US$ 259 million) in 2007.
estimated at US$ 3.9 billion,
registering an increase of 2 percent     Kenya
over the year 2006.                      Kenya is the largest producer of
                                         flowers in Africa. Floriculture
Japan                                    industry in Kenya is the second
Japan is one of the largest flower       major foreign exchange earner,
growing countries in the world.          after coffee. The industry employs
Around 47 percent of land area           around 100,000 people directly and
under flower cultivation is currently,   around 2 million people indirectly.
under protected cultivation such us      Kenya is currently, the world’s
greenhouses         and      covered     seventh largest exporters of flowers
structures. Chrysanthemums are           accounting for 2.6 percent share in
the most important flowers               world exports. It has exhibited the
cultivated in Japan. Japan is one of     fastest growth among the top cut
the largest consumers of cut             flower exporters in the last decade.
flowers and potted plants. Japanese      Kenya’s cut flowers cluster is
cut flower retail market is estimated    dominant among other sub-Saharan
to be worth US$ 9.3 billion. Japan       Africa flower exporters. Kenya has
is the tenth largest flower importer     the largest market share in
in the world. Only 7 percent of the      European flower imports (51
cut flower consumption in volume         percent) compared to other Sub
terms is imported by Japan.              Saharan African country exporters.



18
Kenyan flower industry is a mature       China
industry in terms of technical           China is reportedly the world’s
learning, market information and         largest ornamental producing
supply of equipment, advisory            country in terms of land area,
services and logistics, and is           constituting one-third of world’s total
characterized by large scale foreign     growing area. According to the
investment. The industry is              national      statistics,    China’s
regarded as one of the most              ornamental plants growing area
codified flower industries in the        was only about 3,000 ha in 1985;
world, which also meets the              which has currently crossed over
international       environmental        700,000 ha. In 2007, China ranked
standards of Good Agricultural           17th amongst world exporters of
Practices.                               floriculture products with a share in
                                         world exports of around 0.76
Ethiopia                                 percent. It is the third largest
The floriculture industry of Ethiopia    supplier of floriculture products to
is one of the fastest growing flower     Japan. Yunnan is the most
industries in the sub-Saharan            important province in China in
Africa. The Ethiopian flower industry    flower growing, accounting for 50
took-off in 2005, and currently,         percent of the nation’s total cut
ranks 22nd amongst world exporters       flower production. Yunnan is the
of floriculture products, with a share   home to one of the growing auction
in world exports of around 0.51          centres in Asian region - the
percent. There are over 70 flower        Kunming International Flora Auction
farms in Ethiopia. Ethiopia grows        (KIFA), which started its operation
Roses, Carnations, Carthamus and         with support from erstwhile
Satice. The sector generated             Aalsmeer Flower Auction (VBA),
employment for over 50,000               Netherlands.
persons         (permanent        and
temporary), and has become one           INDIAN FLORICULTURE
of top five foreign exchange earning     INDUSTRY
products of the country. The
                                         The Indian floriculture industry
Ethiopian flower industry is an
                                         comprises the florist trade, nursery
export-oriented industry and has
                                         plants, potted plants, bulb and seed
been benefiting from Government
                                         production, micro propagation
support at large. About 40 percent
                                         material and extraction of essential
of the farms are fully foreign
                                         oils from flowers.
owned, 23 percent are joint
ventures, and 36 percent are fully           Karnataka, Tamil Nadu, Andhra
domestic owned.                          Pradesh, West Bengal, Maharashtra,




                                                                             19
Uttarakhand, Uttar Pradesh, Delhi,        facilitate flower, trade two auction
Haryana, Kerala, Himachal Pradesh         centres have also been established,
and North Eastern states are the          one at Bangalore, and the other at
major flower growing states in India.     Mumbai. The Auction Centre at
Tamil Nadu is the largest loose flower    Bangalore is built on 5.11 acres of
producing state, while West Bengal        land with a handling capacity of
is the leading cut flower producing       300,000 stems at a time, which is
state in India.                           however, currently handling 100,000
                                          stems and mostly directed to
    Rose is the principal cut flower
                                          domestic trade. The Auction Centre
grown all over the country. Other
                                          in Mumbai has been built on 3 acres
most important cut flower crops in
                                          of land with a total handling capacity
the country are Gladiolus, Tuberose,
                                          of 30 MT of flowers, which is yet to
Asters, Gerbera, Carnation,
                                          be operational.
Anthurium, Lilium, and Orchid.
                                               A number of Export Oriented
    Major markets in terms of
                                          Units (EOUs) have been set up in
number of traders involved and the
                                          the country in floriculture segment in
quantity traded are Chennai,
                                          the last decade and half. Globalization
Coimbatore and Madurai in Tamil
                                          and liberalization of this sector
Nadu; Bangalore, Mysore and
                                          through the Plant, Fruits and Seeds
Dharwad in Karnataka; Hyderabad
                                          (Regulation of Import into India)
and Vijayawada in Andhra Pradesh;
                                          Order, 1989, also known as the ‘New
Thiruvananthapuram and Cochin in
                                          Seed Policy’, have already made it
Kerala; Mumbai and Pune in
                                          feasible to import planting material of
Maharashtra, Kolkata in the eastern
                                          international varieties in the country.
India, and Lucknow/Kannauj, Delhi
and Rajasthan in the north India.              Most of the EOUs in the country
                                          are largely dependent on foreign
     While exports remain the prime
                                          collaborations for technological
motivator for Indian flower growers,
                                          support. Majority of the foreign
the demand in the domestic market
                                          collaboration in the sector have taken
is also on the rise contributing to the
                                          place with units from the
growth of the industry.
                                          Netherlands, Israel and France, with
    Marketing of cut flowers in India     many of them having their
is much unorganised at present. In        establishments in India. Most of the
the metros, however, in the recent        foreign collaborators are also
years, some modern florist show           primarily suppliers of one of the
rooms have come up, where flowers         inputs of the floriculture industry, e.g.,
are kept in controlled temperature        planting material, greenhouses, or
conditions, with considerable             they are specialized in marketing.
attention to value added services. To     Most of the Indian companies are




20
family owned, medium sized               US$ 144 million (Rs. 653 crores)
enterprises. For them, the joint         in 2006-07, which further
ventures are more like a turn-key        decreased by 5.18 percent in the
collaborations. However, in the          year 2008-09 to US$ 80.19 million
recent years, a number of large          (Rs. 369 crores). Important cut
corporate houses such as ESSAR           flowers exported from India include
group, TATA group, Reliance, ITC,        Roses, Lilies, Carnations, and
Bharti Group/Field Fresh, RPG group      Orchids. In the recent years, dried
and Thapar Group have also invested      flowers and foliage have been
in the flower sector.                    forming a large part of floricultural
                                         product exports from India. During,
     Protected cultivation is not a
                                         2008-09 dried flowers constituted
common practice in India, the
                                         over 60 percent of cut flowers
greenhouse designs and structures
                                         exports, and dried foliage
for the modern floriculture units are
                                         constituted around 97 percent of
mostly imported from countries like
                                         total foliage exports from India.
Holland, Israel, France, and the USA.
In India, there are three types of            Europe continues to be the
greenhouse production technologies       largest destination for Indian
viz. low-tech units, mid-tech units,     floriculture exports. However, in the
and hi-tech units. The total             recent years, Indian exports of
investment costs vary significantly      floriculture products have also been
among the three groups. Floricultural    to the Japanese and Australian
crops are highly labour intensive and    markets.
have the capacity to generate more
direct and indirect employment both      Other Associated Industries
in rural areas as well as in the urban   Other associated activities of flower
areas. Hi-tech floriculture employs      growing in India include the dry
more labour. Studies reveal that         flower industry and the essential oil
income obtained from floriculture is     industry. India is the fifth largest
higher than sugarcane (by 4 times),      exporter of dried flowers, and
fruits and vegetables (by 5 times),      second largest exporter of dried
paddy (by 10 times), and ragi, (by 20    foliage in the world accounting for
times).                                  around 7 percent of world exports
                                         in dry flowers and foliage. The main
Exports from India                       export markets for India’s dry flower
India’s exports of floricultural         industry are USA, Netherlands, UK
products in the year 2007-08             and Germany. West Bengal
decreased by 41 percent to US$           accounts for around 70 percent of
84.5 million (Rs. 340 crores), from      the dried flower exports from India.




                                                                           21
      India is the second largest              Government of India, promotes,
exporter of essential oil in the world    assists and facilitates the setting up
after USA. India’s exports of essential   of Agri Export Zones (AEZ), in
oil stood at US$ 298.7 million in 2007-   association with State Governments,
08; during the period of April –          with the objective of providing
February 2008-09, export of               remunerative returns to farming
essential oil stood at US$ 329 million.   community in a sustained manner,
India is the largest exporter of          and      to       increase        their
jasmine oil in the world accounting       competitiveness. There are at
for over 40 percent of total world        present six operational Agri Export
exports in jasmine oil.                   Zones for floriculture development in
                                          India.
Government Incentives /
Initiatives                               OUTLOOK AND PROSPECTS
Government of India acknowledges          The global economic crisis has
the potential of the floriculture         significantly affected the floriculture
industry and has conferred with the       industry worldwide, with demand for
status of 100 percent export              floricultural products considerably
oriented industry. Various incentives     declining in all the major consuming
are being offered by the                  countries, such as Europe, USA
Government of India, which have           and Japan, consequently, affecting
enabled the setting up of a number        export levels, profit margins, and
of floriculture units for producing       employment in the flower sector,
and exporting flowers. Most of            particularly in the developing
these are located near Mumbai,            countries. The decline in demand
Bangalore and Delhi. These units          applies to all flower and product
have obtained technical know-how          varieties. Depression in pricing has
from Dutch and Israeli consultants.       been observed across the product
    Tax benefits are offered to new       segments. Decrease in turnover is
export     oriented     floriculture      a major concern for most of the
companies in the form of income-tax       floriculture companies in the major
holidays and exemption from certain       markets, which is leading to
import duties. Duties have been           estimated 30-50 percent drop in
reduced for import of flower seeds        margins. Other factors affecting the
and tissue-cultured plants. Financial     growth of the industry are higher
                                          freight and input costs due to
support is provided for setting up of
                                          higher fuel and energy costs.
pre-cooling and cold storage units,
as well as for using improved                Majority of the players see little
packaging material.                       room for improvement in the industry




22
in the next couple of years, and            in the international arena has been
expect the situation to improve later.      increasing with the entry of new
Nevertheless, according to the              African countries in global
industry experts current situation may      floriculture trade.
lead to a sector-wide transformation,
and consolidation. A sluggish growth            Besides the African countries, a
is expected in the Western Europe’s         number of Asian neighbours are
floriculture markets, which is              emerging as competitors in the
projected to grow at an average             export markets such as China,
growth of 2 to 4 percent per year until     Nepal, Sri Lanka and Pakistan. With
2018. New markets have also                 international trade in the sector
emerged over the last decade, such          showing not so favourable scenario,
as Russia and Poland, where the             the domestic market for flowers is on
growth in floriculture markets have         the rise with flower consumption in
been robust. The markets in these           the cities and major towns reportedly
regions, and other central and              growing at 40 percent per annum.
eastern European countries, are
                                                 The potential for expansion of
also expected to grow by an average
of 5 to 10 percent, annually until 2018.    commercial floriculture in India,
                                            including production for domestic and
     Albeit the current demand              export sales of cut flowers and plants
slowdown, improving product                 is unlimited. The increasing demand
availability, quality and marketing         projected for both cut flowers and
standards would increase expansion          potted plants in the existing and new
opportunities in the mature markets,        markets would result in increase in
and growing consumer base with              production outside the traditional
higher income is expected to add to         areas. India, in the long run, would
the demand in the new markets. With         benefit from the situation if the
growing        urbanization          and
                                            country expands the production of
emergence of newer marketing
                                            existing products as well as the
concepts, such as online sales and
                                            product range.
specialized florist outlets, floriculture
trade in the coming years, is                    India’s export markets have also
expected to see newer dimensions,           been diversifying from traditional
in terms of more distinct consumer          markets, such as EU and USA, to
demands and product propositions.           new markets in the East Asia, such
                                            as Japan, and Australia. However,
India – Outlook                             more concerted efforts may be
Indian floriculture industry is also        required for the Indian floriculture
affected by the global economic             industry to make a significant mark
slowdown. Further, the competition          in the new and emerging markets,




                                                                               23
such as those in the East European          Constraints Faced at Export
region, and in the Asian region.            Development Stage
     Some of the areas in which             Import tariff
market opportunities exist for the          India is subjected to import duty
Indian floriculture industry are: hi-tech
                                            disadvantage in exports of
cultivation and product diversification
                                            floriculture products to the Europe
(to competitively grow Orchids,
                                            as against its competitors. Cut
Anthurium, Gladiolus, Tuberose, and
                                            flowers from India face a higher
foliage varieties, as the demand for
                                            import duty in Europe during the
tropical flowers and plants is
                                            non-peak season, which works out
increasing worldwide); tapping the
landscaping opportunities (with             upto 17 percent. This has been
growing real estate market                  preventing Indian floricultural
worldwide, nursery industry is also         products from having market
opening up for supplying trees,             access during the crucial months
greens and ornamental plants); floral       in Europe.
arts-floral designing which is
increasingly getting popular in the         Freight Cost
events such as weddings and                 The availability of dedicated
festivities; and growing demand for         perishable carriers is low in India
custom made products, dry flowers           and the freight rates are high.
and foliage, flower seed production,        Although production cost of Indian
flower extracts and essential oil, and      flowers is competitive, the high
natural dyes.                               freight cost puts the industry at a
                                            cost disadvantage position (50-60
CHALLENGES AND                              percent higher than the pricing of
STRATEGIES                                  the competitors).
In spite of the export potential, the
performance of the Indian                   Production Environment and
floriculture sector has not been            Economies of Scale
encouraging. The floriculture               The production centers in India are
exports dropped marginally in value         concentrated mostly in areas where
terms, from US$ 84.57 million in            international cargo handling facilities
2007-08 to US$ 80 million in 2008-          are available; this trend has been
09. Several reasons have been               largely due to inadequate support
cited for this shortfall, mainly related    infrastructure, such as all weather
to trade environment, infrastructure        roads, electricity and telecommu-
and marketing issues such as high           nications, in distant production
import tariff vis-a-vis African             areas, and thus, it may be inferred
countries.                                  that much of the production




24
potential is not optimally utilized.       Growing Conditions and Crop
The small unit size of the flower          Management
farms in India acts as a constraint        Crop management strategies are
in achieving economies of scale.           required to meet the demand in the
                                           international markets with regard to
Supply Infrastructure                      volume of production, product
In India, the availability of dedicated    quality, and delivery time. In India,
cold storage facilities for flowers at     producers often complain about
farmyards as also at airports is           non-availability of requisite chemical
minimal. In addition, cooling facilities   inputs on time, increasing import
in domestic transportation is also         restrictions on such inputs, rise in
inadequate. This inadequate cold           prices of inputs, and scarcity of
chain management is not only               quality irrigation water.
affecting the future of floriculture
trade in the country, but also having      Shortage of Skilled Manpower
a negative impact on the present           and Training
produce and on its marketability.          There is also limited availability of
The customs clearance procedures           technical and marketing knowledge
continue to be time consuming and          and expertise with regard to modern
are still posing a challenge to the        floriculture, particularly at the
flower exporters.                          producer level, in areas such as
                                           greenhouse management, product
Constraints Faced at the                   grading, packaging and storage.
Production Level
                                           Aged Plantation
Availability of Basic Inputs,
                                           The plantations (greenhouse
Including Seeds and Planting
                                           floriculture) in India, of which,
Materials
                                           majority are Roses, are mostly of
The seed and planting material             the older varieties, of over 6 years,
industry in India is relatively not well   whereas the peak productive phase
established. Mostly, the imported          of the plants on an average is only
varieties are preferred for production     3-5 years.
of cut flowers and foliage meant for
exports, for which breeders charge         Constraints Faced at the
high royalty, and thus, the cost of        Marketing Stage
planting material becomes high. In
addition to elite planting material,       Product Diversification and
prevalence of hi-tech production as        Differentiation
well as preservation technology is         A major challenge for Indian flower
also low.                                  exporters is to diversify and reduce




                                                                              25
dependence on producing single           supermarkets for supply logistics,
varieties, which in many cases is        such as, track ordering and sales,
limited to only Rose. The most           and identification of their customer
important strategy being adopted by      base; and organizing storage,
greenhouse growers in Europe and         delivery and transport; have
USA is increasing the varieties of       implications on development of IT
products cultivated.                     systems at the supply base.
                                         Except few large firms in India,
Vertical Integration and                 such levels of conformity in IT
Innovation
                                         development is intricate, given the
Growing competition in the supply        low capital base of the small and
chain through product differentiation    medium floriculture firms.
(for example, increasing number of
varieties) and reliability of supply     Logistics
necessitate the need to have own
                                         With increasing involvement of
capacity for propagation of varieties,
                                         supermarkets in flower trade,
which is a challenge for the small
                                         organizing logistics is becoming a
and medium sized producer/
                                         critical factor for the supplying
exporters in India, with low-end
                                         countries. Supermarkets require not
infrastructure.
                                         only a wide range of varieties but
Quality Parameters and                   also consistency in volume, quality
Environmental Issues                     and timing of delivery.
In the recent years, the increasing
                                         Suitable Packaging
demands        for    quality    and
sustainability by global buyers, and     The low quality of packaging
the growing power of retailers in the    decreases the overall quality of
developed country markets, have          flowers being exported. High
been imposing several challenges         weights of the packaging materials
on the flower producers/exporters        increase the transportation cost of
even in India, particularly with         the exported flowers, which in turn
respect to increasing safety,            minimizes         their      price
environmental concerns, and labor        competitiveness abroad.
standards.
                                         Marketing Capability
Marketing Information and IT             Approach to a flexible marketing
Availability of proper information and   system is very important in the
timely dissemination are key to          current scenario of flower trade.
success of floriculture business.        Direct marketing requires more
The increasing coordination by           marketing personnel (resources)




26
and promotional activities. Long-        freight cost disadvantage can
term commitment and specialised          partially be overcome by achieving
outlets help in building brand image     economies of scale. However, to
and enhance the chances of               overcome the disadvantage of
approaching target groups with           distance with Europe and other
marketing efforts. Indian firms have     distant markets, the flower
limitations in customized marketing      exporting firms, besides other
for direct sales channel, and need       options, may take advantage of
to have specialized outlets for          facilities provided by the Dubai
Indian floricultural products in the     Flower Centre (DFC). To minimize
existing and strategic markets.          the time taken and damages
                                         caused during handling, emphasis
Strategies                               should be given on improvement of
Several positive steps are being         cargo handling facilities and making
undertaken by India to develop the       internal container depots suitable for
floriculture sector as a viable export   floricultural products. Besides
sector. Various policies of the          creating additional cargo space,
Government of India have been            specific to floriculture, efforts may
furthering the pace of development       be taken to increase the frequency
of the floriculture sector with the      of international flights and chartered
objective      of    meeting      the    flights handling floriculture cargo.
requirements         of     stringent    There is a need for operating an
international markets, and to have       efficient     commercial        inland
competitive prices. However, more        transportation system for flower
strategies need to be adopted to         transport.
consolidate the strengths of India in
this sector and create efficient         Government Support
backward and forward linkages.           The Government of India has been
These include:                           providing financial assistance at
                                         several stages of flower value
Infrastructure Support                   chain. Though these have been
Post harvest handling is as              supporting the floriculture growers
important as growing in order to         and exporters, in the long-term,
retain the attractiveness of the         such Government support may
products. The first and foremost         lead to countervailing duty reprisals
requirement is to develop a state-       in some markets. Strategy may
of-the art Integrated Cold Chain, for    thus be towards encouraging
flowers right from the point-of-origin   private sector for co-investments in
(growers) to the point-of-               the supply-chain infrastructure. To
consumption (customers). The             address      the     import     duty




                                                                            27
disadvantage faced by India in the        High capital costs for re-plantation
international markets, such as            is one of the major hurdles, which
Europe, Government may enhance            may be tackled with appropriate re-
its efforts in negotiating preferential   plantation      support        from
tariff regimes with such countries.       Government.
To bring about an efficient
implementation            of       the    Enhancing Production Capacity
Government’s           developmental      State horticulture departments, may
initiatives in this sector, there is a    particularly, take advantage of
need for bringing coherence in the        National Horticulture Mission’s
developmental activities. Multiplicity    programmes and give greater
of support institutions involved in       attention to non-traditional areas
promoting the sector may be               such as South Gujarat, South
streamlined. To create effective          Maharashtra, North Karnataka, hilly
backward and forward linkages,            areas of Tamil Nadu and Karnataka,
attempts may be made in creating          Uttarakhand, Himachal Pradesh,
National Export Promotion Council         Jammu and Kashmir, and North
for export development of modern          Eastern States, which are well
floriculture. Also, flower traders and    endowed to grow flowers and
wholesalers may be encouraged to          ornamental plants, and cater to the
trade their produces through the          growing needs of both domestic
auction centers.                          and international market.
Production and Economies of               Supply of Quality Inputs
Scale
                                          Cut flowers from India are mostly
Shifting to Integrated Supply Chain       grown for exports, and hence,
Model may help in attaining               should follow the latest trend in
economies of scale in the industry.       global demand, and produce the
Large cut flower growers may              popularly preferred varieties of
identify ways to help integrate small     plants. The planting material used
and medium scale growers to               in Indian floriculture industry is
consolidate supply chains, and            mostly imported, and thus, are
thereby help integrate technology         faced by supply and cost
and      stricter    environmental        constraints. Efforts should be made
standards into production practices.      to develop and propagate varieties
                                          indigenously. To help protect
Re-plantation                             breeder’s rights, India may consider
Periodic re-plantation is necessary       becoming a member of the UPOV
in order to maintain the acceptable       with     adequate        safeguard
freshness in variety and quality.         mechanism for the Indian growers.




28
Technology for the construction of        good varieties suited to local
green houses/glass/poly/shade             environmental conditions.
houses that are being imported
need to be dovetailed to Indian           Technology Development
climatic conditions. Low cost green       Indigenous technology for the
houses need to be developed using         construction of green houses/glass/
indigenous R & D. Suitable training       poly/shade houses are required to
should be imparted to the                 be developed to suit the Indian
manpower in the industry before           climatic conditions.
they can be used effectively in
greenhouses. Low cost suitable            Human Resource Development
packaging material needs to be            One of the major challenges faced
developed indigenously for being          by India is shortage of trained /
cost competitive in the international     experienced         technical       and
markets. Supply of quality water          commercial managers in the
should be ensured, and depending          operations of this sector. Thus,
upon the crop pattern, (whether           private initiatives to train individuals
monocrop or polycrop), an                 in the floriculture/horticulture sector
appropriate irrigation system should      may be encouraged to benefit the
be designed and installed to avoid        industry in the long run. Training
waste of expensive fertigation and        centres for diploma courses, on the
chemicals.                                pattern of ITI, for skill development
                                          in floriculture may be set up to
Research and Development                  address this challenge.
There are several agriculture
                                          Developing Joint Ventures
universities in India carrying out
research related to floriculture.         Developing vertical integration and
However, the orientation of such          joint ventures may be a strategy
research is not much towards              that could be adopted by Indian
commercial purposes, and hence            growers to increase the volume of
their findings are not directly related   sales and to receive benefits of
to the production in greenhouses.         economies of scale.
A strong need is being felt by the
entrepreneurs of this industry that       Environmental Strategies
there should be a common                  Flowers are often offered as gifts
research and development centre           for special occasions. The
which would not only give inputs /        consumers want to be seen as
solutions to the challenges faced by      giving an item that is of high quality
the industry, but would also develop      and environmentally friendly.




                                                                               29
Adequate care must be taken in           could be achieved through licensing
usage of chemicals and pesticides.       and contractual agreements with
                                         foreign collaborators. In addition to
Marketing                                fresh cut flowers, Indian floriculture
Marketing initiatives should be          exporters should emphasize
suitably designed to meet the            developing other diversified
market requirements, and yet             products and marketing them
remain competitive.                      through dedicated outlets, thus,
                                         expanding the definition of
Quality and Labeling                     floriculture (from just fresh flowers
Only high-quality flowers are traded     to products and accessories
internationally. Indian exporters must   manufactured from flowers), which
ensure that their produce is free        would enable them to enhance their
from disease and that it is carefully    returns.
treated once harvested. Exporters
should also plan and monitor             Packaging
effective quality control measures       Use of innovative packaging
right from production to post
                                         techniques, catering to the
harvesting,         storage,      and
                                         preservation requirements of the
transportation. Post harvest
                                         international markets, that are
management, including cold
                                         environmentally friendly, are other
treatment, proper packaging and
application of preservatives, may        ways of gaining competitive
need to be strengthened. Attention       advantage in the international flower
may also be required for achieving       markets.
the flower labeling and certification
requirements.                            Establishment of Support
                                         Systems
Diversified Products and                 The greenhouse industry in India
Selection of Product Mix                 has great potential for growth,
Diversification of product mix is also   provided it is supported by
essential considering the changing       institutional systems. Establishing a
pattern of demand. New varieties         network of support systems with
fetch higher prices. Flower growers      the involvement of Government,
may explore other high value             private sector and research
product alternatives, such as            institutions / universities will be
propagating materials of specialty       another strategy for development of
crops for export purposes. This          the floriculture sector.




30
Functioning of Indian Auctions           positioning through international
Indian Auction Centres should be         lobbying      by   the     industry
strengthened through appropriately       associations would help Indian
addressing issues associated with        flower exporters to compete in
challenges. Some of the measures         international markets effectively.
that may be considered include:
creating adequate infrastructure for     Consortia Approach
auctioning; professionalism; dispute     “Consortia” approach may be
handling       and      resolution;      encouraged among the units for
encouraging traders to trade             branding, grading, packaging,
through the auctions; developing         transporting, quality control, supply
and strengthening backward
                                         assurance, market development,
linkages on a continuous basis; and
                                         market promotion, and research
a cost effective and economical
                                         and development. For this purpose,
system of reefer transportation on
commercial lines to transport            it is necessary to encourage some
flowers from production sites to         of the successful and experienced
auctions and from auctions to            entrepreneurs to take a lead in
markets.                                 forming such consortia.

The ‘Brand India’ Campaign               OPPORTUNITIES FOR INDIA
Indian exporters should adopt            The market for floriculture products
customized marketing strategies          consists of a range of product
while targeting various markets.         groups, which offer varying
There is need to intensify marketing     opportunities for countries like India.
efforts for direct sales to emerging     The opportunities are optimal for
markets, and expand markets              India in supplying products such as
outside the traditional European         summer flowers, Orchids and
markets. Taking advantage of the         tropical foliages, particularly during
presence of large population of          the periods when these products
Indian Diaspora, while marketing in      are scarce in the western markets.
the direct-to-retailers channel, could   There are also opportunities for
help expand market reach and             increasing production of value-
overcome the challenges of regional      added products such as dry
competition. Promoting strong            flowers, seeds, potted plants, and
brand image of Indian cut flowers        micropropagants. Opportunities are
and flower accessories through           also prevalent in exploring and
designated outlets at the foreign        developing new markets, and
markets, and advance product             expansion in the existing markets.




                                                                             31
     The strengths of Indian          corporates. With corporate players
floriculture include the favourable   getting in to the business, and
geographical situation, soil and      smaller players consolidating their
environment, labour costs and the     efforts, India’s floriculture sector
recent investment culture of Indian   could expect to blossom in the
                                      coming years.




32
1. INTRODUCTION



     Floriculture has become an               Cut flowers are the most
important commercial activity in the     important floricultural product in the
agriculture sector owing to the steady   international floricultural trade. The
rise in international demand for         most traded varieties are Roses,
floricultural products, and immense      Carnations, Chrysanthemums,
potential it holds in generating         Dahlia, Gargera, Gerbera, Gladiolus,
remunerative self-employment             Gypsophila, Liastris, Nerine, Orchids,
among small and marginal farmers,        Poinsettia, Archilea, Anthurium, Tulip,
and earning the foreign exchange.        and Lilies.
     Floriculture can be defined as
                                         THE PRODUCT
cultivation/production of flowering
and foliage plants, garden-bedding       Cut flowers are parts of plants,
plants, cut flowers and greens under     characteristically including the
controlled conditions mainly for         blooms or “inflorescences” and
commercial purposes.                     some attached plant materials, not
                                         including roots and soil. Fresh cut
     According to international trade    flowers are highly perishable as
classification, floriculture products    they maintain only limited life-
encompasses (a) bulbs, tubers and        supporting processes by absorbing
tuberous roots, (b) other live plants    water through their stems. Fresh
(including trees, shrubs, bushes,        cut flowers are used for decorative
roots, cutting and slips), (c) cut-      purposes       such    as     vase
flowers and flower buds, fresh dried,    arrangements and bouquets at
dyed, bleached, impregnated or           formal events; designs for
otherwise prepared, and (d) foliage,     weddings and funerals; gifts on
branches and other parts (other than     occasions, and in times of illness,
flowers and buds) of trees shrubs,       and at holidays; corsages and
bushes and other plants and              boutonnieres; and informal displays
mosses, lichens and grasses, being       to beautify homes and public
goods of a kind suitable for bouquets    places.
or ornamental purposes, fresh, dried,
dyed, bleached, impregnated or               Preserved flowers are fresh cut
otherwise prepared.                      flowers that have been dehydrated,




                                                                             33
preserved with a chemical solution        a       completely         controlled
and then air- or oven-dried. They may     environment, or just provide shade
be used in boutonnieres, corsages,        or protection from the wind, e.g., an
wreaths, formal and informal              overhead lattice work or a “poly-
displays, and similar ornamental          house” (an aluminum or steel
articles. Preserved flowers, known in     framework covered with a double
the industry as “everlasting flowers”     layer of polyethylene film). Glass
or “everlastings,” are not as             greenhouse is considered to be the
perishable as fresh cut flowers.          most durable structure; however,
     Foliages include leaf, stems and     greenhouse panes made of
parts of plants other than flowers        fiberglass sheets are also used. A
used for decorative purposes in           “poly-house,” is long lasting and
bouquets; in formal and informal          uses low cost-high technology
displays; for plantscaping and            plastics. The latter requires
landscaping; ferns and mosses.            significantly less capital investment
Other plant materials that are traded     than the other types of covered
include young plant material, which       structures and accounts for the
still has to be cultivated in the         majority of protected growing areas.
importing country, before it can be
                                               Air temperature in the
sold to the consumer, in vitro cultures
                                          greenhouse is commonly controlled
prepared by micropropagation and
tissue culture techniques, rooted and     by central steam boilers or individual
unrooted pot plant cuttings, bulbs,       unit heaters fueled by natural gas or
tubers, tuberous roots, corms,            propane and are often combined with
crowns and rhizomes. Finished             horizontal airflow fan systems to
plants are plants that are traded in      circulate air. Common heating
the markets as saleable products          systems for the root-zone of the
and need only to be acclimatized          plants are electrical-resistance
before they can be sold.                  heating strips or pads and small
                                          boiler systems that warm the water
PRODUCTION PROCESS                        as it flows through an array of small
                                          tubes under the propagating units.
Cut Flowers                               Some greenhouses are equipped
Commercially, flowers are cultivated      with computer systems that regulate
in open fields or within a protective     environmental factors such as
structure. The production method          heating,      cooling,    irrigation,
primarily     depends      on    the      fertilization, carbon dioxide, and
environmental conditions of the           ceiling shade blackout for artificial
area and quality considerations.          night. Supplemental lighting is often
The greenhouse structure may form         used to control flowering and quality.




34
     The propagation of flowering             During the production process,
plants can be by means of seed,          approximately 50 percent of all direct
cuttings (either stem tips or rooted     labor is used in harvest activities.
cuttings), bulbs, grafting, or by the    Flowers are harvested when the
process of division. In a covered        proper stem length and inflorescence
setting, the propagative material is     required for sale in the wholesale
typically placed in a mixture of         market are reached. Generally, the
organic material in a raised             optimal stage of growth for harvesting
greenhouse bench, a shallow              is when the flower has just opened.
concrete box usually 4 feet wide and     Stems with more than one flower are
raised 24 to 36 inches (dimensions       usually harvested with less than
may vary) for drainage. Before           one-third of the flowers fully opened.
planting, the soil is prepared, either   The flower stem is cut at the
by sterilization with steam or the       appropriate length by hand with a
application of chemicals. Growers        sharp knife or pruning shears. Since
also use prepackaged soilless media      flower condition does not improve
(rice hulls, coir, sand, or composted    after picking, growers calculate the
bark), which have already been           cutting precisely so that the flower
pasteurized to kill pathogens, weeds,    does not past its prime when it
and seeds. Soil preparation usually      reaches the consumer.
takes place between each harvest.             Many growers harvest by
Although seeds or cuttings are           accumulating an armful of flowers as
planted directly into the greenhouse     they move along an aisle, whereas
bench, bulbs are generally stored        others employ picking carts and/or
and monitored in cool and dark           conveyor systems. Some growers
rooting rooms until they sprout, then    have automated systems that can
transferred to the organic material in   strip leaves, trim stems, and
the greenhouse. Wire or plastic mesh     uniformly bunch flowers that may
is often used to support certain         then be transported on specially
flowers       (e.g.    Roses      and    designed monorails suspended on
Chrysanthemums) as they grow,            tracks from the ceiling of the
thereby encouraging a long straight      greenhouse. With automated
stem. Drip irrigation lines are          systems, surfaces are padded to
generally used to reduce spotting of     minimize damage to the flowers. In
the flower petals, soil splashing onto   the packing warehouse, stems are
the foliage, and the spread of           cut for a second time while
disease. Water is sometimes treated      submerged in water to allow the
by reverse osmosis and injected with     water to move up the stems. They
fertilizers before being applied to      are immediately placed in tepid water
plants.                                  (110 degrees) with added floral




                                                                            35
preservative for at least 2 to 3 hours        Boxes are often packed using
to allow for a maximum amount of          “wet packs” to allow the flowers to
water uptake. They can be left            remain in water throughout their
temporarily in a cool (less than 60       transport. Packed boxes are also
degrees) location or stored in a 40       pre-cooled by units that fill them with
degrees cooler temperature                98 percent humid, cool air for added
overnight for subsequent grading.         protection. The boxes are then
Flowers that do not retain water and      transported by refrigerated truck or
are not kept at low temperatures          by air to the sales units
losses water and wilt quickly.
                                          Foliage
      Grading of cut flowers is done to
                                          Starting from cuttings, tissue
ensure consistent standards. Stems
                                          cultured liners, or seeds,
are generally graded by stem length
                                          commercial foliage plants are
(18 to 24 inches for most flower
                                          generally produced in soilless
types) and are downgraded for short
                                          media confined by containers in
or broken stems, poor flower              shaded         greenhouses          or
condition, poor foliage condition, or     shadehouses. Some foliage plants
old flowers. Sorting machines are         used as interiorscape trees are
able to grade flowers by length of        grown in full sun for the first part
stem, however, all other factors are      of their production cycle, and then
still determined by human decision-       grown under shade. Regardless of
making. Pompon Chrysanthemums             their specific production protocols,
are graded into 250- to 340-gram          all plants are managed under
bunches containing several stems,         controlled conditions including light,
while standard Chrysanthemums of          temperature, water, fertilization, and
equal sizes are graded in groups of       pest control until they approach
10 or 12. The flower buds are             marketable sizes called finished
wrapped in cone-shaped plastic            plants. The plants are then
sleeves to prevent damage.                acclimatized, graded, and shipped
Carnations are usually separated          to destinations for interior and
into piles of 3 grades; each grade is     exterior scaping. Acclimatization is
then bunched into units of 25 stems.      a seriate procedure in which light
For Roses, 25 flowers from an             intensity, nutrient supply, and
individual grade are bunched with the     irrigation frequency are reduced to
heads on an even plane. Stems are         anatomically and physiologically
then tied together with string and        alter the plant so that it can survive
parchment, or waxed paper is              and thrive after shipping and
wrapped around the heads for              placement in an interior or foreign
protection.                               environment. Small pot plants may




36
require     several     weeks      to    flowers after drying by immersing
acclimatize, while large interior        the flower bundles in hot vegetable-
trees may require a minimum of six       based dyes. The dyed flowers are
months. Therefore, the complete          then returned to the dryer for a
foliage plant cycle comprises: (1)       period of 3 to 4 days. When the
plant propagation via tissue culture,    drying process is complete, the
rooting of cuttings, or seed             flowers are arranged and packaged
germination; (2) production of           for sale.
marketable plants from tissue
cultured liners, rooted cuttings, or     INDUSTRY CHARACTERISTICS
seedlings; and (3) postproduction        The growing and the marketing of
plant care, including shipment,          cut flowers depend on several key
interiorscape installation, and          success factors. The production
maintenance.                             factors and the characteristics of
                                         the markets that are required for
Dried and Preserved Flowers              successfully growing flowers
The production process for dried         include:
and preserved flowers is similar to
                                         ●   Good physical conditions: high
that of cut flowers up to the point
                                             light intensity, abundant water,
of harvesting. Flowers are cut,
                                             clean soil (or the use of
bunched, and then dehydrated in
                                             hydroponics), and good
mechanical dryers or in the sun, or
                                             climate;
preserved chemically. Preserved
flowers are placed in a solution of      ●   Appropriate seeds and planting
glycerin and water for a period of 3         material;
to 7 days. As the solution is drawn
up into the plant stem and into the      ●   Capital for investments and
flowers, the water in the plant tissue       working capital;
is replaced with glycerin, yielding a    ●   Productive and skilled labour;
final product that remains soft and
pliable for several years. Since the     ●   Expertise         in     growing
flowers naturally turn brown as the          techniques;
tissues degrade, dye may be              ●   Good management             and
placed in the solution to be drawn           organisational activity;
up by the stem. The glycerin-
preserved flowers are then placed        ●   Pesticides         and     other
in industrial dryers at a temperature        chemicals;
of about 60o to 75o F while fans         ●   Energy for heating;
remove humidity from the air.
Colors can also be applied to the        ●   Infrastructure;




                                                                           37
●    Quality consciousness all              system in the production
     along the production and post-         country is necessary for
     harvest chain. Cut flowers             exporting.
     have a highly perishable nature
                                       ●    Meeting the quality standards
     and the deterioration starts at
                                            including triple P (planet,
     the moment of harvesting.
                                            people, profit) codes of
●    Adequate logistic structure for        conducts in order to fulfil the
     exporting;                             consumers’ preferences. The
                                            supermarkets           chains
●    Adequate       supply    chain
                                            increasingly      set       the
     infrastructure, including post-
                                            parameters      for     these
     harvest treatments and a
                                            standards.
     network of supplying;
                                            The above factors mainly
●    Knowledge of the destination
                                       concern the production and trade
     markets, especially the
                                       environment. The international
     consumers’ preferences and        competitive environment is as
     their dynamics. Emotion is one    important as production knowledge.
     of the main attributes of         Most developing countries in the
     flowers. Fashion trends or        flower business produce for export
     crazes are of importance; for     markets and the domestic market is
     instance, the type and colour     irrelevant. Due to such trade flows
     of flowers.                       the international trade regulations and
●    Knowledge of strengths and        standards need to be met.
     weaknesses compared to the
     competitors;                      SUPPLY CHAIN MANAGEMENT
                                       IN FLORICULTURE
●    Knowledge infrastructure has
                                       Traditionally, flowers had been
     to    be    innovative    and
                                       marketed by the grower to a flower
     responsive to the requirements
                                       wholesaler, a retail florist, or directly
     of the destination markets;
                                       to the public by a street vendor or
●    Meeting the international trade   at a farmers’ market. Wholesalers
     standards. For propagation        in this marketing structure
     inputs (nursery stocks or         consolidate products from various
     seeds) acceptance of the          growers and sell to smaller units
     Union International pour la       and to retail outlets. The
     Protection des obtentions         wholesaler’s product was often on
     Végétales (UPOV) regulations      consignment from the grower.
     is highly desirable. An           However, in the recent years, the
     adequate phytosanitary control    market channels for cut flowers,




38
especially, under commercial             the environment (Planet) referring
floriculture       have       become     to conservation of soil, water and
increasingly complex, since a large      air, and the effects of the use of
part of the production has shifted       fertilizer, chemicals for pest control,
from traditional growing regions to      use of energy, and the amount of
new growing regions. The market          waste; and a social responsible
structure in floriculture trade, which   way (People) referring to concerns
for a long time involved auctioning      on human rights, poverty, and
at flower auctions in the major
                                         workers’ rights on wages, health
consuming countries, has been
                                         and security.
gradually undergoing change
towards direct sales with more and            The supply chain in floriculture
more products being sold directly        thus, currently combine commercial
to supermarkets and specialized          quality (branding) of the product,
wholesalers. Depending on the            together with environmental quality
market focus and the desired
                                         (labels / certificates e.g., Eurep-GAP)
image, the product specifications on
                                         and social standards (labels /
quantity, diversity and quality
                                         certificates e.g., Fair Flower,
assurances schemes are met. The
trend currently, is towards              Florimark) in the product proposition
supermarkets, garden centers and         towards the customers. Additionally,
warehouses wanting to be assured         managing the logistics of products to
that the products are produced in        the outlets, from the chain partners,
a sustainable way, thus, referring it    requires registrations, certificates,
to a triple P-concept; a way of          quality audits, and information supply
producing combining Profit; care for     in the chain.




                                                                             39
2. PRODUCTION AND CONSUMPTION



     The world production of              and Mexico. The economies of some
floriculture is growing at a rate of 10   of these countries are even
percent per year. There are currently,    dependent on floriculture industry,
over 50 countries that are active in      such as Colombia and Kenya.
floriculture production on a large
                                               With China (286,068 ha) and
scale. The total area under
                                          India (161,000 ha) having the majority
floriculture in the world, both under
                                          of the world acreage under cut
protected area and open, is presently
                                          flowers and plants production, the
estimated to be around 628,972
                                          Asia-Pacific region has the major
hectares. In terms of production
                                          share (75 percent) of the total world
value, the Netherlands (Euro 3901
million), the United States (Euro 2992    area under floriculture production.
million), Japan (Euro 2987 million),      Europe has a 10 percent share in the
Italy (Euro 1627 million), Germany        world area under floriculture. The
(Euro 1289 million) and Canada            acreage under flower cultivation in
(Euro 1067 million) are the largest       Africa is very small (1.5 percent).
producers of cut flowers and plants.      With around 2200 ha, Kenya is the
However, due to stagnation in             largest producer of flowers and
production in these traditionally         plants in Africa, followed by South
recognized centers, developing            Africa and Zimbabwe both growing
countries have emerged as large           over 1000 ha of flowers. Latin
production centers in the past few        America has an 8 percent share in
decades. This is further supported by     the world area under floriculture, with
low production cost and seasonal          Mexico having the largest area under
advantages in the developing              flower production (21,129 ha).
countries, which ensures supply of
floriculture products throughout the      PRODUCTION IN SELECT
year. Some of the major developing        PRODUCING COUNTRIES
country producers and exporters of
cut flowers and plants are Colombia,      Europe
South Korea, Kenya, Israel, Ecuador,      In Europe, the production area
Poland, Ethiopia, Costa Rica,             under floriculture crops in the
Thailand, India, China, Zimbabwe,         leading producting countries such




40
                        Table 2.1:
    WORLD AREA UNDER PRODUCTION AND PRODUCTION VALUES
                OF FLOWERS AND POT PLANTS
                                              Production Value
                               Area (in ha)          (mn Euro)
Europe        Austria                 2171                 240
              Belgium                 1652                 263
              Czech Republic           220                  43
              Denmark                  544                 349
              Finland                  135                  96
              France                  5232                 956
              Germany                 7640                1289
              Greece                  1300                 172
              Guernsey                  55                  45
              Hungary                  440                  95
              Ireland                   62                  19
              Italy                   7976                1627
              Netherlands             7884                3901
              Norway                   113                 145
              Poland                  4593                 186
              Portugal                 240                 457
              Russia                  2200                 150
              Spain                   6140                 412
              Sweden                   159                 128
              Switzerland              517                 228
              United Kingdom          6769                 431

              Total                  56042               11232

Middle East   Israel                  2700                 205
              Turkey                  1273                  15

              Total                   3973                 220

                                                      (Contd....)




                                                              41
(Contd...)
                                                              Production Value
                                            Area (in ha)             (mn Euro)
    Africa          Ethiopia                         645                      90
                    Ivory Coast                      690                       0
                    Kenya                           2180                     299
                    Morocco                          320                      11
                    South Africa                    1050                      69
                    Tanzania                         120                       0
                    Uganda                           126                       8
                    Zambia                           125                       0
                    Zimbabwe                        1100                      27

                    Total                           6356                     504
    Asia-Pacific    Australia                       5400                     335
                    China                         286068                    2668
                    Taiwan                          5346                     240
                    Hong Kong                        343                       7
                    India                        1610001                      —-
                    Japan                          17914                    2987
                    South Korea                     7185                     558
                    Malaysia                        2000                      20
                    Philippines                      670                       0
                    Singapore                        162                      10
                    Sri Lanka                          0                       5
                    Thailand                        8320                      61
                    Total                         459408                    6891
    North America   Canada                           928                    1067
                    United States                  19405                    2992
                    Total                          20333                    4059
    Central/      Brazil                           10285                     350
    South America Colombia                          7500                     813
                  Costa Rica                        4500                      80
                  Dominican Republic                 400                       –
                  Ecuador                           3441                     190
                  Guatemala                          605                      17
                  Mexico                           21129                       –
                    Total                          47860                    1450
    SOURCE: AIPH / Union Fleurs: International Statistics Flowers and Plants 2008

1      Data drawn from National Horticulture Board, India


42
as the Netherlands, Germany and        cost of production and favourable
Denmark has been gradually             cultivation environment. There has
declining. Number of growers have      been also shift in production from
also been decreasing in some of        central and northern Europe to
the European countries such as         peripheral Europe. Furthermore, to
the Netherlands, Italy, Spain,         overcome rising competition from
Belgium, Sweden and Denmark.           developing country producers,
However, the average production        European growers are increasingly
per company has been increasing,
                                       specializing in certain varieties and
which coupled with a recovery and
                                       product segment. For example,
growth in the cut flower production
                                       European producers of Roses
in some East European countries,
such as Poland and Hungary, has        ( Rosa ) are switching to large-
been resulting in a stable overall     budded varieties to compete with
production. Due to increasing          small-budded varieties from the
competition from the producers of      developing countries. Similarly,
developing countries a number of       there has been an increase in
European flower growers are            supply of ‘mini’ Gerbera in the
shifting production bases to           European markets developed by
developing countries such as Kenya     European growers with improved
and Ethiopia, which offers lower       cultivation technology.


                          Table 2.2:
      CUT FLOWER PRODUCTION IN SELECT EUROPEAN COUNTRIES
 Country            Major cut flowers produced
                    (both in open area and under glass)
 Germany            Rosa, Dendranthema, Foliage, Gerbera, Tulipa
 Spain              Dianthus, Rosa, Gladiolus, Dendranthema, Lilium, Iris
 France             Rosa, Dianthus, Tulipa, Gladiolus, Dendranthema
 Italy              Rosa, Dianthus, Gerbera, Dendranthema, Gladioli
 The Netherlands    Rosa, Dendranthema, Tulipa, Lilium, Gerberas, Orchid,
                    Freesias
 UK                 Narcissus, Gladiolus, Dendranthema, Alstroemeria,
                    Dianthus, Freesia, Iris, Rosa, Lillies
 Poland             Rosa, Gerbera, Dianthus, Dendranthema, Freesia,
                    Anthurium
 Hungary            Dianthus, Gerbera, Rosa

 SOURCE: CBI, The Netherlands




                                                                            43
     Netherlands is the largest EU       The United States
producer of young plant material         In the United States, due to
(potted flowering plants and foliage),   increase in imports, production area
followed by France, Spain and            under floriculture products is
Germany. It holds a strong position      significantly decreasing. The flowers
in the production of young Rose plant    are grown in open fields or within
material and Pelargonium cuttings.       protective structure, like glass or
Tropical flowering plants are also       fiberglass      greenhouses,       or
produced in greenhouses in the EU.       constructions that provide shade or
The biggest production of potted         protection against wind. Majority of
Orchid, Bromelia and Anthurium is        the ornamentals are grown in open
located in The Netherlands, Italy and    field. In 2007, total area under
Germany. Italy, Spain and Portugal       floriculture and nursery crops have
also grow increasingly larger tropical   declined by 2.5 percent compared
plants like Mediterranean palms          to 2006, from 19,894 ha to 19,405
(Phoenix,            Chamaedorea,        ha. Compared to 2006, in 2007,
Washingtonia). Young plant materials     area under various shade covers
of tropical varieties (such as Yucca,    decreased by 3.3 percent and open
Dracaena, Beaucarnea, Codiaeum           area decreased by 2.0 percent. The
and different palm species) are          covered area accounts for about 35
imported by specialised importers or     percent of the total area under
by the growers themselves.               floriculture production, of which
                                Table 2.3:
              FLORICULTURAL PRODUCTION AREA AND GROWERS
                          IN THE UNITED STATES
                                                             2006       2007
 Area in ha
     Glass greenhouses                                        505        469
     Fibreglass cover                                         622        615
     Plastic film cover                                      2712       2681
 Total greenhouses covered                                   3838       3765
 Shade/ temporary cover                                      3255       3092
 Total covered area                                          7094       6857
     Open field                                            12,800     12,548
 Total area                                                19,894     19,405
 Large growers (sales US$100,000 or more) numbers           6,562      6,140
 Average sales per ha (US$000)                                194        203
 Average sales per grower (US$000)                            614        667

 SOURCE: Agriculture Statistics Board, NASS, USDA 2008



44
Greenhouse accounts for 55                is carried out under glass and
percent.                                  plastic    covers.    Commercial
                                          greenhouse production is a year-
     The number of cut flower
                                          round enterprise with flowers such
growers is also declining in USA. In
                                          as    Carnation,     Rose      and
2007, the number of producers
decreased by 6 percent, from 6,562        Chrysanthemum, but is seasonally
in 2006 to 6,140. The number of large     oriented with flowers such as
growers (with sales US$100,000 or         Poinsettia and Bermuda lily.
more) also declined by 4 percent,         Houseplants such as Cyclamen,
from 2,979 in 2006 to 2,863 in 2007.      Cineraria, Pelargonium, and African
The flower industry in the United         violet are also produced in
States is undergoing a period of          commercial greenhouses, but in a
consolidation and contraction. Most       lesser volume compared to the cut
of the farms, currently, are family       flowers.
owned and operated. In the recent              The total area under floriculture
years, imports have been exceeding        production has been increasing in
domestic production and to compete        Canada. However, total operations
with the low cost imports, growers        have been reducing. The area under
have been shifting to cut flower          cultivation increased by 10 percent
specialties, which are not imported       over the five years between 2001 to
in significant quantity.                  2006. Total number of operations,
                                          both farms and nurseries, declined
Canada                                    to 11 percent and 16 percent
In Canada, flowers are cultivated by      respectively, between 1981 to 2006.
both commercial growers and               The flower industry in Canada is
hobbyists. Most of the commercial         generally concentrated in Ontario,
production of flowers in the country      British Columbia, and Quebec,

                             Table 2.4:
           FLORICULTURE AND NURSERY FARM AREA IN CANADA
 Product              1981    1986      1991   1996    2001      2006    CAGR %
                                                                         2001-06
 Number of Farms
 Floriculture            —    3,180   6,283    4,340   4,024     3,578   - 2.32 %
 Nursery             2,428    2,284   3,846    4,844   4,530     3,825   - 3.33 %
 Area (ha)
 Floriculture            —     396      456     691        845    927     1.87 %
 Nursery            11,369 13,575 19,689 21,251 22,776 24,953             1.84 %

 SOURCE: Statistics Canada, 2008 (Census of Agriculture)




                                                                               45
which together account for about 85      Ecuador
percent of total production.             Ecuador is an important player in
                                         the world floriculture trade. The
Latin America                            country has around 3,500 ha under
                                         floriculture, of which, 2,500 ha is
Colombia
                                         under rose cultivation. Other flowers
Colombia accounts for around 2           grown        in    Ecuador        are
percent of the total land under          Chrysanthemum and Carnation.
floriculture in the world. Colombia      The sector employs around 60,000
has over 7,500 ha under floriculture     people directly and over 100,000
of which, 7,000 ha is intensively        people indirectly.
cultivated under greenhouses and
the remaining are cultivated under       Africa
rainfed conditions, mostly foliage
and filler ornamentals. Farms are        Kenya
located around two main clusters,        Kenya is the largest producer of
the Bogota plateau with 79 percent       flowers in Africa and one of the
of the area and Rionegro valley of       largest suppliers of flowers to the
Antioquia with 18 percent, and the       world. Floriculture industry in Kenya
remaining 3 percent in other areas       is the second major foreign
of the country.                          exchange earner, after coffee. The
    The farm sizes are fragmented.       industry employs around 100,000
The ‘small’ ones with less than 50       people directly and around 2 million
acres and the “medium” sized, 50 to      people indirectly. The major flower
125 acres, account for 50 percent of     varieties grown and exported from
the exports. The other 50 percent is     Kenya are Roses, Carnations,
exported by very large farms,            Statice, Cutfoliage, Carthhamus,
operating over 125 acres under           Solidaster/Solidago, Chrysanthe-
greenhouses.                             mums,       Arabicum,        Trelizia,
                                         Rudbeckia, Gypsophilia, Lilies,
     Three major types of flowers
                                         Molucella,       Erynngium        and
grown in Colombia are: Roses,
                                         TubeRoses. The main export
Carnations (standard and spray) and
                                         season is October to May.
Chrysanthemums (mums and
poms), covering three quarters of the         Main cut flower growing areas in
area. The rest are known as specialty    Kenya include Lake Naivasha, Thika,
cut flowers and fillers mostly used as   and Kiambu / Limuru regions. Most
companions in bouquets. The              of the flower production companies
Colombian flower sector generates        have their own flower farms. These
around 110,000 jobs directly and         companies grow, harvest, pack and
94,000 jobs indirectly.                  transport cut flowers to airports for




46
export. The flowers in Kenya are        Asia
mostly grown in the greenhouses.
                                        Israel
Ethiopia                                Flowers and ornamental plants
Floriculture has lately emerged as      account for 8.0 percent of Israel’s
a flourishing business in Ethiopia.     total agricultural production. Israel’s
According, to the Ethiopian             flower sector is relatively small by
Floriculture     Producers     and      international standards, but is highly
Exporters Association (EFPEA),          profitable. The average flower farm
floriculture is set to become the       is about 1.8 hectares. The farmers’
largest foreign exchange earner for     expertise, combined with support
Ethiopia in the next few years,         from and collaboration with
overtaking coffee.                      research institutions and extension
                                        services, contribute to the high
    There are over 70 flower farms      quality and wide variety of flowers.
in Ethiopia of which, 45 percent are    Although the number of flower
owned by local people and remaining     growers has decreased by around
55 percent are owned by foreign         50 percent in recent years (from
investors. The Industry employs over    5,000 to 2,700), production has
70,000 people. Ethiopia grows           risen steadily to around 1.4 billion
Roses, Carnations, Carthamus and        flowers a year. This is due to
Satice.                                 technological advances and an
                                        intensive system of production.
Zimbabwe                                About half of all the flowers are
The cut flower industry of              grown in advanced, computerized
Zimbabwe is highly export oriented,     greenhouses, and some 12 percent
with almost 100 percent of flowers      is produced under netting. Flower
commercially grown being exported.      varieties grown in Israel include
Zimbabwe has about 900 ha of land       Roses, Gypsophila, Wax flowers,
under floriculture cultivation with     Solidago, Limonium, Lisianthus
over 27,000 workers engaged with        (Eustoma), Gerbera, Hypericum,
the activity. Roses are the main        Anemone, and a number of
flowers grown in Zimbabwe               ornamental plants. In the past,
followed by Asters and Proteas.         traditional varieties (such as Rose,
The industry is fragmented, with        Gerbera and Carnation) accounted
about 300 growers with average          for about 80 percent of total flower
size of holding estimated at 4 ha.      production. Currently, these
Plantings are fairly widespread, with   varieties account for less than 40
the highest concentration in the        percent of total flower production
Highveld and the Eastern                and have been replaced by
Highlands.                              acclimatized new varieties of




                                                                            47
‘summer flowers’ from Europe,            greater quantities of flowers are
which are supplied to Europe during      grown in the southern parts of Japan.
its winter season.                       However, with the increase in the
                                         summer temperatures, greater
Japan                                    quantities of flowers are grown north
Japan is one of the largest flower       of Tokyo.
growing countries in the world,
cultivating flowers on an area of        China
17,914 ha. However, the area under       China has in recent years become
flower cultivation has gone down         one of the largest flower growing
substantially from 18,970 ha since       and consuming countries in the
1995. Around 8,344 ha (47 percent)       world. Currently, China’s annual
under flower cultivation is currently,   production capacity is 2.7 billion
under protected cultivation such us      fresh flowers. The main producing
greenhouses         and     covered      regions     are     Yunnan     and
structures. Individual farms are very    Guangdong. However, Yunnan, is
small averaging less than 0.3 ha
                                         the largest flower production base
with the majority of farmers being
                                         in China, accounting for around 40
engaged part-time.
                                         percent of the country’s flower
     Chrysanthemums are the most         production industry. There are over
important flowers cultivated in Japan,   390 enterprises engaged in cut
accounting over 35 percent of total      flower production including 38 joint
production, followed by Carnations,      ventures with partners in Hong
Roses, Gypsophila and Statice.           Kong, Taiwan, Japan and the USA.
Other types sold in the market include
Freesias, Tulips and Alstroemerias.      Thailand
Whilst the production of Carnations
                                         Thailand is one of the leading
is steadily decreasing in the recent
                                         producers of tropical floriculture
years, Roses are increasing in
                                         crops. The development of
popularity. However, the most
                                         ornamental industry in the country
significant growth has been in the
                                         has been initiated by the private
production of other high value flowers
                                         sector with little support from the
including the Bulb crops, Lilium,
Gerbera and Orchids.                     government. Dendrobium orchid,
                                         which has been developed solely
    Flower production in Japan is        from introduced species, is the
highly seasonal with the majority of     most commercially important
the flowers being harvested from         floriculture crop of the country. It is
May to October. However, flower          a home of diverse ornamental plant
production areas vary with the           genera; such as Aglaonema,
season. During the winter months,        Curcuma, Dracaena, Homalomena,




48
Impatient, Ixora and many Orchid       highest, followed by Europe and
genera. The core competency of         USA.
the industry is rapid propagation as
well as breeding a new cultivar.       Europe
Currently, the country is known to     The European Union (EU)
be the world center for breeding       consumes over 50 percent of the
Aglaonema, Curcuma and tropical        world’s flowers, and includes many
Orchids.
                                       countries, which have a relatively
    The Orchid planting area in        high per capita consumption of cut
Thailand covers about 6,000 acres,     flowers. Germany is the major
mainly in Bangkok and nearby           consumer, followed by the UK,
provinces, namely Nakhon Pathom,       France and Italy, in the order of
Samut Sakhon, Ratchaburi, Pathum       importance.
Thani, Ayutthaya, Suphan Buri, and
Chon Buri. The flowering season in         The markets in the EU are
Thailand usually takes place during    generally divided into three
the rainy season, from July to         categories:
October. There are more than 1,000     ●   Mature markets such as
species of Orchids in the country.         Germany, The Netherlands,
    Besides Orchids, over 30 types         France, Belgium, and the
of flowers are commercially                Scandinavian countries. These
cultivated in the country, which           markets are characterised by
include Roses, Carnations and              relatively high levels of per
Chrysanthemums.                            capita expenditure on flowers.
                                           The size of these markets
CONSUMPTION                                tends to be stable and
                                           sometimes even declining.
Europe, USA and Japan are the              Consumers tend to spend a
major consumers of floriculture            relatively high share of flower
products. Flower consumption in            expenditure on personal use.
the United States is relatively low        They are familiar with flowers
as compared to Western Europe;             and are interested in new and
however, the industry has been             appealing products.
consistently    growing.       The
consumption in the developed           ●   Growth markets such as
markets in the Europe and Japan            Spain and the UK are generally
has been showing stagnancy or              of considerable size. The UK
declining trends, in the recent            for instance is already one of
years. In case of cut flowers, per         the largest consumer markets,
capita consumption in Japan is the         and is expected to continue to




                                                                       49
       grow. In some of the growth               is increasing, they tend to buy
       markets, the per capita                   more flowers. Nevertheless,
       spending is still relatively low          flowers are still considered a
       compared to the mature                    luxury item and are bought
       markets.                                  mainly as gifts.
●      Markets in development                    The total consumption of
       such as the East-European            floricultural products in the EU
       countries and Greece are the         remained relatively stable between
       expanding economies. As the          2002 and 2006; however,
       purchasing      power     of         consumptions among different
       consumers in these countries         countries varied. Consumption in the
                             Table 2.5:
        EU CONSUMPTION OF CUT FLOWERS AND FOLIAGE, 2002-2006
                                                       2002          2004      2006*
                                                                 EUR million
    Germany                                           3,108         3,022       2,988
    UK                                                2,401         2,649       2,867
    France                                            1,960         1,939       1,860
    Italy                                             2,126         1,805       1,652
    Spain                                               815           916         968
    The Netherlands                                     959           876         864
    Belgium                                             297           358         401
    Sweden                                              299           311         342
    Austria                                             354           364         320
    Poland                                              267           225         304
    Demark                                              215           234         230
    Finland                                             179           167         175
    Greece                                              172           183         176
    Ireland                                             118           141         152
    Portugal                                            155           147         154
    Hungary                                             122           129         140
    Czech Republic                                      118           123         120
    Romania                                             n.a.           67         105
    Slovakia                                             53            46          50
    Slovenia                                             47            42          34

    Total                                            13,765        13,677      13,902
    Information on the other new EU countries is not available

    SOURCE: CBI, The Netherlands, 2008; * Data for 2006 has been drawn from
    BBH, VBN, PT and HBAG (Dutch Floricultural Wholesale Board)



50
leading markets of Germany, France          EU, which may be due to slow down
and the Netherlands decreased               in these economies.
marginally. The floricultural market in
Italy, which was considered as one              The total consumption of finished
of the expanding markets has also           pot plants2 in the EU is estimated at
been showing stagnancy in the               Euro 9.8 billion in 2006. Pot plants
recent years. Market saturation is one      refer to the indoor plants and potted
of the major causes of decreasing           outdoor plants. The market mainly
consumption in floricultural products       consists of household consumers,
in some of the leading markets in the       although companies and institutions

                              Table 2.6:
             CONSUMPTION OF POT PLANTS IN THE EU, 2002-2006
                                                      2002        2004      2006
                                                              EUR million
    Germany                                          3,627       3,875      3,957
    France                                           1,228       1,260      1,260
    UK                                                 711         785        785
    Italy                                              570         705        705
    Spain                                              410         481        525
    The Netherlands                                    531         506        523
    Sweden                                             383         398        425
    Austria                                            274         289        314
    Belgium                                            155         347        305
    Denmark                                            231         250        223
    Finland                                            145         168        205
    Poland                                             115         114        114
    Czech Republic                                      51          82        113
    Hungary                                             71          71        101
    Portugal                                            72          95         85
    Greece                                              77          89         78
    Ireland                                             43          51         59
    Slovakia                                            32          34         40
    Slovenia                                            11          16         27
    Romania                                            n.a.         22         22

    Total                                            8,737       9,616      9,844

    SOURCE: CBI, The Netherlands, 2008

2      Excluding consumption by Luxembourg, Bulgaria, Malta, Cyprus and the Baltic
       States


                                                                               51
are also major consumers of plants.                 markets, the UK and Italy showed an
Between 2002 and 2006, average                      increase in consumption of pot plants
per capita expenditure increased                    between 2002 and 2004. The most
from Euro 20 to Euro 22. In the same                significant growth markets in the EU
period, total consumption increased                 for pot plants are Spain, Austria,
on an average by 3 percent annually.                Ireland, Finland and the East-
                                                    European countries.
     Germany is the largest market
for pot plants in the EU, followed at a                  In 2006, per capita consumption
distance by France. Of the largest                  of floricultural products was highest
                                 Table 2.7:
                  PER CAPITA FLOWER CONSUMPTION IN 2006
                       Per capita consumption       Population       Estimated market value
                          Cut   Plants        Cut                    Cut       Plants         Cut
                      flowers            flowers                 flowers                  flowers
                                         & plants                                        & plants
                                  Euro               Million                  Million Euro
 Austria                   40      38         78          8             320        304          624
 Belgium                   39      29         68         10             390        290          680
 Croatia (2003)             7       7         14          5              35         35           70
 Czech Republic            12      11         23         10             120        110          230
 Denmark                   46      41         87          5             230        205          435
 Finland                   35      39         74          5             175        195          370
 France                    30      20         50         62           1,860      1,240        3,100
 Germany                   36      48         84         83           2,988      3,984        6,972
 Greece                    16       7         23         11             176         77          253
 Hungary                   14      10         24         10             140        100          240
 Ireland                   38      14         52          4             152         56          208
 Italy                     28      12         40         59           1,652        708        2,360
 Netherlands               54      32         86         16             864        512        1,376
 Norway                    62      62        124          5             310        310          620
 Poland                     8       3         11         38             304        114          418
 Portugal                  14       8         22         11             154         88          242
 Romania                    5       1          6         21             105         21          126
 Russia                     5       1          6        143             715        143          423
 Slovakia                  10       5         15          5              50         25           75
 Slovenia                  17      20         37          2              34         40           74
 Spain                     22      12         34         44             968        528        1,496
 Sweden                    38      47         85          9             342        423          765
 Switzerland               82      43        125          7             574        301          875
 Ukraine                    5       3          8         46             230        138          368
 United Kingdom            47      13         60         61           2,867        793        3,660
 Europe                    23      16         38        680          15,755     10,740       26,060
 Japan*                    54                 54        128           6,912                   6,912
 USA*                      21                 21        306           6,426                   6,426

 *Cut flowers, only
 SOURCE: BBH, VBN, PT, HBAG (Dutch Floricultural Wholesale Board), Netherlands
 Population: Stat. Bundesamt 2007: Statistisches Jahrbuch. Berlin.



52
in Switzerland followed by Norway,       considered as indicator for the best-
Denmark, The Netherlands, Sweden,        sold cut flower species in the EU.
Germany and Austria. Currently, the      Rosa is the most important cut
per capita expenditure in East           flower traded at the Netherlands
European countries on flowers and        auctions, followed by Dendranthema,
plants amounts to approximately          Tulipa, Lilium and Gerbera.
Euro 7 to Euro 8 per person per year.
                                              Consumption patterns of buyers
    Flowers in EU are sold mostly in     living in different member states in
auctions at the Netherlands and also     the EU vary considerably. However,
some through direct sales. The           some key common features of EU
Netherlands auctions are generally       consumers are discussed below:
                          Table 2.8:
    CUT FLOWERS SPECIES SOLD AT THE NETHERLANDS AUCTIONS,
                          2002-2006
                                                  EUR million
                               2002     2003   2004   2005   2006        Avg.
                                                                      annual
                                                                      change
                                                                    2002-2006
                                                                          (%)
 Rosa                            700    681     706    729    758         2.0
 Dendranthema (Spray)            307    299     285    293    300        -0.6
 Tulipa                          171    186     185    192    223         6.9
 Lilium                          168    160     158    164    167        -0.1
 Gerbera                         108    106     116    121    122         3.1
 Cymbidium                        66     66      65     70     72         2.2
 Dendranthema (Ind Grp GE)        35     38      39     47     56        12.5
 Freesia                          62     60      60     57     55        -3.0
 Anthurium                        41     43      40     41     46         2.9
 Alstroemeria                     44     40      38     39     39        -3.0
 Hippeastrum                      27     28      33     35     35         6.7
 Eustoma russellianum             37     34      32     34     35        -1.4
 Zantedeschia                     31     30      32     33     34         2.3
 Gypsophila                       39     37      32     33     34        -3.4
 Hypericum                        35     31      30     29     29        -4.6
 Dianthus                         45     35      32     30     28       -11.2
 Others                          478    455     479    454    467        -0.6
 Total                         2,394 2,330 2,330      2,401 2,500         1.1

 SOURCE: VBN (2007)




                                                                            53
Segmentation by purpose in               special holidays ( Annexure 1 ) in
purchasing                               which flower sales increases in
Around 50-60 percent of the flowers      Europe.
purchased in the EU are for the               Flowers in the EU are also
purpose of gifting. About 15 percent     purchased for personal use such as
is bought for funerals and some 20       for decorating houses and interior-
percent is for personal use.             scaping. Companies and institutions
However, the figures vary greatly        also purchase flowers for ornamental
among the countries. In general,         uses. Almost 90 percent of the
personal use of flowers is higher in     companies purchase flowers to give
the high-income countries. The           them away as birthday and
criteria for purchasing flowers are      anniversary        presents.       The
mainly quality, price, the species of    institutional markets differ as per the
flowers used in bouquets, the            member countries; however,
colour of flowers, freshness, vase       institutional market typically accounts
life, and fragrance. The importance      for between 10 and 25 percent of the
of the criteria varies considerably      total flower sales.
between the EU countries.
                                              The following market segments
     Some occasions have an              can be recognised for flowering and
important influence on the demand        foliage plants in Europe.
for cut flowers and foliage in the EU.
During occasions, such as                      In the recent years, the purchase
Valentine’s Day, Christmas, Mother’s     of foliage plants has increased
Day, and Secretary’s Day, there are      moderately in the EU; however,
substantial peaks in flower sales.       flowering plants still have a larger
Besides, the internationally well-       market share. In Europe, the main
known peak-sales days, most EU           purpose of purchasing plants is for
member countries have their own          gifting (30-40 percent), Another 20 to
                               Consumer Market
 Personal use:             For home, working place, terrace and garden
 Gifts and
 special occasions:
    Gifts:                 Special occasions such as birthdays
    Funerals:              Funerals and cremations and to place on graves
    Events:                Valentine’s Day, Mother’s Day, Christmas Day
 Interior Scaping:
 Architects/               Large plants to decorate new or renovated buildings
 Real Estate Companies:
 Interior Landscapers:     To decorate offices, shopping malls, airports etc.

 SOURCE: CBI, The Netherlands, 2008



54
30 percent is bought for special             approximately three quarters of
occasions, and 30 to 35 percent is           flowers sold as gifts. Floricultural
used for decoration at home. Sixty           products experienced lower sales
percent of plant purchases is made           except cut flowers, herbaceous
at florists, the rest is bought at other     perennials, and cut cultivated
places like garden centres and               greens, which together accounted
supermarkets. However, in the                for 27 percent of total grower sales
recent years, the latter is increasing
                                             in 2006. However, in 2007, the
in importance in most European
                                             wholesale value of floricultural crops
countries.
                                             by large operations increased by 2
    With regard to consumer                  percent. The large operations
preferences on plant species in the          accounts for 96 percent of the total
EU, outdoor tropical plants are more         value of floriculture crops.
popular in Mediterranean countries,
where they are used in gardens. In                Annuals and perennials
the North of Europe consumption is           accounted for 32 percent of the total
more focused on tropical indoor              floricultural sales in the USA in 2007.
plants. Consumers in Southern                With regard to cut flower varieties,
Europe and the UK prefer larger              Tulips, Gerbera, Daisies, Orchids,
plants, which are less delicate.             and Lilies are the highest selling
                                             products. Sales of Roses, Pompon,
USA                                          Mums, Gladioli, and Snapdragons
The US flower market is primarily            decreased in 2007, largely because
an   impulse    market      with             of weaker demand.

                             Table 2.9:
            WHOLESALE TRADE OF FLORICULTURE PRODUCTS
                         IN USA, 2004-2007
                                                Value (‘000 USD)
 Products                                  2004       2005        2006       2007
 Cut Flowers                         412,431       413,962     411,337    415,659
 Cut Cultivated Greens               102,976       107,444      97,608     92,458
 Potted Flowering Plants             800,535       812,358     621,460    660,628
 Foliage Plants for Indoor or        685,264       709,512     527,912    629,581
 Patio Use
 Bedding and Garden Annuals        1,868,084      1,897,365   1,823,265 1,764,278
 Propagative Floriculture Material         –              –     383,948   379,165

 SOURCE: Agricultural Statistics Board, NASS, USDA 2008




                                                                                 55
                         Exhibit 2.1:
       WHOLESALE TRADE (BY VALUE) BY PLANT CATEGORY OF
              FLORICULTURAL CROPS, 2007, IN USA




                                                     Total = US$ 3.94 bn
 SOURCE: Agricultural Statistics Board, NASS, USDA 2008

                            Table 2.10.
               WHOLESALE TRADE OF CUT FLOWERS BY
                 SPECIES IN 2006 AND 2007 IN USA
                                 Quantity Sold       Value at Wholesale
                                 (1,000 stems)           (1,000 USD)

                                2006        2007          2006     2007
 Alstroemeria                   8,595      9,232       1,885       1,869
 Carnations                     5,428      3,457         955         649
 Chrysanthemums, Pompon        10,338     10,101      12,985      12,899
 Delphinium and Larkspur       26,142     23,305       6,133       5,207
 Gerbera Daisies              112,587    114,583      33,977      34,749
 Gladioli                      95,350     87,855      22,694      23,629
 Iris                          81,194     82,073      18,315      18,303
 Lilies                       107,044    109,823      75,459      73,894
 Lisianthus                     8,518     10,386       3,670       4,003
 Orchids                       10,332     12,038      12,428      13,600
 Roses                         82,138     71,598      30,974      28,798
 Snapdragons                   36,559     33,114      10,244       8,407
 Tulips                       141,893    156,760      48,391      56,128
 Other Cut Flowers                  –          –     134,198     133,524

 SOURCE: Agricultural Statistics Board, NASS, USDA 2008


56
Japan                                     flower auction markets in Japan,
Japan is one of the largest               including around 20 central auction
consumers of cut flowers and              markets. Cut flowers are sold from
potted plants. Both the total             various locations such as florists,
consumption of flowers and potted         home centres, supermarkets, and
plants, and the average per capita        convenience stores. However, in
consumption in Japan are high.            recent years there has been an
Around 40-50 percent of the total         increase in Internet sales to
consumption derives from business         individuals. Around 95 percent of all
entities that handle ceremonial           flower and ornamental crops are sold
occasions such as weddings and            through auctions.
funerals, corporate gifts, floral              Japan has a long history of floral
decorations in hotels, etc. Until         arts. Flower arrangement (Ikebana)
recently, individual flower and           are a traditional part of Japanese
nursery / garden products                 religious and ceremonial occasions.
consumption has been lower than           The demand for flowers for everyday
in Japan than that of other major         use (casual flowers) has also been
industrialized countries. However, in     rising. Flower usage in Japan is
the past two decades Japan’s              generally represented by: business
flower market has changed                 (30 percent), gifts (30 percent), home
significantly. Although institutional     and religious usage (26 percent).
demand (hotels, national events,
flower arrangements, etc.) has                 Business use, which includes
decreased due to slowdown in              flowers for weddings, funeral
economy, non-commercial demand            ceremonies and hotel decoration are
has been growing. Currently,              the main use of flowers in Japan.
institutional demand has decreased        However, more recently, the demand
from about 40 percent to 30               for cut flowers as personal gifts has
percent. Noncommercial demand             grown rapidly. For gifting of occasions
for both personal (gifts, casual          include Mother’s Day, birthdays and
flowers, Ikebana and home                 farewells. There is also a growing
gardening) and regional (housing          trend amongst young women to
projects and public areas) use has        purchase flowers for everyday use.
become an established part of the
                                              The demand for cut flowers in
market.
                                          Japan is seasonal. Demand for cut
    The Japanese cut flower retail        flowers rises during March, August
market is estimated to be worth US$       and September (due to Buddhist
9.3 billion, which is nearly 27 percent   ceremonies), in May (when Mother’s
of world flower consumption by            Day is celebrated), and in December
value. There are over 290 registered      (for Christmas and New Year




                                                                              57
celebrations). These five months         consumers. Standard Carnations
account for 55 percent of total annual   are generally popular for Mother’s
household expenditure on cut             Day. While the production of more
flowers. Flower usage by season and      colourful Carnations are increasing,
occasions is provided in Annexure 1.     pastel shades such as pink,
     The most popular flower in Japan    particularly suits the Japanese taste.
is Chrysanthemums, followed by           Other types of flowers sold on the
Carnations, Roses, Gypsophila and        market include Freesias, Tulips,
Statice. Chrysanthemum is the            Lilies and Alstroemerias.
national flower of Japan and is the
                                              Preferences for pastel tones
most widely cultivated and
                                         have been changing more towards
consumed flower. It is regarded as
the Imperial Crest. Chrysanthemums       intense shades such as yellow,
are used for Buddhist observances        bright pink and red. In general,
and commercial applications such         however, colour preferences vary by
as funerals and memorials.               the season, by region, and by specific
Carnations are the major seller both     flower variety. For example, pink is
in terms of volume and value. The        popular during spring; white, green
spray type of both the varieties is      and yellow during summer; and,
most popular with Japanese               orange, red and purple in autumn.




58
3. WORLD FLORICULTURE TRADE



OVERVIEW                                   Chrysanthemums, Carnations and
The world floriculture trade is            Orchids are the most traded
characterized by a high degree of          products. Of these, Roses contribute
concentration by product and               around 70 percent of the total cut
sources. Developed countries in            flower industry trade. Europe is the
Europe, America and Asia account           largest consumer as well as exporter
                                           of floricultural products in the world.
for more than 90 percent of the total
                                           Five European countries, viz., the
world trade in floriculture products.
                                           Netherlands, Italy, Belgium, Denmark
Roses are the main traded product.
                                           and Germany, account for over 66
    International trade in floriculture,   percent of total exports by value of
to a large extent is organized along       floricultural products in the world.
regional lines. Asia-Pacific countries
                                                World imports are highly
are the main suppliers to Japan and
                                           concentrated geographically. Europe
Hong Kong. African and other
                                           by far is the largest importer of
European countries are the principal
                                           floricultural products in the world,
suppliers to Europe’s main markets,
                                           followed by America and Asia. Seven
and the supplies to the United States
                                           European countries viz., Germany,
is mainly catered by Colombia and
                                           United Kingdom, Netherlands,
Ecuador.
                                           France, Italy, Belgium, and
      The global exports of floriculture   Switzerland account for more than
products stood at US$ 17 billion in        46 percent of total imports by value
the year 2007. With an annual              of floricultural products in the world.
average growth rate of 10.3 percent,
world exports are expected to reach        EXPORTS
US$ 25 billion by 2012. Fresh cut          Top ten countries, viz., the
flowers and foliage accounted for          Netherlands, Colombia, Italy,
around 49.1 percent (US$ 8.41              Belgium, Denmark, Germany,
billion), and live plants, bulbs and       Kenya, USA, Ecuador and Canada,
cuttings accounted for 50.9 percent        account for over 80 percent of the
(US$ 8.58 billion) of total floriculture   total export value of the world’s
products exported in 2007. Roses,          floricultural  crops.    Europe,




                                                                               59
                         Exhibit 3.1:
       EXPORTS OF FLORICULTURE PRODUCTS IN THE WORLD




 SOURCE: UN Comtrade 2009



                        Exhibit 3.2:
     SHARE OF WORLD EXPORTS OF FLORICULTURE PRODUCTS
                 BY VALUE, BY REGION, 2007




 SOURCE: Compiled from UN COMTRADE Data 2009




60
                          Exhibit 3.3:
       SHARE OF WORLD IMPORTS OF FLORICULTURE PRODUCTS
                   BY VALUE, BY REGION, 2007




 SOURCE: Compiled from UNCOMTRADE Data 2009


especially the Netherlands,                 products have been increasing. In
continues to dominate the world             2007,       intra-Europe       exports
floriculture industry; it has been the      accounted for around 85 percent of
epicenter for world flower trading.         total exports of floricultural products
It was estimated that in 2007 over          from Europe, and the share of other
50 percent (US$ 8.56 billion) of            countries in its exports increased to
world floriculture exports came from        15 percent. Germany was the major
the Netherlands; this figure includes       market, accounting for US$ 2.63
crops that are grown domestically,          billion (21 percent) of total European
and crops that are imported,                exports. Other major destinations for
brokered, and then resold.                  European exports were the United
                                            Kingdom (14 percent), France (12
      The European exports of
                                            percent), and to a lesser extent Italy
floricultural products are largely intra-
                                            (6 percent). The most important
European in nature. Intra-Europe
                                            export destinations for Europe
exports of floricultural products
                                            outside European Union were
accounted for over 90 percent of total
                                            Switzerland (4 percent), Russia (3
European exports in 2005, and only
                                            percent), and the USA (3 percent).
10 percent of exports were to other
countries. However, in the recent              Colombia is the second largest
years, share of other countries in          exporter of floricultural products in the
European exports of floricultural           world with a share of around




                                                                                  61
6.5 percent (US$ 1.12 billion). It is        Among the product categories,
also the single largest exporter of     live plants, bulbs and tubers and
Carnations in the world with a total    cuttings had the larger share (50.5
world market share of 15 percent.       percent) in the total floricultural
North America is Colombia’s largest     product exports, in 2007, while cut
flower trading partner, representing    flowers and foliage made up to 49.5
85 percent of Colombian flower          percent of the total exports.
exports.

                             Table 3.1:
      TOP EXPORTING COUNTRIES (2007) OF FLORICULTURE PRODUCTS
                      IN THE WORLD BY VALUE
 Rank      Exporters                        US$ million        Share (%)
           World                                  16998            100.00
 1         Netherlands                             8561             49.66
 2         Colombia                                1120              6.50
 3         Italy                                    879              5.10
 4         Belgium                                  705              4.09
 5         Denmark                                  634              3.68
 6         Germany                                  619              3.59
 7         Kenya                                    442              2.56
 8         USA                                      420              2.43
 9         Ecuador                                  406              2.36
 10        Canada                                   327              1.90
 11        Spain                                    300              1.74
 12        Israel                                   259              1.50
 13        France                                   227              1.32
 14        Zimbabwe                                 201              1.17
 15        Costa Rica                               195              1.13
 16        India                                    141              0.82
 17        China                                    132              0.76
 18        Poland                                   116              0.67
 19        Thailand                                 109              0.64
 20        Taiwan                                   109              0.63
 21        United Kingdom                           107              0.62
 22        Ethiopia                                  89              0.51
 23        Portugal                                  73              0.42
 24        Malaysia                                  67              0.39
 25        New Zealand                               64              0.37

 SOURCE: UN Comtrade 2009




62
                           Exhibit 3.4:
        EXPORT SHARE OF VARIOUS FLORICULTURAL PRODUCTS
                AS PER HS CLASSIFICATION IN 2007




 SOURCE: UN Comtrade 2009


Cut Flowers and Foliage                       The Netherlands is the largest
The worldwide export value of cut        exporting country of cut flowers and
flowers and foliage amounted to          foliage in the world. Its share in the
US$ 8.41 billion in 2007. Europe still   world exports of cut flowers and
maintains its position as the leading    foliage stood at 49.9 percent (US$
exporter in the world with a share       4.20 billion) in the year 2007. The
of over 60 percent of total exports      Netherlands has been experiencing
of cut flowers and foliage. However,     a dip in the last few years in terms of
European exports of cut flowers and      revenue and share due to growing
foliage (US$ 5.06 billion) are largely   exports from other developing
intra-European in nature with only       countries such as Colombia,
about 11 percent exported to other       Ecuador, Kenya, Zimbabwe, Israel,
non-European countries. The share        India, Thailand and Costa Rica.
of non-European countries in the
worldwide export value of cut                Roses account for the majority
flowers was about 25 percent in          of world exports in cut flowers. In
1994, which has gone up to around        2007, Rose exports was worth US$
30 percent in 2007. Re-exports are       1.58    billion,   followed     by
very common from some of the             Chrysanthemums US$ 0.61 billion,
leading European exporting               Carnations US$ 0.46 billion and
countries such as the Netherlands        Orchids US$ 0.22 billion.
and Italy.




                                                                             63
                           Exhibit 3.5:
        SHARE OF TOP CUT FLOWER EXPORTERS IN THE WORLD
                         BY VALUE (2007)




 SOURCE: UN Comtrade 2009

Live Plants, Bulbs and Cuttings          IMPORTS
The world exports of live plants,        Globally, the main importers of
bulbs and cuttings are estimated to      floricultural products are the
be about US$ 8.58 billion in 2007.       developed countries, which in
This is more than the three times        general also have a large area of
the value of flowers exported in         flowers under production. The USA
1994 (US$ 2.8 billion).                  imports mainly from Colombia,
                                         Ecuador, and the Netherlands. The
     As in the case of cut flowers,
                                         USA and the Latin American
Europe is the leading exporter of live
                                         countries can be regarded as the
plants, bulbs and cuttings, supplying
                                         second flower trade cluster. Europe
predominantly to the European            is the first cluster, and is twice as
countries. However, the share of         large as the American cluster.
intra-European trade has been falling    Canada is also a part of this
in the recent years. European            cluster, with major part of its
countries also export to the USA,        imports coming from the USA, the
Canada, Japan, China, and Russian        Netherlands, and Colombia.
Federation. Major exporters of live
plants, bulbs and cuttings in 2007            Netherlands is not only a large
were the Netherlands, Italy, Belgium,    exporter but also a large importer of
Germany, Denmark, Canada, Spain,         floricultural products. The import
USA, and France.                         value is about 25 percent of the




64
                          Table 3.2:
       LEADING EXPORTERS OF CUT FLOWERS AND FOLIAGE
                 IN THE WORLD BY VALUE (2007)
                                                (US$ million)
Rank   Exporters                   2004     2005     2006     2007
       World                      6193.7   6573.8   7979.6   8418.1
1      Netherlands                3054.4   3287.7   3537.5   4200.1
2      Colombia                    703.4    907.5    969.9   1117.9
3      Ecuador                     342.2    370.8    436.8    404.4
4      Kenya                       231.9    246.4    316.3    390.3
5      Italy                        87.4    191.3    196.2    221.5
6      United States of America     39.4    141.2    166.1    208.3
7      Zimbabwe                     16.9     33.8    765.2    201.1
8      Belgium                      69.6    112.9    134.9    168.8
9      Denmark                      11.3    104.7    109.1    135.0
10     Israel                      145.3     98.3    102.9    128.3
11     India                        21.0     61.0    125.0    118.4
12     Germany                      45.7     89.5     95.1    102.2
13     Thailand                     58.6     69.8     76.3     82.5
14     Costa Rica                   30.0    103.7    109.1     75.4
15     Canada                       22.5     73.1     76.8     72.0
16     Ethiopia                      1.9     12.1     25.1     68.8
17     China                        16.6     36.5     55.7     67.5
18     Malaysia                     32.2     43.4     52.2     57.8
19     Spain                        80.5     69.7     58.3     55.1
20     Mexico                       20.3     33.6     62.9     43.1
21     United Kingdom               32.2     45.6     46.4     42.0
22     South Africa                 21.7     37.0     33.6     38.3
23     France                       22.9     32.0     33.3     33.9
24     Turkey                       20.2     27.8     29.9     32.7
25     Republic of Korea            36.3     32.7     26.5     31.9

SOURCE: UN Comtrade 2009




                                                                 65
                           Exhibit 3.6:
     SHARE OF LEADING EXPORTERS OF LIVE PLANTS, BULBS AND
                    CUTTINGS BY VALUE (2007)




 SOURCE: UN Comtrade 2009

export value. The Netherlands is the       Cut Flowers and Foliage
major supplier to the European             In 2007, the total value of cut
countries. Japan is part of the Asia-      flowers and foliage imported by the
Pacific flower trade cluster, with a       world was about US$ 8.41 billion.
size of around 25 percent of the           Europe has maintained its position
American cluster. Main suppliers of        as the top importer of cut flowers
cut flowers to Japan are Malaysia,         and foliage in the last decade.
Colombia, Thailand, and China.             Europe along with USA and
                                           Canada accounted for almost 90
      The world imports of floricultural   percent of worldwide import of cut
products in 2007, stood at US$ 17.0        flowers and foliage by value in
billion. Germany (US$ 2.59 billion)        2007. Other major importers of cut
was the largest importer, followed by      flowers and foliage in the year 2007
the United Kingdom (US$ 1.89 billion),     were     Russia,      Japan,     and
USA (US$ 1.81 billion), the                Singapore.
Netherlands (US$ 1.55 billion), and            Most imports generally, take
France (US$ 1.43 billion). Other           place during the winter season
major importers were Italy, Russia,        between November and May. Japan,
Belgium, Switzerland, and Japan.           South Korea, China, Hong Kong,
These ten countries accounted for          Singapore, Malaysia, and Thailand
almost 73 percent of all imports of        have been the major importers in
floriculture products in 2007.             Asia in 2007.




66
                          Table 3.3:
         LEADING EXPORTERS OF LIVE PLANTS, BULBS AND
                   CUTTINGS BY VALUE (2007)
                                                  (US$ million)
Rank   Exporters                 2004     2005     2006     2007
       World                    6649.0   6826.1   7420.6   8579.9
1      Netherlands              3324.4   3400.7   3752.5   4359.1
2      Italy                     460.6    459.1    499.8    617.5
3      Belgium                   506.9    506.7    490.8    536.3
4      Germany                   321.9    383.9    445.0    516.5
5      Denmark                   462.2    405.3    502.1    499.1
6      Canada                    277.0    249.4    245.1    254.9
7      Spain                     178.8    178.3    193.7    245.2
8      USA                       174.6    198.7    221.7    211.3
9      France                    186.3    188.5    175.4    193.5
10     Poland                     56.6     58.7     53.1     72.6
11     United Kingdom             43.9     39.8     49.3     65.4
12     China                      32.4     40.6     49.5     64.0
13     Israel                     56.6     49.8     40.6     47.9
14     Japan                      15.3     18.0     24.9     47.6
15     New Zealand                26.9     29.3     26.1     33.3
16     Portugal                   19.0     22.3     25.9     32.9
17     Austria                    17.9     21.3     20.4     32.3
18     Chile                      15.2     18.6     27.0     30.6
19     Brazil                     17.4     19.4     24.9     29.4
20     Thailand                   14.3     18.6     19.7     26.9
21     India                       5.6      7.3     19.0     22.1
22     South Africa               20.2     22.0     19.5     21.5
23     Turkey                      9.2      8.4     10.6     13.8
24     Sweden                      5.2      8.0      6.4     10.5
25     Europe Othr. Nes            1.9      4.0      3.3      8.8

SOURCE: UN Comtrade 2009




                                                               67
                        Exhibit 3.7:
SHARE OF TOP FLORICULTURE PRODUCTS IMPORTERS IN THE WORLD
                      BY VALUE (2007)




 SOURCE: UN Comtrade 2009



                        Exhibit 3.8:
 SHARE OF TOP CUT FLOWER & FOLIAGE IMPORTERS IN THE WORLD
                      BY VALUE (2007)




 SOURCE: UN Comtrade 2009




68
                           Table 3.4:
     LEADING IMPORTERS OF CUT FLOWERS AND FOLIAGE IN THE
                    WORLD BY VALUE (2007)
                                                 (US$ million)
Rank   Importers                 2004     2005     2006     2007


1      Germany                  1123.0   1262.1   1258.3   1276.1
2      United Kingdom           1026.8   1011.1   1057.5   1203.9
3      USA                      1001.0   1035.4   1117.0   1186.2
4      Netherlands               718.6    757.5    833.0    956.8
5      France                    560.4    563.4    573.3    582.1
6      Russian Federation        124.4    182.6    275.7    507.5
7      Japan                     265.5    278.1    290.1    310.8
8      Italy                     220.5    236.3    246.7    268.2
9      Belgium                   174.0    186.8    207.2    249.4
10     Switzerland               201.0    196.2    200.9    217.0
11     Austria                   110.7    123.0    123.3    164.0
12     Canada                    103.7    114.2    125.6    141.3
13     Spain                      79.8     97.8    112.1    128.1
14     Denmark                   101.9    107.8    105.5    122.3
15     Sweden                     74.8     80.8     98.7    111.3
16     Poland                     55.3     74.6     84.1    108.9
17     Norway                     46.3     54.8     59.3     74.9
18     Czech Republic             44.6     49.6     52.4     68.6
19     Ireland                    43.2     48.0     53.1     49.0
20     Greece                     33.5     31.9     34.9     40.0
21     Singapore                  27.2     29.6     33.1     38.1
22     Finland                    24.9     26.7     29.2     35.5
23     Romania                     8.0     10.3     15.5     30.5
24     Portugal                   20.3     23.5     22.8     29.8
25     Hungary                    23.2     27.1     25.2     25.7

SOURCE: UN Comtrade 2009




                                                               69
Live Plants, Bulbs and Cuttings         between 2002 and 2004 had a
The worldwide import value of           negative effect on consumption and,
plants, bulbs and cuttings stood at     subsequently, on imports of cut
US$ 8.58 billion in 2007. The           flowers. According to the trade data
imports of plants, bulbs and            from Eurostat, in 2003 and 2004,
cuttings is also mainly by European     imports decreased by 2 percent
countries, accounting for almost 80     annually. As the economy
percent of the total import value in    recovered from 2005 onwards,
2007. Other major non-European          consumption and imports of flowers
importing countries have been USA,      increased again. This resulted in a
Canada, Japan, Russia, China and        net increase in imports of 2 percent
Mexico.                                 annually between 2003 and 2007.
                                        In contrast, the volume of imports
Europe – The largest market             decreased by 2.7 percent annually.
                                        This indicates higher average
Europe is the world’s leading
                                        prices of the imported flowers and
importer of flowers and foliage, with
                                        foliage.
the European Union (EU) having the
major share in imports. The                 Germany has long been the
economic slowdown and the               largest European importer. However,
subsequent decline in purchasing        imports by Germany have decreased
power in many European countries        considerably in recent years and the

                           Exhibit 3.9:
           SHARE OF LEADING IMPORTERS OF LIVE PLANTS,
               BULBS AND CUTTINGS BY VALUE (2007)




 SOURCE: UN Comtrade 2009




70
                             Table 3.5:
     LEADING IMPORTERS OF LIVE PLANTS, BULBS AND CUTTINGS BY
                           VALUE (2007)
                                                    (US$ million)
Rank     Importers                 2004     2005     2006     2007
         World                    6649.0   6828.1   7421.7   8579.9
1        Germany                  1107.6   1232.6   1214.1   1309.4
2        France                    703.4    710.7    748.1    847.2
3        United Kingdom            550.5    592.7    603.8    687.1
4        USA                       606.2    595.5    604.5    627.2
5        Netherlands               416.5    418.5    475.7    586.5
6        Italy                     275.1    278.7    292.5    338.4
7        Belgium                   269.7    271.0    273.5    312.9
8        Switzerland               249.6    255.1    273.9    307.3
9        Austria                   193.3    206.5    201.4    283.5
10       Sweden                    181.3    179.8    198.0    231.4
11       Denmark                   155.3    157.1    177.0    226.3
12       Canada                    172.4    184.3    192.5    212.6
13       Japan                     195.5    185.7    190.3    197.9
14       Spain                     154.7    166.3    166.5    181.5
15       Russian Federation         61.2     64.0     88.2    141.5
16       Norway                     94.8    102.8    113.8    138.2
17       Poland                     85.6     86.2     95.0    130.7
18       Finland                    64.0     66.1     72.6     85.1
19       Ireland                    35.4     41.0     53.4     79.1
20       Czech Republic             48.8     46.8     52.9     72.5
21       China                      48.9     65.6     59.1     67.6
22       Republic of Korea          38.8     47.5     55.4     63.8
23       Portugal                   49.7     46.5     50.3     63.1
24       Mexico                     36.4     43.0     51.5     59.2
25       Turkey                     22.8     32.9     47.9     51.5

SOURCE: UN Comtrade 2009




                                                                 71
UK has grown to an extent                 imports, followed by the UK (24
comparable with Germany in 2007.          percent), The Netherlands (16
Together, Germany and the UK              percent) and France (11 percent).
account for nearly half of total EU
                                              Roses are the most popular
imports by value. Other important EU
                                          flowers imported in the EU. Around
importers are the Netherlands and
                                          32 percent of total cut flowers
France.
                                          imported by the EU in 2007
     Of the total EU flowers and          comprised of Roses. The
foliage imports in 2007, 75 percent       Netherlands is the leading importer
consisted of imports from other EU        (28 percent) of cut Roses in the EU,
member countries. The Netherlands         and is also a leading supplier of fresh
was the leading importer of cut           cut Roses to the EU. Other leading
flowers and foliage produced in           EU importers are Germany (22
developing countries, accounting for      percent), the UK (13 percent) and
approximately 56 percent of EU            France (11 percent). Nearly all EU
imports. A large part of Netherlands’     countries increased their imports of
imports is re-exported to other           Roses during the period 2003-2007.
European countries, in particular to      However, high growth rates were
Germany. The Netherlands is also          reported by The Netherlands (8.8
the largest producer of cut flowers in    percent), UK (13 percent), and other
the EU and its exports consist of a       medium-sized markets such as
large portion of locally grown            Sweden (14 percent) and Spain (14
products. Between 2003 and 2007,          percent). Many smaller markets
total extra-EU imports increased by       such as Romania, Hungary and
7.4 percent. Developing countries,        Finland showed even higher growth
which were the major suppliers of cut     rates.
flowers to the EU, were Kenya (4
                                               Among other cut flowers,
percent), Israel (2 percent), Colombia
                                          imports of Dianthus have decreased
and Ecuador (each 1 percent).
                                          significantly in recent decades. It is
Kenya increased its supply to EU by
                                          rapidly losing market share in many
12 percent (by value) annually
                                          EU markets. The UK is the EU’s
between 2003 and 2007.
                                          leading Dianthus importing country,
     The total imports of cut flowers     accounting for 41 percent of total
into the EU amounted to around US$        imports. Orchids are the oldest and
4.45 billion in the year 2007. Cut        most familiar tropical flower species,
flowers accounted for around 42           and are also a leading import product
percent of total floricultural products   in the flower trade. Imports of fresh
imported in the EU in 2007. Germany       cut Orchid into the EU increased by
was the leading EU importer,              3.4 percent annually on an average
accounting for 25 percent of total EU     between 2003 and 2007. The supply




72
of Orchids is dominated by 2            Developing countries are the main
countries: The Netherlands and          suppliers of tropical flowers to the
Thailand. Imports from Thailand, the    EU. However, in recent years some
world’s largest exporter of tropical    varieties are also grown in green
cut Orchids, and second largest         houses in the Netherlands,
supplier to the EU, accounted for 24    Germany, Italy and France. Some
percent of total imports by the EU.     of the tropical flowers like
The     Chrysanthemums          and     Cymbidium Orchids and Anthurium
Carnations accounted for 7 percent      have outgrown their status as niche
and 6 percent of total EU imports of    products and are now found in the
cut flowers in the year 2007.           mainstream and bulk segments.
                                            Most tropical flowers are sold
Tropical Flowers                        directly via European importers. An
The EU is also a leading importer       estimated 20-30 percent of all tropical
of tropical flowers. Major tropical     flowers sold in the EU are through
flowers imported in the EU are          the Dutch auctions. Role of the
Orchid and Anthurium. Other             auctions is markedly higher for
important products falling within the   mainstream products like Orchid
group are: Heliconias, Proteas (and     (Cymbidium, Phalaenopsis, etc), and
other Fijnbos), Zingiber, and           Anthurium than for the smaller niche
Strelitzia (birds of paradise).         products.

                        Exhibit 3.10:
 IMPORTS OF FLORICULTURAL PRODUCTS BY THE EU BY VALUE (2007)




 SOURCE: UN Comtrade 2009




                                                                            73
                              Table 3.6
           TOP TROPICAL FLOWERS SOLD AT THE DUTCH AUCTIONS
                     Turnover (Euro 000)                     Supply (stems 000)
 Product          2003     2005    2007 CAGR (%)     2003       2005    2007    CAGR (%)
                                          2003-07                                 2003-07
 Cymbidium       65,735   70,197 71,174     2.1%    32,337    33,533   34,655       1.8%
 Anthurium       42,628   40,953 45,908     1.9%    63,899    88,566   83,284       7.6%
 Strelitzia       6,428    6,691   7,005    2.2%     4,892     5,053    5,823       4.8%
 Leucadendron     4,901    5,077   4,935    0.2%    32,488    31,737   33,391       0.7%
 Phalaenopsis     2,263    2,670   3,918   18.3%     4,343     7,090   10,522      35.6%
 Leucospermum     3,143    3,099   3,573    3.4%     6,405     6,312    8,009       6.3%
 Heliconia        2,899    3,315   3,467    4.9%     2,405     2,985    3,614      12.6%
 Protea           4,399    3,810   2,968    -8.1%    3,861     3,362    3,272       -3.8%
 Curcuma          1,850    1,877   2,215    4.9%     3,367     3,728    3,495       1.0%
 Ananus            182      211     655    65.0%      238        286    1,170      97.9%
 Paphiopedilum     564      484     407     -7.0%     780        831     651        -4.1%
 Dendrobium        298      481     237     -5.1%    1,434     1,759     915        -9.0%
 Banksia           137      326     159     4.0%      524        442     250       -13.1%

 SOURCE: Federation of Dutch Flower Auctions (VBN) (2008)

Summer Flowers                               main products imported into the EU
Almost all summer flowers sold in            are Gypsophila, Hypericum and
the EU are as fillers, mixed with            Solidago.
other flowers and greenery in
bouquets. In Europe, summer                  Prepared Flowers
flowers are produced either by               About 5.0 percent of total cut flower
small traditional growers or by large        imports in the EU in 2007, were in
bulk growers. The Netherlands,               form of preserved (dried, bleached
France, Spain, Italy, Germany, and           and dyed) flowers. Between 2005
some of East-European countries,             and 2007, the imports of preserved
such as Poland and Hungary are               flowers in the EU increased on an
the major producers of summer
                                             average by 33 percent annually. In
flowers. Large quantities of summer
                                             2007, the largest EU importers of
flowers are also imported
                                             prepared cut flowers include: the
particularly during the winter
                                             UK (21 percent), France (18
months between October-May. The
                                             percent), Germany (13 percent)
two main exporters of summer
                                             and Denmark (7.6 percent).
flowers to the EU are Kenya and
Israel. Other suppliers are Ecuador,            The Netherlands was the largest
Egypt, Ethiopia, and Zimbabwe. The           supplier of preserved flowers in 2007,




74
                         Table 3.7:
  TOP 20 SUMMER FLOWER SPECIES SOLD AT THE DUTCH AUCTIONS
                                                   (Euro 000)
 Product                       2003      2005     2007    Average Annual
                                                              Change (%)
                                                                  2003-07
 Eustoma russellianum         34,594    33,703   38,047               2.5%
 Gypsophila                   36,908    32,569   31,471              -3.7%
 Hypericum                    31,018    28,650   29,743              -1.0%
 Hydrangea                    13,244    16,085   21,880              16.3%
 Paeonia                       9,485    15,269   20,552              29.2%
 Helianthus                   17,130    17,313   18,102               1.4%
 Solidago                     18,330    14,210   12,465              -8.0%
 Limonium                     14,882    12,038   11,192              -6.2%
 Ornithogalum                  6,787     7,865    9,642              10.5%
 Ranunculus                    6,008     8,086    9,201              13.3%
 Veronica                      6,290     6,908    8,474               8.7%
 Chamelaucium                  9,199     8,352    8,197              -2.7%
 Tanecetum                     5,836     6,294    7,561               7.4%
 Antirrhinum                   4,770     4,511    7,429              13.9%
 Delphinium                    6,856     6,594    7,107               0.9%
 Anemone                       6,633     6,569    7,003               1.4%
 Eryngium                      7,813     6,618    6,761              -3.4%
 Aster                         9,866     7,410    6,736              -7.9%
 Celosia                       7,517     6,278    6,288              -4.1%
 Brassica                      5,738     5,890    5,776               0.2%

 SOURCE: Federation of Dutch Flower Auctions (VBN) (2008)

accounting for about 73 percent of      cuttings in the EU increased by
total prepared cut flowers imports in   3 percent annually during the period
the EU. Re-exports have a significant   2003-07. Of the total EU imports,
share in the Netherlands’ exports of    90 percent is intra-EU and only 10
prepared flowers.                       percent is from outside EU, of
                                        which 8 percent is from developing
Live Plants, Bulbs and Cuttings         countries. Germany is the largest
The imports of live plants and plant    EU importer of plants and plant
materials such as bulbs, and            material, followed by France, The




                                                                         75
Netherlands, and the United                   Imports of rooted cuttings in the
Kingdom. In 2007, Germany                EU increased on an average by
accounted for 25 percent of total        6 percent annually to reach 86
EU imports in terms of value,            thousand tonnes between 2003 and
followed by France (14 percent),         2007. The leading EU importers of
the Netherlands (12 percent), and        rooted cuttings are the Netherlands,
the UK (10 percent). The                 UK, Denmark, France, and Germany.
Netherlands was the main supplier        The leading suppliers of rooted
of plants and plant material to the      cuttings to the EU are The
EU in 2007, accounting for 56            Netherlands, Germany, Costa Rica,
percent of total imports by EU           Guatemala, China, India, and Sri
countries. Besides the Netherlands,      Lanka. Imports of unrooted cuttings
other major exporters to the EU          by EU member countries increased
were Denmark, Germany, and               on an average by 2 percent annually.
Belgium.                                 Leading importers of unrooted
     Finished indoor plants constitute   cuttings in the EU are the Netherlands
the main imported product. Flowering     and Germany. Major suppliers of
plants account for 48 percent of the     unrooted cuttings to the EU are
imports within the group of finished     Kenya, Israel, the Netherlands and
indoor plants. Germany is the leading    China.
importer of finished flowering plants,       Imports of bulbs, tubers and
accounting for 32 percent of total       rhizomes in the EU increased on an
imports. The second largest EU           average by 28 percent annually
importer was France (17 percent),        between 2003 and 2007, amounting
followed by the United Kingdom and       to 34 thousand tonnes in 2007. The
Sweden, each accounting for              leading importers are France,
approximately 9 percent. Almost all      Germany, the Netherlands, and the
supplies of flowering plants to the EU
                                         UK. The major suppliers are
came from intra-EU countries. EU
                                         countries in the EU, which account
imports of outdoor plants increased
                                         for a market share of 83 percent.
on an average by 3.1 percent
                                         Other major suppliers are Thailand
annually between 2003 and 2007.
                                         and China.
The main outdoor plants traded in
Europe         are      Pelargonium           The Netherlands is the leading
(Geranium), Viola, Erica calluna,        exporter of cut flowers and foliage,
Fuchsia, Buxus sempervirens,             and live plants in the EU, followed at
Chamaecyparis, and Petunias.             a distance by Denmark, Belgium,
Leading suppliers of outdoor plants      Germany and Italy. While the exports
to the EU are The Netherlands, Italy,    by the Netherlands, Germany and
Germany, Belgium, Kenya, and             Italy increased during 2007, those by
China.                                   Denmark and Belgium had



76
decreased. New EU countries such         with Colombia (60 percent) and
as Slovenia, Lithuania and Latvia        Ecuador (19 percent) having the
reported steady increase in exports,     largest share. Other major suppliers
in 2007.                                 are the Netherlands, Costa Rica,
                                         Mexico, Canada, and Thailand. In
     EU exports of cut flowers and
                                         general, there has been a rise in
foliage, and live plants and cuttings    imports of floricultural products in
were mainly directed to other EU         USA in the recent years, both in
member states. Major destinations        terms of value and volume. Since the
were Germany (24 percent), France        growth rates in value and volume of
(14 percent), United Kingdom (9.1        imports are almost the same, import
percent), the Netherlands (6.3           prices have been largely stable.
percent), and Italy (5.8 percent).       Imports in general have a share of
Destinations outside the EU, where       60 percent in the domestic US
EU exported floriculture products        consumption of floricultural products.
include Switzerland, Russia, Norway      Miami International Airport receives
and the USA.                             80-90 percent of all imported cut
                                         flowers.
USA – The growing market
                                             Among major fresh cut flowers,
The US market is one of the world’s
                                         import demand for Roses and
largest consumer markets for
                                         Carnations has been stronger than
flowers. However, consumption per
                                         for Chrysanthemums in 2007.
head is relatively low in the USA;
                                         Imports of Orchids and unrooted
nevertheless, the consumer
                                         cuttings have also been growing
expenditures on cut flowers have
                                         steadily over the past few years.
potential to grow. Despite the large
                                         Thailand (60 percent), the
production value, it is the third
                                         Netherlands (24 percent), and New
largest importer of cut flowers in the
                                         Zealand (10 percent) are the leading
world. The share of cut flowers in
                                         suppliers of Orchids to USA.
total US imports of floriculture
                                         However, in the recent years,
products stood at 57.5 percent in
                                         supplies of Orchids from Malaysia
2007, which has been increasing in
                                         and Taiwan are also increasing
the recent years relative to the
                                         substantially. Costa Rica (37
share of imports of other nursery
                                         percent), Guatemala (20 percent),
and floricultural products. Since
                                         and Mexico (15 percent) are the
1989, imports of cut flowers have
                                         major suppliers of unrooted cuttings
been increasing while the domestic
                                         to the USA. In the recent years,
production has remained the same
                                         supplies of unrooted cuttings to US
or have marginally decreased.
                                         markets from Brazil and China have
   Latin American countries              been steadily increasing. For
continue to remain the largest           flowering bulbs, the Netherlands and
suppliers of cut flowers to the USA,     Canada are the major sources of


                                                                            77
                           Exhibit 3.11:
       SHARE BY VALUE OF VARIOUS FLORICULTURAL PRODUCTS
                     IMPORTED BY USA - 2007




 SOURCE: UN Comtrade 2009

imports by USA. However, the                  Value of US exports of
Netherlands, New Zealand and Chile       floricultural products was a quarter
are the largest suppliers of Tulip and   of import value of floricultural
Lily bulbs to the US markets. Canada     products in 2007. However, exports
and, to a lesser extent, Mexico are      have been increasing steadily, largely
the leading suppliers of Christmas       oriented towards Canada and
trees and other foliage products to      Mexico.
the United States.
                                         Japan – The largest Asian Market
      US imports of floriculture
                                         The market value of cut flowers in
products amounted to US$ 1.81
                                         Japan is the highest in the world.
billion in 2007. The imports of          Japan is also the fourth largest
floricultural products in the USA have   country in terms of production value
increased on an average 4 percent        of cut flowers after China, India and
annually between 2004 and 2007.          the Netherlands. Only 7 percent of
The increasing import trend for          the cut flower consumption in
ornamental crops appears to be           volume terms is imported by
focused on unrooted cuttings and cut     Japan. Japan ranks tenth in world
flowers, which are sourced largely       imports of floricultural products.
from Central and South America.          Japan’s imports of floricultural
With respect to flowering bulbs and      products represent around 3
live plants, the fast-growing new        percent of total world imports of
suppliers include Chile and China.       floricultural products. In 2007, the



78
total imports of floricultural products        Among the major flowers
in Japan stood at US$ 509 million.        imported in 2007, Chrysanthemums
The Netherlands (22 percent),             had the largest share with 27 percent,
China (13 percent), and Malaysia          followed by Orchids (23 percent), and
(12 percent) were the largest             Carnations (18 percent). Malaysia is
supplier of floricultural products to     the      largest     supplier       of
Japan. Other major suppliers are          Chrysanthemums to the Japanese
Taiwan, Colombia, Thailand, and
                                          markets. Leading suppliers of
New Zealand. These seven
                                          Orchids are Thailand, Taiwan,
countries account for 78 percent of
total imports of floricultural products   Malaysia, and New Zealand. China is
in Japan.                                 the leading supplier of foliage plants
                                          to Japan. Other major suppliers are
     Malaysia is the leading supplier     Malaysia and USA.
of cut flowers to Japan. In 2007,
Malaysia exported 21 percent of total          Japan is the fourth largest
cut flowers imported by Japan,            importer of prepared and preserved
followed by Colombia (16 percent),        flower in the world. Around 8 percent
Thailand (13 percent), China (10          of total cut flowers imported in Japan
percent), and Taiwan (6 percent). Cut     is in preserved and prepared form.
flowers imports in Japan have
increased on an average by 11                 About 60 percent of the imports
percent annually between 2003 and         of cut flowers and foliage occur
2007.                                     between August and December.
                              Exhibit 3.12
                      CUT FLOWERS IMPORT IN JAPAN




 SOURCE: UN Comtrade 2009



                                                                             79
4. TRADE CHANNELS IN FLOWER
   INDUSTRY



INTRODUCTION                              considering their distribution. The
Europe, Japan and the USA are the         manner in which they are distributed
major producers as well as buyers         across different countries is not
of cut flowers and plants. However,       similar. However, the main channels
over the last decade and half, these      and processes involved are almost
countries and regions have started        the same.
importing substantial volume of
floricultural products from the           Producers
emerging markets due to non-              Producers mainly sell their cut
availability of varieties inconsistency   flowers and plants through auctions
in supply throughout the year, and        and wholesalers. The auction
cost advantage over domestically          system is used in the Netherlands
produced products.                        and Japan. In the western markets,
                                          producers sell their products
     As flowers travel from exporters
                                          directly to the wholesale traders or
to consumers, they pass through
                                          through wholesale markets. Some
various stages and are handled by
                                          producers also sell their produce
various actors. This chapter thus,
                                          directly to the retail traders. This
discusses the main characteristics,
                                          mode avoids intermediaries/
similarities and differences of major
                                          middlemen and also they can
distribution channels.
                                          produce according to the specific
                                          needs of the buyer. However, this
THE FLOWER CHAIN
                                          method limits producers’ market
The parties that trade in cut flowers     access        and    diversification
and plants, from the producer to the      possibilities. Also they don’t enjoy
final consumer, are depicted in the       economies of scale. So far direct
flower chain diagram (Exhibit 4.1).       selling has been more common
The chain provides an insight into        among plant producers.
the various distribution channels of
floricultural products.                   Auctions
    Flowers and plants are                Auctions are sales organizations for
perishable. This characteristic forms     producers. The producers try to
an important criterion while              obtain the highest possible price for



80
                               Exhibit 4.1:
                           THE FLOWER CHAIN




their products through these sales     distributing function. The collecting
organizations. In the Netherlands,     function consists of purchasing a
these auctions are conducted by        wide range of cut flowers and
sales cooperatives and the             plants. The distributing function
producers are members of such          consists of the wholesaler catering
cooperatives. The cooperatives aim     to the needs of his clients in their
at realizing the highest possible      demand for flowers.
sales price for the affiliated
members and suppliers. The             Forms of Wholesale
suppliers of flowers also have to be   Wholesalers could be specialized
affiliated with the auctioning         in cut flowers and/or plants alone
organizations.                         and may sell only one type of
                                       flowers, such as the Rose.
Wholesale
In countries that do not have               Breeder/Wholesaler
auctions, flowers are sold to the      A breeder/wholesaler may purchase
wholesale and retail trade through     and sell or auction flowers of other
producer markets. The wholesale        producers to widen his own product
market has both collecting and         range.




                                                                         81
      Domestic wholesaler                intermediate products or end
Domestic wholesalers supply only         products for the customer. An
to the domestic wholesale and            intermediate product is one that is
retail markets.                          to be further processed into an end
                                         product for the customer. An end
     Cash and carry                      product for instance would be a
A cash and carry is a cooled sales       bouquet that a wholesaler has
outlet where both the wholesale          made suitable to be sold directly in
and retail traders may purchase cut      a shop. Some wholesalers make
flowers and plants.                      these bouquets themselves, while
                                         other wholesalers contract the
      Exporter                           same       out    to   specialized
Exporting wholesalers supply a           businesses.
wide range of flowers to foreign
florists, wholesalers, and or                 The  customers     of   the
supermarkets. A further distinction      wholesaler/exporter are florists,
can be made between wholesalers,         supermarkets      and      other
who sell ‘door-to-door’, the so called   wholesalers. Marketing channels
Flying Dutchmen, and wholesalers         used by the wholesaler/exporters
who deliver to order.                    are:

     Commission agent/importer                End-use specialist
This type of wholesaler specializes      Specializing in certain consumer
in import flowers, bouquets, painted     segments such as bouquets.
flowers and/or the sale of flowers
that were purchased at other                  Vertical level specialist
auctions.
                                         Specializing in deliveries to a
Purchase                                 specific link in the flower chain,
                                         such as supermarkets or florists.
The wholesale trade purchases its
cut flowers and plants from
                                              Geographic specialist
producers, auctions, foreign
exporters and/or commission              Sales only take place in a specific
agents. The degree to which              geographic area, such as the
wholesalers purchase imported            Netherlands or the United Kingdom.
flowers depend on the domestic
supply and on the price.                      Customer-size specialist
                                         Exporters concentrate on segments
Sales                                    that are neglected by other
Cut flowers and plants of                exporters, such as cash and carry
wholesaler/exporter may be               and garden centers.



82
    Normally, wholesalers are able to     flowers. These are then stored in
cater to retailers within a radius of     refrigerated rooms. Ordered flowers
1000 km. Customers outside this           are then collected and packaged
radius are generally importers/and or     according to customer’s needs and
wholesalers.                              placed in boxes or on water. These
                                          are then shipped to the wholesaler’s
     The relationship between the
                                          own shipment department. From the
customer and the seller is of great
                                          shipment department they are further
importance in the flower trade. Sales
                                          delivered to the customers through
in the wholesale trade take place by      own or third party transport.
telephone, fax, Internet or by personal
visits. The gross profit margins are          The trade in cut flowers and
in the range of 10-15 percent for         plants is mainly regional due to its
commissioned          agents       and    unfavourable price/volume ratio. The
approximately 15 percent for other        wholesale trade supplies to
wholesalers. Deviations in these          customers within a range of 1,500 km
estimates occur due to transport          radius by trucks.
costs and customers’ wishes.                   Transport by sea is used only for
     Trade fairs and promotional          the export of few plants.
events are commonly used by               Intercontinental deliveries are
wholesalers for publicity and market      handled by air. Due to increased
penetration. Advertisements and           intercontinental trade over the last
trade names are hardly an issue in        decade, few airlines have started
this trade.                               offering door-to-door service or have
                                          a branch of their own at important
Logistics                                 wholesale markets or auctions.
                                          There are also a few companies who
Cut flowers and plants are
                                          specialize in the transport of flowers
perishable products. The wholesale
                                          between markets and to airports.
trade bears this in mind in its
approach, furnishing and facilities.          The choice of packaging and the
The wholesalers approach is that          means of transport are extremely
cut flowers are top priority over         crucial to wholesalers in order to
plants to be sold on the day they         maintain the freshness of the flowers
are purchased. The cut flowers are        and plants and also to achieve a
kept fresh by storage in water,           favourable price/volume ratio.
cooling of storage rooms and
                                              International supplies can be
means of transport, efficient and
                                          hindered by lengthy customs
fast delivery and proper packaging.
                                          formalities, phytosanitory inspections
   The wholesaler decides the             and         other        unforeseen
purchase quantity and types of            circumstances. The solution lies in




                                                                             83
fast custom clearance, inspection,         Street vendors
and setting up of pre-shipment             They sell at very low prices with
inspection centers.                        minimum services.
     Packaging is also crucial in order
                                           Garden centers
to preserve the freshness and
optimal condition as well as to            Cut flowers and plants are part of
prevent damage. Apart from this role,      a wide range of garden products
packaging also has a promotional           sold at garden centers. The market
and presentational significance for        shares of each of these types of
sellers.                                   retailers vary across countries and
                                           markets.
Retail Trade
                                           Purchase
This is the link between the
wholesaler and the customer. The           Retailers normally purchase from
consumer can choose from four              several wholesalers. There are
types of retailers:                        exclusive contracts, but they usually
                                           relate to specific products rather
Florist                                    than an entire range of flowers and
                                           plants. The links between producer
A florist supplies cut flowers and         and retailer vary across nations,
plants to buyers. They could be            with Japan having the most number
exclusive florist or franchise florists.   of links.
Exclusive florists would generally
give excellent service but at high         Sales
prices, while the franchise florists       In Europe and Japan, the retail
would position themselves in a low-        trade uses personal sales. In USA,
value segment.                             most     sales    happen      over
                                           telephones. Telemarketing is also a
Supermarkets                               major medium of sales in many
Supermarkets are increasingly              developed countries.
becoming an important source of
retail trade. They sell at competitive     Consumers
prices and offer very little in terms      Consumers can be divided into two
of customized services. The                types:
importance of supermarkets in retail
trade of flowers has been steadily         1.   Individual households
growing in major European, North           2.   Institutional markets (include
American and Japanese markets.                  government institutions, hotels
This trend is further expected to               and other profit/non-profit
continue in future as well.                     businesses)



84
                             Exhibit 4.2:
                  CONSUMPTION PURPOSES OF FLOWER




Use                                       festive event, fall under this
Cut flowers and plants are bought         segment. The demand in this
for one’s own use, as a gift or for       segment is fairly stable. Florists,
occasions. The purchase of cut            street vendors and garden centers
flowers is concentrated around            are particularly active in this
special days such as Easter,              segment.
Valentine’s Day, Mother’s Day and
other religious/non-religious festivals   Mass segment
and cultural celebrations. Most of        Cut flowers and plants supplied by
these festivals fall during the winter    supermarkets and street vendors at
period, i.e., November to May. But        competitive prices fall under this
this is not a strict transition. Many     segment. This include standard
countries in Europe like Germany          mono-bunches and bouquets.
and the Netherlands buy flowers for
own use. While this segment was           Specialty segment
not so well developed in the USA          Customized orders are central in
and Japan in the past, since the
                                          this segment. Importance is paid to
recent years, there has been an
                                          type of flowers, colours and shape
increasing trend of buying flowers
                                          that are crucial in the order. Garden
for own use even in these two
                                          centers and florists operate in this
countries. The segments according
to the nature of cut flowers are:         segment.
                                             The mass and specialty
Basic segment                             segments normally belong to the
Cut flowers and plants bought in          ‘own-use’ segment. For the
memory of someone, or for a               consumer, the concept of quality



                                                                            85
usually means ‘freshness’ and other                   Exhibit 4.3:
subjective aspects such as type of             PRODUCT LIFE CYCLE (PLC)
flower, colour, leaf size and price.             IN OWN USE SEGMENT
Quality is not a uniform concept and
                                                 Introduction (e.g. India)
is applied flexibly. Many times
suggestions or advice by retailers                          
also play an important role in                  Growth (e.g. Japan, USA)
consumer’s choice.
                                                            
MARKET DEVELOPMENT                         Saturation (e.g. European Union)
                                                            
Computerisations
                                                         Decline
There is a growing use of online
trading and sales in the flower
                                          country and supply of the relevant
business. This is evidently making
                                          type in the world market. However,
the trade more efficient and
                                          with increasing supply and varieties,
effective. Prices and services have
                                          the PLC is getting shorter. There is
become more uniform and
                                          market for those who offer lower
transparent. This is also gradually
                                          prices and newer varieties and
reducing the number of links in
                                          products.
flower trade.
                                          Trade Channels in Europe
Product life cycle
Cut flowers and plants have a             Trade channel for cut flowers
Product Life Cycle (PLC) that             Products can follow a wide range
corresponds to various phases in          of different routes before reaching
the sale and pricing of these             the consumer in Europe. Imported
products. Depending on the degree         cut flowers and foliage follow one
of familiarity with flowers, countries,   of the following four distribution
products,         and      segments,      channels in Europe:
consumption are classified into any
one of the phases in the PLC. The         1.   Via one of the auctions: In this
                                               case, products are received,
product life cycle to ‘own use’
                                               un-packed and prepared for
segment, is depicted in Exhibit 4.3.
                                               auctioning by the handling
    The later phases are usually               department of the auction.
characterized by increased supply
                                          2.   Via an agent to the auctions:
and greater price competition.
                                               The products are received by
    PLC is also related to fashion             an agent who prepares the
trends, economic situation of a                products for auctioning.




86
3.    Via an agent to a wholesaler:    auction system, while channels
      The products are received by     numbered 3 and 4 are referred to as
      an agent, who forwards the       ‘direct trade’
      imported products (with or
      without preparation) to a             The importance of the four
      wholesaler.                      different routes in the trade channel
                                       depends strongly on the product, and
4.    Via an importing wholesaler or   the exporting and destination country.
      importer: The products arrive    In contrast to the import of majority
      directly from the logistical     of cut flowers, foliage is mostly
      handler at the importing         imported by specialised agents and
      wholesaler. After unpacking      wholesalers, and rarely passes
      and further preparation, the     through the auction system.
      products are mostly sold to
      domestic       or      foreign   Auctions
      wholesalers or retailers.
                                       The main auction centers in the
   The distribution channels           Europe are in the Netherlands and
numbered 1 and 2 pass through the      Germany. The Netherlands auctions

                           Exhibit 4.4:
     DISTRIBUTION NETWORK OF THE CUT FLOWER TRADE IN EUROPE




 SOURCE: CBI, The Netherlands


                                                                          87
are the largest in the world and               purpose of the auctions is to handle
perhaps the first of its kind. The             produce from their member growers,
auctions in the Netherlands are co-            who are obliged to submit their
operatives, owned by domestic                  whole production to the auction.
growers and open to membership                 Floricultural products submitted to
for all growers in the European                the auctions are sold either by
Union (EU), as well as to some                 means of the auction clock or
growers outside the EU. The main               through the Intermediary Office.

                                      Box 1:
                                THE AUCTION CLOCK
     Prior to auction, each batch of the products received are examined by auction
 inspectors. The flowers are sorted according to various grade classification standards.
 During the process, the flowers are checked for diseases and pests, for colour
 deviations and leaf yellowing. All the information is electronically stored and the
 products are cleared for auctioning.
      Flower trolleys move the product for sale past the auction clock. At the moment
 of the sale, the single hand of the clock descends until a prospective buyer, halts
 the hands of the clock using a button. The price then indicated is the purchase
 price.
      After the buying procedure, the products are distributed to the buyers, who
 have rented packaging space at the auction. The whole process at the auction is
 highly automated, from handling and storage of goods before auction, to
 administration of the sale and delivery to the buyer’s office, as well as packaging for
 transport in the packing room.
      Auction buyers may also make use of the Remote Buying service (in Dutch it
 is called ‘Kopen op Afstand’ or KOA). In recent years, there has been a significant
 increase in the share of the auction’s turnover via KOA. Remote buying enables
 traders to purchase products online, and traders are no longer required to be
 physically present in the auction location. It is also recognised as being used by
 the Dutch exporters to allow their larger clients to become more involved in the
 buying process.
       The Intermediary Office of the auction acts as an intermediary between seller
 and buyer on a commission basis. Its importance with respect to the sales of cut
 flowers is still relatively small, but growing. Currently, around 15 percent of the cut
 flowers imported by the auction are sold via the mediation services. The purpose of
 this facility is to scale up the market for flowers, especially in view of the increasing
 market share of large retailers, which need to have a large, stable and reliable
 supply of flowers and have the capacity to bypass the auction clock.




88
     The Netherlands wholesalers            the traditional auctions. Currently,
are the main customer bases of the          160 to 170 buyers purchase flowers
auctions. Their markets are mainly          on a regular basis via TFA’s auction
in Europe and, to a lesser extent,          system.
outside Europe. The Netherlands
                                                Growers located in Kenya,
auctions currently, handle about 80-
                                            Uganda, Tanzania, Zimbabwe and
90 percent of the Netherlands
                                            Zambia channel their products
produce and 60 percent of flowers
                                            through auctioning at the TFA on the
imported into The Netherlands. The          European market. Rosa is the main
auctions heavily influence global           product traded at TFA, representing
flower trade and serve as a price-          approximately 94 percent of total
setting institute for a large part of the   turnover. Other major products at
flower market, in particular in Europe,     TFA are Dianthus and Statice.
where they have an estimated 30 to
40 percent market share in cut              Wholesalers
flowers. However, in the recent years,
                                            There are two kinds of wholesalers
the share of the Netherlands auction
                                            in the Dutch flower chain: local
is gradually decreasing largely due
                                            wholesalers         and       export
to increase in direct sales to large
                                            wholesalers. The principal task of
retail chains, and increase in scale
                                            wholesalers is to purchase large
of the flower business in general.
                                            volume of flowers and break into
    Besides the auctions in The             smaller volumes and sell them to
Netherlands (the FloraHolland) and          their clients. Most wholesalers
the auction in Germany (Landgard),          purchase their products at auctions.
other countries also trade flowers at       Large export wholesalers tend to
auctions. Although the importance of        buy from all the important flower
these auctions for international trade      auctions, in order to buy the best
is small compared to the                    products at the best prices. Some
Netherlands auctions, some of them          (importing) wholesalers purchase
are gaining significance.                   their products directly from growers
                                            to avoid costs associated with the
Tele Flower Auction (TFA)                   auctioning.
TFA is a private auction set up by              Local wholesalers sell their
East African Flowers (EAF), to              products to domestic retailers,
focus on imports from outside               whereas the export wholesalers re-
Europe. TFA was one of the first            export their products to wholesalers
computerised auctions, without the          and retailers abroad. The fastest
physical transfer of flowers past the       growing wholesale companies are
auction clock. Supply criteria and          the one supplying to supermarkets.
commissions are comparable to               The importance of deliveries by




                                                                             89
export wholesalers to retailers abroad    of Tesco in the UK) and long-term
is also increasing in the past decade.    planning. Quality requirements by
In some European countries,               the supermarkets may not only
traditional wholesale markets still       include stem size and other visual
play a role in the distribution chain     quality characteristics, but also vase
where growers and wholesalers sell        life guarantee (like 7 days in many
their produce to local retailers, which   supermarkets), the supply of both
are mainly specialised flower shops       mono-bunches           and      mixed
and smaller garden centers.               bouquets, and certification such as
                                          GLOBALGAP (formerly known as
Retailers
                                          EUREPGAP) or Max Havelaar.
Traditional florists still dominate the
retail distribution of flowers in most    Agents
European countries. However, the
                                          Agents deliver various services,
shares of supermarkets, garden
                                          which facilitate trade between
centers, and market and street
                                          exporters and their customers.
vendors are also important. The
                                          Besides commodity handling,
importance of the supermarket, at
                                          which used to be the only service
the retail level of the distribution
                                          offered by the agents, currently,
chain, has been increasing for the
                                          agents in Europe provide wide
past few years. However, the
market share of supermarkets has          range of services such as
stabilised in some countries. In          consultancy, product and marketing
general, the retail florists offer a      information and import materials.
wide assortment of flowers,               They have become financially
whereas the assortment sold by            integrated into flower farms and
market and street vendors is              have adopted a range of
narrow. The increased involvement         competencies such as purchasing
of the supermarkets has provided          flowers in supplier countries;
substantial market growth for the         providing a wide range of marketing
industry. Supermarket sales are           information on consumption trends,
highest per capita in Ireland and         environmental programmes and
Denmark, and are also expanding           quality-related        aspects     of
in other European countries.              distribution. In addition, agents are
However, supplying to the                 diverting increasing volumes of
supermarkets has been quite               flowers to supermarket chains,
difficult for smaller traders as they     Dutch wholesalers, and to foreign
demand very strict quality                importers. These capabilities have
requirements, high performance            made agents very important to off-
logistics (99.8 percent in the case       auction clients.




90
                           Table 4.1:
  CHARACTERISTICS OF MAIN TYPES OF RETAIL CHANNEL IN EUROPE
                    Discount      Full-service       Garden Centre /   Flower
                    Supermarket   Supermarket        DIY-chain         Shops

 Assortment         Small         Small              Broad             Broad
 Purchasing         Direct from   Service            Service           Wholesale
                    grower /      provider           provider          provider
                    wholesale
 Logistics          Centralised   Decentralised      Decentralised     Centralised
 Sales              Auctions/     Day trade /        Day trade /       Day trade
                    promotions    auctions           auctions
 Chain management   Weak          Strong             Strong            Weak
 Chain players      Grower,       Grower,            Grower,           Grower,
                    wholesale     wholesale          wholesale         auction,
                                                                       wholesale
 Adding value       Limited       Limited            Important         Very limited
 Need for service   None          Much               Much              Little
 of Supplier

 Pricing            Low           Sharp              Sharp             Average

 SOURCE: LEI (2006)


     Besides the aforementioned              varies as per the product type. It is
channels, another strong development         different for finished and unfinished
in the European floricultural business       plants, flower plants and tissue
is the increasing importance of              cultured products. However, for
electronic commerce. All large               exporters of plants from the
auction houses in the Netherlands            developing countries, the main
and other European countries have            channels recognised for the
set up several services to develop           distribution of young plant material
and foster e-commerce. Several               to the European market include:
African and South American
                                             ●    Production on behalf of a
exporters, have linked their supply
                                                  European breeder/propagator;
directly to the systems of European
importers/wholesalers through                ●    Supplying via an importer of
e-commerce facilities.                            young plant material; and

Trade channels for plants                    ●    Supplying directly            to    a
                                                  European grower.
Plants and plant material
characterised by their own typical               In case of In-vitro propagation, it
trade structure in Europe also               is conducted in purpose-developed




                                                                                      91
                            Exhibit 4.5:
         DISTRIBUTION STRUCTURE OF YOUNG PLANT MATERIAL




 SOURCE: CBI, The Netherlands

laboratory.       Most      Europe’s     foliage. Two main channels are
commercial laboratories for micro-       recognised for the distribution of
propagation of plants are located in     finished plants: directly exporting
the Netherlands, France, Italy,          from grower to the wholesaler, or
Germany and Belgium. However, in         exporting from the grower via the
the recent years, a large number of      auctions to wholesalers and retailers.
production facilities are increasingly
shifted to the developing countries to   Trade Channel in USA
take advantage of low production         The market channels for cut flowers
costs. Usually, a company in a           and plants in the USA are
developing country works under           increasingly becoming complex.
licence from the European company        Most fresh cut flower production
and the propagation facilities are       moves through the traditional
concerned only with the multiplication   market channels, from growers to
process. The rest of the product         wholesalers to retail florists, and
cycle such as development of new         finally to consumers. The majority
varieties, selection, breeding, and      of preserved flowers go from
marketing, are carried out by the        processors to wholesalers to craft
European company.                        stores or retail florists, and finally
                                         to the consumer.
     The finished plants, however,
follows the same distribution channel       In the recent years, the retail
as in the case of cut flowers and        marketing of fresh cut flowers in the




92
                             Exhibit 4.6:
             DISTRIBUTION STRUCTURE OF FINISHED PLANTS




 SOURCE: CBI, The Netherlands

US has shifted from a large number         Trade Channel in Japan
of small, independent retail florists to   The Japanese distribution channel
florist chains, and mass-market            is more like the Dutch channel but
retailers with garden centers. The         without an export dimension. The
entrance of mass merchandisers             wholesalers,       including     the
changed the marketing practice in          wholesale markets and auction,
the industry. It has moved from a          smoothly coordinate (in both
product and sales orientation to a         countries) the interaction between
customer driven, market-oriented           supply and demand and ensure
approach. The mass-merchandising           competitive price formation. The
concept of strict inventory                Japanese wholesale markets are
management and the tracking of             mainly focussed on the domestic
consumer sales have begun to be            market. The major wholesale
adopted by independent retailers and       distribution routes of cut flowers in
suppliers. The cost-cutting strategies     Japan are as follows:
of the mass merchandisers have
also induced the development of            The auction system
more productive flower varieties by        A large percentage of cut flowers
breeders, increasing volume to             are sold through the traditional
reduce per stem, costs, and                auction system. With this system,
introducing       more       efficient     importers receive flowers, clear
management practices.                      customs, and send flowers to




                                                                             93
                           Exhibit 4.7:
        DISTRIBUTION CHANNELS FOR FRESH CUT FLOWERS IN
                       THE UNITED STATES




 SOURCE: U.S. International Trade Commission


                           Exhibit 4.8:
        DISTRIBUTION CHANNELS FOR PRESERVED FLOWERS IN
                       THE UNITED STATES




 SOURCE: U.S. International Trade Commission




94
auction houses on a consignment        customers, such as supermarkets,
basis. Based on their own analysis     buy flowers directly from suppliers
and experience, importers decide       or through importers. However, in
which market to send flowers so        this system opportunity is often
that it would attract the highest      limited to certain varieties that are
price. The final amount payable to     reasonably priced and ideal for
the suppliers is fixed after the       volume retailers.
auction. Auction houses take a 10
percent commission, which is           Sales to importer’s customer
designated by wholesale market law
in Japan. Only registered buyers       Some importers have been actively
                                       developing their customer base and
can buy flowers directly through the
                                       selling directly. This includes home
auction system. Small retailers,
                                       delivery sales and correspondence
flower designers, and other buyers
                                       sales operated by the importer or
tend to buy through ‘intermediate      their related companies. The
wholesalers’ who have shops within     distribution by this channel is still,
the auction houses.                    small compared to the traditional
                                       ways of distribution.
Pre-ordering and
pre-auction sales                      PRICING PRACTICES
These systems were not actively        Market prices for cut flowers are
used until the recent revision of      sensitive to demand as well as
Japan’s wholesale market law.          supply conditions. Supplies are
When pre-ordering, the importers       determined by growers’ strategic
take orders from the auction house     planting and pinching schedules as
or from their own customers before     well as the weather. When peak
shipment; and in pre-auction sales,    production does not coincide with
after shipment but before auction,     peak demand, prices fluctuate.
they sell at fixed prices that are     Some of the main holidays and
usually higher than auction prices.    festivals strongly influence the
This system gives an improved          prices. Certain physical variations
return, but suppliers have to make     such as species, varieties, lengths,
a commitment to satisfy required       color, and qualities such as
standards set by the auction house     appearance, and freshness, are
or importer.                           also important in establishing prices
                                       for cut flowers.
Direct sales to large retailers            Prices of cut flowers are largely
Mainly to avoid the auction house      controlled by the Netherlands’
commission, some large retail          auctions. There are currently about




                                                                          95
                           Exhibit 4.9:
      DISTRIBUTION CHANNEL FOR IMPORTED FLOWERS IN JAPAN




 SOURCE: Jetro

15,000 different product codes used      can be considerable. Major causes
at the Netherlands auctions. Between     of these short-term price fluctuations
2002 and 2007 the average prices of      are the public holidays and climatic
cut flowers increased from EUR 0.20      conditions. Furthermore, a clear
to EUR 0.23. This price development      seasonal price pattern exists. Prices
is attributed largely to the             are at their lowest during the summer
developments in assortments in the       period, when production in Europe is
recent years.                            at peak, and are highest in November
                                         and December.
     Owing to the nature of supply
and demand, short-term price                  On average, imported products
fluctuations occur frequently at the     sell for lower prices than products
auctions. Intra-day price fluctuations   locally produced in the Netherlands.




96
                                     Table 4.2:
                   COMPARISON OF WHOLESALE MARKETS IN JAPAN AND
                                 THE NETHERLANDS
                 Parameters            Japan                     The Netherlands
                 Shipping parties      Individuals, groups,      Individuals,
                                       unions                    companies
  Distribution




                 Shipping packages     Cardboard                 Mainly reusable
                                                                 transit buckets
                 Transport to the      Transport agents          Individual transport
                 market
                 Reloading during
                 transport             Yes                       No
                 Number                > 277                     > 7
  Market




                 Scale of largest      Ohta Market:              Aalsmeer: 70 ha
                 market                4.5 ha
                 Management body       Independent               Cooperative
                                       companies                 of growers
  Management




                 Handling fee          Higher than
                                       Dutch auctions
                 Middle trade system   Not so developed          Well established
                 Quality inspection    Standards according       Ranking by markets’
                                       to place of origin        official inspectors
                                       (markets not involved)

 SOURCE: Jetro


The main reasons are the quality of                  In case of plants and cuttings,
the Netherlands’ products, the                   trade margins vary largely depending
freshness of local produce, and their            on the type of product (young plant
wider range, which comprises a                   material, finished plants and interior
number of specialised, high-priced               scaping), the distribution channel,
products.                                        and the continuous changes in
                                                 supply and demand. In the case of
     Prices of select products and               trade agreements, the margins in the
varieties at the Netherlands auctions            plant industry also often depend on
for 2003 to 2007 are provided in Table           the level of the margins in related
4.4. Considering their market share,             sectors. For example, margins for
these prices can be considered to be             Kenyan           producers          of
indicative for price levels in Europe.           Chrysanthemum cuttings are




                                                                                        97
                             Table 4.3:
              FACTORS INFLUENCING PRODUCER PRICES OF
                     CUT FLOWERS AND FOLIAGE

 ●   Seasonality                           ●   Colour and quantity of leaf
 ●   Variety                               ●   Freedom from chemical deposits
 ●   Size of buds                              and water-marking
 ●   Stage of opening of buds              ●   Freedom from pests and diseases
 ●   Uniformity of bud-opening stage       ●   Packaging
 ●   Colour-brightness of flower           ●   Overall appearances
 ●   Bud damage
                                           ●   Temperature of flowers on arrival
 ●   Uniformity of stem length per
     bunch                                 ●   Vase life
 ●   Uniformity of bud size per bunch      ●   Regularity of consignments
 ●   Consistency within and between        ●   Buyer’s previous experience of
     consignments                              suppliers


strongly influenced by the profitability   and 25 percent of the gross sales
of Kenyan cut Rose farms, as these         depending on the country, market
are often able to switch from              segment, handling requirements and
cultivating Roses to producing young       product profile. Wholesalers add an
plants.                                    estimated 25-30 percent of their
     The marketing costs of the            purchasing costs to the prices for
auctions range from 10-12 percent          their buyers. Retailers add 50-150
for large volume or high value             percent of their purchasing costs to
products and up to 20 percent for          the prices for consumers. The
small volume or low-value plants.          margin of supermarkets and
Intermediary Office at the                 discounters is usually closer to 50
Netherlands auction plays an               percent, while the margin of florists
important role in the plant business.      is usually closer to 150 percent.
Around 63 percent of auction sales         However, margins of florists vary
in plants are channeled through the        largely depending on the country and
Intermediary        Office.      The       profile of the florist. Very trendy and
Commission charged by the                  exclusive florists in expensive
Intermediary Office is lower, which is     neighbourhoods have high margins,
around 3–5 percent. Agents and             while simpler florists at cheaper
importing wholesalers of plants in         locations have lower margins.
Europe typically operate on a              Consequently, in countries where
commission of fixed prices, which          traditional florists dominate sales,
can roughly vary between 5 percent         average margins of florists are




98
                        Table 4.4 :
   AVERAGE ANNUAL PRICES OF SELECT FRESH CUT FLOWERS AT
              NETHERLANDS AUCTIONS: 2005-2007
                                         in Euro cents, per stem
                         ‘05   ‘06   ‘07                              ‘05   ‘06   ‘07
GENERAL                                    BULB FLOWERS
Alstroemeria              15    16    16   Lilium
Anthurium (andreanum)     49    55    55    - Asiatic Group           30    36    32
Dendranthema                                - Oriental Group          61    59    57
Spray                     21    24    21    - Longiflorum Group       40    38    39
 - Euro                   22    20    24    - Longiflorum x Asiatic   32    35    33
 - Euro Sunny             22    22    22
 - Delianne White         21    24    23   SUMMER FLOWERS
 - Anastasia              24    26    23    Aster                     20    23    22
 - Reagan Sunny           21    20    22    Chamelaucium              14    16    16
Santini                   18    18    18    Eryngium                  24    27    29
Dianthus                                    Eustoma russellianum      30    32    32
                                            (single)
Standard                  16    15    16    Eustoma russellianum      31    32    33
                                              (stuffed)
 - Farida                 18    14    16    Gypsophila
Spray                     10    10    13    - Million Star            18    19    17
 - Scarlette              12    13    14    - Double Time             24    24    22
Gerbera (big budded)      24    26    24    Helianthus                26    27    28
Gerbera (mini)            14    14    13    Hypericum
Gladiolus (big budded)    14    15    16    - Pinky Flair             16    18    16
Heliconia                109   115    97    - Excellent Flair         15    13    12
Hippeastrum               83    85    78    Liatris                   15    16    15
Hydrangea                 95   102   104    Limonium sinautum         19    19    20
Orchids:                                    Ornithogalum              14    15    16
 - Phalaenopsis           38    46    37    Paeonia                   40    41    40
 - Cymbidium (big bud)   330   334   329    Phlox                     13    13    16
 - Cymbidium (sm bud)    138   148   140    Ranunculus                14    15    14
 - Paphiopedilum          58    52    63    Solidago                  13    13    13
Protea                   108   107    90    Tanacetum                 17    16    19
Rosa                                        Trachelium caeruleum      19    21    25
Large budded              26    27    28    Veronica                  14    14    17
 - Passion                33    38    38
 - Grand Prix             46    53    47   FOLIAGE
 - Akito                  19    21    22   Fatsia                     11    11    11
 - Avalanche              34    38    41   Dracena                    29    29    26
Small budded              11    12    12   Ruscus                      8     8     9
 - Red Calypso            11    14    13
 - Chelsea                12    12    12
 - Pistache               10    10    11
 - Sunny Sher             12    13    12
 - Viva!                  12    13    14
Spray                     24    29    34
 - Diadeem                 9     9     8
Strelitzia               132   128   120
Zantedeschia              49    46    46

SOURCE: VBN (2008)




                                                                                    99
expected to be low. In countries           (Europe, Japan and the USA) to
where florists have positioned             many Asian, African and Latin
themselves in the higher segments,         American countries. However, many
often in response to supermarkets          of these emerging economies have
operating in the lower segment,            not been able to reap the benefits
average margins of florists are            of their potential due to a number
generally high.                            of trade restrictions imposed on
     Price margins in this segment         their products in the form of tariff
also vary greatly depending upon the       and non-tariff barriers by the EU
distribution channel. For example, in      countries, USA, as well as Japan.
Germany the total margin is relatively
low as large share of the products         Tariff and Quotas
are sold through discounters and           European Union (EU)
other cheap stores, which sell plants
for very low prices, while in Italy, the   Import duties
margins are relatively high due to the     Approximately 80 percent of cut
fragmented distribution network.           flowers imported into the EU from
     The Dutch marketing system            developing countries is free from
and the importers in Miami play an         tariffs or enjoys a preferential tariff.
important role in pricing of cut flowers   The conventional import duty set by
and plants in the USA. Miami               the EU on cut flowers and plants
International Airport receives             is 10.9 / 12 percent. In order to
80-90 percent of all imported cut          support exports from the developing
flowers. The large purchasing power        countries, the EU operates the
of the mass merchandisers and their        Generalised System of Preferences
cost-cutting strategies coupled with       (GSP), where distinctions are made
low-priced imports, have kept fresh        in terms of lower tariffs (0-8.5
cut flower-prices low over the years.      percent) for countries depending
However, in the recent years, the          upon the group they fall as
wholesale market prices in the USA         classified below:
have been rising, despite the fact that
                                                SPGA: Countries included in the
the prices are largely dominated by
                                           special arrangements for Least
the imports.
                                           Developed Countries (LDC),
TRADE MEASURES                             following the Everything But Arms
                                           (EBA) initiative.
In the last decade, there has been
a shift in export shares for cut               SPGE: Countries included in the
flowers and plants from traditional        special arrangements to combat
leading producing countries                drug and trafficking: Andean Group




100
                          Table 4.5:
     WHOLESALE PRICES OF SELECT CUT FLOWERS AND FOLIAGE
                  (US$ PER UNIT) IN THE USA
 Cut Flowers                       2003          2004          2005      2006
  Alstroemeria                      0.30          0.31         0.35       0.22
  Carnations                        0.18          0.18         0.20       0.19
  Chrysanthemums                    1.30          1.33         1.40       1.40
  Delphinium, larkspur              0.24          0.25         0.24       0.24
  Gerbera daisy                     0.30          0.31         0.31       0.30
  Gladioli                          0.23          0.23         0.23       0.22
  Iris                              0.23          0.23         0.23       0.23
  Lilies                            0.65          0.63         0.67       0.68
  Lisianthus                        0.45          0.46         0.40       0.39
  Orchids                           0.70          0.69         0.67       0.75
  Roses                             0.38          0.40         0.39       0.38
  Snapdragons                       0.28          0.30         0.28       0.26
  Tulips                            0.34          0.35         0.33       0.34
 Foliage
 Leatherleaf ferns                  0.84          0.88         1.03       1.05


(Colombia, Venezuela, Ecuador,             Columbia, Costa Rica, Ecuador, El
Peru, Bolivia), the Central American       Salvador, Georgia, Guatemala,
Common Market (Guatemala,                  Honduras, Mongolia, Nicaragua,
Honduras, El Salvador, Nicaragua,          Panama, Peru, Sri Lanka and
Costa Rica, Panama), and Pakistan.         Venezuela) are qualified to receive
                                           additional preferences on tariffs and
   SPGL: Countries benefiting from
                                           quotas.
GSP minus the countries of the SPGA
and SPGE groups.
                                           Bilateral / Multilateral
    All SPGA and SPGE countries            Agreements
excluding Belarus and Myanmar can          Economic Partnership Agreement
export to EU countries without any         (EPA) - A new trade regime
import duty imposed on it. However,        between the EU and the ACP
relaxations are not absolute. They are
                                           countries, which was agreed in
subject to a volume restriction.
                                           December 2007, after the WTO
   Under the GSP + scheme, 14              ruling on the Cotonou Agreement
beneficiary countries (Bolivia,            causing unfair competition, allows




                                                                            101
the ACP1 and the CARIFORUM2               and others (e.g. a number of near
countries to export to EU without         East and north African countries);
any import duties.                        there are also further concessional
                                          rate for the Least Developed
    A tariff contingent applies to a
                                          Countries (LDCs) and special rates
number of fresh cut flowers from
                                          for certain Latin American countries
Algeria, Egypt, Mexico, Jordan,
                                          under Free Trade Agreements. For
Tunisia, Palestinian Administrative
                                          instance:
Areas, South Africa and Israel, which
allows them to export to the EU duty      ●    North American Free Trade
free or in terms of lower tariff.              Agreement (NAFTA) provides
However, quotas and a minimum                  free trade between Mexico,
price level restriction limit their            Canada and the USA.
exports.
                                          ●    The African Growth and
Others                                         Opportunity Act (AGOA) allows
                                               duty-free entry of goods from
The non-EU European countries like             40 countries in Sub-Saharan
Norway impose protectionist                    Africa in the USA.
measures like tariff quotas in the
summer period (June – October).           ●    The Caribbean Basin Initiative
Import license is a must for                   (CBI) Program and the Andean
importers in Switzerland and                   Trade Preference Act (ATPA)
Norway.                                        program allow free trade
                                               among the countries in the
USA                                            Central America, Caribbean
                                               and the USA, and among the
The cut flowers and plants imported
                                               Andean countries (Bolivia,
into the USA are also subject to
                                               Colombia, Ecuador, and Peru)
import duties. There are a number
                                               and the USA, respectively.
of preference programmes outlining
tariff and quotas for imports into the         Furthermore, plant quarantine
USA. In addition to the Most              regulations also apply on imports.
Favoured Nation (MFN) tariff rate,        Among other things, it also applies
there is the GSP rate applied to          on import of soil. Phytosanitory
imports from developing countries         certification is required for most cut


1     Countries in Africa, Caribbean and Pacific
2     Caribbean Group of States: Anitugua a Barbuda, Bahamas, Barbados, Belize,
      Dominica, Dominican rep, Grenada, Guyana, Jamaica, Surinam, Saint Kitts a
      Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad a Tobago




102
flowers and plants imported into the          Forestry and Fishery - MAFF),
USA. Imports into the USA are                 Japan;
allowed only through airports having      ●   Soil or plants in soil;
plant inspection services (Los            ●   Plants determined as illegal by
Angeles, Seattle, Washington,                 MAFF, Japan;
Orlando, New York, Newark, Miami          ●   Containers and wrappings
and San Francisco).                           made from illegal items.
                                              If any disease or vermin is
Japan
                                          detected during import inspection,
Japan offers relatively few tariff        the consignment is fumigated.
concessions      to    developing
countries under its GSP system.           Other Regulations
For the most part, GSP rates and          ●   Some items are registered
MFN rates are the same. There is              under the species registration
no import duty on cut flowers                 system of the Seeds and
(HS0603) imports. For plant leaves            Seedlings Law, and permission
and branches (HS0604), tariff rates           is required to import from
are 5 percent in general tariff, 3            species registration agents
percent in WTO tariff, and zero               who may charge royalties
percent in preferential tariff.               depending upon the item.
However, imports of cut flowers and
                                          ●   Importing endangered species
plants are subjected to a stringent
                                              is prohibited by the Convention
Plant Quarantine Law, which is                on International Trade in
time consuming and poses                      Endangered Species of Wild
challenges in retaining quality/              Fauna and Flora, while some
freshness of flowers.                         flowers require export permits
     A consumption tax of 5 percent           from the exporting country.
is charged at each handling stage (5
                                          Non-tariff Barriers
percent of the CIF price at the
importing stage). To obtain a             ●   Phytosanitory regulations on
quarantine certificate, the importer          country of origin;
needs to request for an import            ●   Product and packaging
inspection.                                   requirements set by the
                                              Vereniging              van
     Plant Quarantine Law prohibits
                                              Bloemenveilingen (VBN), the
the importation of the following items:
                                              Dutch     Flower   Auctions
●    Harmful animals and plants               Association, the umbrella
     (quarantine pests, as defined            organization of the Dutch
     by the Ministry of Agriculture           auctions;




                                                                         103
●     Environmental requirements         chemical crop protection. In the
      with regard to packaging and       scheme, the use of pesticides,
      waste.                             fertilizers and energy, and waste
                                         management         are    recorded.
Codes of conduct and plant               However, in recent years, the focus
property rights                          has shifted towards certification
Several codes of conduct govern          activities. For the environmental
the international flower business.       issues, four levels of qualification
Some of these codes and the plant        schemes are provided. Due to the
property rights by the Union             increasing number of supermarkets
International pour la Protection de      that demand GLOBALGAP and a
Obtentions Végétales (UPOV) are          social code, MPS developed
summarized in this Section.              additional standards like ISO-9001,
                                         social codes or trade certifications.
Phytosanitary obligations                For instance, the social code
                                         covers health, safety and terms of
The plant protection service is
                                         employment. Currently, MPS is
responsible       for    excluding,
                                         active in over 50 countries and is
combating and controlling pests and
diseases in the plant sector. For        becoming an internationally
instance, the Dutch Inspection           recognized world standard. Having
Service, which is supervised by the      a MPS certificate is important for
Plantenziektenkundig Dienst (PD),        trading through the Dutch auctions.
carries out the inspections and          However, taking part in the MPS
issue plant passports (sometimes         certification system is not without
required in the EU), and                 its obligations and is not free.
phytosanitary certificates valid for     Labels developed under MPS for
the EU. Comparable plant                 flower growers include:
inspection services are present in
most countries importing cut             ●   MPS-Florimark production:
flowers and plants. A proficiency            the TOP certificate for TOP
level in conducting the phytosanitary        companies with TOP products;
obligations is a condition for           ●   MPS-ABC:         environmental
international market entry.                  certification;

The Dutch MPS code                       ●   MPS-Socially Qualified: for
The Dutch milieu programma                   social aspects, such as safety,
sierteelt    (MPS;     Floriculture          health and working conditions;
Environmental Project) has been in       ●   MPS-GAP: certification for
operation since 1995. It was initially       compliance with demands from
aimed at reducing dependency on              the retail sector;




104
●   MPS-Quality: quality care          Standard is consistent with ILO
    certificate;                       (International Labour Organization)
●   MPS-QualiTree: proper quality      conventions. This first level certifies
    and maximum reliability;           compliance with labour rights,
                                       health and safety standards and
●   ETI: Ethical Trading Initiative;   environmental legislation. The Gold
●   ISO 9001:2000: certificate in      Standard requires stricter standards
    the field of quality care.         and farms can achieve this
                                       standard after having gained the
Labels developed under MPS for         silver standard. The audits are
flower traders include:                external and repeated every six
●   MPS - Florimark trade: the         months. The Kenya Flower Council
    TOP certificate for TOP            signed a partnership with MPS in
    companies with TOP products;       2002.
●   Florimark            TraceCert:
                                       Flower Labelling Programme,
    certificate for traceability;
                                       FLP
●   Florimark GTP (Good Trade          Flower Labelling Programme (FLP)
    Practice): quality management      is a German consumer label that
    system with supplementary          was developed as a joint initiative
    requirements for traceability      of human rights organisations, trade
    and     social/environmental       unions, flower producers and flower
    issues;
                                       retailers. FLP is based on the
●   ISO 9001:2000: certificate in      International Code of Conduct (ICC)
    the field of quality care and      for the production of cut flowers.
    chain quality.                     The objective of the Flower Label
                                       Program is to improve labor, social,
     Besides, there are also product
                                       health and safety standards for
certifications developed by MPS that
include:                               farm workers; judicious use of
                                       chemicals and pesticides on the
●   GLOBALGAP - for flowers            flowers; and to follow stringent
    and plants;                        standards      to    protect     the
●   Integral Chain Care (IKZ®);        environment. Over 60 farms
                                       worldwide are currently the
●   TNC: Tesco’s Natures Choice.       members of FLP, which include
                                       farms from Colombia, Ecuador,
The Kenya Flower Council Code          Kenya, South Africa, Tanzania,
The Kenya Flower Council code          Zimbabwe and Portugal. The
has two levels regarding labour and    combined size of these farms is
environmental standards. The Silver    more than 2,470 acres (approx.




                                                                          105
1000 hectares) with a total                  for sustainable cultivation of flowers
workforce of approximately 15,000.           and plants. It was launched in 2005
FLP is supported by the biggest              and is therefore, relatively new.
German importers (Straelener                 Currently, there are more than 700
Blumenhandel, Florimex, Omniflora)           registered      companies:        233
as well as by Dutch importer (Four
                                             producers, 117 traders/exporters
Seasons Quality). About 3 percent
                                             and 387 retailers spread across the
of total flower sales in Germany are
                                             world. The objective of FFP is to
FLP-certified flowers. The cost of
certification is classified as per the       improve social issues such as
certification seekers such as                labour conditions in the flower
traders, producers, trade unions             production, as well as improvement
and NGOs.                                    of the environmental performance.
                                             Traceability is a key requirement
Fair Flowers Fair Plants label,              and every link in the chain must
FFP                                          participate in FFP in order to
Fair Flowers Fair Plants (FFP) is            guarantee the FFP requirements,
the first international consumer label       from producer to trader to retailer.

                           Box 2:
  INTERNATIONAL CODE OF CONDUCT (ICC) FOR THE PRODUCTION OF
                        CUT FLOWERS
      In 1998, a coalition of non-governmental organisations in Switzerland, Germany,
 the Netherlands, the United Kingdom, Sweden, and the International Trade Union
 (IUF) proposed International Code of Conduct for the production of cut flowers (ICC).
     The International Code of Conduct for cut flowers is basically a social code and
 based on the ILO-conventions and UN Universal Declaration of Human Rights.
       The code pays attention to:
 1.    Freedom of association and collective bargaining
 2.    Equality of treatment
 3.    Living wages
 4.    Working hours
 5.    Health and safety
 6.    Pesticides and chemicals
 7.    Security of employment
 8.    Protection of the environment
 9.    No child labour
 10.   No forced labour




106
     The cost per year for                 improvements in the new varieties.
participating in FFP for the producers     Breeding new varieties of plants
ranges from EUR 50 to EUR 200              requires substantial investments.
depending upon the area of land            Breeders must obtain profits to
under production. However, as of           recover these costs to fund new
now, traders and retailers are not         research. UPOV, thus, ensures that
required to be certified according to      members of the Union grant the
any scheme, but must be able to            breeder the property rights on the
guarantee the traceability of the          basis of a set of clearly defined
products. Traders and retailers also       principles. To be eligible for
pay an annual fee for participating in     protection, varieties have to be
FFP.                                       1) distinct from existing commonly
                                           known varieties, 2) sufficiently
UPOV - Protection of new
                                           uniform, 3) stable, and 4) new, in the
varieties
                                           sense that they must not have been
    Consumer preferences are               commercialized prior to certain dates
continuously changing, which               established by reference to the date
requires new plant varieties. Thus,        of application for protection. Being a
there has been a continuous                member of UPOV enables access
innovation in the plant varieties in the   to new varieties and thus, the
demand-driven          and      highly     innovation and market orientation of
competitive cut-flower industry and        the supply chain. Not being a UPOV
supply chain. With that it has been        member, thus, can be a competitive
also necessary to attain cost              disadvantage. Most developed
effectiveness, quality and quantity        countries are members of UPOV.




                                                                             107
5. CASE STUDIES



     Over the past two decades           position the Dutch flower industry
global floriculture industry has         on top of the world cut flower
undergone a paradigm shift with          industry.
respect to production and trade. The
changes include, either over             Production
production or stagnancy in production    The Netherlands is by far the
in the traditional flower producing      largest cut flower producer of the
countries (that have an established      European Union (EU), accounting
flower industry), giving rise to new
                                         for nearly half of the production
markets and propelling the need for
                                         value of the EU. According to AIPH
development of newer varieties; and,
                                         (2004, 2008), in the years 2003-
shift in production to newer countries
                                         2007 the production value of flowers
that have advantages in terms of
                                         and pot plants increased by
production cost and conditions, thus
giving rise to newer trading patterns.   10 percent annually, amounting to
This       section      deals    with    EUR 3,901 million in 2007. Although
characteristics of some key              detail production figures have
established market in cut flower         shown a decline in greenhouse
production/sales, and also provides      growers and production area under
a brief overview of some of the new      glasshouse in the country, growth
players in the industry.                 in production value have indicated
                                         increase in scales and production
THE DUTCH FLOWER                         by larger companies. This
INDUSTRY – THE MOST                      increasing scales and expanded
ESTABLISHED ONE                          productivity is largely attributed to
                                         increased investments in hi-tech
The Dutch flower industry is one of
                                         production techniques.
the most established flower
industries in the world. Being an             Structure: The Netherlands has
international marketing hub for cut      some of the most efficient and
flowers, the advanced production         productive producers of the world.
methods and the innovative nature        The profitability of the Dutch
of the industry largely contribute to    floriculture sector is higher than that




108
of any other Dutch agriculture sector.   Obtentions Végétales (UPOV)
Labour, energy and planting              guidelines.
materials are the largest cost items.
                                             Besides the flowers and plants,
The firms are highly specialized on
                                         the Netherlands also manufactures
one flower variety. For Roses, big-
                                         greenhouses, robotics and computer
bud type, the average yield per ha is
                                         systems, transport systems, cold
2.5 million stems, which results in an
                                         stores, sorting and bunching
average cost price of EUR 0.21-0.25
                                         machineries as well as all other
per stem. The average auction price
                                         inputs for production such as
is around EUR 0.26 per stem. Capital
                                         hydroponics, biological plant
for investment is widely available at
                                         protection,     pesticides,    and
competitive interest rates. The
                                         equipments. The suppliers are often
mostly family-owned farms have a
                                         based in the production areas.
solvency of around 50 percent. Due
to the collateral security by the             Knowledge infrastructure: The
farmers, the risk for the banks has      knowledge structure of the Dutch
been quite moderate.                     flower industry is mainly embedded
                                         in the Wageningen University and
     Breeders and Infrastructure: The
                                         Research Centre, which has about
production of propagation material is
                                         7000 employees. Research on plant
an important part of the flower
industry. It is carried out in special   breeding, greenhouse techniques,
nurseries. The techniques vary from      post-harvest handling, growing
traditional methods like grafting and    techniques, and economics and
cuttings, to more modern producing       marketing is carried out at the
methods like tissue culture or           Centre. The research is both publicly
genetic engineering, including           and privately financed. Education at
marker technology. The Netherlands       all levels – ranging from skills for
is one of the world’s most advanced      labourers working in greenhouses, to
producers and home to many               academic researchers – is widely
international companies in this field.   available in the Netherlands and on
Some of the plant cuttings are also      a competitive level for non-agricultural
produced in developing countries.        education.
For          example,          Dutch
Chrysanthemum cuttings are               Marketing
produced in Kenya, Tanzania and          The concentration of the production
Uganda. The breeders in these            area within 50 km of the auctions
countries are compensated for their      is a very important aspect for the
investments through royalties and        strong position of the Netherlands’
licences under the (Union                production in the world. The two
International pour la Protection de      main production regions in the




                                                                             109
                             Table 5.1
          CHARACTERISTICS OF THE DUTCH FLOWER INDUSTRY
 Indicator                                      2005        2006        2007
 Growers of ornamentals (number)
 ●  under glass (ha)                            3,026       2,818      2,548
 ●  open area (ha)                              1,736        1,677     1,522
 Area under ornamentals
 ●  under glass (ha)                            3,250       3,093      3,003
 ●  open area (ha)                              2,513       2,603      2,573
 Production value (EUR million)                2,045*          —       3,901
 Average size of companies (ha)
 ●  under glass (ha)                             1.07        1.10       1.18
 ●  open area (ha)                               1.45        1.55       1.69
 Area of cut flowers (ha under glass)
 Rosa                                            780          754        652
 Dendranthema                                    598          597        566
 Lilium                                          255          232        220
 Orchids                                         214          210        240
 Gerbera                                         212          205        206
 Freesia                                         167          152        155
 Anthurium                                        95          111        120
 Alstroemeria                                     83           77         93
 Eustoma rusellianum                              50           42         40
 Dianthus                                         31           32         32
 Other                                           765          683        678

 *cut flowers only
  SOURCE: Flower Council of Holland; CBS Landbouwstatistiek (2008)

Netherlands can be found in the           growers in developing countries.
Westland region (near The Hague           Recently, however, due to gradual
and Rotterdam) and around                 decline in share in the world trade,
Aalsmeer, near the FloraHolland           Dutch growers have begun taking
auctions.        Growers       in  the    on increasing value addition
Netherlands have traditionally put        activities at the market side of the
relatively little effort into marketing   value chain by marketing and selling
their products, compared to               their products themselves to fortify




110
their position. This forward               Netherlands passes through the
integration has resulted in the            auctions, which also includes
development of clusters and                imported products. Less often, cut
cooperatives,       such       as          flowers and foliage go directly from
‘telersverenigingen’     (grower           growers to wholesalers and, in a
cooperatives). By bundling their           few cases, from wholesalers
resources and through clustering,          directly to retailers or consumers.
the cooperatives have been able to
employ their own salesmen and                   Supply from foreign growers
marketers, and to offer a more             generally follows two distinct trade
complete assortment.                       channels: the auctions and directly
                                           to wholesalers. An estimated 60-70
     In the recent years, quality has      percent of imports go to the auctions
become more important for                  and 30-40 percent goes directly to
Netherlands’ growers to distinguish        wholesalers. Compared to domestic
their products from low-priced             supplies, a relatively large share of
imports; hence, initiatives have been      foreign supply bypasses the auction
taken to increase consumer                 system to supply directly to
awareness about quality and make           wholesalers. This is largely due to
it easier for consumers to recognize
                                           the relatively high costs involved with
quality. For example, introduction of
                                           trading via the auction (15-20 percent
the ‘First Class’-label for Alstroemeria
                                           for     non-auction        members).
from a cooperative of Netherlands
                                           Nonetheless, merger of VBA (Flower
breeders and growers. The flowers
                                           Auction of Aalsmeer) and
under this label are supplied with a
                                           FloraHolland in January 2008 has
clearly visible label and vase-life
                                           been of particular significance for the
indication. According to the flower
                                           flower business in the Netherlands.
auction FloraHolland, ‘First Class’
Alstroemeria fetched notably higher        The merger has given birth to the
prices than regular Alstroemeria in        largest flower auction in the world by
the first weeks after its introduction     the name ‘FloraHolland’.
in spring 2007.                                  Besides FloraHolland and the
                                           Tele Flower Auction (TFA), two
Trade channels                             smaller (semi) independent auctions
Exhibit 5.1 presents the distribution      with a regional function, viz., Veiling
channels of cut flowers in the             Oost Nederland (VON), and Veiling
Netherlands. The auctions play a           Vleuten, have also merged, forming
dominant role in the distribution of       a cooperative, named Plantion. The
flowers in The Netherlands as in           combined turnover of the Plantion
the case of EU in general. A               auction amounts to approximately
majority (estimated 80 percent) of         EUR 92 million (compared to EUR 4
the cut flower trade in the                billion of FloraHolland).



                                                                              111
                            Exhibit 5.1:
       DISTRIBUTION CHANNEL OF FLOWERS IN THE NETHERLANDS




 * the strength of the arrows indicate the importance of the distribution channel

 SOURCE: CBI, The Netherlands

    Auctions : The Dutch flower                   import both flowers and plants; 70
auctions use a clock that starts at a             importers, which solely import cut
high price determined by the                      flowers; and 26 importers
auctioneer based on market                        specialised in foliage, in the
knowledge and the actual supply.                  Netherlands. Wholesalers (import,
The price drops until a buyer stops               export, and local) are even larger
the clock to buy a lot of flowers from            in number. About 550 wholesalers
a specific grower at the actual clock             have been trading in flowers and
price. The process restarts for the               plants and another 350 is
remaining part of the lot of that                 specialised in flowers only.
specific grower or for a lot from
                                                       The retail trade in the Netherlands
another grower. The system of the
                                                  is characterised by a wide variety of
auction enables growers to
                                                  outlets. Although their market share
specialize in some varieties.
                                                  is decreasing, florists still represent
Economies of scale are another
                                                  the leading retail channel, accounting
advantage for the grower.
                                                  for nearly half of the total Netherlands
                                                  sales of cut flowers. The sales of
Other trade channels                              flowers by supermarkets has
According to the Handbook of                      increased significantly in the past few
Flowers and Plants, 2007, there are               years, reaching a current market
approximately 56 companies, which                 share of about 15 percent.



112
                             Table 5.2:
   TURNOVER OF DUTCH AUCTIONS RELATED TO CUT FLOWERS AND
         PLANTS (including imports) 2005-2007 EUR (million)
                                       2005       2006      2007    % Change
                                                                       (07/06)
 Cut Flowers
 FloraHolland                          1,317     1,385      1,414           2.1
 VBA                                   1,041     1,070      1,083           1.2
 VON                                      24        28         31          10.7
 Vieuten                                  18        19         20           5.3
 Total                                 2,401     2,500      2,548           1.9
 Outdoor Plants
 FloraHolland                          145.0     156.2      175.7          12.5
 Aalsmeer Flower Auction (VBA)         110.1     115.5      121.9           5.5
 VON                                    18.5      13.0       13.9           6.7
 Vleuten (BVV)                           3.4       3.7        4.0           7.1
 Total                                 276.9     288.5      315.5           9.4
 Indoor Plants
 FloraHolland                          542.0     595.4      650.7           9.3
 Aalsmeer Flower Auction (VBA)         538.5     570.5      618.0           8.3
 VON                                    16.7      16.2       18.7          15.5
 Vleuten (BVV)                           4.4       4.5        4.6           3.7
 Total                                 1,101     1,186      1,292           8.9

 SOURCE: VBN (2008)

Supermarkets are particularly strong           Cash and Carry wholesale
in sales of low-priced flowers and        outlets are also represented in large
bouquets for own use, as they             numbers in The Netherlands;
purchase large quantities at low          currently, they are about 45 in
prices and offer a convenient             numbers. Sales via the Internet
opportunity for grocery shoppers to       account for only less than 1 percent
purchase          flowers      also.      of total sales; however, internet sales
Supermarkets are mainly supplied by       have been increasing in the recent
wholesalers in the Netherlands,           years.
which are specialised in supplying           Dutch consumers purchase
large retail chains.                      about 50 percent of all flowers at the




                                                                             113
florists, of which there are             levies, bucket rent and handling
approximately 3,450 in numbers in        fees. The marketing costs and the
the Netherlands. Their number has        airfreight costs sometimes inhibit
been decreasing slightly over the past   marketing of small volumes or low-
5 years, due to strong competition       value flowers traded by foreign
from other types of retail channels.     growers. Certain costs at the
To compete with other trade              auction are equal for members and
channels, florists offer larger          non-members such as lot charges,
assortments, higher quality, as also     trolley tariffs, and the costs of
flower-related products (e.g. vases)     phytosanitary inspection.
and better services. Florists are            Depending on their function in
followed by street and market sales      the chain, wholesalers add an
outlets, in terms of ranking which       estimated 10-25 percent of their
account for about a quarter of flower    purchasing costs to the prices.
sales to Dutch consumers. Street         Retailers add an estimated 75-100
and market sales are characterised       percent of their purchasing costs to
by the supply of more traditional cut    the prices for consumers. This
flowers, by stem or in bouquets, with    margin is an average of both
simple packaging and at low prices.      supermarkets and florists. The
Mono-bunches is the largest selling      percentages for florists are actually
segment by the street vendors,           higher, while those of supermarkets
followed by mixed bouquets and           tend to be lower.
compositions.
                                         Trade
Price structure                          The Netherlands is the most
The overall auction costs for            important player in the trade of cut
Netherlands’ growers, who are            flowers and foliage in the EU as
members and supply via the               well as in the world. The demand
auctions, is about 5-10 percent of       from domestic traders is, to a large
the auction-selling price, depending     extent, met by local production.
on member status, batch sizes,           Imports, however, also enable
etc. The total auction costs for         traders in the Netherlands to supply
foreign growers, who are not             a broad selection of cut flowers to
members of the auctions, may vary        its European customers throughout
from 15-20 percent of the auction-       the year. Therefore, despite its large
selling price. The marketing costs       production        capacity,        the
of auction are generally lower for       Netherlands is still the third largest
large volumes or high value product      importer of cut flowers and foliage
and higher for small volumes or          in the EU, accounting for around
low-value crops. These costs             16 percent of total imports in
include commission, promotion            the EU.



114
    The Netherlands is the leading       Netherlands are mainly comprised of
entry point for flowers and foliage      summer flowers and Rosa.
from developing countries in the EU.
The value of imports sourced from        ISRAEL FLOWER INDUSTRY –
developing countries increased by        INNOVATIVE AND ADVANCED
8.7 percent annually between 2003        Israel’s cut-flower industry is
and 2007. It sources flowers from a      regarded as one of the most
number of developing countries.          advanced flower industries in the
However, the leading supplying           world by virtue of the technologies
countries are: Kenya (37 percent),       used in production of large varieties
Ecuador (13 percent), Ethiopia (6.5      of flowers even in the desert like
percent), Colombia (5 percent),          conditions. Flowers are Israel’s
Zimbabwe (3.8 percent) and Uganda        leading export product in the
(3.8 percent). The main non-             agriculture sector(29 percent).
developing country suppliers of cut      Individual farms average less than
flowers and foliage to the               a hectare and together occupy less
Netherlands are Israel (7.4 percent)     than 2 percent of crop-producing
                                         land. These units are generally
and Italy (2.5 percent).
                                         small by international standards, but
    With respect to product groups,      highly profitable. The expertise of
the most important products              the farmers contributes to the high
imported by the Netherlands are          quality and wide variety of flowers,
Roses, Dianthus and summer               which include cut flowers such as
flowers. The Netherlands is the          Roses, Gypsophila, Carnations,
largest importer of Rosa within the      Solidago, limonium, Gerbera,
EU, and the second largest importer      Anemone and ornamental plants.
of Dianthus in the EU. Imports of        New, acclimatized varieties
                                         introduced from other countries
Gladioli, ‘preserved flowers’ and
                                         account to about 50 percent of
Orchids have also been significantly
                                         Israel’s flower exports. These
increasing, in the recent years. The
                                         varieties include “summer flowers”
Netherlands is also the second           from Europe, acclimatized so that
largest importer of foliage in the EU.   they can be harvested and exported
     The Netherlands is the largest      during Europe’s winter season, and
exporter of all product groups within    flowers indigenous to the southern
the cut flowers and foliage sector in    hemisphere.
the EU. Compared to other countries          Although the number of flower
in the EU, it is both a large exporter   growers has decreased by around
of domestic flowers and a large re-      50 percent in the last decade (from
exporter of flowers. Exports by The      5,000 to 2,700), production has risen




                                                                          115
                                   Table 5.3:
                  THE FEATURES OF THE DUTCH FLOWER AUCTIONS
 Exchange process         Features                    Strengths                  Limitations
 Search                   All trading options         All major trading          Buyers have to
                          are present at the          opportunities in one       come to the
                          auctions                    location reduce            auction and sellers
                                                      search costs               have to deliver
                                                                                 their products there
 Valuation                ‘Dutch auction’             Efficient for trading      Prices decrease
                          bid method                  small lots within a        during the day.
                                                      fixed time, up to          Fairness is
                                                      1000 transactions          accomplished by a
                                                      per hour                   sequence based
                                                                                 on a lottery
 Logistics                Auction is central hub      Very efficient transfer    Packaging costs are
                          providing logistics for     and enables                incurred multiple
                          transferring products       specialization in          times: for transport
                          between buyers and          marketing functions        to and from the
                          sellers. Costs are                                     auction. Multiple
                          shared among                                           handling of flowers
                          all buyers                                             can damage them.
 Payment and              Auction provides            Shared costs among
 settlement               systems or order            auction participants
                          tracking, payments          and economies of
                          and settlements within      scale in these systems
                          one day
 Authentication           Auction authenticates       Very efficient for large   Buyers and
                          participants and grades     volume trading. The        growers perceive
                          the quality of products.    auction reduces            quality grades as
                          It is responsible for       counterparty risk,         too broad, artificially
                          tracking and ensuring       product and related        inflating the value
                          delivery of orders to       authentication costs       of products at the
                          buyers                      for buyers and sellers     lower end of the
                                                                                 quality rating
 Communication            Simple visual and           Efficient and low cost     Requires
 and computing            computerized                for shared                 synchronous
                          communications of           communications             communications for
                          competitors, products,      infrastructure             trading and
                          price and other trading                                allocation of parties
                          information on the                                     to the limiting
                          clock                                                  trading floor.
 Product representation   The product is current      Buyers can directly        Buyers and
                          product with a simple       inspect the product        growers perceive
                          code identifying            in the auction hall        quality grades as
                          grower, and a gross                                    too broad. The high
                          level quality grade.                                   cost of visual
                                                                                 inspection
 Legitimating             Auction is responsible
                          for recording bids and
                          legitimating transactions
 Influence                The auction can             The auction, by            Auctions rules tend
                          exclude growers and         centralizing and           to favour growers
                          buyers who do not           requiring the product
                          meet various criteria       to be delivered prior
                                                      to sale, minimizes
                                                      opportunism
 Dispute resolution       The auction provides        Low dispute resolving
                          for various arbitration     costs
                          mechanisms and rules
                          for resolving problems

 SOURCE: Kambil & van Heck



116
                                        Box 3:
FLORAHOLLAND: The largest flower auction in the world
     The two large flower auction in the Netherlands, Bloemenveiling Aalsameer
and the former FloraHolland merged on 1 January 2008 into one company, under
the name FloraHolland. With this merger, FloraHolland is the market leader and
key player in the international floriculture sector. It has a network of 6 centres; for
auction and mediation: three export centers (Aalsmeer, Naaldwijk and Rijnsburg),
and three regional centers (Venlo, Bleiswijk and Eelde), and a location in Boskoop.
     FloraHolland is a cooperative organisation. Approximately 6000 grower members
are the owners of the business. They select the board and decide on policy together.
They sell all their flowers and plants via FloraHolland. The sale of flowers and plants
takes place in various ways. The most familiar way is the auction clock.

            FloraHolland in figures:
            Number of locations                                       6
            Number of auction halls                                  12
            Numbner of auction clocks                                39
            Average number of clock transactions per day       115,981
            Number of processed trolleys (2007)              8,163,819
            Surface area buildings                       2.2 min Sq. m.
            Number of suppliers                                   9,500
            Number of traders                                     5,600
            Number of employees                                   4,600
            Annual turnover                                   EUR 4 bn

Auction at FloraHolland
    5.00 pm: Nursery - The auction process begins at the nursery. Flowers and
plants are carefully packaged in ‘fust’, a container designed to safely transport the
product and see it through auction, or in flat cardboard box, or in a high plastic
bucket. All containers are stacked on a moveable cart, called a trolley. After filling in
and electronically sending the delivery form, the products are taken to the auction.
This lets the auction employees know exactly what products are on their way.
     8.00 pm: Transport - Every day trolleys with flowers and plants are transported
from nurseries to the auction. The grower delivers them personally or arranges for a
specialized transport company to do so. Products from other parts of the world
often come by air to the Netherlands and are transferred to containers and stacked
on the trolleys in the auction buildings.
     10.00 pm: Arrival -The flowers and plants arrive at the auction. The electronic
delivery form of the grower is scanned by an auction employee and is used to
cross-check the listed number of items. The grower (or transporter) then takes the
empty trolleys and containers back for the next day of delivery.
                                                                        (Continued)




                                                                                      117
      10.30 pm: Refrigerated area - As soon as the electronic delivery forms have
 been scanned, products are sent to the refrigerated area. There are various refrigerated
 areas with different temperatures, so that the best climate for each type of product
 is achieved. This maintains the quality of the flowers and plants. In the refrigerated
 areas, products are grouped by variety so that all the single varieties are together.
       4.00 am: Quality inspection - In the course of the night, the Auction Quality
 Inspectors perform random quality controls on the flowers and plants supplied. In
 the electronic delivery form, the grower indicates about the quality of his product. At
 the end of the inspection, the buyer can be assured that the quality as indicated is
 correct, as well as other product information. The flowers and plants are now ready
 for the auction clock.
       6.00 am: Clock - The clock is the beating heart of the Auction. Every day
 thousands of buyers attend the twelve auction halls of FloraHolland. They get all
 the information they need on the clock front. In a matter of hours, the auction sells
 millions of flowers and plants through tens of thousands of transactions. Speed is
 the most important factor at the auction, because the sooner the flowers or plants
 get to the buyers, the better.
     7.00 am: Distribution - Immediately after the flowers and plants are sold, they
 move to the distribution area. Here, the FloraHolland employees make sure that the
 sold products get to the customers as quickly as possible. FloraHolland trades
 over twelve billion flowers and plants every year through its efficient distribution
 system. The products arrive at the right destination and on time, every day.
      11.00 am: Auction customer - There is a wide variety of customers who buy
 at FloraHolland. Ranging from a street corner stand to the largest export company.
 Once the buyer has his/her purchase at his/her place, he/she prepares it for dispatch.
 The products are dispatched on the same day to places such as supermarkets in
 Dusseldorf, garden centers in Prague, chic specialty shops in Moscow or a pretty
 flower stands in London. Most of the transport is done by road; however, air transport
 is also sometimes used.
      4.00 pm: Consumer - The sold flowers and plants usually arrive in the shops
 on the same day or the very next day. For distant destinations transportation takes
 more time, and deliveries are made all over the world. The shop is the last link in the
 chain, before the flowers or plants reach the end users, i.e. consumers; the cycle is
 then complete. Meanwhile at the nursery the next cycle has already begun. The
 cycle runs through out the year.




118
steadily to around 1.4 billion flowers     Israel’s warmer climate. Much of this
a year. This is due to technological       industry is based on person-to-
advances and an intensive system           person contractual arrangements.
of production. About half of all the
flowers are grown in advanced,             Flower Marketing
computerized greenhouses and               The flower sector is based mainly
around 12 percent under netting. The       on direct contacts between the
latest innovation being the setting up     local growers and their regular
of the first of several “hothouse          customers abroad. About 60
parks”, where farmers grow flowers         percent of output is sold directly
in rented greenhouses with all             from the Israeli grower to flower
infrastructure and services supplied.      auctions in Western Europe.
     Ornamental plants are a rapidly       Around 20 percent is sold directly
growing industry. Over US$ 50              to buyers through the auctions, with
million worth of different ornamental      a fixed price, as a long- or short-
plants, either as rooted or un-rooted      term agreements. The remaining 20
cuttings, or in pots in various stages     percent of flower production is sold
of growth, are exported worldwide,         on wholesale markets in various
but predominantly to Europe. Most of       Western European countries, the
these plants serve as the starting         USA, and Eastern Europe. Small
materials for European house and           quantities are exported to Asian
garden plant nurseries, which may          countries, mainly Japan. Agrexco -
gain a season or even a year (and a        a semi-governmental company and
lot of energy) by having the initial       Israel’s largest exporter of fresh
stages of growth carried out in            agricultural produce, handles flower
                              Table 5.4:
                     FLOWER PRODUCTION IN ISRAEL
 Product                             Area (ha)          Yield per ha (stems)
 Wax flower                               256                   400,000
 Roses                                    214                 2,500,000
 Gypsophilia                              207                 1,000,000
 Solidago                                 198                 1,600,000
 Safari sunset                            188                   400,000
 Helantius                                137                   250,000
 Ruscus                                    89                 2,500,000
 Limonium                                  70                 1,000,000
 Gerbera                                   58                   400,000

 Total                                   2,748

 SOURCE: International Society for Horticulture Science (ISHS) October, 2005



                                                                            119
export together with some private         ●   Advanced       research     on
companies. The chain of post-                 Integrated Pest Management
harvest handling and storage of               (IPM), growing media, and their
flowers and ornamentals, from                 application in production
harvest until their arrival on the            systems;
customer’s shelf in Europe, is
                                          ●   Around 3 percent of the
strictly maintained in order to
                                              agricultural GNP of Israel is
guarantee the quality and reliability.
                                              annually invested in R&D.
Traditionally,     flowers       and
ornamentals are sent by cargo             ●   A government part funded (80
planes and regular scheduled                  percent) agricultural extension
flights. However, recently, following         service.
intensive research on quality control
measures, sea shipment has                KENYA FLOWER INDUSTRY –
become an option.                         A MAJOR DEVELOPING
                                          COUNTRY EXPORTER
Other Salient Features                    Kenya is currently, the world’s
●     Israeli flower growers are          seventh largest exporters of
      members of MPS code of              flowers. Nevertheless, the share of
      conduct;                            its production in the world is low
●     Post-harvest chain is strictly      and a home market is negligible.
      maintained to guarantee high        Although Kenya currently, accounts
      quality and reliability;            for only 2.6 percent share in world
●     Application of advanced             exports, it has exhibited the fastest
      technology in the production        growth among the top cut flower
      system such as irrigation,          exporters in the last decade. From
      fertigation, automated control      2004-2008, Kenya’s floriculture
      on climate systems, and             exports grew at a compounded
      temperatures;                       annual growth rate (CAGR) of
●     Real-time information on            around 21 percent.
      markets, flower production,
      guidelines       on       disease   Trade and Export Performance
      prevention, fertilizing, growing    The flower industry in Kenya is the
      conditions as well as on            second largest foreign exchange
      economics of production by          earner for the country. In 2007,
      use of Internet and other           Kenya exported floriculture products
      electronic media;                   worth around US$ 442 million, an
●     Use          of          advance    increase of around 23 percent over
      biotechnologies aimed at a          2006. According to the Kenya
      state-of-art propagation;           Flower Council (KFC), Kenya




120
exported around 90,000 tons of             African country exporters. However,
flowers in the year 2007.                  Ethiopia’s flower exports have
                                           exhibited the highest growth in the
    Kenya’s cut flowers cluster is
                                           European markets between 2004
dominant among other sub-Saharan
                                           and 2007, growing at about a CAGR
Africa flower exporters. In 2007,
                                           of 238 percent.
Kenya’s flower exports was about 1.5
times greater than the combined
                                           Production
exports of its six competitors in the
Sub-Saharan Africa. Kenya has the          The flower production has been
largest market share in European           growing since the mid 1980s; it
flower imports (51 percent)                reached a peak in mid 1990s and
compared to other Sub Saharan              has accelerated ever since. For the

                        Table 5.5:
  MAJOR FLOWER EXPORTERS TO EUROPE IN SUB-SAHARAN AFRICA
Country                     2007 Value        2007 Europe        CAGR (%)
                           (US$ million)    Market Share (%)     2004-2007
 Kenya                          364                 51               12
 Zimbabwe                       123                 17              103
 Ethiopia                        81                 11              238
 South Africa                    45                  6                3
 Uganda                          34                  5                5
 Zambia                          26                  4               26
 United Republic                 23                  3               21
    of Tanzania

 SOURCE: Calculated from UNComtrade 2009 Data


                             Table 5.6:
           KEY FEATURES OF THE KENYAN FLOWER INDUSTRY
      Indicators
 Acreage of flowers (ha)                                    2,180 (year 2003)
 Number of growers                                            140 (year 2003)
 Exports (US$ 000)                                                    442,150
 Market share (%)
    The Netherlands                                                        52
    UK                                                                     20
    Germany                                                                 6
    Japan                                                                 1.4
    France                                                                1.4

 SOURCE: UNComtrade 2009 and AIPH / Union Fleurs 2008



                                                                           121
past two decades, Kenya has had               The total cost of flowers from
an annual growth rate of 13 percent       farm to market for a medium scale
in flower production in volume and        flower farm in Kenya could be
15 percent in production value.           summarized as given in the box
                                          below.
     The different climate zones in
Kenya favour flower growing. The               Post-harvest operations are
main cut-flower areas are located in      largely influenced by the major
the north, and northwest of Nairobi.      European buyers, especially the UK
In Kenya, 70 percent of the               supermarkets. Most large-scale
production value is accounted by          farmers      have     invested      in
Roses, followed by Hypercum,              sophisticated post harvest cold
Lisianthus and standard Carnations,       supply-chain infrastructure including
each with a share of around 2             refrigerated trucks. About 90 percent
percent. Roses are the major export       of Kenya’s flowers are handled by
product. Nairobi airport is important     specialized airfreight forwarders,
for the country’s export logistics. The   three of which are owned or are linked
farm size ranges from peasant             to top flower producers. The cargo
farmers of up to 5 ha to large farms      is booked for clearance at the Nairobi
of more than 250 ha. The labour           airport a week in advance. Transport
force on the farms of 20 to over 100
                                          is a large component in the unit cost
ha ranges from 250 to 6000 people.
                                          of flowers in Kenya. The transport
The 40 largest producers account for
                                          cost averages around one US cent
nearly 75 percent of the total exports.
                                          per stem.
About 4,000-5,000 small and
medium scale producers account for            In recent years, the sector has
only 5-13 percent of total flower         benefited from a surge in foreign
export production.                        investment, particularly, from Israel

 Indicators                                             Cost expressed in %
 Production                                             29.1
 Post-harvest handling                                  5.8
 Transport and handling                                 65.1
                                                        Cost in Actuals
 Delivery to market                                     Kshs 9.96
 Auction price                                          Kshs 11.25
 Gross margin                                           Kshs 1.29
 Gross margin (%)                                       13

 SOURCE: P.M. Mitiambo (2008) Eastern and South African Management Institute
 (ESAMI)




122
and Holland, and many of the           of scale to invest in sophisticated
dominant flower forms are owned        post-harvest cold-supply chain
and managed by expatriates.            infrastructure including refrigerated
According to World Bank estimates,     trucks for transportation to airport.
the total investment into the Kenyan   The large-scale exporters also have
flower industry from 2002 to 2004      a logistic infrastructure for direct
was US$ 200 - 300 million. The         distribution to the mass-market
continued investment in the sector     retailers in the international
has further upgraded the cluster’s     markets.
technology, production skills and           On the other hand, small-scale
market know-how.                       growers have an ad-hoc value chain,
                                       which relies heavily on the Dutch
Value Chain                            auction system in Holland.
The Kenyan flower value chain can      Cooperative and informal merchants
be classified into two: large scale    sometimes act as middlemen
flower producers and small-scale       aggregating volume for transport to
flower growers. The large-scale        market. They use the same four
flower producers are vertically        leading freight forwarders and for
integrated across the entire value     many of them, this is their last
chain with some large-scale            interface in the chain. These flowers
growers who breed their own plant      are then exported to Holland where
stock. Large-scale estates also        wholesalers and some retailers
leverage their size and economies      purchase the cut flowers at the

                             Exhibit 5.2:
              KENYA’S CUT FLOWER CLUSTER VALUE CHAIN




 SOURCE: Kusi Hornberger etal., May 2007


                                                                        123
Dutch auction. This distribution            management. The Kenya Flower
channel however has the lowest              Council (KFC) is the dominant trade
value per volume exported from              association working in collaboration
Kenya.                                      with other regional growers
                                            associations. Notably the KFC has
      Kenya’s cut flower cluster has a
                                            three quality certifications (silver, gold
relatively developed cluster map,
                                            and     platinum),        which        are
which include the input suppliers,
                                            benchmarked to European import
breeders, post-harvest handlers and
                                            standards. A detail cluster map of the
transporters. The cut flower cluster
                                            Kenyan flower industry and its
also benefited from the presence of
                                            strengths and weaknesses are
three related activities viz.,
                                            provided in Exhibits 5.3 and 5.4.
agriculture, horticulture and tourism.
The agriculture and horticulture                 There are two key regulatory
clusters provides critical mass for         bodies in Kenya: Horticultural Crops
training and research institutions in       Development Authority (HCDA);
agri-business. In addition, the             Kenya Plant Health Inspectorate
horticulture cluster is particularly        Service (KEPHIS). The most
important as most Kenyan flower             important function of the HCDA is
farmers also grow fruits and                licensing. All farmers wishing to
vegetables for export. This provides        engage in horticultural exports must
critical export volume mass as fruits       be licensed with the HCDA. KEPHIS
and vegetables are exported through         plays the role of domestic authority
the same distribution channel. The          on phytosanitary issues. KEPHIS
tourism cluster played an important         regulations extend to all plant exorts
role in transportation of the flowers       and imports including seeds,
to the export markets.                      cuttings, fresh fruits and flowers.
     Further, the cut flower cluster has    However, KEPHIS has not been
numerous          institutions        for   accredited by internationally
collaboration (IFCs) that include           recognized certification authorities.
NGOs, research institutions, trade
associations and government                 Trade Agreements
agencies. The Kenya Agricultural            Kenya is a party to several regional
Research Institute (KARI) has               and bilateral trade agreements,
productivity research programs in           most prominently including the
horticultural and industrial crops as       Common Market for Eastern and
well as other food crops, livestock,        Southern Africa (COMESA), the
land and water management, while            East African Community (EAC), the
African Insect Science for Food and         African Growth and Opportunity Act
Health (ICIPE) develops methods for         (AGOA), and the ACP/EU Cotonou
managing horticultural crops                Partnership     Agreement.       Of
including pest and disease                  particular importance for Kenya’s



124
           Exhibits 5.3:
KENYA’S CUT FLOWER CLUSTER MAP




            Exhibit 5.4:
KENYA CUT-FLOWER CLUSTER DIAMOND




                                   125
floriculture is the ACP/EU              provides congenial trading platform
agreement, which established            for the East African Countries
guidelines for inter-regional trade     namely Kenya, Tanzania, Uganda
between the EU and the group of         and Rwanda. The Act includes
African Caribbean and Pacific           provisions for elimination of internal
(ACP) nations. Under the                tariffs and other charges of
agreement, the EU offers duty free      equivalent effect; elimination of non-
access to ACP countries for             tariff barrier; establishment of a
products including flowers from the     common external tariff; Rules of
ESA region. This trade preference       Origin; dumping, subsidies and
was the driving force behind the        countervailing duties; security and
development and growth of the           other restrictions to trade;
floriculture sector in ESA countries.   competition; duty drawback; refund
However, this preferential treatment    and remission of duties and taxes;
expired on 2008, after which,           customs        co-operation;       re-
Kenya as a non-LDC is subject to        exportation of goods; and
the Generalized System of               simplification and harmonization of
Preferences (GSP), which specifies      trade       documentation         and
a 5% tariff.                            procedures.

Investment Promotion                    Other Salient Features
Kenya competes with almost all of       Kenya’s flower industry:
its neighbours as a destination for
                                        ●   Matured industry and has
investment in floriculture. Kenya has
                                            achieved a critical mass for
responded with several initiatives to
                                            technical learning, market
maintain attractiveness that apply to
                                            information and supply of
new investments in floriculture.
                                            equipment, advisory services
These include (i) incentives to allow
                                            and logistics. However, much
manufacturers to import plant,
                                            knowledge is hired from foreign
machinery, equipment and raw
                                            consultants. Innovative cultivars
materials duty free, for exclusive
                                            have to be imported.
use in the manufacture of goods for
export; (ii) investments in Export      ●   Meets the international
Processing Zones (EPZ) are                  environmental standards of
granted ten year tax holiday, VAT           Good Agricultural Practices
exemption, and ten year withholding         and applies social codes. It is
tax holidays on repatriated                 one of the most codified flower
dividends; (iii) East African               industries in the world.
Community (EAC) Customs                 ●   Operates in a weak domestic
Management Act and the Tax                  market.      The      business
Remissions for Exports Office               confidence among the large
(TREO) (EPZ & KRA 2007), which              growers is high.



126
●   Export oriented in an               Production
    increasingly       competitive      Currently, there are over 70 farms
    international market. However,      in Ethiopia involved with flower
    the     competitive      power      production and trade. In 2007, the
    worldwide       is   not    yet     total sum of hectares of land held
    determined. Mostly it is            by floriculture investors reached
    compared with the emerging          almost 2000, of which about 700
    flower industries in other sub-     hectares were covered under
    Saharan countries.                  greenhouse. The sector created
●   Largely depends on the Dutch        over      50,000      employment
    marketing institutions. The         (permanent and temporary), and
    transaction costs seem to be        has become one of top five foreign
    higher than in the Netherlands.     exchange earning commodities in
    According to the experts in the     the country. In the past 7 years
    industry, Kenyan flower             Ethiopia became the second largest
    industry is relatively vulnerable   flower exporter in Africa (next to
    and in a global commodity           Kenya) to the EU market.
    chain, other countries can                The growth was partly due to
    easily substitute Kenyan flower     initiatives taken by the government to
    suppliers.
                                        promote the sector, coupled with the
                                        entrepreneurial interest shown by the
ETHIOPIA FLOWER INDUSTRY
                                        private sector. Some of the
– THE FASTEST GROWING IN
                                        government initiatives are: five-year
THE WORLD                               tax holiday, duty-free machinery
The floriculture industry of Ethiopia   imports, easy access to bank loan
is the fastest growing flower           and up to 70 percent bank funding,
industry in the sub-Saharan Africa.     cheap and easy acquisition of leased
A modern, export oriented and           government land.
private sector based floriculture
industry began to emerge in                  The majority of the flower farms
Ethiopia in the late 1990s. The         in Ethiopia are located in about 50 km
pioneer, Golden Rose, the largest       radius of the capital city, Addis Ababa.
floriculture      company        was    The largest cluster Holeta accounts
established in 1999, which started      for 31.3 percent of the total number
exporting in 2000. Between 2000         of farms. The second and third
and 2001, other two farms namely        largest clusters are Sebeta and
Summit Agro industry and Enyi           Debre Zeit accounting for 15.6
Ethio Rose were established. The        percent and 10.9 percent flower
flower industry took-off in 2005 and    farms respectively. Most of the flower
continues to grow rapidly.              farms are located at altitude above




                                                                            127
2000 meters above sea level. This              percent is being exported. In
includes cluster areas such as,                Ethiopia all the producers are
Sebeta, Sendafa, Holeta and                    exporters. Europe is the main
Menagesha. Such a higher altitude              market for the Ethiopian exporters,
enables to produce high quality                followed at a distant by Japan. In
Roses (long stem and large buds)               addition to the European and
that command higher prices in the              Japanese markets, Ethiopian
world market.                                  exporters also exports around 15
     About 40 percent of the farms are         percent of their produce to the
fully foreign owned, 23 percent are            Middle East countries during the
joint ventures and 36 percent are fully        summer time when European
domestic owned. Holland, India and             demand declines. Almost 100
Israel takes the lead with about 34            percent of the flower exports from
percent, 22 percent, and 12 percent            Ethiopia are shipped by air, of which
of the total number of foreign owned           about 87 percent are transported by
farms (fully or joint venture) in Kenya.       the national carrier, the Ethiopian
Around 80 percent of the farms                 Airlines.
mainly involved with Rose production,              Export sales are usually made in
13 percent are mainly engaged in               two ways; direct sales and auction
summer flower production, and only             (mainly through Dutch auction). The
7 percent are engaged in cuttings and          major outlet for the Ethiopian flower
other plant materials.                         exporters is the Dutch auction. For
                                               example, in 2007, 55 percent of the
Trade and market channels                      firms exported over 70 percent of
Domestic market for cut flower in              their product through the Dutch
the country is negligible; about 97            auction. The percentage of firms

                               Table 5.7:
             CHARACTERISTICS OF ETHIOPIAN FLOWER INDUSTRY
 Year    Number of    Number of   Total land     Flower      Exported    Export
         farms in     permanent   owned by       under       stems in    revenue
         production   workers     the farms      covered     (million)   (millions US$)
                                  (ha)           land (ha)
 2000    1            115         40             7           0.174       0.05
 2002    2            —           —              —-          —           —
 2003    5            —           —-             —           —           —
 2004    10           —           —              —           —           —
 2005    30           10,244      1081.5         319.2       243.62      57.04
 2006    51           16,604      1635.9         586.5       488.32      100.77
 2007    64           21,785      1804.4         648.5       915.0       168.04

 SOURCE: Gebreeyesus & Sonobe, 2009




128
mainly exporting through the Dutch        of companies to which royalties is
auction has been almost the same          paid is also higher in the direct sales.
for the past three years. However,        About 48 percent of firms involved in
there are few firms who also export       direct sales have their own
through other auctions such as,           propagation facilities, while only 18
Japan and Germany. In 2007, around        percent of firms involved in the
6 percent of the firms have reportedly    auction channel have their own
exported around 20 percent of their       propagation facility.
products through Japan auction.
                                              There is not much difference
    The second largest channel for        between the cost structure, with
Ethiopian flower exporters is direct      respect to production inputs,
sales to supermarkets and other           packaging, transportation and
retailers. In 2007, around 39 percent     advice, amongst the two marketing
of Ethiopian flower exporters             channels, viz., auction and direct
exported over 70 percent of their         sales. However, the share of cost of
product through direct sales. In          chemicals and fertilizers for farms in
Ethiopia, the farms that are involved     case of direct sales channels is
mainly in direct sales are larger, both   marginally higher (9.7 percent)
in terms of area covered and              compared to those using auctions
employment than those farms that          (7 percent).    The       marketing
export mainly through auction. The        commissions and agents fee is also
number of varieties produced and          marginally higher in auction market
exported by the farms with direct         than direct sales, 7 percent and
marketing channels are also higher.       3 percent of total export revenue,
Consequently, the average number          respectively.

                                Table 5.8:
              ETHIOPIAN FLOWER INDUSTRY: COST ORIENTATION
                     AS PERCENTAGE OF TOTAL SALES
 Indicators                                            Cost (% of total sales)
 Planting material                                                6.0
 Chemicals and fertilizers                                        7.6
 Packaging cost                                                   2.0
 Transportation                                                  21.6
 Technical advice                                                 1.0
 Commission & agent’s fee                                         4.8

 SOURCE: Gebreeyesus & Sonobe, 2009




                                                                              129
                            Table 5.9:
              AVERAGE PRICE OF ETHIOPIAN CUT FLOWER
 Year                                                      Price (USD/stem)
 2000                                                                    0.23
 2001                                                                    0.16
 2002                                                                    0.18
 2003                                                                    0.18
 2004                                                                    0.16
 2005                                                                    0.15
 2006                                                                    0.17

 SOURCE: Ethiopian Customs Authority (ECA) 2008

Ethiopian Rose Supply Chain:                 The Rose supply chain involves
Production to Market                    several steps from production to
                                        export. In the production component,
Given the diversity of climatic
                                        the process begins with selection and
conditions and altitudes in Ethiopia,
                                        trials of varieties, propagation of
three basic types of Rose varieties
                                        varieties, planting cuttings in
are being grown. These are
                                        greenhouse, application of chemical
sweetheart (30-40 cm stems and
                                        inputs and irrigation, disease control,
small buds), intermediates (40-60       and harvesting in the greenhouse.
cm in stem length) and tea hybrids      In the logistics / post-harvest
(60-80 cm stems). The majority of       component, there is initial cooling at
Ethiopian production falls into the     4 degrees centigrade followed by
intermediates, with considerable        grading, sorting, and bunching; a
variation between farms. The yields     second cooling at 2 degrees
per square meter also vary; for tea     centigrade, followed by packing in
hybrids yield range from 120 to 140     specialized cartons; loading to
stems per square meter and for          refrigerated truck; customs clearance;
intermediates the yield range from      airport handling; and air shipment. In
140 to 180 stems per square             the marketing component, there is
meter. Varieties are selected on the    identification and negotiation with
basis of advice from expatriate         buyers,        searching       market
technical experts and from the          information, and ensuring completion
seed companies themselves. All the      of sale (Exhibit 5.5). The production
farms conduct their own varietal        is     year-round       and     highly
trials and handle their own plant       industrialized, and the post-harvest
disease control.                        processing is tightly coordinated with




130
a three-day period from harvest to        the highly capital intensive nature of
arrival in destination markets abroad.    production and processing, Rose
                                          farming is not a smallholder activity
     The supply chain is process-
                                          in Ethiopia.
intensive in both the pre- and post-
harvest phases, including strict              Logistics is a major source of
requirements         on    chemical       competitive advantage or weakness.
application and timing, temperature       Product quality is much dependent
and humidity control, irrigation,         on the pre-harvest processes.
cooling temperature and length,           Ethiopia’s Rose industry has been
packing materials, and quality            targeting the high-end of the
differentiation and sorting. It is also   European market, where Kenya is its
characterized by an extremely tightly     competitor. Prices are determined
controlled time dimension of the          based on demand; flowers fetch
logistics process, given the product      higher prices during the peak
attributes desired, and the fragility     seasons of Christmas, Easter and
and perishability of the Roses. Given     Valentine days.
                           Exhibit 5.5:
       VERTICALLY INTEGRATED ROSE SUPPLY CHAIN IN ETHIOPIA




                                                                            131
Salient features                         development over the last few
Ethiopian flower industry:               decades. According to China’s
●    Is a modern export-oriented,        national statistics, in 1985, the
     industry;                           nationwide ornamental plants
                                         growing area was only about 3,000
●     Has been benefiting from           ha corresponding to a total output
      government support at large.       value of 5.3 billion RMB (US$ 0.7
      Government of Ethiopia’s           billion); this has crossed over to
      promotional initiatives towards    700,000 ha with a total output value
      the sub-sector has been            of nearly 50 billion RMB.
      meeting          with       the
      entrepreneurial interest in the         As a result, China has reportedly
      private sector, which has          become the world’s largest
      resulted in substantial foreign    ornamental plants producing country
      investments in the industry;       in terms of land area, constituting
                                         one-third of world’s growing area.
●     Unlike its competitors–Kenya
      or Zimbabwe–Ethiopia was               Two decades ago, most of the
      never been colonised and thus,     ornamental plants in China were
      resistance      to    foreign      either produced by small specialist
      investment in new flower farms     growers or by fruit and vegetable
      has been minimal;                  farmers who allocated some of their
●     Has a competitive advantage        land to ornamentals. The ornamental
      in terms of cheap labor (50 to     products were generally sold directly
      60 percent lower than its          to consumers at street markets.
      nearest competitor, Kenya),        However, with the introduction of
      favorable weather condition        several     initiatives    towards
      and a saving of 30 percent on      improvements in agricultural policy
      freight cost.                      and structure, taken by the
                                         Government of China, flower
●     Operates in segments similar
                                         growers in China have benefited
      to that of its nearest
                                         from several internal developments,
      competitor               Kenya.
                                         such as advanced technologies and
      Nevertheless, reaching the top
                                         horticultural skills, and modern
      slot in Africa in the near terms
                                         greenhouse production. In synchrony
      may be a challenge, given its
                                         with improvements in production
      weak supply chain.
                                         systems, the post-farm gate trade in
                                         ornamental plants became better
CHINA’S ORNAMENTAL
                                         organized. For instance, central
PLANTS INDUSTRY –                        flower markets, with defined quality
HIGH AMBITIONS                           standard, were established for flower
The ornamentals plants industry in       trading, which to a large extent
China has experienced tremendous         replaced single private wholesale



132
flower shops. Furthermore, in the        partly because of people’s
main cities of ornamental plants         preference for plants and bonsai
industry (viz., Kunming, Guangzhou,      due to their longer shelf life.
Shanghai, and Beijing), exhibitions      However, in the recent years, cut
have become annual events. The           flowers account for 33 percent of
Kunming International Flora Auction      total ornamental plants output value.
(KIFA) started operations in 2003 with   Other categories include pot plants
the support from the erstwhile           (54     percent);    grass     (turf)
Aalsmeer Flower Auction (VBA) in the     (5 percent), bulb (3 percent),
Netherlands.                             nursery stock (3 percent), and
                                         seeds (2 percent). The top ten cut
Increased domestic and                   flowers in China, on the basis of
international marketing                  value and in descending order, are
                                         Rose, Carnation, Chrysanthemum,
Improvements in living standards in
                                         Gladiolus, Calla, Gypsophila,
China contributed to the increased
                                         Anthurium, Gerbera, Lily, and
ornamental plants consumption in
                                         Limonium.
the domestic market. The
consumption has been increasing              With regard to international
by around 20 percent every year.         markets, China’s entry into the WTO
Nowadays, using ornamental plants        has facilitated increased co-operation
as gifts or for decoration on            with international counterparts. In
traditional (e.g., Chinese New Year)     addition to becoming one of the major
or non-traditional (e.g., Valentine’s    producers, China is set to become
Day) occasions is increasingly           the worlds major consumer market
becoming popular, especially in the      for ornamental products. To meet
urban areas. In the past, domestic       current domestic market demand,
demand for cut flowers was small,        China imports about 90 percent, 98

                           Exhibit 5.6:
       DEVELOPMENT IN CHINA’S ORNAMENTALS MARKETING AND
                      PRODUCTION SYSTEMS




                                                                           133
percent, 60 percent of its             ornamental plants, increasing from
requirements of flower seeds, bulbs,   US$ 25.4 million in 1990 to US$ 131.5
and flower seedlings, respectively.    million in 2007. The top five provinces
These imports are mainly from the      for ornamental plants exports in
Netherlands, Korea, Belgium, Israel,   China are Guangdong, Shanghai,
and Japan. In addition, the Chinese    Yunnan, Fujian, and Zhejiang.
government has issued a series of      Ornamental plants from these
policy interventions to encourage      provinces are exported to more than
ornamental plants export, which        80 countries, but mostly to Japan, the
have resulted in the export value of   Netherlands, the USA, and Korea.
                           Exhibit 5.7:
        GROWTH OF CHINA’S TOTAL ANNUAL EXPORT VALUE OF
                   ORNAMENTALS 1990 TO 2007




 SOURCE: UN Comtrade 2009, and www.agri.gov.cn

                        Exhibit 5.8:
  EXPORT SHARE OF ORNAMENTAL PLANTS VARIETIES IN CHINA 2007




 SOURCE: UN Comtrade 2009



134
Yunnan – China’s largest flower          domestically-built steel frame
producing province                       greenhouses. Around 30 hectares of
Yunnan is the most important             automatically controlled irrigation
province in China in the field of        systems and 200 hectares of semi-
flower growing. Yunnan province          automatic or simple drip irrigation
accounts for 50 percent of the           systems were installed. Carnation,
nation’s total cut flower production.    Lily and Rose are the most popular
The size of the planting area for cut    varieties among the growers in
flowers in Yunnan province               Yunnan.
amounts to over 4000 hectares.                Yunnan’s cut flower sales
Apart from sales in the domestic         volume accounts for more than 50
market, Yunnan also exports its          percent of the national total. Around
flowers to a number of countries         80 percent of the production volume
such as Japan, Korea, Hong Kong,         is sold to over 70 large and medium-
Thailand and Singapore.                  sized cities within China, while
     Around 2,500 kinds of rare          between around 20 percent is
ornamental flowers and uncommon          exported to Japan, Thailand,
plants have been identified in Yunnan.   Singapore, South Korea, Taiwan, and
The districts of Lijiang and Zhongdian   Hong Kong.
in the northwestern part of Yunnan           Presently, there are two main
province are the main production         marketing channels for Yunnan
bases for flower bulbs and cut           flowers. The first option is through the
flowers. The districts of Kunming and    Dounan wholesale flower market,
Yuxi in the central part of Yunnan are   and second option is for the
the core production areas for cut        enterprises to sell their products
flowers and subtropical cut flowers.     directly to the client. The Yunnan cut
The districts of Jinhong, Yuanjiang      flower trading is centralized in the
and Hekou in the Southern part of        Kunming area. Around 80 percent of
Yunnan Province mainly produces          the total output is handled at the
tropical Orchids, cut flowers and        Dounan wholesale flower market.
indoor foliage plants.
                                              Over 300 registered traders are
   With respect to growing               permanent members of the market.
methods, Yunnan is known for its         The average daily trading volume
high-tech,     large-scale     and       amounts to over 3 million stems of
specialized production. Until 2003,      cut flowers, and 12 tons of cut
Yunnan imported equipments for           greenery. An average of 4,000 traders
construction of 18 hectares of           participate in the trading on a daily
greenhouses, and constructed             basis. During the peak period, the
another     150     hectares     of      daily transaction volume goes up to




                                                                             135
over 4 million stems of cut flowers      with respect to inefficient transport
and 18 tons of cut greenery, with the    and logistic systems.
participations over 6,000 traders.
Trading in the market is by auction,     SWOT analysis of the Chinese
which is carried out by the Kunming      ornamental industry
International Flora Auction Trading
Co. Ltd. (KIFA). The KIFA auctioning     Strengths and opportunities
system is based on the erstwhile         1.   China is home to important
Aalsmeer Flower Auction (VBA). KIFA           genetic resources, with nearly
is a government agency set up by              20,000 identified species of
the Yunan provincial government.              native plants;
     Besides KIFA, the Yunnan            2.   Diverse and varying climates in
government has also started a                 different regions of China allow
logistical service company called             year-round ornamental plants
Yunnan United Floral Transport &              production in both open field
Marketing Co. or FLY that handles all         and under covered conditions.
logistical matters from the production        Specific species can be
and/or market place and upto the final        produced in places where soil
buyers.                                       and climate are most suitable
    Over 400 flower enterprises are           for high yields and quality. For
registered in Yunnan province. These          example, Chrysanthemum is
include state-owned companies,                grown mainly in Guangdong
stock market-registered companies,            and Shanghai, while Lily and
private-owned companies, foreign              Gladiolus are produced mainly
companies and joint ventures. In the          in Gansu and Liaoning,
recent years, foreign investments in          respectively;
the industry are surging in,
                                         3.   A large and low cost labour
particularly from the Dutch
                                              force provides a strong
companies. The Dutch companies
                                              competitive advantage for
are mainly engaged in production of
                                              China’s ornamental plants
young plants and flower bulbs.
                                              industry compared with many
Investments from Asian countries
                                              other countries, such as the
and regions such as Japan, Taiwan,
                                              Netherlands;
South Korea and Hong Kong are also
increasingly flowing in. However, a      4.   Rapid development of China’s
major hurdle for foreign companies            national economy fuels the
to expand their operations in the             growth of ornamental plants
flower sector is the slow                     production and marketing.
implementation of breeder’s rights in         Growth    in   per    capita
China.        Other      challenges           consumption of ornamental
encountered in this province are often        plants is especially high in



136
     cities.     The       domestic          ornamental           plants
     ornamental plants market has            production;
     great potential for further         ●   Although labor is readily
     expansion. In addition, China’s         available and at low cost,
     entry into the WTO would act            workers have limited
     as a catalyst to promote import         ‘know-how’ with regard to
     and export of ornamental plants         modern         floricultural
     in      the       international         production and handling
     marketplace.                            systems;
                                         ●   Quality       management
Weaknesses and threats                       throughout production,
1.   Many facets of the World                transportation, distribution
     ornamental plants industry are          and marketing has not
     new to China and, thus, pose            been         standardised.
     economic,      technological,           Moreover, producers are
     social, and environmental               more price-sensitive than
     challenges. Current production          quality sensitive because
     and handling efficiencies,              producing higher quality
     yields, and quality are still low       may require greater
     compared to those in countries          investment, which does
     such as the Netherlands,                not provide immediate
     Colombia, and Israel. For               return.     Thus,     some
     instance, China uses one -third         operators would rather
     of the world’s ornamental               continue with low quality,
     plants growing area to produce          cheap products for sale
     only 0.5 percent of the world’s         locally;
     production of ornamental            ●   The interaction between
     plants. Average ornamental              R&D and production
     plants production per unit area         practices is generally low.
     in China is only equivalent to          Many universities and
     1.7 percent, 6.2 percent, and           institutions have active
     7.9 percent of the productivity         groups researching on pre-
     in the Netherlands, Israel, and         harvest and post-harvest
     Colombia, respectively.                 aspects of ornamental
                                             plants. However, the
2.   Low efficiency can be attributed
                                             results of the research are
     to the following reasons:
                                             yet to achieve collaborative
     ●   Growers        are      not         effort, genuine commit-
         specialized in ornamental           ment,      and    financial
         plants cultivation as they          investment to find their
         have recently shifted from          place in commercial
         vegetable and fruit to              practice.


                                                                     137
6. INDIAN FLORICULTURE
   INDUSTRY



INTRODUCTION                              industry in India. Indian floriculture
Indian floriculture, which was earlier    industry, which was hitherto
regarded as a backyard gardening          individual-driven, became corporate-
activity yielding flowers for religious   driven and is likely to become one of
offerings or home decoration, has         the major players in the global
over a period of time transformed         floriculture market in the near future.
into a commercially viable industry.
Its origin, as an important income        The Industry
generating activity by small farmers,     The Indian floriculture industry, has
laid the foundation for an                been growing at a compounded
economically viable diversification       annual growth rate (CAGR) of 25
option for corporates in the agri         percent over the past decade, and
business sector over the past two
                                          is currently, worth US$ 230 million.
decades.
                                          The Indian floriculture industry
     A surge in Indian economy,           broadly comprise of:
liberalized seed policy, urbanization,
                                          ●    The florist trade of traditional
and ever growing interest in ‘saying
it with flowers’ paved the way for             and contemporary cut flowers
state-of-the-art         greenhouse            and cut foliage, both fresh and
technology for export oriented flower          dried     and     value-added
production during early 1990s.                 products like bouquets, floral
Liberalization from all the fronts has         baskets, flower arrangements
not only facilitated import of latest          and garlands;
technology, but also encouraged and       ●    The plant nursery for
enhanced import of internationally             propagation and supply of plant
acclaimed planting material of                 material including tissue culture
different varieties. The Government            plants, seeds, bulbs, corms
of India made various provisions and           and other propagated material;
introduced a variety of incentives
helping to establish 100 percent          ●    Plant rental service for supply
Export–Oriented–Units (EOUs)                   of houseplants on annual rent
resulting in a vibrant floriculture            for a specific period;




138
●      Flower perfume, essential oils     commercial growing of flowers is
       and gulkand.                       more prominent in the states of
                                          Karnataka, Tamil Nadu, Andhra
Production                                Pradesh, West Bengal, Maharashtra,
The growth in Indian floriculture         Uttarakhand, Uttar Pradesh, Delhi,
cultivation has been phenomenal in        Haryana, Kerala, Himachal Pradesh
the last decade. The area under           and North Eastern states.
flower cultivation has more than
doubled from 53,000 hectares              Major Floriculture Crops in India
(1993-94) to 1,61,000 hectares            Rose is the principal cut flower
(2007-08) and has been growing at         grown all over the country, even
a CAGR of 8.26 percent. Of this,          though in terms of total area, it may
500 ha of production is in                not appear so. The larger
greenhouse; around 5 percent of           percentage of the area in many
greenhouse        production    is        states is used for growing scented
domestically consumed and the             rose, mainly to be sold as loose
remainder is exported. In 2007-08,        flowers. These are used for
flower production in the country          offerings at places of worship, for
was estimated at 870,000 MT of            the extraction of essential oils and
loose flowers and 4,342 million           also used in garlands. For cut
(numbers) of cut flowers.                 flower use, the old rose varieties,
                                          such as Queen Elizabeth, Super
    Though all states in India have a     Star, Montezuma, Papa Meilland,
tradition of growing flowers, the         Christian Dior, Eiffel Tower, Kiss of

                              Table 6.1:
           AREA AND PRODUCTION OF FLOWERS IN INDIA (2000-2008)
    Year             Area (‘000 ha)                Production
                                        Loose (000’MT)    Cut Nos. (millions)
    2000-01                      98               556                    804
    2001-02                     106               535                   2565
    2002-03                      70               735                   2060
    2003-04                     101               580                   1793
    2004-05                     116               655                   1952
    2005-06                     129               654                   2920
    2006-07                     144               880                   3716
    2007-08                     161               870                   4342

    SOURCE: National Horticultural Board 2009




                                                                           139
                            Exhibit 6.1:
               PRODUCTION TREND OF FLOWERS IN INDIA




 SOURCE: National Horticultural Board


                         Exhibit 6.2:
         MAJOR LOOSE FLOWER PRODUCING STATES (2007-08)




 SOURCE: Indian Horticulture Database 2008, National Horticultural Board




140
                          Exhibit 6.3:
           MAJOR CUT FLOWER PRODUCING STATES (2007-08)




 SOURCE: Indian Horticulture Database 2008, National Horticultural Board


Fire, Golden Giant, Garde Henkel,       with improved agronomic techniques
and First Prize are still popular. In   and better management, the northern
recent times, with production for       plains of Delhi, Haryana, Punjab,
export gaining ground in the country,   Uttar Pradesh, as well as
the latest varieties like First Red,    Maharashtra and Karnataka have
Grand Gala, Konfitti, Ravel, Tineke,    emerged as the major areas for
Sacha, Prophyta, Pareo, Noblesse,
                                        production of Gladiolus.
Virsilia, and Vivaldi are also being
grown commercially.                          Tuberose, a very popular cut
                                        flower crop in India is grown mainly
    Gladiolus is the next most
important cut flower crop in the        in the eastern part of the country i.e.
country. Earlier it was considered a    West Bengal, and also in northern
crop for temperate regions and its      plains and parts of southern India.
growing was restricted to the hilly     Both single and double flower
areas, particularly in the north        varieties are equally popular.
eastern region, which still continues   Tuberose flowers are also sold loose
to supply the planting material to      in some areas for preparing garlands
most parts of the country. However,     and wreaths.




                                                                           141
                                                     Table 6.2:




142
                            STATE-WISE PRODUCTION OF FLOWERS IN INDIA (2005-06 TO 2007-08)
      State / UTs                                Area (000 ha)     Production (Loose flowers in 000 MT and Cut flowers in Lakh Nos.)

                                2005-06    2006-07       2007-08              2005-06            2006-07              2007-08
                                                                         Loose          Cut   Loose        Cut    Loose         Cut
      Andaman & Nicobar            0.01       0.01          0.03            2.54          -     2.54          -     4.70           -
      Andhra Pradesh              17.51      21.66         23.52           88.81      67.07   116.24      65.87   126.27       67.82
      Bihar                        0.20       0.20          0.20            2.30      10.60     2.30      10.60     2.30       10.60
      Chattisgarh                  1.55       2.03          2.36               -          -     7.84          -     6.91           -
      Daman & Diu                  0.00       0.00          0.00            0.01          -     0.01          -     0.01           -
      Delhi                        5.50       5.50          5.50            5.67    1038.20     5.70    1038.00     5.70    1038.00
      Gujarat                      7.12       8.42          9.74           42.18    4392.00    49.50    5063.00    49.50    5063.00
      Haryana                      5.40       5.65          6.11           26.30     622.70    52.15    1404.04    61.76       10.53
      Himachal Pradesh             0.41       0.58          0.58            3.01     434.35     3.63     530.75     3.40     565.55
      Jammu & Kashmir              0.33       0.33          0.33            1.34     217.90     1.34     218.00     1.34     218.00
      Jharkhand                    0.00       0.21          0.11            0.00       0.00     0.33     273.00     0.23       73.00
      Karnataka                   21.10      23.02         22.34          156.20    5239.00   192.07    5660.00   169.12    5550.00
      Madhya Pradesh               3.67       2.50          2.55            2.00          -     1.40          -     1.53           -
      Maharashtra                  9.44      14.76         16.74           56.08    3410.00    88.90    4774.00    69.45    5728.00
      Mizoram                      0.04       0.04          0.05            0.00      17.96     0.00      30.91     0.00       36.59
      Nagaland                     0.00       0.00          0.02            0.00       0.00     0.00       0.00     0.00       16.50
      Orissa                       0.59       0.59          2.40            1.79     129.64     1.93       0.00     7.00     129.60
      Pondicherry                  0.48       0.33          0.33            2.67          -     2.67     129.60     2.67           -
      Punjab                       0.80       0.95          1.00            4.10          -    74.00          -    77.90           -
      Rajasthan                    3.01       2.73          3.34            2.26          -     3.26          -     4.61           -
      Sikkim                       0.10       0.10          0.01               -       33.1     0.09      16.78     0.09      22..82
      Tamil Nadu                  24.75      26.73         26.74          202.00          -   218.06          -   214.38           -
      Uttar Pradesh                8.25       8.39          8.41           12.18    3668.00    12.34    3746.00    12.36    3752.00
      Uttaranchal                  0.56       0.71          0.90            0.36     575.00     0.46    1229.74     0.70    1455.45
      West Bengal                 17.89      18.56         27.42           42.29    9347.90    43.68   12966.00    48.45   19680.00
      TOTAL                      128.68     144.01        160.72          654.08   29203.42   880.43   37156.29   870.38   43417.46
      SOURCE: National Horticulture Board 2009
     The other main cut flowers            purposes. Bougainvillea is an
include Asters, Gerbera, Carnation,        important and popular flowering plant
Anthurium, Lilium, and Orchid.             grown widely throughout the country.
Production of Orchids is restricted        The dwarf and bushy ones are mainly
mainly in the northeastern hill regions,   grown as pot plants. Among other
besides parts of the southern states       traditional flowers grown in large
of Kerala and Karnataka. The main          areas are Crossandra in southern
species grown are Dendrobiums,             states of Tamil Nadu, Karnataka and
Vanda, Paphiopedilums, Oncidiums,          Andhra Pradesh, and Aster in
Phalaenopsis and Cymbidiums.               Maharashtra.
     Among the traditional crops               Marigold, Aster,       Roses,
grown for loose flowers, the largest       Tuberose, Gladiolus, Jasmine,
area is under Marigold, grown all over     Crossendra are grown generally in
the country. In most parts of the          the open fields, while Gerbera,
country only local varieties are grown     Carnation, Roses, Anthurium, Lilium,
for generations. African Marigolds         and Orchids are cultivated under
occupy more area as compared to            green house conditions.
the small flowered French types.
                                                Major flowering plants largely
Jasmine flowers in view of its
                                           produced and sold in pots for indoor
fragrance are also very popular as
                                           use are Poinsettias, Orchids, florist
loose flowers, and find a very
                                           Chrysanthemums, and finished
important place both in the perfume
                                           florist Azaleas. Foliage plants such
industry and flower market. The
                                           as ferns, crotons, bamboos, and
major areas under this crop are in
                                           palms are also produced and sold in
Tamil Nadu and Karnataka in South,
                                           pots and hanging baskets for indoor
and West Bengal in East. The
                                           and patio use, including larger
varieties are mainly improved clones
                                           specimens for office, hotel, and
of     Jasminum        grandiflorum,
                                           restaurant interiors.
J. auriculatum and J. sambac.
Chrysanthemum is recognized as a
                                           Consumption and Domestic
potent flower crop in India. It is used
as a cut flower for interior decoration
                                           Trade
and as loose flowers for making            While exports remain the prime
garlands. The Chrysanthemum,               motivator for Indian flower
particularly the white varieties are       cultivators, the demand in the
much in demand as loose flowers            domestic market is also enormous
during the autumn period of October-       and is on the rise. Modernisation
December when other flowers like           and growing western cultural
Jasmine, Tuberose are not available        influences has resulted in
for use in garlands and other similar      consumers, especially the young




                                                                            143
population in the country buying         Trivandrum and Cochin in Kerala;
flowers on occasions like                and Mumbai and Pune in
Valentine’s Day, Friendship Day,         Maharashtra. The city of Mumbai
Mother’s Day, Father’s Day and so        itself has three large markets.
on. There is also a huge spurt in        Kolkata is the biggest market in the
demand for flowers during religious      eastern India. In addition to the
festivities.                             market in the city of Kolkata, there
                                         are several fairly large regional
    Flower retailing is also
                                         markets in West Bengal. In the north,
undergoing a sea change in the
                                         Lucknow/Kannauj and Delhi are the
country. Besides the small vendors
                                         major markets for flowers besides
selling flowers from buckets on
                                         locations in Rajasthan.
roadsides, there has been an
emergence of many up market
                                         Flower markets in select Indian
shops and flower boutiques in major
                                         cities
metros, in the recent years, that
witness demand round the year. The       Mumbai
large supermarket/hypermarket retail
chains that are mushrooming across       There are three flower markets in
the country are expected to further      Mumbai, two in Dadar area and one
stimulate this growth.                   in Bhuleshwar. The important
                                         flowers traded in these markets are
     The major markets for flowers       the Rose, Marigold, Jasmine,
are situated in the states, which        Gladioli, Tuberose, Chrysanthemum,
produce significant quantities of        Aster and Daisy. The growers in
flowers. Kerala is one state that has    and around Mumbai bring their
a fairly large market without any        produce to these markets. In
significant production of flowers.       addition, flowers also come from
Some states, particularly those in the   Bangalore, Madurai, Chennai,
Southern India, have more than one       Coimbatore and Pushkar Valley in
large market in the state as the area    Rajasthan.
under flower production is fairly
widely distributed. The major markets    Pune
in terms of number of traders involved   There is only one major flower
and the quantity traded are in the       market in Pune. The major flowers
peninsular region and east India. The    traded in this market are Rose,
major markets in peninsular India are    Tuberose, Marigold, Aster, Jasmine
Chennai, Coimbatore and Madurai in       and Gladioli. Most of the Asters and
Tamil Nadu; Bangalore, Mysore and        Tube Roses traded in this market
Dharwad in Karnataka; Hyderabad          are supplied from areas around
and Vijayawada in Andhra Pradesh;        Pune, such as Alandi, Solapur




144
Road, Lodi and Supa. Roses are           no brokers/agents in this market.
supplied from Sangli and Tazgaon         The flowers are usually marketed
and to some extent from Nasik.           by wholesaler/retailers.
Jasmine is grown in and around
Pune. Producers nearby use               Lucknow and Kannauj
bicycles and two wheelers to bring       There is a single market in
their produce to the market. Others      Lucknow. The major flowers traded
primarily use state transport for        in this market are Roses (red rose
moving the flowers. However, in the      used in garlands and pink rose
recent years, some large producers       petals used for the extraction of oil
have also started using refer            and in the manufacture of gulkand)
transport for flower transfers.          Jasmine, Marigold and Sunflower.
                                         The commission agents in Kannauj
Ahmedabad                                market deals mainly with pink rose
The lone flower market in the city       petals supplied to the perfume
is situated in Lal Dharwaja area.        industry. The flowers supplied to this
The major flowers traded in this         market are generally produced
market are Marigold, Jasmine and         within a radius of 10-20 km. Some
Tuberose. The flowers are supplied       of the producing areas supplying
to this market from villages             flowers to this market are
generally within a radius of 50 km.      Alamnagar, Mariyabad Road,
The farmers usually bring their          Pataura, Narauna and Baravan. The
produce in trains, and tempos.           major modes of tranfer of flowers
                                         to this market are bicycles, two-
Thiruvananthapuram                       wheelers and tempos.
The trading in flowers in
Thiruvananthapuram takes place in        New Delhi
the Chalai market. The major             The only flower market in Delhi is
flowers traded are different varieties   situated in Fatehpuri near Chandni
of Jasmine and Marigold, mainly          Chowk. The major flowers traded
produced in the state. The               in this market are Roses (red
wholesalers in the market get the        Roses and rose petals), Marigolds,
flowers from adjacent producing          Jasmine and Gladioli. The flowers
areas in Tamil Nadu such as              come from producing areas around
Thovalai,            Kumarapuram,        Delhi generally within a radius of 75
Thisayanpillai, Tenkasi, Madurai,        km, such as Fatehpur Beri,
Tirunelveli, Kottigodu, Kovilpatti and   Mehrauli,      Farukha        Nagar,
Chunkhankode. As the flowers are         Chattarpur, Ghaziabad, Faridabad,
not produced in this state, there are    Gurgaon and Muradnagar.




                                                                           145
Madurai                                 of the produce comes from local
Madurai has one of the biggest          areas and the rest from Bangalore
flower markets in India. The major      and Madurai. The flowers are
flowers traded in this market are       transported to this market by
different varieties of Jasmine, Rose,   buses, trucks and by air.
Crossandra and Tuberose. The
flowers coming into this town are       Hyderabad
generally produced within a radius      Jambagh flower market is located
of 25km from the city.                  near Mozanjahi market in
                                        Hyderabad. The major flowers
Kolkata                                 traded in this market are Rose,
The Malikghat bazaar located below      Jasmine, Chrysanthemum, Marigold
the Howrah Bridge is the largest        and Crosandra.
wholesale flower market in Kolkata.
This market has the largest             Bangalore
selection of flowers sold in the        There are two wholesale flower
country. Any kind of flower can be      markets in Bangalore, one each at
sold in this market. The quality and    K.R. Market (better known as City
freshness of the flowers, however,      market) and Russel market,
leaves a lot to be desired. Flowers     Shivajinagar. The former is bigger
meant for cut flower trade, namely      and most of the wholesale trade in
Gladioli and Tuberoses are picked       traditional flowers takes place there.
and the best of the lot are sent to     Modern flowers are traded mostly
the New Market near Park Street,        at Russel market. However, with the
which is an up market in the city.      development of the Auction Centre
                                        at Hebbal, bulk of the modern (non-
Chennai                                 traditional) cut flowers like long
The flower market in Chennai is         stemmed Rose, Gladiolus and
located in the Central Market at        Carnations are currently passing
Parrys. This is the only wholesale      through the auction. The major
market in Chennai. The flowers          flowers traded at the K.R. market
sold in this market are Crossandra,     are Jasmine (mallige and kakda),
Tuberose, Jasmine, Rose, Marigold,      Crossandra,                Marigold,
etc. The flowers come to this           Chrysanthemums and Aster. Small
market from nearby production           quantities of Rose (loose blooms
areas such as Dharampur,                and long stemmed) and Gladiolus
Panchetti,     Tambaram,       and      are also traded. Flower arrival in the
Poonamalei districts. The flowers       market is seasonal. Jasmine
are also supplied from Madurai and      (kakda scentless white blooms)
Bangalore markets. About one half       season in the market is between




146
August          and         January.    flowers are kept in controlled
Chrysanthemums start arriving in        temperature conditions, with
July and last up to October. The        considerable attention to value
demand for Chrysanthemum,               added service.
Marigold and Aster reaches peak
                                             The        packaging         and
during October due to Dussera ,
                                        transportation of flowers from the
when buses and other vehicles are
                                        production centres to the wholesale
decorated with flowers. Rose
(traditional) is bought and sold        markets at present is largely
outside the market premises             unscientific. The flowers, depending
generally, where the sellers            on the kind, are packed in old gunny
themselves retail them. Most of the     bags, bamboo baskets, simple
trade takes place at predetermined      cartons or just wrapped in old
contract prices. The city service       newspapers and transported to
buses carry maximum flowers to          markets by road, rail or by air. The
the city market from the villages and   mode of transportation depends on
suburbs of Bangalore. Farmers           the distance to the markets and the
bring Roses on two wheelers also.       volume. Mostly, flowers are
Long distance flowers are however       harvested in the evening time and
transported by bus, truck or train.     transported to nearby cities by
                                        overnight trains or buses. In recent
Marketing and Distribution              years, however, the Government of
Channel                                 India has been providing assistance
                                        for buying refrigerated carriage vans.
Marketing of cut flowers in India is
                                        Also, a large number of export
much unorganised at present. In
                                        oriented units have built up state-of-
most metropolitan cities, that have
                                        the-art facilities of pre-cooling
large market potential, flowers are
                                        chambers, cold stores and reefer
brought to wholesale markets,
                                        vans and their produce coming for
which mostly operate in open yards.
                                        domestic market sales are also,
A few large flower merchants
                                        thus, of good quality and have longer
generally buy most of the produce
                                        vase life, and command higher price.
and distribute them to local retail
outlets after significant price mark         In view of the unorganized set
up. The retail florist shops also       up, it is difficult to estimate the size
usually operate in the open on-road     of flower trade, both in terms of
sides, with different flowers           volume and value. It is since the last
arranged in large buckets. In the       decade that this business has really
metros, however, in the recent          boomed in India, which is indicative
years, some modern florist show         to the growing floriculture cultivation
rooms have come up, where               in India, and is also reflected in the




                                                                            147
                                   Box 4:
                           FLOWER AUCTION CENTRES
       Bangalore – The International Flower Auction Centre (IFAB) set up by the
 Karnataka Agro Industries Corporation (KAIC), Hebbal, Bangalore was inaugurated,
 on January 18, 2007. The project is a joint effort of the Central Government Agriculture
 and Processed Food Products Export Development Authority (APEDA) and the
 State Government. IFAB is operated and controlled by the growers led by the South
 India Floriculture Association (SIFA) and backed by key government agencies like
 the APEDA and the KAIC. Presently, about 40 large growers and numerous small
 growers are registered and participating at daily flower auctions at the IFAB. SIFA
 has a 51 per cent stake in IFAB, while the small growers hold 16 percent, and the
 balance is held by the state government agencies, like Karnataka Agro Industries
 Corporation (KAIC) and Karnataka State Agricultural Produce Processing and Export
 Corporation (KAPPEC).
      The facility is built on 5.11 acres of land with an estimated total project cost of
 Rs. 10 crores. The Auction center can accommodate over 100 bidders. Only
 registered producer/buyers are allowed to bid here. Quality of the flowers is checked
 before putting them to the auction.
      The unique design of the complex is based on solar passive architecture
 principles and is environmentally suitable for the salubrious climate of Bangalore.
 The infrastructure consists of:
 ●     Cold Storage (capacity of 2.5 lakh stems) area of 300 sq.m
 ●     Distribution Hall area of 400 sq.m
 ●     Buyers area of 300 sq.m
 ●     Auction Hall area of 300 sq.m
      The highlights of the design are :
      —  Design fits into rocky landscape with minimal environmental impact;
      —  Integration of solar passive architecture techniques;
      —  Design makes best use of natural daylight to reduce overall electrical load;
      —  Optimum orientation of individual blocks and features such as earth berths
         to reduce thermal load.
      Provision for incorporation of:
      — State-of-the-art SCADA based automatic storage and retrieval of flowers ;
      — Real time integration of E-trading and online accounting with auction;
      — Internet enabled auction process, which could be fully integrated to the
        complete automation, accounting and localized physical auction;
      — Solar photovoltaic panels for power generation;
      — Modular design with ample scope for expansion.
                                                                         (Contd...)




148
 (Contd...)
      The auction begins at 8.30 a.m. everyday. Unlike the English method of auction
 that starts with the lowest price and moves up, the centre follows the Dutch auction
 system. This prevents buyers from banding together to keep the prices low. The
 clock at the IFAB follows the Dutch system of price determination that starts at a
 higher price and keeps dropping until a buyer stops it at a bid and buys a part of the
 lot.
      Truckloads of flowers arrive each evening and are moved to a cold storage
 maintained at 4oC – the facility can store over 300,000 stems at a time. The next
 morning they are brought out on trolleys to be inspected by potential buyers before
 auction begins.
    Mumbai – An Auction Centre has been set up at the Maharashtra Agro-Industries
 Development Corporation Ltd., (MAIDC) Goregaon, with contribution from APEDA ,
 MAIDC and the State Government, at a total project cost of Rs. 21 crores.
      The Auction Centre has been built on 3 acres of land with a total capacity of
 handling 30 MT of flowers. The Centre has a cold storage facility of 10 MT. Two
 auction clocks have been installed at the Centre, which has been imported from
 Belgium. The Auction Centre can accommodate over 100 traders at a time, which
 works out to over 50 traders per clock.
     The Auction Centre is however, yet to take off as it is faced with challenges
 associated with respect to operations and maintenance.

number of new florist outlets in cities,      floricultural products in the year
and increase in the public purchase           2007-08 decreased by 48 percent
of flowers as gifts.                          to US$ 84.5 million (Rs. 340
                                              crores), from US$ 144 million
    The loose flowers (traditional
                                              (Rs. 653 crores) in 2006-07, which
crops like Marigold, and Jasmine) are
                                              further decreased by 5.18 percent
usually traded by weight. The
                                              in the year 2008-09 to US$ 80.31
average price of different flowers in
                                              million. However, in rupee terms
major markets varies considerably
depending on the period of availability.      there was a marginal increase of
                                              8.4 percent from Rs. 340 crores in
Exports                                       2007-08 to Rs. 368.8 crores in
                                              2008-09.
Floriculture has been identified as
a thrust export sector in India in the             During 2007-08, exports of cut
post-liberalization era. The global           flowers and foliage were valued at
markets offer a vast potential and            US$ 70.4 million (Rs. 283.4 crores),
advantages for India. However,                while exports of live plants, bulbs and
India’s share in the international            tubers stood at US$ 14.1 million
markets for floricultural products is         (Rs. 56.7 crores). In the year 2008-
still negligible at less than one             09 upto February 2009, exports of
percent. India’s exports of                   cut flowers and foliage were valued


                                                                                    149
at US$ 60.17 million (Rs. 272.3       part of floricultural product exports
crores) and exports of live plants,   from India. During 2007-08, dried
bulbs and tubers were valued at US$   flowers constituted around 65
11.04 million (Rs. 49.4 crores).      percent of cut flowers exports, and
Important cut flowers exported from   dried foliage constituted around 97
India include Roses, Lilies,          percent of total foliage exports from
Carnations, and Orchids. In the       India, which were 64 percent and 99
recent years, dried flowers and       percent respectively in the year
foliage have been forming a large     2008-09 (upto February 2009).

                            Exhibit 6.4:
                 FLORICULTURE EXPORTS FROM INDIA




 SOURCE: DGCIS

                          Exhibit 6.5:
        COMPOSITION OF FLORICULTURE EXPORTS FROM INDIA




 SOURCE: DGCIS



150
                           Table 6.3:
         BREAK-UP OF FLORICULTURE EXPORTS FROM INDIA
ITC    Product Description                                     US$ Million
HS                                         2005-06   2006-07     2007-08     Apri 08-
Code                                                                          Feb 09
6      Live trees, and other plants;          68.1     144.2        84.5        71.2
       bulbs, roots and the like;
       cut flowers and ornamental
       foliage.
601    Bulbs, tubers, tuberous roots,          1.0       1.8          1.6         1.4
       corms, crowns and rhizomes,
       dormant, in growth or in flower;
       chicory plants and roots
602    Other live plants (including            6.3      17.2        12.5          9.6
       their roots), cuttings and slips;
       mushroom spawn
603    Cut flowers and flower buds of         31.5      90.5        29.6        22.4
       a kind suitable for bouquets or
       for ornamental purposes, fresh,
       dried, dyed, bleached
604    Foliage, branches and other            29.3      34.7        40.8        37.8
       parts of plants, without flowers
       or flower buds, and grasses,
       mosses and lichens

                       Exhibit 6.6:
COMPOSITION OF CUT FLOWER AND FOLIAGE EXPORTS FROM INDIA




SOURCE: UN Comtrade 2009



                                                                                  151
    Fresh cut flowers are mainly      Australia and New Zealand, over the
exported from Tamil Nadu, Karnataka   past 5 years.
and Maharashtra whereas dried
                                      Though the focus is slowly shifting
flowers are being exported mainly
                                      to different markets, EU yet
from Tamil Nadu and West Bengal.
                                      remains an important destination
Markets for Exports of                for India’s cut flowers, which is
Floriculture Products                 evident in the fact that Europe,
                                      accounted for over 50 percent of
Over the years, Europe has been       the total cut flower export
the largest destination for Indian    realizations during 2008-09.
floriculture exports, and EU
auctions have been the preferred      In the two key export markets, viz.
channel for the Indian flower         Europe and Japan, India faces
exporters. However, in the recent     intense competition from East
years, Indian exporting units have    African countries like Kenya,
been developing and increasing        Ethiopia and Tanzania (in the EU
their concentration in the Japanese   market), and from South Korea,
and Australian markets, which are     Thailand, and Australia and New
reflected in the increase in the      Zealand (in the Japanese market).
export realizations from Japan,       These countries have immense
                           Exhibit 6.7:
      REGION-WISE EXPORT OF INDIAN FLORICULTURAL PRODUCTS




 SOURCE: DGCIS




152
                           Table 6.4:
    TOP TEN IMPORTING COUNTRIES OF FLORICULTURAL PRODUCTS
                     FROM INDIA (US$ million)
                              2004        2005      2006       2007       2008
 USA                          10.8        17.3       16.7       17.6       16.0
 Netherlands                   6.1         6.2        9.9       10.7       13.2
 United Kingdom                5.6         7.0        8.0        8.9       10.1
 Germany                       4.6         5.5        6.8        8.5        9.2
 Japan                         3.5        12.8       71.8       60.6        3.1
 Ethiopia                      0.0         0.7        2.5        4.5        2.9
 United Arab Emirates          1.1         1.4        2.0        1.7        2.3
 Italy                         2.0         2.1        2.5        2.4        2.3
 Canada                        0.5         0.3        0.7        1.2        2.2
 Australia                     1.0         1.1        1.5        1.6        2.0
 Others                       11.8        13.9       21.7       22.8       17.1
 Total                        46.9        68.3     144.0       140.5       80.3

 SOURCE: UN Comtrade 2009

production capacities, and provide         Development Authority (APEDA),
the varieties with quality of flowers,     more than 150 EOUs with over 1,500
which match the international              million stems capacity (small and
standards.                                 big) on an estimated area of 500
                                           hectares have been approved in the
Export Oriented Floriculture               sector. However, many of them
Development                                operate at less than their capacity.
A number of Export Oriented Units          These units export Roses,
(EOUs) have been set up in the             Carnations, Orchids, Gladioli and
country in floriculture segment in         Anthrodium to Japan, Netherlands,
the last decade and half.                  USA, Germany and France.
Globalization and liberalization of
                                                Majority of the floricultural units
Plant, Fruits and Seeds (Regulation
                                           are based in Southern part of the
of Import into India) Order, 1989,
                                           country mainly in Karnataka, Andhra
also known as the New Seed Policy
                                           Pradesh and Tamil Nadu. About 125
have already made it feasible to
                                           hi-tech units are concentrated in
import planting material of
                                           Karnataka covering 200 hectares;
international varieties in the country.
                                           Maharashtra has 39 units covering
   According to the Agricultural and       150 hectares, Tamil Nadu has 17
Processed Food Products Export             units covering 152 hectares and



                                                                               153
Delhi has 12 units covering 50               buy back arrangements. However, in
hectares.                                    the recent years, a number of large
                                             corporate houses such as ESSAR
      There are around 70 high tech
                                             group, TATA group, Reliance, ITC,
floriculture units in the country. These
                                             Bharti Group/Field Fresh, RPG group
units are mostly concentrated in
Bangalore and Pune belt.                     and Thapar Group have also invested
                                             in the flower sector.
Foreign Collaboration and                         Floriculture is a capital-intensive
Investments                                  industry with long gestation period.
Most of the EOUs in the country              According to a report on floriculture
are largely dependent on foreign             by the Parliamentary Standing
collaborations for technological             Committee          on     Commerce,
support as the cultivation of cut            Government of India, investment
flowers for export purposes under            worth over Rs.500 crore has been
protected environment is relatively          made in the floriculture industry in the
a recent phenomenon. Majority of             country during the last decade. There
the foreign collaboration in the             are wide variations in the cost of
sector have taken place with units           establishing the export-oriented
from the Netherlands, Israel and             floriculture units in the country.
France with many of them having              However, according to the report, the
their offices in India.                      cost of flower production under
                                             controlled condition is estimated at
    Most of the foreign collaborators
are primarily suppliers of one of the        around Rs.1.75 crores to Rs.2.25
inputs of the floriculture industry, e.g.,   crores per hectare.
planting material, greenhouses, or
they are specialized in marketing.           Modern Floriculture Units and
Some collaborators such as the               Greenhouse Technology
Dutch floriculture companies also            Since protected cultivation is not a
have their production bases in India,        common practice in India, the
especially growing summer and                greenhouse designs and structures
tropical flowers.                            for the modern floriculture units are
                                             mostly imported from countries like
    Most of the Indian companies are
                                             Holland, Israel, France, and the
family owned, medium sized
                                             USA. Due to the mild climate, Indian
businesses. For these Indian
                                             growers use mainly simple poly-
entrepreneurs, the joint ventures are
                                             covered structures to facilitate
more like a turn-key collaborations.
                                             protected cultivation of cut flowers.
They are largely dependent on the
foreign companies for setting up of             The cost of constructing a
the projects, and supply of inputs with      greenhouse structure differs with




154
respect to the type of technology          investment costs among the groups.
being adopted. In India, three types       Other costs, such as costs of
of     greenhouse          production      planting materials and other
technologies could be identified. The      greenhouse accessories, however,
first group represents the low-cost        do not show significant variation
polyhouse technology (low-tech             among the three groups.
units). This group has adapted
foreign greenhouse designs and             Employment and Income
fabricated         the      structures     Generation
indigenously in India with little or no    Floricultural crops are highly labour
environmental control systems. The         intensive and have the capacity to
second group (mid-tech units) has          generate more direct and indirect
imported polyhouse structures with         employment both in rural areas as
special environmental control              well as in the urban areas.
systems like the fan-and-pad system        Estimates across different states in
to control temperatures and maintain       India indicate that the employment
required humidity levels in the            generation of flower crops
greenhouses to improve quality             cultivation is higher than other
control. The third group (hi-tech units)   horticulture crops, food crops and
is the most technologically oriented.      commercial crops. A study
They have imported polyhouse
                                           conducted by University of
structures and the fan-and-pad
                                           Agricultural Sciences (UAS)
environmental control systems with
                                           Bangalore, in Chitradurga district of
additional structure features to allow
                                           Karnataka showed that the
the use of artificial growing media for
                                           employment generation of one
cultivation, such as rockwool blocks.
                                           hectare of Crossandra was 1,461
The first two groups are generally
                                           man-days per year. Of this, 65
growing flowers in normal soil.
                                           percent accounted for female
    In India, about 72 percent of the      workforce. It was also estimated
growers have adopted the low-cost          that conventional (traditional)
indigenous technology, while 21            floriculture provided a decent
percent adopted the second type of         standard of living for nearly 10,000
greenhouse, and only 7 percent have        farm households and employment
adopted the high-cost imported             to 80,000 farm labourers and 2.5
polyhouse with artificial medium of        lakh small retailers and flower
cultivation. The total investment          vendors in the state of Karnataka
costs varies significantly among the       in 2002 (Prakash 2002:240). In
three groups. The cost of                  contrast to the traditional floriculture,
constructing the greenhouse is the         the modern floriculture generated
main source of variation in total          more employment. The range of




                                                                                155
employment per hectare was 7,121          highest acreage under flowers,
man-days (Thippaiah 2001:120) to          Bihar has the highest productivity (it
7,468 man-days /hectare including         is a small producer though),
technical    labour     (Prakash          followed by Haryana. But many
2002:247), whereas the food crops,        other states, notably in the southern
generated employment of 860 man-          region, such as Karnataka excel in
days per hectare per annum.               the production of high-quality
                                          flowers, which are in greater
     Hi-tech floriculture employs more    demand in the domestic and the
labour. There are no definite             export markets. Discussed below
estimates on total labour required in     briefly are some key flower
hi-tech/modern floriculture, which        producing regions of India.
largely depends on the capacity of
the units. However, the UAS study         Karnataka
estimates the proportion of               Karnataka occupies a prominent
permanent labour at 8 percent in the      position in floriculture in the country.
hi-tech floriculture units in Bangalore   Floriculture covers about 22,340
in 2002, and that they were given         hectares in the state, and flower
industrial benefits.                      production is over 1.60 lakh tonnes.
     In tandem with employment            There are around 125 hi-tech
generation, the flower crops have the     floriculture units in the State, spread
inherent advantage of providing           over an area of 200 hectares.
higher productivity per unit of land      There are about 150 nurseries, big
resulting in higher income. Studies       and small, registered and
reveal that income obtained from          unregistered, in and around the
floriculture is 4, 5, 10, and 20 times    Bangalore city. The State has
higher than sugarcane, fruits and         already established an International
vegetables, paddy, and ragi,              Flower Auction Centre (IFAC) at
respectively.                             Bangalore, which is said to be the
                                          first of its kind in the country.
The Flower Hubs                              The floriculture business is
Several states have emerged as            concentrated    in    Bangalore,
major flower-producing zones.             Belgaum, Kodagu, Dakshina
These include Maharashtra,                Kannada, Udupi and Kolar districts.
Karnataka, Tamil Nadu, Andhra             The flowers that dominate the
Pradesh, West Bengal, Uttar               production     are       Marigold,
Pradesh, Haryana and New Delhi.           Chrysanthemum, Jasmine, Tube
While some states such as Tamil           Rose, Crossandra, Aster, and Rose.
Nadu and West Bengal have the             The highest number of hi-tech




156
floriculture units are in Belgaum (70),    and Anthurium and the quality of the
followed by Bangalore Rural district       flowers is matching with international
(25), Bangalore city (20), Kodagu          standards. The growers of
(10), and Udupi, Dakshina Kannada          Maharashtra are one of the most
and Shimoga (five each). There are         established exporters of flowers from
nearly 1,000 florist stalls in             India. According to the Western India
Bangalore.                                 Floriculture Association (WIFA),
                                           Pune accounts for around 30 percent
     A major chunk of floriculture
                                           of floricultural products exports from
exports is from the Bangalore region,
                                           India annually.
which is around 60 percent of the total
floricultural exports from the country.
                                           Tamil Nadu
Maharashtra                                     The floriculture industry in Tamil
                                           Nadu has been growing steadily. The
      Favourable         agro-climatic
                                           area       around        Coimbatore,
conditions in Pune, Nashik and Sangli
                                           Dharmapuri and the Nilgiris have
have made the regions one of the
                                           been earmarked as places for the
major flower producing zones in
                                           cultivation of flowers like Roses and
Maharashtra. These districts have
                                           Chrysanthemums. Coimbatore has
the maximum concentration of
                                           been identified as an intensive
floriculture units. There are around 20
                                           floriculture zone.
hi-tech units in these regions, with
over 70 ha area under hi-tech                   Hosur region in the state is one
cultivation. There are about 400-450       of the most productive cut flower
medium-tech units, with over 50-60         regions. Roses are cultivated on
ha area. A floriculture village has been   about 500 ha in the region. The
set up in Talegaon in the Pune district,   region has more than 20 hi-tech
with around 150 ha area. A wholesale       floriculture units spread over 120 ha.
flower market-cum-auction centre
                                                Tanflora, a joint venture between
with a handling capacity of 30 tonnes
                                           the Tamil Nadu Industrial
flowers has also been set up in
                                           Development Corporation (TIDCO)
Mumbai, which is yet to be
                                           and private promoters, is the
operational.
                                           country’s first Agri Export Zone (AEZ)
    The major traditional flowers          for cut Roses and one of the largest
grown in the State are Rose,               such facilities in the country. Tanflora
Marigold, Gladilous, Gerbera and           is also Asia’s largest rose production
Carnation. Anthurium is among its          centre, producing around 37.5 million
non-traditional flower production. The     Roses every year. Flower cultivation
State has many poly-houses,                in Tanflora is undertaken by 25
growing Roses, Gerbera, Carnation          growers having 2 hectares of




                                                                               157
production area each, mostly under              The State has four clusters of
greenhouses.       Total     annual         model nurseries set up under
production capacity is 70 million           National Horticultural Mission at
Roses from 50 hectares. Facilities          Thally, Kelamangalam and Berigai.
provided by Tanflora include:
                                            Andhra Pradesh
●      Central Packing House - 80000
       sq.ft. of fully insulated building       The State is one of the leading
       to handle and process fresh          producers of loose flowers in the
       cut Roses.                           country. The traditional flowers grown
                                            in the state are Rose, Jasmine,
●      Cold Room Facilities - 19000         Crossandra, Chrysanthemum,
       sq.ft of CFC-Free state-of-the       Marigold, and Tuberose. There has
       art cold room facilities.            been a significant increase in the
       Uninterrupted cold chain is          demand for cut flowers of crops such
       maintained with the help of          as Gerbera, Carnation, and
       dock shelters and packaging in       Anthurium in the state, in the recent
       cold rooms.                          years.
●      Infrastructure facilities like
       roads, drains, water, technical      West Bengal
       support, One Stop Shop, and              Floriculture including ornamental
       laboratory.                          plant production is an emerging
                                            industry in West Bengal, having high
●      Rainwater harvesting facilities
                                            prospects. The state produces
       with the installed capacity to
                                            around 58,000 tonnes of flowers
       harvest over 100 million liters.
                                            every year and has more than 10,000
●      Logistics     and    marketing       acres of land earmarked for the
       facilities.                          purpose.

                             Table 6.5:
           MAIN FLOWER PRODUCING AREAS IN ANDHRA PRADESH
    Flowers              Production Areas
    Loose Flowers
    Crossandra           Ananthpur, Kurnool
    Jasmine              Ananthpur, Kurnool, Rangareddy, Guntur, Vishakapatnam
    Marigold             Rangareddy, Nellore, Kurnool
    Chrysanthemum        Chittoor, Cuddapah, Rangareddy
    Cut Flowers
    Rose                 Rangareddy, Nizamabad
    Gladiolus            Medak, Rangareddy, Nizamabad

    SOURCE: Andhra Pradesh Horticulture Department



158
    Major flowers produced in the          ●    A mega flower mart in
State are Tuberose, Gladiolus, Rose,            Mullickghat, Kolkata, has been
Gerbera, Carnation and Cockscomb.               set up with dedicated flower
Flowers in West Bengal are mainly               stalls, state-of-the-art cold
grown in places like, Kalimpong,                chain    infrastructure     for
Panskura, Ranaghat, Thakurnagar,                preserving flowers;
Bagnan and also other places around
                                           ●    A comprehensive multi-storied
the state.
                                                flower market with facilities for
    The state exports 14,000 flowers            cold storage at Panskura;
every week. The export basket has
                                           ●    Another floriculture park is
traditional flowers like Marigold,
                                                being developed at Jagulia near
Jasmine, Chrysanthemum, China
                                                Haringhata in Nadia district with
Aster, Crossandra, Tube-rose and
                                                two separate pack houses,
contemporary flowers like Rose,
                                                one for flowers and one for
Gladiolus, Carnation and Orchids.
                                                vegetables, one exclusive
    The Government of West Bengal               nursery, and a commercial
has taken several initiatives to boost          seed production farm.
the sector, which include:
                                           Haryana and Punjab
●      Setting up a floriculture park at
       Mungpoo in North Bengal, with           In the recent years, Haryana has
       common infrastructure facilities    also evolved as one of the key flower
       such as cold storage facilities,    producing regions of the country. Its
       grading / packaging room,           share in all India flower production is
       tissue culture lab and              around 5.0 percent (loose flowers)
       refrigerated vans to collect and    and 4.0 percent (cut flowers). The
       transport flowers;                  main flowers grown in Haryana are


                                  Table 6.6:
                     FLOWERS EXPORTED FROM WEST BENGAL
    Flowers Exported       Destination Countries     Volume of Flower Export
    Tuberose               Holland auction market    Average: 10,000 stem
                                                     per week
    Gladiolus              Sharjah and London        Average: 2,000 stem
                                                     per week
    Rose, Gerbera,         London                    Average: 2,000 stem
    Carnation and                                    per week
    Cockscomb

    SOURCE: Dept. of Food Processing Industries and Horticulture, West Bengal




                                                                              159
                             Table 6.7:
              MAIN FLOWER PRODUCING AREAS IN HARYANA
 Flowers               Production Areas
 Gladiolus             Faridabad, Gurgaon, Karnal, Panchkula
 Tuberose              Faridabad
 Rose                  Panipat, Sonipat, Gurgaon, Kaithal
 Marigold              Gurgaon, Sonipat, Jind, Jhajjar, Faridabad

 SOURCE: Ministry of Agriculture, Govt. of India


Marigold, Rose, Tuberose and               such as Marigold are largely
Gladiolus.                                 produced in Ludhiana, Patiala and
                                           Fatehgarh Sahib. Besides Gladiolus,
     Under the National Horticulture
                                           Rose cultivation is also gaining
Mission, Karnal, Panipat, Sonipat,
                                           popularity among flower growers in
Rohtak, Faridabad, Mewat, Gurgaon,
                                           Punjab. Two hi-tech units in Patiala
and Jhajjar regions of the State have
                                           and Amritsar have been exporting
been identified as floriculture
                                           100 percent of their Rose production
clusters, where different varieties of
bulbous flowers and high value loose       to European markets.
flowers are being cultivated. Some               Flower seed production is a
of the important varieties grown in        profitable venture and has been
these regions are Chrysanthemum,           adopted by number of farmers in the
Gladiolus, Marigold, Carnation,            State of Punjab. According to the
Lilium, and Rose.                          Department of Horticulture, Punjab,
     Growing of flowers is an              it is estimated that every year flower
important          component          of   seed worth Rs. 5-6 crore are being
diversification of agricultural cropping   exported to USA, Holland, Germany,
pattern in Punjab. In Punjab,              and UK. It is estimated that at present
floriculture mainly include the            flower seed is produced in about 700
cultivation of different species of        acres. The seed production is
gladiolus. Majra, near Chandigarh,         generally on contract basis with the
and Dappar, near Patiala are main          private       companies          under
centres of Gladiolus production in         agreements with their counterparts
Punjab. Other Gladiolus producing          in foreign countries. By virtue of its
areas are Ludhiana, Faridkot,              favourable climatic conditions,
Amritsar and Jalandhar. Cut flowers        Punjab also produces planting
such as Chrysanthemums are                 materials of large number of bulbous
mainly grown in Jalandhar, Ludhiana,       crops such as Gladioulus,
and Fatehgarh Sahib. Loose flowers         Narcissus, and Nerines.




160
    Punjab is also one of largest           Jammu and Kashmir
producers of loose flowers such as               The practice of flower cultivation
Rosa damascene, Polianthes                  at commercial scale by individual
tuberose,       and       Jasminum          growers is at its initial stage in the
grandiflorum for essential oil industry.    State; however commercial
                                            cultivation is gradually picking up with
Himachal Pradesh                            boost from the State government. At
     In the recent years, flower            present, around 300 hectares of land
farmers in Himachal Pradesh have            in the state is under cultivation of
been shifting from traditional crops        different varieties of flowers,
to high value crop - flowers. The           particularly Marigold, Jasmine, Aster,
diverse agro-climatic conditions in         Rose,      Chrysanthemum and
the hill state ensure availability of       Tuberose. In the recent years, the
                                            state has been exporting flowers
flowers from different climatic zones
                                            worth Rs. 2 crore annually and more
round the year. Mid- and high-altitude
                                            than 300 people are associated with
areas of Solan, Shimla, Sirmaur,
                                            this sector.
Mandi, Kullu, Bilaspur and Chamba
districts of the State have emerged             With the recent launch of the
as the most productive zones for            Tulip Garden, the State is set to
flower cultivation in the State. The        become the Tulip hub of the country.
farmers in these regions are growing        Currently around 50 exotic varieties
commercial varieties of Marigold,           of Tulips imported from Holland are
Carnation, Tulip, Lilium, Gladiolus,        grown in over 90 acres of land,
Chrysanthemum and                Rose.      producing around 3 million Tulip
Carnations grown in Himachal                bulbs annually.
Pradesh are generally in high                   Other varieties grown in the State
demand in the cut flower markets            include Gladioli grown in Jammu,
and fetch premium prices, due to            Kud, Chenani, Poonch and Rajouri
their quality and shelf life. Most of the   Districts in Jammu, and Srinagar;
farmers in the Solan district cultivate     Budhgam and Anantnag in Kashmir
exotic varieties of Roses in                region, producing around one lakh
greenhouses.                                stems annually; Lily is grown in
                                            Panchari, Sudhmahadev (during
     Currently, around 2,500 farmers        winter), Poonch and Rajouri (during
are involved in flower cultivation in       summer) in Jammu region; and
584 hectares of land in the State. The      Srinagar, Budhgam, Pulwama in
total earnings from floriculture in the     Kashmir region; Hysenthesis is
state are around Rs. 220 million a          grown mainly in Leh and hilly regions
year.                                       in Jammu, Doda, Poonch districts.




                                                                                161
Gujarat                                         Besides Roses, farmers in the
     In Gujarat, about 70 growers in        region also grow estimatedly about
Navsari and Surat districts of Gujarat      20 lakh flowers of Gerbera and 14
are involved in growing flowers under       lakh units of Carnations.
climate-controlled green houses. A
few large growers are also exporting        Rajasthan
their products to countries such as              Rajasthan is one of the leading
Japan, New Zealand, Germany and             Rose producing states in the country.
the UK. Most of the floriculturists in      Roses from Rajasthan have
the region are small growers growing
                                            traditionally been used for fragrance,
flowers in greenhouses in about one
                                            essence, Rose water, and other
hectare of land. They have been
                                            edible products. However, in the
growing exotic varieties of flowers
such as Gerberas and Dutch Roses            recent years, Roses are also
in manually created red soil or Coco        produced as cut flowers and are
Peat3, as black cotton soil, which is       exported. With 80 percent of its land
dominant in the region is not fit for       under Rose cultivation, Pushkar in
growing flowers. The largest grower         Ajmer district is one of the leading
and exporter in the region is Best          producers of indigenous varieties of
Rose Biotech, which has been                Roses in the country. It is one of the
exporting Hybrid Tea Roses from the         highest producers of Roses and also
region to Japan and New Zealand.            the Rose-based products such as
The company grows and exports               Gulkand (sweet rose preserve),
hybrid Tea Rose varieties such as           Rose water, and dried Rose petals.
Respect (Red), Royal Class (Red),           According to the industry sources,
Pretty Woman (Pink), Passion
                                            around 40-50 percent of Roses and
(Red), Aqua (Pink), Corvette
                                            Rose products produced in the State
(Orange), Gold Strike (Yellow),
Circus (Bicolor), Indian Sunset             is exported. Middle East is the largest
(Orange), Zaria (White), and Exciting       market for these products, followed
(Bicolor).                                  by Europe and USA.

                            Table 6.8:
        MOST PROMINENT FLOWER GROWING AREAS IN RAJASTHAN
    Flower Group                     Name of the Districts
    Cut flowers                      Jaipur, Ajmer, Alwar
    Bulbous                          Jaipur, Ajmer, Alwar
    Loose flowers                    Sriganganagar, Ajmer, Jaipur, Alwar,

    SOURCE: National Horticulture Mission, Rajashthan

3      Also known as coir pith or coir dust, it is a byproduct of extracting fibres
       from the husk of a coconut.


162
North Eastern Region of India            Carnation, Gerbera, Anthurium,
Northeastern region of the country       Alstroemeria, Asiatic and Oriental
has long been considered as              Lilium.
nature’s gift to the country in view          Majority of area under floriculture
of the wealth of ornamental plants.      is under Gladiolus, Lilium, and other
The region abounds in wealth of          bulbs. The area under Rose and
Orchids, Rhododendrons, Primulas,        Cymbidium Orchids is steadily
and various kinds of Lilies. All the     growing. Cymbidium Orchids, Rose
eight Northeastern States are rich       and Anthurium are meant for cut
production areas of flowers in the       flowers, while Lilium and Alstroemeria
State; however, Sikkim is one of the     are promoted for production of cut
leading regions.                         flowers and bulbs / rhizomes.
Sikkim                                   Meghalaya
    The state of Sikkim has 4,500             In Meghalaya, flower growers
species of flowering plants, out of      originally practiced floriculture as a
which 600 are Orchid species, 36         hobby. Today, the growing demand
Rhododendrons species, 60                has lead to cultivation of flowers also
Primulae species, 16 Conifers            for commercial reasons. Meghalaya
species, 23 Bamboo species, 362          is known for a variety of rich flora and
Ferns and Allies, 8 Tree ferns, 60       species of Orchids that grow wild.
Primulas, 11 Oaks, and over 424
                                         The areas near Shillong in East Khasi
Medicinal plants. Out of 600 Orchid
                                         Hills District such as Upper Shillong,
species grown, 300 are Sikkim’s
                                         Barapani and Umiam are highly
natural species.
                                         productive regions for flower
    The most important commercial        cultivation. Ornamental crops that
flowers that can be grown in Sikkim      are grrown in Meghalaya are Orchids,
are Cymbidium Orchids, Gladioli,         Chrysanthemums, Gerberras,

                           Table 6.9:
   PRODUCTION AND YIELD OF FLORICULTURE PRODUCTS IN 2006- 07
                    IN THE STATE OF SIKKIM
 Crops                                 2006 – 07
                          Area in 000 ha        Production in lakh nos
 Cut / pot flower                      0.05                             17.28
 Plants / Bulbs                        0.07                             16.50
 Total flowers                         0.12                             33.78

 SOURCE: Horticulture and Cash Crop Development Department, Sikkim




                                                                             163
Carnations, Liliums, Strelitzia            about one-third of the produce is sent
Reginae, Gladiolus, Asters,                to other states in the country and
Marigolds, Statice, Gomphrenas,            remaining two-third is sold in the
Helichyrsums, Zinnias, Roses and           domestic market.
different kind of house plants.
                                                During recent years, awareness
     The Dewlieh Horticulture Farm         of the profitability of flower cultivation,
set up under the horticulture initiative   and particularly, the information about
of the Meghalaya government in Ri          the Rose occupying a dominant
Bhoi district is one of the first Centre   position in domestic and international
of Excellence for Rose in the region.      markets have led to rapid increase
The farm produces around 20 lakh           in the area under Rose cultivation in
Rose stems annually. The different         the State. The Department of
varieties of Roses produced in the         Horticulture, Government of
farm include Cherry Lady, Iceberg,         Mizoram, with the inception of
Golden Gate, Corvette, Tropical            Technology Mission established
Amazaon, Grand Gala, First Red and         Model Floriculture for Rose in
Circus. The department envisages           Mizoram in the year 2005. Seeing the
increasing Rose production to 200          successful performance of the
lakh stems in the next three years         model, the Department of
targeting exports to Japan and East        Horticulture identified a number of
Asian countries.                           farmers having certain background
                                           in Rose cultivation around Aizawl city
Mizoram                                    and Champhai town for Rose
     Anthurium is the popular cut          growing. Permanent structures for
flower grown in Mizoram and has            Rose cultivation were established in
been identified by the Government of       the identified farmers fields with
Mizoram as one of the thrust               complete set for production of cut
floriculture crops. Aizwal, Serchhip       flowers. The production of cut flowers
and Lung Lei regions are the most          including Roses in these regions is
productive zones for Anthurium             estimated to be around 18,00,000
cultivation in the state.                  (numbers) annually.
    At present, more than 300                  Under the Central Government
farmers are engaged in cultivation of      Horticulture Mission, States like
Anthurium, and an estimated over           Mizoram, Sikkim and Meghalaya
5,50,000 number of plants have been        have established Centres of
planted yielding around 27,50,000 -        Excellence in Horticulture. In
33,00,000 number of flowers on an          Mizoram and Meghalaya, these
average (a single plant produce            centres act as an interface between
around 5-6 flowers in a year), and         the private buyer of flowers, such as




164
Zopar , and the farmers. Zopar          production of flowers in the State.
provides imported planting materials,   Commercial cultivation of Rose was
mainly from Holland and Israel, and     first introduced at Yisemyong village
technological know-how to the           under Mokokchung District by the
farmers, as also information on         state government in 2004-05 on pilot
markets, and help in exports of their   project basis. The success of the
products through their networks in      pilot project has resulted in
India and international markets.        commercial cultivation of Roses in
Anthurium from Mizoram, and Roses       the region. So far 35 units of green
from Meghalaya are being exported       house, spread over more than 500
to Dubai and to other international     square metres of land, have been set
markets by Zopar.                       up under active guidance of the state
                                        Department of Horticulture and
Nagaland
                                        technical know how of companies
     In the recent years, Nagaland      such as Zopar Private Limited and
has also emerged as one of the highly   Florance Flora. Around 20 Self Help
productive regions for flower           Groups (SHGs) are associated with
production in the North Eastern         Rose cultivation in the region. Till
States. According to the annual         2008, 12 lakh stems of Roses have
administrative report of the            been harvested.
Horticulture Department of Nagaland,
the commercial cultivation of           Arunachal Pradesh
floriculture, which started during
                                            Floriculture development in
2004-05, was further extended during
                                        Arunachal Pradesh is centred around
2008-09, covering an area of 5 ha
                                        Orchid cultivation, which has been
under green house cultivation.
                                        promoted in the state as a cash crop
Besides Roses, Lilium, Anthurium
                                        as well as a supplement crop in
and Heliconia, some new varieties of
                                        Jhum and wastelands by Forest
flowers were introduced during the
                                        Department. About 1220 species of
current year, which are Alstroemeria
                                        Orchids are reportedly available in
and Zantedeschia benefiting about
                                        India, of which 750 species are
200 groups of entrepreneurs.
                                        reportedly found in North East India,
     Currently, there are about 50 ha   and about 550 species (45 percent
under commercial floriculture, of       of the country’s Orchids) are
which, about 30 ha are under hi-tech    reportedly found in Arunachal
production and 20 ha under open         Pradesh alone.
field.
                                           At present there is no
   The districts of Kohima,             commercial floriculture activity,
Mokokchung, Wokha and Dimapur           except for a couple of Orchid
have been identified for commercial     growers who have taken up




                                                                         165
                                Box 5:
                  FLORICULTURE PROJECTS IN NAGALAND
 ●     Floriculture Project at Satsuphen, Wokha – The project is a success story in
       the State. The entrepreneurs, Kaka and Brothers of the Longsa Flower Growers’
       Association, have been harvesting Liliums of high quality setting National
       records in domestic flower exhibitions.
 ●     A low cost Lilium project at Chuchuyimpang, Mokukchung .
 ●     The Self Help Group Lilium project at the Hospital Colony, where plants are
       being grown in different phases so that harvesting could be organized all year
       round.
 ●     The Model Floriculture Centre for Roses and Carnations at Yisemyong covers
       an area of about 38 acres of land. The Centre produces world-class quality
       Roses and Carnations that are in high demand in the national and international
       markets. There are eight varieties of Carnations that are grown in the centre;
       these are Accardi, Master, Schabert, Diena, Star, Varna, and Dalila. The
       centre is also equipped with its own pharmacy for Roses and Carnations.
 ●     Niathu Garden in Kohima is producing Lilium throughout the year. The Garden
       sells over 5000 stems of flowers a week to Delhi at a price ranging between
       Rs.15 to Rs. 25 depending upon the size of the flowers.
 ●     Floriculture projects at Chumukedima and Dimapur, covering an area of 4000
       sq.m. are growing around 40,000 Anthurium plants of 11 varieties.


Cymbidium farming for markets in            Other Uses
Delhi and Kolkota. These farms are          Other associated activities of flower
mainly located in the Hapoli / Ziro area    growing include the dry flower
in the lower Subansiri District.            industry and the essential oil
                                            industry.
     Orchids, particularly Cymbidium
are the only commercial flower crop
                                            The Dry Flower Industry
in the state at present. The Orchid
Division of the State Forest Research       In the recent years, dry flower
Institute (SFRI) at its Orchid              industry has emerged as one of the
                                            promising areas of floriculture.
Research Centre at Tipi, Bhalukpong
                                            Dried or dehydrated flowers or plant
(West Kameng District), and also at
                                            part or botanicals (roots, leaves,
Itanagar, has been multiplying the          stem, bark or whole plant) are used
Cymbidium planting material through         for ornamental purposes. Dry
tissue culture for distribution among       decorative materials are globally
the growers as well as for conducting       accepted as natural, eco-friendly,
demonstration trials.                       long lasting and inexpensive. The




166
world trade in dried and prepared            and exported from dry flowers such
flower and plant-parts is estimated          as handmade paper, lampshades,
at US$ 1.47 billion. The main                wall quilt, decorations, books, and
markets for dried flowers and plant          candle         holders.     Flower
parts in the world are the UK,               arrangements exported include dried
France, Germany, Japan, Belgium,             samples of cone, foliage,
Denmark, Austria, Netherlands,               bulbrushes, and flowers like rose
Spain and USA.                               buds, lilies in form of bouquets or
     India is one of the leaders in this     loose, and plant materials.
field. India is the fifth largest exporter        In India, Maharashtra, Karnataka,
of dried flowers and second largest          Hyderabad in Andhra Pradesh, and
exporter of dried foliage in the world       Kolkata in West Bengal have
accounting for around 7 percent of           emerged as major dry flower
world exports in dry flowers and             industrial zones in the recent times.
foliage. The main export markets for
                                             West Bengal accounts for around 70
India’s dry flower industry are USA,
                                             percent of the dried flower exports
Netherlands, UK and Germany. The
                                             from India. Some of the other dry
industry has been growing at a rate
                                             flowers producing regions in India are
of 15 percent annually. Potpourris are
                                             coastal areas of Andhra Pradesh
one of the major segments of dry
flower industry in India. The potpourri      such as Nalgonda, Medak, and areas
variety of dried flowers is a purely         in the West Godavari.
export oriented segment and has                  Other      countries     having
specialized processing units. The            significant dry flower production are
industry in India provides direct            Europe, Japan, Taiwan, UK,
employment to around 15,000                  Hongkong, and Australia.
persons and indirect employment to
around 60,000 persons.                       Essential Oil
    The processing of dried flowers          The international trade in essential
involves drying, bleaching and               oil stood at around US$ 4.9 billion
colouring after their collection.            in 2007, growing at a CAGR of
Suitable packing methods are also            around 12 percent during 2004 to
needed for their storage, transport          2007. Recent trends like shift to
and marketing. In India, about 60            naturals, and aromatherapy, are
percent of the raw materials are             driving the growth of essential oil
sourced from natural forests and             industry. Markets in India and China
plains, while only 40 percent of the         are growing at much faster rate.
flowers are cultivated for drying,           India is the second largest exporter
bleaching and coloring. Various types        of essential oil in the world after
of products are also manufactured            USA. India’s exports of essential oil




                                                                               167
stood at US$ 298.7 million in 2007-     in the world accounting for over 40
08, and US$ 319.2 milion in 2008-       percent of total world exports in
09 (upto February 2009). India is       Jasmine oil. The leading export
the largest exporter of Jasmine oil     markets for Indian Jasmine oil are

                              Table 6.10:
         RETAIL PRICES OF SELECT ESSENTIAL OILS IN THE WORLD
 Essential Oil       Scientific Name          Avg. Price per 500 gms in US$
 Basil               Oscimum cannu                          4.94
 Benzoin gum         Styrax benzoin                         7.80
 Bergamot            Citrus bergamia                       11.57
 Bitter orange       Citrus aurantium                      13.83
 Clary clary sage    Salvia sclarea                        69.68
 Coriander           Coriandrum sativum                    42.64
 Cumin seed          Cuminum cymimum                       21.76
 Cyprus              Cupressus sempervirans                33.80
 Davana              Artemesia pallens                   142.35
 Geranium oil        Pelargonium graveolens                33.80
 Ginger              Zingiber officinale                   40.56
 Grapefruit oil      Citrus paradisi                       16.33
 Hyssop              Hyssop officinalis                    27.56
 Jasmine             Jasminum officinale                 153.40
 Jasmine             Jasamunum chandifloram              527.88
 Juniper berry       Laurus nobillis                       21.84
 Lavender            Lavender augustifolia                 14.53
 Lemon grass         Cymbopogan citrates                    7.35
 Lime                Citrus aurautifolia                   20.02
 Rose oil            Rosa damascena                     3432.48
 Rosewood oil        Aniba rosedora                        19.76
 Rosemary            Rosmarinus officinalis                14.51
 Sage                Salvai officinalis                    91.00
 Spearmint           Mentha spicate                        14.51
 Spikenard           Nardostachys jatamanis                70.20
 Valerian wallichi   Valeriana officinalis               278.20
 Vetiver oil         Vetiveria zizanoides                  78.52
 Wormwood oil        Artemisa absinthium                 120.65
 Yara yara           Achillea millefolium                  18.12
 Ylang Ylang         Canaga odorata                        17.55

 SOURCE: Industry Sources




168
France, accounting for over 36             Most of these units are located near
percent of total Jasmine oil exports       Mumbai, Bangalore and Delhi. These
from India, followed by UAE, USA,          units have obtained technical know-
Germany and UK. Rose oil and               how from Dutch and Israeli
Jasmine oil command highest price          consultants.
in the international essential oil
                                                The new seed policy has already
markets.
                                           made it feasible to import planting
     In India, flower crops grown for      material of international varieties. Tax
essential oil production are limited       benefits are offered to new export
and include mainly Rose, Jasmine,          oriented floriculture companies in the
and Tuberose. Rosa damascene is            form of income-tax holidays.
exclusively cultivated for extraction of   Additionally, there are substantial duty
essential oils, rose water, attar, and     exemptions for imports including cut
gulkhand in Rajasthan and Uttar            flowers, flower seeds and tissue-
Pradesh. The rose products are             cultured plants. Further, allowing 100
largely consumed in the domestic           percent Foreign Direct Investment
market, and to some extent exported        (FDI) in the industry has facilitated
to the Middle East.                        joint ventures, ensuring a steady
                                           inflow of capital and modern
Government Incentives /                    technology. Financial support has
Initiatives                                been offered for air-freight for export
The liberalization of industrial and       of cut-flowers and tissue-cultured
trade policies paved the way for           plants, and financial support of up to
development of export-oriented             50 per cent has been offered for
production of cut flowers.                 establishing cold storage, pre-
Commercial floriculture is becoming        cooling units, refrigerated vans and
an important segment from the              green houses.
export angle, and is being viewed
                                                The Agricultural and Processed
as a high growth segment.
                                           Food Products Export Development
Government of India acknowledges
                                           Authority (APEDA), is responsible for
the potential of the floriculture
                                           export promotion and development of
industry and has conferred the
                                           floriculture in India. APEDA provides
industry a 100 percent export
                                           financial support for establishing cold
oriented status.
                                           storage,        pre-cooling      units,
    Various incentives are being           refrigerated vans and green houses,
offered by the Government of India,        and provides airfreight support to
which have enabled the setting up of       floriculture exports. In addition,
a number of floriculture units for         APEDA also provides financial
producing and exporting flowers.           support for using improved




                                                                               169
packaging material. Refinance               Development of Commercial
assistance is available from the            Floriculture with the following
National Bank for Agriculture and           objectives:
Rural Development (NABARD) for
                                            ●   To improve production and
commercial banks and State
                                                productivity of traditional as
Finance Corporations that have
                                                well as cut flowers through
financed the floriculture units.
                                                availability of quality planting
     The Ministry of Agriculture,               material and transfer of
Government of India, has also set up            technology;
11 model floriculture centre units, two     ●   To improve human resource
large centres and 20 tissue culture             capabilities for growing flowers
units to support this sector. Six agri-         scientifically;
export zones have also been set up
for floriculture where large flower         ●   To promote production of off-
farms share common infrastructural              season and quality flowers
facilities, thus bringing into effect the       through protected cultivation;
benefits of scale. Walk in-type cold        ●   To improve on-farm post
storage at international airports like          harvest handling of flowers.
Delhi, Mumbai Hyderabad, Chennai
and Thiruvananthpuram have also                  The pattern of assistance under
been set up for storage of export           this program include:
produce.                                    ●   Specific  attention    for
     Auction centres are also being             development of traditional
set up at major cities such as                  flowers;
Bangalore and Mumbai (yet to be             ●   Strengthening of Model
operational), for helping in price              Floriculture Centres (MFC) for
discovery and trading. Further, to              additional facilities and
facilitate trading at the international         extension of MFC in other
flower markets, APEDA has set up a              potential States;
Market Facilitation Centre at
                                            ●   Improvement in productivity
Aalsmeer, in the Netherlands, the
                                                and production through higher
world’s largest flower auction centre.
                                                use of inputs and area
Similar centers are also envisaged
                                                expansion;
in Dubai in the Middle East, and Tokyo
in the Far East.                            ●   Assistance for off-season
                                                production of flowers;
   Department of Agriculture and
Cooperation, Ministry of Agriculture,       ●   Emphasis on on-farm post-
Government of India has a                       harvest management of
programme       for      Integrated             flowers;




170
●    Encouragement          for                diversification and skilled
     greenhouse cultivation of                 employments;
     flowers;                             ●    To generate value addition,
●    Farmer          participatory             promote the development and
     demonstration of cultivar                 dissemination      of  eco-
     technology; and                           technologies based on the
                                               blending of the traditional
●    Dissemination of information              wisdom and technology with
     through training and media                frontier knowledge such as
     support.                                  biotechnology, information
     The Technology Mission for                technology      and   space
Integrated       Development         of        technology; and
Horticulture in North-Eastern States      ●    To provide the missing links in
including Sikkim, by the Department            ongoing          horticulture
of Agriculture and Cooperation,                development projects.
Ministry of Agriculture, Government
                                                The Technology Mission
of India, has the following objectives:
                                          comprise of four Mini Missions, viz.
●    To establish convergence and         Mini Mission-I (MM-I) for research,
     synergy among numerous               Mini Mission-II (MM–II) for production
     ongoing        governmental          and productivity, Mini Mission–III (MM-
     programme in the field of            III) for post harvest management,
     horticulture development to          marketing and export, and Mini
     achieve horizontal and vertical      Mission-IV (MM-IV) for processing
     integration      of     these        and marketing of processed
     programmes;                          products.
●    To      ensure      adequate,             The Integrated Development of
     appropriate, timely and              Horticulture in Tribal/Hilly Areas, by
     concurrent attention to all the      the Department of Agriculture and
     links in the production, post        Cooperation, Ministry of Agriculture,
     harvest and consumption              Government of India, adopts an
     chain;                               integrated       compact         area
                                          development approach that will
●    To maximise economic,
                                          address crop production with forward
     ecological and social benefits
                                          and backward linkages, such as,
     from the existing investment
                                          availability of genetically improved
     and infrastructure created for
                                          planting material and seeds of high
     horticulture development;
                                          yielding varieties; supply of inputs;
●    To promote ecologically              post-harvest infrastructure facilities,
     sustainable intensification,         like, collection centres, storage,
     economically     desirable           transport and marketing.



                                                                             171
     A National Committee on               competitiveness, and influence the
formulating a rehabilitation package       growth of the industry. With
for the ailing floriculture industry has   technology gaps narrowing, these
also been formed.                          exogenous factors have become
                                           critical in determining the
Agri Export Zones (AEZ)                    competitiveness of the industry. In
Government of India, promotes,             this section, the role and influence
assists and facilitates the setting up     of exogenous factors such as
of Agri Export Zones (AEZ), in             infrastructure,      temperatures,
association          with        State     transportation including government
Governments for the purpose of             policies are discussed briefly.
providing access to international
markets for agricultural produce/          Infrastructure
products from the country. The             Floriculture products are highly
objective is to provide remunerative       perishable. The consistency and
returns to farming community in a          stability of quality depends on the
sustained manner and to increase           procurement, cold storage and
their competitiveness. There are at        supply chain infrastructure available
present six operational Agri Export        from the place of harvest. There is
Zones for floriculture development         high capital cost involved in setting
in India.                                  up of cold storages, discouraging
                                           entrepreneurs getting into floriculture
Influence of Exogenous                     business.
Factors
Exogenous factors are those that           Airports
are not inherent to floriculture, but      Domestic and international airports
significantly affect the viability and     at strategic locations are essential

                             Table 6.11:
      LIST OF OPERATIONAL AGRI EXPORT ZONES FOR FLORICULTURE
                           DEVELOPMENT
 Sr. No.     State              District/Area
 1           Tamil Nadu         Dharmapuri
 2           Uttranchal         Districts of Dehradun, Pantnagar
 3           Maharashtra        Pune, Nasik, Kolhapur and Sangli
 4           Karnataka          Bangalore (Urban), Bangalore (Rural), Kolar,
                                Tumkur, Kodagu and Belgaum
 5           Sikkim             East Sikkim
 6           Tamil Nadu         Nilgiri District

 SOURCE: APEDA



172
for the growth and development of             relative humidity for 12 months for
the floriculture industry. One can            each sector would categorise them
find large number of floriculture             under the following three zones:
projects around Bangalore, Pune,              ●     Zone I: A temperature below
Delhi and Hyderabad, where airport                  28 degrees centigrade is the
facilities are available.                           ideal natural climatic condition
                                                    and no additional care is
Temperature                                         required to maintain it.
Optimum temperature of a location             ●     Zone II: Temperate versus
is a very important criterion where                 relative humidity zone where
there is abundant sunlight and good                 temperature could be cooled
soil available. The optimum                         down by low cost cooling
temperature for most floriculture                   system such as wetpad
products ranges between 15 and 28                   method or fog method. But
degrees centigrade. An analysis                     such methods could be more
based      on    the     maximum                    expensive      than      regular
temperature and corresponding                       greenhouses.

                                  Box 6:
                      REGION-WISE ZONE COMPATIBILITY
 Bangalore Sector
      From July to January the conditions are ideal in Bangalore and only two months
 (May and June) fall under high heat zone, needing air conditioning for cooling. In
 practice, by pruning the plants and giving them rest during May and June, one can
 easily take care of the climatic situation.
 Pune Sector
       Only July to August fall under the ideal zone, while from November to March it
 falls under the Zone II. Pune has only 7 months as ideal for Rose and 5 months
 come under the Zone III, where cooling is expensive.
 Hyderabad Sector
       Due to the high temperature, plants grown between the months of April and
 October will be adversely affected and in turn there will be a reduction in the quality
 of flowers produced. With the help of misting or the wetpad method, the plants can
 be grown under ideal temperatures from November to March.
 Delhi Sector
      Extreme fluctuations in weather conditions are observed in Delhi between May
 and October and during these months maintaining the temperature to the optimum
 level is expensive, since wetpad method will not be able to achieve the desired
 level. Hence, only six months, from November to April are relatively suitable months.




                                                                                     173
●     Zone III: In this zone the         a farm until they arrive at an export
      temperature could be reduced       destination, can take from 44 1/2
      to the optimum level only with     hours to almost 13 days,
      the help of air conditioners,      significantly affecting the quality of
      which is very expensive.           the fresh flowers. For example,
                                         assuming that Roses can last up
Transportation                           to 14 days in good condition, if
Transportation cost and time are         handled properly after harvesting,
among the most critical factors for      and a modest retail shelf life
the success of fresh flower              expectancy of seven days, it is
industry. Freight cost occupies the      reasonable to state that from the
largest portion of transportation cost   seventh day in transit onwards, the
in the floriculture trade. Cost of       cost of time increases as each
                                         additional travel day lowers the
freight is a function of dimensional
                                         quality and consequently the price
weight, frequency, continuity of
                                         of the product.
shipments, negotiation between
airline and shipper, airplane
                                         Policies
configuration and distance.
                                         Import restrictions for import of
Depending on the time of the year        specific pesticides / insecticides
(peak seasons), it is estimated that     which may be required to tackle
transportation costs can be 10-20        unexpected or non-prevalent
percent higher for some countries.       diseases and insects may also be
Similarly, a shipment of fresh           considered as another exogenous
flowers, from the time of harvest on     factor.




174
7. OUTLOOK AND PROSPECTS



    The current global economic               Latin American countries such
downturn, has significantly affected      as Colombia, which is heavily
the floriculture industry worldwide,      dependent on the US flower markets,
with demand for floricultural products    have been hit relatively hard with
declining in all the major consuming      larger number of production bases
countries. This chapter, thus, briefly    being shut down, leaving significant
discusses the impact of the global        number of growers unemployed.
economic slowdown on the flower           Smaller companies in these
industry, and also outlines the broad     countries are facing bankruptcy, and
prospects for the industry.               layoffs are higher compared to the
                                          larger and more efficient companies.
Flower Industry in the Global             Flower exporters in Colombia have
Economic Slowdown                         also reported a 30 percent reduction
                                          in export earnings, post crisis, over
The current economic crisis has           the corresponding period of 2007.
significantly affected the floriculture   According to the exporters from
industry worldwide, with demand for       Colombia and Guatemala, significant
floricultural products considerably       decline in exports have been
declining. Since, the consumption         observed in case of more expensive
of floriculture products worldwide        exotic flowers such as Heliconias,
largely depends upon the income           Musa, Ginger, Birds of paradise and
levels and purchasing power parity        Foliage, due to demand slump in
of the consumers, the crisis has          both US and European markets.
resulted in decline in demand in all      However, demand for less expensive
the major consuming countries             and more commonly known products
such as Europe, USA and Japan,            such as Roses and Carnations have
consequently, affecting export levels,    been relatively unaltered or have been
profit margins, and employment in         growing marginally. For example,
the flower sector, particularly in the    until November 2008, exports of
developing countries, which               Roses and Carnations from
significantly depends upon flower         Colombia have grown by 4.2 and 1.8
trade.                                    percent, respectively.




                                                                            175
     Considered to be relatively low-    flowers, both in Europe and USA,
cost producers, African flower           have resulted in piling up of stocks
producers are being pressured into       leading to decrease in prices.
cutting prices further by the current    According to the Dutch importers,
international financial crisis. While    prices of floriculture products have
many of the larger and more efficient    gone down by approximately, 15 to
companies, such as joint ventures        30 percent since December 2008,
with foreign companies (Dutch            with some varieties being sold even
investors), appear to be weathering      at lesser than the cost prices.
the storm, smaller companies are         Besides the crisis, this decrease in
facing serious difficulties, even more   demand in Europe is also attributed
if their ties with buyers are not        to devaluation of Euro and other
contracted. Further, it has been         major European currencies, such
observed that the impact is also
                                         as the British Pound, Polish Zloty
dependent on the extent to which
                                         and the Russian Rouble.
these suppliers depend upon exports
to the EU and other major markets            The decline in demand applies
as against to having a firm position     to all flower and product varieties.
on local and regional markets. For       Depression in pricing has been
example, Egypt has a fairly robust       observed across the product
domestic market, and thus, not much      segments. However, the impact of
affected by the crisis.                  the crisis has been more evident on
                                         bouquets, which is also the lowest
    Most of the Asian countries,
                                         priced product segment. A shift in
whose exports of flowers to EU and
                                         consumer behaviour has also been
USA are not substantial, and those
                                         observed from more expensive and
have well developed domestic
markets, were not much impacted by       luxury flower products to less
the crisis.                              expensive varieties. Further, it has
                                         been observed that products whose
Declining Demand                         production was declining in the
                                         recent years (e.g. Freesias) due to
The demand for flowers in the EU         less demand and subsequent low
and USA markets have dropped             price are currently, fetching better
significantly since December 2008,       prices.
in terms of order numbers,
volumes and prices. Dutch import             According to the Centre for
turnovers, consequently, have gone       Promotion of Imports from the
down by upto 30 percent. A similar       Developing Countries (CBI), the
trend has also been observed in the      Netherlands, and reports from the
USA. A sudden drop in demand for         industry sources, the number of




176
company closures in the floriculture     rates for transporting flowers,
sector in The Netherlands has            especially during the peak periods.
doubled recently, particularly in the    Similarly, auction fees, which
case of the production companies.        include box rentals, inspection fees,
Another trend is consolidation to        administrative costs and traffic
reduce cost of production, increase      rights are also generally high. With
the scale of operation and leverage      the quantum of trade in the sector
the niche advantages.                    decreasing,         the       higher
     Decline in turnover is a major      transportation and trading costs are
concern for most of the floriculture     also acting as hindering factor for
companies in the major markets.          the growth of the industry.
Some of the floricultural companies           Following the financial crisis
in the EU have reported a 50 percent     export insurances have also
drop in margins from the previous        become         expensive.      Credit
levels. Shrinkage in margins has         insurances for exporting to distant
been generating pressure on costing      destinations have been the major
of the products with companies
                                         cost in flower trade for many
reviewing many cost factors and
                                         countries. Following the financial
often cutting purchasing prices first.
                                         crisis, banks and financing
The flower market is increasingly
                                         institutions are adopting conservative
becoming a ‘buyers’ market’, in which
                                         lending, which hinders the growth of
high-end products (specialties) are
facing the toughest competition.         the industry. Nevertheless, industry
These developments are placing           experts opine that once the situation
pressure not only on employment,         improves there could be sector-wide
but also on aspects such as              transformation, and consolidation.
Corporate Social Responsibility
(CSR) and sustainable production.        Prospects
On the other hand, it is worth           Despite the current frenzied market
mentioning that shrinking margins        situation and the difficulties in
are forcing producers to innovate, for   forecasting demand in the near
instance, using geothermal energy        future, a sluggish growth is still
as well as marketing in domestic         expected in the Western Europe’s
market.                                  floriculture markets, according to a
                                         report by the Rabobank. Based on
Other Factors                            the observation of economics,
Freight costs are an important           demographics and other growth
factor in the flower trade. A limited    drivers, the report expects an
number of airlines dominate this         average growth of 2 to 4 percent
market and they tend to charge high      per year until 2018.




                                                                           177
     There are wide differences                 Throughout the world, the market
among countries in the consumption         share of organized retail in floriculture
of cut flowers and potted plants,          trade has been increasing over the
particularly in the Europe.                recent years, although the growth
Furthermore, floriculture consumers        rate has been rather slow. However,
world over, in the recent years, have      in some of the European countries,
adopted an unpredictable and               such as UK, the growth has been
demanding approach, giving rise to         relatively faster. An estimated 10-20
a clearer market distinction between       percent of cut flowers are sold in
mass and niche products. Earlier,          supermarkets throughout Europe.
most of the market value was               UK has been leading the
generated by offering the consumer         developments in multi-channel
a fairly good product for a reasonable     marketing of cut flowers, and the
price. However, nowadays, either low       sales of cut flowers by the
                                           supermarkets in the Europe. For
priced or premium products is where
                                           instance, two decades ago,
value is being generated, particularly
                                           supermarkets in the UK only had a 2
in the more mature markets in the
                                           percent market share in the cut
Europe. Accordingly, the current
                                           flower sales; a decade ago this share
need for the players in the floriculture
                                           went up to 35 percent, and in 2008 it
industry is to carefully segment their     was estimated at 68 percent,
products, brands, and customer             triggered mainly by the success in
propositions.                              the grab-and-go impulse purchases
     Albeit the current demand             (accounting for almost half of the
slowdown, improving product                total cut flower market). Further, the
availability, quality and marketing        next attributing factor was the ability
standards would increase expansion         of the UK supermarkets to introduce
opportunities in the markets largely       more segmentation in the floricultural
seen as predominantly mature. For          product category, such as ‘value for
instance, only a small share of cut        money’, next to premium products,
                                           particularly, for the gift market. In
flowers in the Western Europe and
                                           addition, retailers have started to
Japan are purchased for personal
                                           provide more information on the
use; the majority of purchases are
                                           products they sell, such as country
related to special occasions such as
                                           of origin, carbon print of the products
Valentine’s Day, Mother ’s Day,
                                           produced, and characteristics of the
birthdays, funerals, religious             primary producer.
occasions,       and      weddings.
Development of grab-and-go market               As supermarkets are more
may help in driving sales for personal     focused on maximizing volumes and
use.                                       efficiency of logistical systems, there




178
                         Exhibit 7.1:
 DISTINCTLY TRANSFORMED FLORICULTURE MARKET SEGMENTATION




SOURCE: Rabobank, 2008

                       Table 7.1:
CHANGING CONSUMER BEHAVIOUR AND IMPACT OF FLOWER DEMAND
CONSUMER BEHAVIOUR                      IMPACT ON FLOWER DEMAND
Capricious: The same consumer           Proper availability of both high & low
easily switches from low priced bulk    value products and exclusive products
to high-priced exclusive products,      at different marketing channels can
buying both at Prada kind of            expand total flower and plant markets.
premium stores and as well at
one-dollar/one-euro shops
Diversity: Consumers’ tend to           Growing market for exclusive tailor-
express their personalities and         made products, and new innovative
individualism, adequately facilitated   products. Opportunities for
by new technologies. For example,       personalized packaging, creation of
creating pesonalised greeting cards,    buying special experiences, organic
manufacturing own wallpapers,           products, etc.
designing own t-shirts and
garments, etc.
Demanding: Consumers are                Higher demands on service
becoming more demanding. They are       guarantees, corporate responsibility,
well informed, mainly by the media      etc. related to flowers sold. Growing
and the internet. They want their       demand for convenience products
unique need to be met quickly and       (‘easy to take and treat’ flowers and
efficiently. At the same time           plants)
consumers also want producers
and manufacturers to take social
and environmental issues
into account.

SOURCE: Adapted from Rabobank study on the European Floriculture Industry


                                                                            179
is little room for tailor-made products    Blume 2000 in Germany (with 210
or delicate flowers and plants that        shops generating sales of about
cannot be handled in standard              Euro 120 million), and florist chain
systems. This implies that there is        Monceau Fleurs in Europe, (which
another growing trade channel and          combines low price with convenience
opportunity that of specialized florists   products in a clear and appealing
and specialized products in the            format, has around 400 stores all
floriculture markets, such as that of
                                           over the Europe, generating annual
Europe, particularly for weddings,
                                           sales of about Euro 150 million), fall
funerals, corporate events, and for
offering exclusivity and creativity.       under this category.
Another market trend recently
observed in the predominantly              Online Sales – A new
mature floriculture markets is,            development in floriculture
grouping among florists to take            marketing
advantage of joint purchasing and          A development that is to surely
joint marketing, thereby, creating new     change the floriculture industry is
retail formats and brands in flower        the emergence of the online sales
marketing. For example, European           channel - a marketing channel that
florist chains such as Mester Grønn        is steadily growing in the recent
(with more than 70 locations in            years, with increasing urbanization,
shopping malls throughout Norway),         and a culture of ‘saying it with
                           Exhibit 7.2:
      EVOLVING MARKETING SEGMENTS IN FLORICULTURE INDUSTRY




 SOURCE: Rabobank, 2008




180
flowers’. Traditionally, florist shops   geographic locations for the purpose
have been delivering cut flowers to      of occupation and education, it is
the consumers’ doorsteps; however,       expected that the online business will
in the last decade, new flower           expand rapidly in the coming years,
delivery operators have emerged,         partly at the expense of flower and
some of them having no                   plant delivery through local florists.
background in the floriculture
industry at all. Some of these are       New Markets and New Sources
new online flower shops originating      Over the last decade, several new
from IT-based companies, some            markets have evolved; such as
from online gift shops, individual
                                         Russia and Poland, where the
florists, florists under umbrella
                                         growth in floriculture markets have
organizations such as Fleurop/
                                         been robust. Although absolute
Interflora and Euroflorist in Europe,
                                         flower and plant consumption in
and florist chains such as Blume
2000 and Monceau Fleurs. In              these countries remains relatively
addition, there are supermarkets,        small, growing consumer base with
for example, Lidl Blumenservice in       higher income is expected to add
Germany, operating online shops          to the demand in these markets.
nationally or regionally. World wide     According to the Rabobank study,
online shops have also emerged           over the next few years, the
such as ‘1800-flowers’ and ‘Flora        floriculture market in these regions
2000’, and logistical services such      and other central and eastern
as TNT post, who are active in           European countries is expected to
online floriculture sales. The           grow by an average of 5 to 10
important characteristic for the         percent, annually.
online flower delivery business is
                                              The Netherlands, Colombia,
that it is largely occasion driven.
                                         Ecuador, and Kenya are the main
    A number of them offer a broad       floriculture export nations, and the
range of gifts including flowers,        Netherlands is the main trading hub
chocolates and wines, and                for cut flowers and potted plants
incidentally     compete      with       within the European trading regions.
businesses outside the floriculture      However, the pattern has been
sector such as chocolate, cake and       changing with the emergence of new
wine, and also compete with widely       sourcing regions, such as China,
assorted online shops such as            India, Ethiopia, Thailand and Turkey.
amazon.com.                              An increasing number of companies
   In the light of rapidly growing       from emerging floriculture producers,
urbanization and scattering of           especially from India and China, are
families and friends to different        stretching their businesses to African




                                                                           181
and European floriculture. In general,       it has been faced by a major
cross-border, even cross-continent           setback – the global recession.
investments are becoming more                India’s flower export market, which
common in floriculture.                      was estimated at over Rs. 300
                                             crores in 2006-07 has decreased
     Furthermore,          distribution      by 15-20 percent in 2008-09 owing
processes are also undergoing                to global economic slowdown. With
drastic changes, which is likely to          increasing input costs, the industry
continue in the near future. A growing       foresees an overall increase in
share of supply is moving away from          production cost by 10 percent,
wholesale markets and auction                which is likely to be passed on to
centers, and transported directly from       the consumers. The main sources
the producer to the wholesaler or            of the fertilisers used in floriculture
retailer. The total supply chain is likely   are being imported from Europe and
to operate more efficiently and              China. According to the Industry
become more transparent in the               sources, earlier, China had been
future, with physical flow of products       providing a 35 percent subsidy to
and virtual information getting more         their fertiliser companies on export
and more separated.                          of fertilizers, which has now been
                                             discontinued and China have
      In the higher-end market
                                             imposed a 35 percent export duty
segment, floriculture companies that
                                             on fertilizers. Besides, the prices of
have either deep understanding of
                                             phosphorous and sulphur based
markets or products or a large extent
                                             fertilizers have also increased in the
of flexibility and innovativeness will be
                                             international markets and has
able to succeed, and in the lower-end        further led to an increase in
markets, suppliers to retail multiples,      fertilizer prices by up to 200
discount stores and D-I-Y (Do it             percent.
Yourself) stores can sustain by use
of outstanding logistics, consistent              Over the years, there has been
quality and low costs.                       increase in prices of packaging
                                             material, such as polythene PP
India - Outlook                              covers, and corrugated boxes, which
                                             have increased the export prices and
Commercial floriculture in India is
                                             affected India’s export prospects of
going through a paradigm shift,
                                             floriculture products to Europe,
where traditional flower cultivation is
                                             Japan, China and the USA.
giving way to modern hi-tech flower
cultivation, which is evident from                According to the Indian
India’s rising production and exports        floriculture exporters, the cost of
in the sector. The Indian flower             production for a single stem of Rose
industry was just blossoming when            has increased from Rs 1.50 to




182
Rs 1.70, and exports to Japan and        Industry observers. With growing
Europe have apparently come down         urbanization in the country, Indian
during 2008-09. The overall sales of     consumers are ready to pay and buy
the industry have also gone down by      flowers, which include a variety of
25 percent. Exporters also reveal that   imported products. Products from
their profit margins have also           foreign suppliers are increasingly
decreased by almost 50 percent           becoming visible in the domestic
during the period.                       markets. China has been emerging
                                         as a significant supplier of floriculture
     The demand for flowers in the
                                         products in India, which include a
international markets have also gone
                                         wide variety of foliage products,
down as buyers are not ready to
                                         Roses and Orchids, followed by
spend much on flowers due to overall
                                         Thailand, Taiwan and Australia with
recessionary conditions. This has
                                         their traditional soft and wild flowers.
affected India’s sales even during the
                                         Commercial          floriculture       is
peak periods such as Christmas,
                                         considered under crop diversification
Valentine’s Day and Ohigan
                                         in agriculture and is increasingly
(Japanese festival).
                                         being considered as remunerative
     In the export markets, a number     economic activity by the farmers
of other neighbours are emerging as      across the country. This coupled with
competitors. Besides China, closer       growing urbanization and changing
to home, Nepal is provided with          lifestyles have given a boost to the
special duty free access to EU in this   per capita consumption of flowers
sector, and production of flowers in     and plants in the country significantly.
the country is expanding. Pakistan is    In the recent years, flower
also emerging as a production centre     consumption in the cities and major
and Indian companies are supplying       towns is reportedly growing at 40
high quality inputs to Pakistan. Sri     percent per annum. Flower retail
Lanka is already supplying greens        shops and boutiques have
and flowers to Europe and South          mushroomed all over the cities and
East Asian markets. A number of          towns. Further, super-market/
Indian exporters/companies have          hypermarket retail chains have also
also set up large production bases       fueled the growth in the
in African countries such as Kenya,      consumption. A number of
Ethiopia and Tanzania.                   corporates have also entered into the
                                         sector with large investments.
    With international trade in the
sector showing not so favourable              Realizing the importance of
scenario, the domestic market is         floriculture’s contribution to national
largely    unaffected     by    the      agricultural       economy,         the
developments, according to the           Government of India has introduced




                                                                              183
many developmental programmes           the import standards pose
mainly through the schemes of           challenges as consuming countries
Ministry of Commerce and Industry,      are expected to make the
implemented by (APEDA), and             regulations more stringent to
Ministry of Agriculture implemented     safeguard the interests of local
under (National Horticulture Board),    growers.
National Horticulture Mission, and
Technology Mission for North Eastern    Markets and Demand
States. All these have generated        In the recent years, India has also
ample scope for the industry to         been diversifying its export markets
expand in domestic and global sales.    from traditional markets such as
The potential for commercial            EU and USA to new markets in the
floriculture in India, including        East Asia, such as Japan and
production for domestic and export      Australia. In order to understand the
sales of cut flowers and plants is      changes in these markets,
unlimited, provided the challenges      especially the demand for cut
are converted into opportunities        flowers and foliage, vis-à-vis India’s
through      strategic    planning,     performance in these market, trend
infrastructural development and         analyses have been done, using a
regional cooperation.                   bubble graph that categorises
                                        markets into four categories/
Prospects - India                       quadrants - gainers in dynamic
According to the industry               markets, losers in dynamic
observers, despite the precarious       markets, losers in declining markets
market situation, the floriculture      and gainers in declining markets.
industry is expected to grow, though
                                             Exhibit 7.3 shows the import
at a slower rate, in most of the
                                        value of fresh cut flowers (HS Code
major and emerging markets. The
                                        060310) of importing countries (size
increasing demand projected for
                                        of the bubbles indicate the share of
both cut flowers and potted plants
                                        that country in world imports of the
in these markets would result in
                                        selected product), and compares
increase in production outside the
                                        India’s export growth with the growth
traditional areas, due to escalating
                                        of international demand during the
cost and environmental regulations
                                        period 2002-2006.
in these traditional areas. India, in
the long run, would benefit from this        Annual export of fresh cut flowers
trend and may grow further by           from India witnessed a growth of 10
increasing the production of existing   percent during the period and has
products as well as expanding the       been shown as the vertical dotted
product range. However, post-           line. Countries to which India’s flower
harvest management and meeting          export growth has been more than



184
10 percent fall on the right hand side    particularly dynamic markets whose
of this line and vice versa. Annual       import demand for fresh cut flowers
average growth of imports of fresh        is growing faster than world average,
cut flowers by India’s partner            and in which Indian exporters have
countries from the world has been         increased their market share.
plotted on the vertical axis. This was    Exports to these markets have
also 10 percent during the analysed       proven        their    international
period and countries that have better     competitiveness over the period and
growth in import demand (more than        is likely to continue the trend with
10 percent) may be considered as          concerted efforts from the Indian
dynamic markets, while countries          exporters.
below this level may be considered
as declining markets. The diagonal             Losses in dynamic markets:
line represents locus of points, which    These markets are challenging
indicate a constant market share for      markets and need focussed trade
India in imports of fresh cut flowers     promotion efforts. While international
by that particular market. The slope      demand for fresh cut flowers in these
of this diagonal line is 0.8 and it       markets has been growing at above
divides the chart vertically into two     average rates, India’s share has
parts. Countries below this diagonal      been falling behind. These countries
line have shown lower import growth       include Singapore, Malaysia and
than India’s average growth of            Australia, where India has been
exports of fresh cut flowers to that      losing market share, and needs to be
country implying that India has           focused upon.
increased its share in that market            Losses in declining markets: The
(gained). Conversely, countries           export prospects to these countries
above the diagonal line have seen an      tend to be bleak since import
erosion of India’s market share in that   demand of fresh cut flowers from
country’s imports (losses).               these markets have increased at a
    Thus, the intersection of the         below-average rate or have actually
diagonal and horizontal lines divides     declined, and the market share of
the entire graph into four quadrants,     India has also gone down. Such
with the following characteristics:       countries include France and
                                          Switzerland.
    Gains in dynamic markets:
These are the export markets for             Gains in declining markets:
fresh cut flowers in which India has      Import markets in this quadrant,
performed well: such as Japan and         such as UK, Italy and Germany are
Greece. This quadrant contains,           showing growth in demand at a




                                                                            185
                        Exhibit 7.3:
  EXPORT PERFORMANCE OF FLORICULTURE PRODUCTS FROM INDIA
                 AND POTENTIAL MARKETS




 SOURCE: Exim Bank Analysis; ITC UNCTAD Trade Map Database

below average rate, but the market       countries but whose import demand
share of India has seen a rise.          of cut flowers and other floriculture
                                         produscts have been growing
    The scope of this exhibit is         significantly in the recent years, and
confined to those countries, which       where India has not been able to
have been exhibiting relatively higher   make a breakthrough. These markets
import demand of fresh cut flowers       include some of the East European
over the years. There are however,       markets such as Poland, Czech
certain emerging markets, whose          Republic and Norway. Others include
imports is relatively lesser in terms    Sweden and Belgium. Russian
of volume than the major importing       Federation has proved to be the most



186
dynamic market in the recent years,       major regional markets, and also
as its import demand has been             have been increasing their shares
growing at four times higher rate than    in these markets.
the world average between 2003-07
(Table 7.2).                              Market opportunities
     Table 7.2 also reveals that          Exhibit 7.5 provides the market
though India’s share in cut flower        opportunities for Indian floriculture
imports by the leading importing          industry depending upon the peak,
countries is less, India has been able    not so peak, and lean periods of
to increase its export share in fresh     demand of floriculture products in
cut flowers to these countries in the     the international and domestic
recent years. The table also reveals      markets.
that for many of the countries such
as UK, Germany, Italy and Austria,        Expansion and diversification
India’s flower export was mainly in       in floriculture
the form of dried flowers, and in some
countries, such as Canada and             Hi-tech/Protected Cultivation
Denmark, around 100 percent of            The cut flowers, which are being
flowers exports from India has been       exported from India, are mostly from
in the form of dried flowers. The table   hi-tech floricultural units. Protected
thus, implies that there is ample         cultivation although is limited in India
scope for India to make a mark in the     (5 percent of total cropped area
emerging dynamic flower markets,          under flower), its contribution to total
and as well increase its share in         floricultural exports is significant. At
steadily growing existing markets.        present, there are about 110 export-
                                          oriented floricultural units in
India’s Export Performance in             operation, covering an area of about
Select Cut Flower Markets                 500 ha. These units are growing
Exhibit 7.4 shows India’s                 mostly Roses, but can be diversified
performance in cut flower exports         into Orchids, Anthurium, Gladiolus,
in the major strategic markets. The       Tuberose, and Foliage varieties, as
exhibit reveals that despite being        the demand for tropical flowers and
the second largest producer of            plants is increasing worldwide.
flowers in the region, except in          Europe is one of the largest
UAE and Japan, India has not been         consumers of tropical/summer
able to make a significant mark in        flowers, and India is the largest Asian
other major strategic markets             country supplier of summer flowers
analysed. Countries such as               to the Europe. India is also the
Thailand, Malaysia and China have         second largest supplier of fresh
been consistent suppliers to the          foliage to the Europe. With




                                                                              187
                                              Table 7.2:




188
      GROWTH IN TERMS OF VALUE IN TOP INTERNATIONAL MARKETS OF CUT FLOWERS AND INDIA’S EXPORT
                    SHARE IN THESE MARKETS, 2003-07 WORLD AVERAGE: 10.3 PERCENT
      Importing         Average     India’s exports in US$ million          India’ share in imports of           Share of fresh cut flowers in      Average
      Countries          Annual                                             cut flowers by the country            total exports of cut flowers       Annual
                        Growth                                                    from World (%)                         from India (%)             Growth
                         (AAGR)                                                                                                                    (AAGR) in
                            in                                                                                                                      exports
                        imports                                                                                                                       from
                           (%)                                                                                                                     India (%)

                         2003-07   2003   2004   2005    2006    2007    2003   2004   2005   2006   2007       2003   2004   2005   2006   2007    2003-07

      USA                    4.2    2.5   2.21    2.63    2.26    1.38   0.39   0.30   0.36   0.29       0.12    12     12     11     16     38          -11
      Germany                4.7   0.97   1.71    1.85    2.74    1.00   0.10   0.17   0.19   0.29       0.09    10     15     11      4     16           17
      UK                    13.7   6.21   3.91     4.6    3.23    0.69   0.63   0.38   0.39   0.25       0.07     2      4     10      6      2         -32
      France                 7.9   2.65   3.01    2.38    3.16    2.65   0.76   0.74   1.07   1.19       0.39    31     50     32     34     55            2
      Russia*               38.9   0.89   0.51    0.73    0.44    1.27   0.18   0.10   0.15   0.08       0.24    42     18     36     18     29           37
      Netherlands           18.5   0.03   0.09    0.12    0.14    0.09   0.02   0.05   0.06   0.05       0.02     0      0      0      0      2           53
      Japan                 15.1   5.09   3.18   12.19   63.77    5.95   3.41   1.75   6.11   25.4       2.30    99     98    100    100    100         145
      Italy                  5.4   0.91   1.08    1.09    0.92    0.53   0.47   0.51   0.55   0.42       0.22    16     29     39     13     39         -10
      Switzerland           10.2    0.3    0.2    0.15    0.28    0.52   0.24   0.15   0.11   0.21       0.29   100    100    100    100     78           29
      Belgium               19.3   0.15   0.42    0.61     0.4    0.29   0.17   0.42   0.62   0.39       0.17    27      2      5      0      1           41
      Austria               14.0   0.04   0.22    0.33    0.21    0.06   0.05   0.24   0.34   0.21       0.04     0      0      0      0      3           98
      Denmark               12.6    0.2   0.14     0.1     0.3    0.55   0.22   0.18   0.12   0.34       0.48     0      0      0      0      0           56
      Canada                 6.6   0.16   0.17    0.45    0.56    0.63   0.29   0.28   0.63   0.73       0.57     0      0      0      0      0           52
      Spain                 19.4   0.05   0.11     0.1    0.05   0.004   0.07   0.13   0.12   0.05       0.00     0     18     90     20      0           -8
      Sweden                19.9   0.07   0.19     0.2    0.25    0.10   0.12   0.22   0.20   0.34       0.10     0      0      0      0      0           35
      Ireland               15.3   0.35   0.17     0.3    0.33    0.14   1.50   0.63   0.80   0.73       0.18     0     12     17      3      0           -6
      Poland*               26.4      0      0       0       0   0.009   0.00   0.00   0.00   0.00       0.01     0      0      0      0      0          —-
      Norway                19.9   0.05   0.01    0.03    0.06    0.04   0.29   0.04   0.11   0.23       0.08     0      0      0      0     11           47
      Czech Republic*       29.2      0      0       0       0    0.02   0.00   0.00   0.00   0.00       0.05     0      0      0      0      3          —-

      * Most Dynamic markets
      SOURCE: Exim Bank Analysis
      DataSOURCE: DGCIS and UN Comtrade Database
diversification and growing new          Some of the potential tropical
varieties, India could expand its    flower varieties that can be explored
product range and share in the       by Indian floriculture exporters are
European summer flower and foliage   given in Table 7.3.
markets.

                           Exhibit 7.4:
          COMPARISON OF INDIA’S EXPORT PERFORMANCE IN
                    SELECT ASIAN MARKETS




 SOURCE: ITC UNCTAD Trade Map Database; India Data Source- DGCIS




                                                                      189
                           Exhibit 7.5:
           SEASONAL OPPORTUNITIES FOR TRADE IN FLOWERS




    India has several advantages        Landscaping
and great potential to increase the     Indian real estate sector has been
acreage under intensive production      witnessing a revolution, driven by
under     controlled     condition.     the booming economy, favourable
Technological advancement has           demographics and liberalized
been achieved in this area. Some of     foreign direct investment (FDI)
the technologies that have been         regime. Growing at a rate of 30 per
indigenously standardized include:      cent, it has emerged as one of the
      Tissue culture for mass scale     most appealing segment for
      production in varieties such as   domestic as well as foreign real
      Orchid, Carnation, Lilium, and    estate developers. The growing
      Foliage plants;                   middle class population in India has
                                        opened a new era for Indian
      Automated green (poly)            ornamental plants and nursery
      houses     for Rose and           industry, supplying trees, greens
      Carnation;                        and plants.
      Shade-net for Gerbera and
                                            According to Industry sources,
      Anthurium;
                                        leading producers of plants and
      Cool chain and post harvest       trees and specialized nurserymen
      management       of    Rose,      from Europe and other regions, such
      Carnation, and Gerbera;           as Israel, are increasingly joining
      Breeding of Anthurium;            Indian companies to produce
                                        varieties of trees and plants for Indian
      Production of artificial media    market and for exports as well. Indian
      such as coco-peat, peat moss,     tissue culture industry, which has
      vermiulture.                      been growing at a steady rate has




190
                         Table 7.3:
POTENTIAL FLOWERS AND FOLIAGE PLANTS FOR CULTIVATION IN INDIA
Northern & Eastern India – Himalayan Foothills and Indo-Gangetic Plains
Major flowers grown                     Untapped varieties
·   Gladiolus                           · Iris
·   Carnations                          · Dahlia
·   Chrysanthemum                       · Zinnia
·   Lilum                               · Crocus
·   Tuberose                            · Salvia
·   Rose                                · Begonia
·   Gerbera                             · Cineraria
                                        · Gaillardia
                                        · Antirrhinum
                                        · Aster
                                        · Ornamental grasses
                                        · Ferns
                                        · Crotons
North Eastern India
Major Flowers grown                     Untapped varieties
Cymbidium                               · Anthurium
                                        · Bromeliads
                                        · Sterlitzia
                                        · Heliconia
                                        · Calla lily
                                        · Football lily
                                        · Other tropical Orchids
Central and Western India
Major flowers grown                     Untapped varieties
·   Gladiolus                           · Statice
·   Carnations                          · Aster
·   Chrysanthemum                       · Limonium
·   Lilum                               · Solidago
·   Tuberose                            · Phlox
·   Rose                                · Calla lily
·   Gerbera
Southern India
Major flowers grown                     Major foliage that may be grown
·   Carnations                          · Araucaria
·   Rose                                · Aglonema
·   Anthurium                           · Anthurium
·   Jasmine                             · Aspidistra
·   Tropical Orchids                    · Begonia
                                        · Buddlea
                                        · Caladium
                                        · Cestrum
                                        · Clerodendron spendens
                                        · Dracaena varieties
                                        · Ficus varieties
                                        · Monestera
                                        · Philodendron
                                        · Coleus
                                        · Sciandapsus


                                                                          191
led to European plant breeders            some of them can endure frost and
sending their new varieties to Indian     are cold hardy. India has the most
labs to multiply planting materials. In   suitable climatic conditions for
Western and Southern India, tissue        palms in general. However, India
culture labs are already exporting        needs to be selective while growing
high quality products to over 20          palms especially in northern and
countries, and are also entering into     northwestern India as some parts
foreign collaborations to secure          of Uttar Pradesh, Delhi, Punjab,
foreign investments and joint             Rajasthan, Haryana, Himachal
ventures. The advent of such              Pradesh and Kashmir have
developments has been opening up          extremely high and / or very low
new opportunities for specialized         temperatures in certain parts of the
nursery concept in India.                 year.
                                               In the recent years, palms form
Scope for Landscaping
                                          a significant part of horti-floriculture
      Hotel / Recreational Resorts        trade in India and has become an
      Sports Venues / Complexes           integral part of the nursery concept
      Embassies                           both in India and abroad. Currently,
      Religious Sites                     around 200 varieties of palms are in
      Cemeteries                          cultivation in various nurseries in
      Government / Public / Defence       India.
      Sites                                   Water Gardening – Flowers
      Amusement Parks / Gardens           such as lotus and water lilies are
      Air Ports                           main flowers for water gardening in
      Educational Institutions            India. With green and ecological
      Golf / Race Courses                 concept of living are increasing the
                                          awareness of consumers all over the
      Commercial / Residential Sites
                                          world, concept such as water
      Industrial premises (for using      gardening using lotus and water lilies
      effluent treated water for the      are also growing popular. Lotus and
      green area)                         water lilies are also grown in large
                                          containers in terraces of buildings
Select promising landscaping              and complexes. There are various
concepts                                  international societies promoting
Palms – Palms are becoming                water gardening and collating
increasingly popular and integral         information on these bio-diverse
part of every landscaping. Palms          groups of plants. India is a home to a
require very less care and attention      large variety of lotus and water lilies
once given the right environment for      that grow naturally as wild across
growth. Though palms are tropical,        India. ‘Green Living Concepts’ such




192
as water gardening may open up           among others. India has already
new avenues for landscaping, and         established itself as the leading
also scope for product range             supplier of dried flowers and foliage
expansion for Indian floricultural       to the European markets. The
exporters.                               demand for dry flowers is
                                         increasing at an impressive rate of
Floral Arts                              8-10 percent, and therefore there is
Surging per capita income and            considerable scope for the Indian
progressive lifestyles have led to a     floriculture entrepreneurs to
phenomenal increase in floral art        increase their market share in the
and floral designing market in India.    global dry flower industry.
Floral arts and floral designing is
increasingly becoming popular,           Flower Seed Production
promoted by wedding planners and         Seed production of seasonal flower
event organizers in India, with          crops has been emerging as a
demand for flowers increasing
                                         lucrative business and is practiced
significantly during wedding and
                                         in considerable areas in Punjab and
festive seasons.
                                         Haryana for higher returns. In the
Alongside, India has become one of       recent years, demand has been
the world’s attractive tourism           increasing in domestic markets and
destinations, creating a new boom        in the neighbouring countries such
in flower consumption in the             as Pakistan, and Nepal.
hospitality industry.
                                         Nursery Industry
Dry Flowers
                                         A growing number of International
Dry flowers constitute nearly 15         plant breeders are moving to India
percent of the global floriculture       for propagating a large variety of
business, and also form a major          planting materials such as
share in floricultural exports from      seedlings, budded plants, rooted
India. At present, the industry is not   cuttings, bulbs, tubers, corms, and
well organised and relies, to a          annual seed, which have given the
substantial extent, on gathering of      Indian nursery and plant tissue
flowers from the wild and drying         culture industry a major boost. In
them using conventional methods.         recent years, India have emerged
However, some fresh flowers are          as one of the leading suppliers of
also converted into dry flowers for      rooted cuttings, bulbs, tubers,
better returns. These include            tuberous roots, corms and
Dahlias, Marigold, Jute Flowers,         rhizomes to Europe, particularly to
Wood Roses, Lotus pods and Lilies        the EU. EU’s imports of planting




                                                                          193
materials from India showed the          contamination of environment,
highest growth (of 32 percent)           increasing number of consumers
amongst other developing country         particularly in the textile markets in
suppliers between 2003-07.               Europe, Japan and USA are
                                         adopting use of natural dyes,
Flower Extracts and Essential            particularly floral dyes. Floral dyes
Oils                                     are considered eco-friendly and
Flower extracts and essential oils       non-toxic for human skin.
offer another great opportunity for          India has been considered as
value-addition and enhancing of
                                         forerunners in the art of natural
returns as they enjoy a good
                                         dyeing. Natural dyes find use in the
demand in domestic as well as
                                         colouring of textiles, drugs, and
export markets. The cultivation of
                                         cosmetics. Owing to their non-toxic
the Damask rose owes its
popularity largely to its demand for     nature, they are also used for
extraction of oil and preparation of     colouring various food products. In
rose water and gulkand. Products         India, there are more than 450 plants
made of Jasmine, and Tuberose            that can yield dyes, of which 50 are
find a ready market in the               considered to be the most important,
cosmetics industry.                      and seven of them are extracted
                                         from flowers.
Natural Dyes
                                         The Indian Advantage
Due to the disadvantages
associated with synthetic dyes with      India has several other advantages,
respect to their toxicity, and           by virtue of which the country has

                             Table 7.4:
            SELECT FLOWER VARIETIES WITH POTENTIAL FOR
                      NATURAL DYE EXTRACTION
 Flower                    Botanical name                       Dye Colour
 Safflower                 Carthamus tinctorius L.              Red
 Lotus                     Mallotus philippinensis Muell.       Red
 Golden rod                Solidago grandis DC                  Yellow
 Marigold                  Tagetes sp.                          Yellow
 Saffron                   Crocus sativus L                     Yellow
 Flame of the forest       Butea monosperma (Lam) Taubert       Yellow
 Dhalia                    Dhalia sp.                           Orange
 Water lily                Nymphaea alba L                      Blue
 (part used – rhizome)
 Lily (part used – leaf)   Convallaria majalis L.               Orange




194
potential to become one of the           unlike other African countries,
major players in the international       this period is free from adverse
floriculture industry. The significant   climatic disturbances like
advantages that India holds include:     unpredictable monsoon or
                                         rainstorms;
    India has a wide variety of soils
    suitable for growing various         India also has the advantage of
    crops, which reduces the need        favourable agro climate, low-
    to depend on relatively              cost labour, arable land and
                                         skilled manpower;
    expensive artificial media;
                                         Abundant sunshine throughout
    Relatively nearer to the
                                         the year especially in autumn
    emerging floriculture markets
                                         and winter helps in year-round
    like Japan, Australia and
                                         production of the crop without
    Middle-East;
                                         depending on artificial light, and
    Indian Roses have shorter            related cost escalation in
    production cycle (only 45 days)      flower production;
    from day of pruning to
                                         Ideal temperatures for tropical
    harvesting, compared to 55-60
                                         production of flowers should
    days of production cycle in
                                         hover around 28oC during day
    Kenya and Ecuador. Hence,
                                         and 18 o C during night.
    precise programming of
                                         Amongst the Indian production
    flowering is possible in Indian
                                         centres, Bangalore (29oC day;
    conditions that meet the peak
                                         18 oC night) offers the best
    market demands;
                                         climatic range, followed by
    During the peak demand               Pune, Hyderabad and Delhi
    worldwide in November-March          (32 o C day; 18 o C night).
    (Christmas, New Year Day,            Bangalore and Pune have
    Valentine’s Day etc.), the           salubrious climate, and thus
    weather in India is very             they are the most favorable
    conducive for quality flower         destinations for formation of
    production. At the same time         floriculture hubs.




                                                                       195
8. CHALLENGES AND STRATEGIES



     Despite the anticipated growth in     chapter, the scope for discussion is
the world floriculture industry, the       limited to the macro challenges
challenges remain. While the               faced by the Indian floriculture sector,
challenges faced by the floriculture       and strategies that may be adopted
industry is largely country specific, in   to overcome the challenges.
the recent years it has been observed
                                                India’s floriculture exports
that shift in consumer preferences
                                           dropped by around 44 percent in
has been significantly affecting the
                                           value terms, from US$ 144 million in
industry across the globe in terms of
                                           2006-07 to US$ 80 million in 2008-
demand and trade flow. Challenges
                                           09. Several reasons have been cited
are faced at both the ends of the
                                           for this shortfall, mainly related to
supply chain viz, producers and
                                           global       trade     environment,
buyers. While the production of some
                                           infrastructure constraints and
large producing countries is
                                           marketing challenges such as high
stagnating, and coupled with
                                           import tariff. There are also offer
increased costs of production,
                                           emerging challenges such as low
increasing stringent imports
                                           performance of the six floriculture
requirements in major buyer markets
                                           Agri Export Zones, non-operational
are posing considerable challenges
                                           status of Auction centers such as that
on the production system in the
                                           of in Mumbai, and closure of units.
producing regions, particularly in the
                                           According to the industry sources, a
developing countries. Needless to
                                           large number of floriculture units in
mention, floriculture being an agro-
                                           Pune and Karnataka region have
based industry, is susceptible to a
                                           been shut down. For instance, out of
number of natural calamities,
                                           26 large units, which were functioning
affecting trade and overall structure
                                           earlier, only around 10 are reportedly
of the industry substantially.
                                           in business currently, in Pune. In
Furthermore, the trade in floriculture
                                           Talegaon Floriculture Park, Pune,
is increasingly becoming vulnerable
                                           which anticipated allottment of land
to shocks such as currency
                                           to around 100 companies, only 25-
fluctuations and energy costs. These
                                           30 small units are currently operating.
challenges are faced by players
                                           Industry sources mention various
across the industry. However, in this
                                           reasons such as shortage in trained




196
manpower and other issues related        to October. During the period
to infrastructure and investments for    November to April, when it is winter
such a state of affair. Although         in Europe, and the markets largely
floriculture industry is actively        depends upon imported flowers,
supported by the Government, a           the tariff is lowered by five to six
number of floriculture units have been   per cent.
sick as a result of various factors
related to infrastructure and                 Import duty impossed upon India
marketability.                           during the summer months in
                                         Europe is around 12 percent if
    Another major reason cited for       certificate of origin is not provided and
closure of units and shrinking of        10 percent if the same is provided,
flower industry in India has been the    while it is 8.5 percent and 7.2 percent,
real estate boom in Pune and             respectively, during the winter
Bangalore region leading to closure      months in Europe. The real rate
of few floriculture units in these       could work out to nearly 17 percent
regions. At the same time Indian         in non-peak months if one reckons
entrepreneurs have been setting up       with the fact that tariffs are worked
and expanding flower businesses
                                         out on FOB plus freight basis. On the
outside the country. In the recent
                                         other hand most of India’s
years, there have been large-scale
                                         competitors such as Israel,
investments by the Indian
                                         Colombia, Ecuador, and East African
entrepreneurs in East African
                                         countries enjoy zero import duty
countries such as Ethiopia, Kenya
                                         structure in Europe.
and Tanzania, due to favourable
investment environment, adequately            This has been preventing Indian
supported by favourable production       floricultural products from having
conditions.                              market access during the crucial
                                         months in Europe. Given the fact that
CONSTRAINTS FACED AT                     the prices of the cut Roses in Dutch
EXPORT DEVELOPMENT                       auctions have been falling since
STAGE                                    1994, and more so in the May to
                                         October period, a higher import tariff
Import Tariff                            during low price seasons severely
India is subjected to import duty        constrains India’s efforts as
disadvantage in exports of               establishing a steady annual market
floriculture products to the Europe      in Europe across seasons.
as against all its competitors. Cut
flowers from India face a higher         Freight cost
import duty in Europe during the         Availability of dedicated perishable
non-peak market months, i.e., May        carriers is low in India and the




                                                                              197
freight rates work out high. Although    relatively low-volume cargo. Airlines
production cost of Indian flowers is     in India also do not offer airfreight
competitive, the high freight cost       discounts to Indian exporters due to
puts the industry at a cost              their low volume business. The low
disadvantage position (estimated         volume prevents Indian exporters to
50-60 percent higher than the            charter exclusive aircraft for flower
pricing of the competitors).             cargo.

    Airfreight       from     African        Higher freight cost also results
destinations to Europe is currently      in high packaging density affecting
around US$ 1.6 /kg. Airfreight from      the quality of the flowers by bruising,
Israel to Europe is currently around     over heating in transport, and
                                         piercing of foliages by thorns.
US$ 0.80 /kg. Airfreight from Mumbai
to Europe is currently, upwards of
                                         Production environment and
around US$ 3 /kg. Clearing and
                                         economies of scale
forwarding charges for shipments
from India to Europe are                 The production centers in India are
approximately Euro 0.02 /kg. Clearing    concentrated mostly in areas where
and forwarding charges for               international cargo handling facilities
shipments from Africa to Europe are      are available. Much of the
approximately at Euro 0.12 /kg. This     production potential is not optimally
is mainly due to the low volumes, and    utilized largely due to inadequate
                                         support infrastructure such as all
also due to the fact that India has to
                                         weather roads, electricity and
pay duty and therefore, there is
                                         telecommunications, in distant
considerable          administration
                                         production areas.
involved. This increasing freight and
related cost has put India in a              It is also cited that the small unit
disadvantageous position in the          size of the flower farms in India act
global floriculture market.              as a constraint due to operations of
                                         diseconomies of scale. The average
     India’s         geographical        size of Indian farms is approximately
disadvantage to Europe may be one        4 ha, as compared to the size of 40
reason for such a high freight cost;     ha in some East African countries
however, there are also additional       (a 10 ha and above farm is
costs incurred by Indian flower          considered as large farm in India
exporters such as landing and route      while the same would be a small farm
navigation charges and air turbine       in East Africa). Thus, the East African
fuel surcharge. Paucity of air cargo     units are able to leverage their
space for flowers is also another        capacities and capture more market
challenge, especially in the context     share as a result of the production
of airlines preferring to transport      volumes. Besides, being cost




198
competitive, high volume enables         transportation process to ensure that
them to offer a wide range of colours,   the flowers do not deteriorate in their
in the quantities of batch sizes that    quality.
international market demands.
                                              In India, inadequate cold chain
                                         infrastructure is not only affecting the
Supply infrastructure
                                         future of floriculture trade, but also
Clean handling and better storage        having a negative impact on the
environment is very important in         present produce and on its
floriculture supply chain. Cut           marketability. Owing to this, the post
flowers must be cooled to                harvest losses are high. Though no
temperature ranging between 33o F        systematic study has been
to 41 o F without much delay.            conducted to assess these losses,
Higher temperatures not only             the estimated losses range even up
reduce the vase-life but also            to 40 percent, depending upon
increases the respiration rate, heat     various stages of post-harvest
production, and subsequently             handling.
increase the damages caused by
                                              According to the industry
ethylene formation.
                                         sources, in India, the availability of
    Additionally, high temperature       dedicated cold storage facilities at
also generates high humidity/            farmyards as also at airports is
moisture,        which      causes       minimal. In addition, the adequacy
development of fungal and bacterial      levels of cooling facilities in domestic
infections in the stems and flowers      transportation need to be examined
causing deterioration of the product     in the context of the growing
quality. Thus, temperature and           international flower business. Some
humidity controlled transportation is    imminent challenges with cold-chain
needed at all stages of the              in India include:

                          Table 8.1:
   FACTORS AFFECTING LOCATION OF FLORICULTURAL INVESTMENT
            Wage Rate         Land Price        Freight          Customs Duties
            (US$ per month)   (US$ per month)   (US$ per kilo)   (in percent)
 Ethiopia   20                13                1.5-2            0
 Kenya      44                n.a.              1.6              0
                                                                 (5 percent
                                                                 from 2008)
 India      58                6500              2-3              6-9

 SOURCES: India Business Times; Kenya Cut-Flower Cluster, mimeo; ILO;
 Horticulture in Eastern and Southern Africa, Price Waterhouse Coopers




                                                                              199
                                             Exhibit 8.1:
                        RELATION OF VASE LIFE OF FLOWERS WITH TEMPERATURE




                                                                                         % vase life remaining
     Temperature (F)




    SOURCE: George Staby, Perishables Research Organization, and Michael Reid,
    University of California, Davis, CA


●                      Not so well Integrated Cold      ●   Absence of cold storage
                       Supply Chain across the              facilities in most of the airports.
                       country – dominated by               Currently, only six international
                       isolated    stores     without       airports have cold storage
                       connecting logistics support;        facilities for perishable cargo.
                                                            These are: New Delhi,
●                      The cold storages reportedly
                                                            Mumbai, Chennai, Hyderabad,
                       work on primitive technology
                                                            Bangalore, and Thiruvanantha-
                       and hence may not be
                                                            puram.         Under         such
                       relatively effective;
                                                            circumstances several hours
●                      Cold stores are often used for       (sometimes even days) would
                       storing low value products;          lapse before the cargo could
                                                            be loaded to the connecting
●                      Often cold storages opt for
                                                            flight. During this time the
                       short duration dictated by
                                                            cargo would remain in high
                       market imbalances;
                                                            temperatures and low humidity,
●                      Inadequate availability of           resulting in considerable
                       refrigerated vehicles;               deterioration in product quality.




200
●      Constricted cargo space on              have developed their own systems
       flights. Airlines, generally show       and do not need to use cold storage
       resistance to carry cargo               at the airport often except perhaps
       which is seasonal, perishable,          when flight connections are missed.
       voluminous, yet not in such             Since a logistic chain is not properly
       large quantity, which also              developed, the Indian exporters have
       applies to floral cargo.                difficulty in depending on this stand-
       Because of small volume of              alone system.
       flowers, they mostly have to be
       transported on regular flights              The     customs      clearance
       having limited cargo space.             procedures continue to be time
                                               consuming and are still posing a
     The availability of cold storage at       challenge to the exporters.
the airports was one of the major
constraints in the early stages of the             Uninterrupted and low cost
evolution of the floriculture industry         power supply is crucial for the
in India. However, in recent years the         modern floriculture units for
cold storages established in the six           greenhouse operations. However, in
international airports are faced with          some regions, the units are often
the challenge of under utilization of          faced with low power supplies.
the facilities. Discussions with               Besides, floriculture in India is treated
exporters reveal that some of them             as an industry and so pays for use

                             Box 7:
    POTENTIAL OF PROCESSES THAT MAY AFFECT QUALITY OF FLOWER
                   THROUGHOUT THE SUPPLY CHAIN
    Process                                     Time                  Potential to
                                                                      affect quality
    Post-harvest on farm                        4-8 hours             Medium
    Storage on farm                             12-72 hours           Low – Medium
    Transportation to cargo agencies            1-6 hours             Medium
    Storage at cargo agency                     4 hours               Low
    Palletizing                                 6 hours               Medium - High
    Customs clearance (Home)                    0.5 hours             Low
    Loading to aircraft                         1-2 hours             Medium - High
    Flight (non-stop)                           4 hours               High
    Custom clearance (export destination)       4-12 hours            Low
    Depalletizing (at destination)              2-4 hours             High
    Storage at cargo agency (at destination)    4-72 hours            Low – Medium
    Transportation to retailers/ wholesalers    2 hours – 5 days      Medium




                                                                                    201
of power at industrial rates unlike       quality, and delivery time. This may
agriculture.                              increase the demand for availability
                                          of high quality inputs, right kind of
CONSTRAINTS FACED AT THE                  chemicals and fertilizers at
PRODUCTION LEVEL                          affordable prices, and quality water
                                          for irrigation. In India, producers
Availability of basic inputs,             often complain about non-availability
including seeds and planting              of requisite fertilizers on time,
materials                                 increasing import restrictions on
To deliver floricultural products free    fertilizers, and rise in prices of
of disease, it is important for the       fertilizers, which need to be
producers to start with healthy           addressed with appropriate policy
propagation material. The seed and        interventions. Since flowers are
planting material industry in India is    delicate perishables availability of
relatively not well established.          quality irrigation water is also an
Mostly, the imported varieties are        important factor for maintaining
preferred for production of cut           flower/plant health and quality.
flowers and foliage meant for
                                              In India, the shift in cultivation of
exports, for which breeders charge
                                          flowers and plants from open field to
high royalty and thus, the cost of
                                          controlled greenhouses is a recent
planting material becomes high.
                                          phenomenon. Hence, greenhouses
Further, India is still not a signatory
                                          are built mainly with overseas
of UPOV, and hence, there has
                                          technologies, which are often not
been resistance from foreign
breeders to part with new varieties       customized to Indian climatic
to Indian farmers due to fear of          conditions, viz., weather, wind
protection of Breeder’s Rights. In        velocity, and humidity, and hence,
addition to scarcity of elite planting    many of them do not suit optimally.
material, prevalence of hi-tech                Currently, India exports flowers
production as well as preservation        mainly for 6 months in a year. Due to
technology are also low.                  high temperatures faced in many
                                          parts of the country, production under
Growing conditions and crop               normal conditions is affected during
management                                the summer months of March to May
Crop management strategies are            each year. During this period the
required to meet the demand for           crops are rested and the bud sizes
quality in the international markets      fall sharply, thus the production is
and suitable strategies maintain the      severely affected, and export
may be required with regard to            opportunity during this period such as
volume of production, product             Mother’s Day (May) could not be fully




202
capitalized upon. In contrast, units       CONSTRAINTS FACED AT THE
from East Africa are able to supply        MARKETING STAGE
flowers and meet the demand
requirements throughout the year.          Product Diversification and
                                           Differentiation
     Floriculture is a capital-intensive
sector requiring large-scale               One of the major reasons for the
investments in post harvest handling       global buyers in the floriculture
and up-gradation of technology.            industry to diversify their sourcing
Conventional approach of treating          strategies is the increasing use of
floriculture as a form of agriculture      product differentiation strategies in
practice by lending institutions is one    the international market. The
of the reasons for low investment and      retailers derive competitive
process upgradation in this sector.        advantages from selling unique non-
                                           standard products that are not
Shortage of Skilled Manpower               generally available in the market,
and Training                               competing not only on price, but
                                           also on factors such as reliability,
There is also a limited technical and
                                           product variety, product quality and
marketing knowledge and expertise
                                           speed of innovation. In the
with regard to modern floriculture,
                                           floriculture      sector     product
particularly at the producer level, in
                                           differentiation is determined mainly
areas such as greenhouse
                                           by the number of varieties. Hence,
management, product grading,
                                           supermarkets and other retailers in
packaging and storage.
                                           the direct-sales chain demand
                                           larger varieties of flowers. This has
Aged Plantation
                                           become a major challenge for
The plantations (greenhouse                Indian flower exporters, in
floriculture) in India, of which,          diversifying       and      reducing
majority are Roses, are mostly of          dependence on producing single
the older varieties, of over 6 years,      varieties, which in many cases is
whereas the peak productive phase          limited to only Roses. The most
of the plants, on an average, is           important strategy being adopted by
only 3-5 years. India is estimated         greenhouse growers in Europe and
to be re- planting approximately 25        USA is increasing the varieties of
ha per annum as compared to 200            products cultivated. Even African
ha in some African countries. Only         exporters are constantly in search
40 percent of the units in India are       of new floriculture crops and
equipped with the requisite                exploring the production of new
resources for re-plantation.               varieties.




                                                                            203
Vertical integration and                 exporting to select developed country
innovation                               markets. For instance, Japanese
                                         market demands for complete
Engaging in direct marketing of
                                         absence of any living insect or mite
floriculture requires improved
                                         in imported flowers. Thus, there
production capability and innovation.
                                         needs to be a balance while
Also, the growing competition in the
                                         considering environmental issues
supply chain through differentiation
                                         and addressing the requirements of
(for example, more number of             consumers.
varieties) and reliability of supply
necessitate the need to have own              In the recent years, the
capacity for propagation of varieties,   increasing demands for quality and
which may be a challenge for the         sustainability by global buyers, and
small     and     medium       sized     the increasing buying power of
producers/exporters in India, with       retailers in the developed country
low-end infrastructure.                  markets have been posing several
                                         challenges on producers/exporters in
Quality parameters and                   the developing countries, particularly
Environmental issues                     with respect to increasing safety,
                                         environmental concerns, and labor
In the international arena, quality
                                         standards. Through the dominant
has several dimensions. Flowers          position of supermarkets and the
should be free from plagues and          vulnerable nature of the products,
diseases and they should be in           supermarket chains have been
undamaged conditions. These              developing their own standards and
elements could be judged on visual       regulations. Some of the regulations
inspection. However, other quality       and standards applied in the
aspects such as proper physical          floriculture trade include: MPS,
handlings at various stages of           GLOBAL-GAP, ICC, and FLP, which
transportation may be very difficult     have become compulsory for
to judge based on visual inspection.     suppliers in the direct sales channel
Yet, this is one of the important        and prominent in the auctions.
determinants of vase life.
                                              The recently developed Fair
    Increasingly, consumers are          Trade in Flower and Plants (FFP)
concerned about the impact of use        scheme, which is based on the ICC
of chemicals on environment and on       and coordinated by the largest global
the workers. Cut flowers are no          flower industry body, Union Fleurs,
exception to such environmental          involves representatives from
guidelines. Intensive use of crop        environmental NGOs and national
protection agents and fertilizers,       trade unions as well as an auditor for
which may be acting as barrier for       all audits. These actors have to agree




204
that the farm deserves certification,     identification of their customer base,
thus, effectively governing the trade     and organizing storage, delivery and
unions on certification.                  transport, have implications on
                                          development of IT systems at the
Marketing information and IT              supply base. Except few large firms
Availability of proper information and    in India, such levels of conformity in
timely dissemination are key to           IT development is intricate, given the
success of any business. With             low capital base of the small and
rapid developments in information         medium floriculture firms.
technology (IT), possibilities of its
applications in the entire value          Logistics
chain is also increasing. Floriculture    With increasing involvement of
is no exception to this trend. In         supermarkets in flower trade,
order to optimize the distribution        organizing logistics is becoming a
process, increasingly new IT-             critical factor for the supplying
components            and         their   countries. Supermarkets require not
communication aspects are linked          only a range of varieties but also
to distribution and route planning,       consistency in volume, quality and
even in flower trade. For instance,       timing – just-in-time delivery. They
application of RFID tags and micro        demand both flexibility and reliability
sensors for tracking and tracing of       in supply. These requirements
products would be useful                  imply higher post-harvest activities;
throughout the chain.                     for example, the use of flexible and
     In the auction market,               reliable transportation facilities
information is easily accessible,         between production site and
prices and quality requirements are       international markets.
transparent, and are available at one
platform. However, the direct sales       Suitable packaging
market involves dealing with a            The low quality of packaging
number of actual and potential            decreases the overall quality of
buyers.      Gathering       updated      flowers being exported. High
marketing information is more vital for   weights of the packaging materials
competency and survival; thus,            increase the transportation cost of
suppliers in the direct sales channel     the flowers, which in turn minimizes
need to develop own source of             their price competitiveness abroad.
information and use information           Many times, boxes are over-filled
technology systems more aptly. The        hindering air ventilation and causing
increasing      coordination        by    stem and flower damage. In
supermarkets for supply logistics,        adequate shipping instructions
such as, track ordering and sales,        results in improper handling of




                                                                             205
flower boxes causing further             presence is established in the major
damage.                                  markets such as Europe or Japan.

Marketing capability                          Long-term commitment is a key
                                         factor in this industry, in terms of
Approach to a flexible marketing         consistency in product quality and
system is one of the important           delivery. This offers possibilities to
aspects of flower trade. The more        invest in the relation and to optimise
the exporting company or supplier        the fitting of the primary process of
is able to adhere to the customers/      the enterprises in the supply chain,
buyers’ needs and specifications,
                                         thus benefiting all the parties involved
the higher the chances of sales.
                                         in the chain.
    Direct marketing requires more
marketing personnel (resources)          STRATEGIES
than the auction channel to carry out    Several positive steps are being
activities related to promotion and      undertaken by India to develop the
frequent interaction with each client.   floriculture sector as a viable export
APEDA has set up a Market                sector. Various policies of the
Facilitation Centre at Aalsmeer,         Government of India have been
Netherlands, whose marketing             furthering the pace of development
efforts are more confined to the         with the overall objective of meeting
auctions than dealing with sales         the requirements of international
related to supermarket and               markets, and to have competitive
wholesale levels.                        prices. However, more strategies
    Specialised outlets help in          need to be adopted to consolidate
building brand image and enhance         the strengths of India in this sector
the chances of approaching target        and create an efficient backward
groups with marketing efforts. Thus,     and forward linkage. These include:
the outlets are being set up through
careful selection of locations.          Infrastructure Support
Product assortment and price setting     Post harvest handling is as
complement the identified locations.     important as growing in order to
Potential suppliers should be able to    retain the attractiveness of the
leverage this marketing structure with   product to the end consumers. In
various products and services,           that sense, the reliability of air
which eventually would distinguish       connections is as crucial as its
them from others. According to           costs. Since, flowers are highly
industry sources, unlike potential       perishable in nature, speed of
suppliers from other countries, no       delivery is utmost importance,
Indian flower wholesale or retail        besides      taking    adequate




206
temperature control during transit.              requires application of appropriate
Hence, it is important to invest in              technology that can enhance the
adequate infrastructure facilities.              performance of the cold chain
    The first and foremost                       process, adequately supported by
requirement is to develop a state-of-            skilled and trained cold chain
the art Integrated Cold Chain, for               managers. The current cold chain
flowers right from the point-of-origin           management in India needs to
(growers) to the point-of-                       undergo a transformation, both in
consumption (customers). This also               structure and approach.

                                    Box 8:
                         INTEGRATED COLD CHAIN MODEL




 Refrigerated Transport – There may be requirement of both refrigerated vans and
 refrigerated containers in case of rail transport, in adequate quantity, especially at small
 centers and not just in major cities alone.
 Terminal/Holding Cold Storages - Terminal or holding cold storages must have a pre-
 cooling facility to reduce the quantity of harmful gases and also a humidity-optimizing
 unit to maintain the right level of moisture. They should also have grading, sorting and
 packaging facilities. There may be need to revamp the cold storages at airports both in
 terms of capacity and number. Again the focus should be on relatively smaller airports
 rather only on major airports.
 Floral/Retail Outlets - The cold chain must not be broken even at retail level. In the
 international markets, even at florist outlets, flowers are displayed in refrigerated cold
 transparent display boxes, which have regulated temperature and humidity to maintain
 the freshness of the flowers. These display boxes are open-top refrigerated case, which
 may be mounted on a cart, booth or the like. The display case includes a plurality of
 elongated bins placed adjacent in a stepped array from an upper bin at the rear of the
 case to a lower bin at the front of the case. Thus, the bins are advantageously arranged
 to provide a best possible display of merchandise. At the same time, the stepped
 arrangement permits a slow flow of refrigerated air from back of the case at the upper
 bin, and forwardly into the lower bin with the cool air cascading over merchandise,
 especially within the lower bin.




                                                                                          207
     The freight cost disadvantage        handle such equipment and
can partially be overcome by              processes, or imparting proper
achieving economies of scale.             training to workforce in handling such
However, to overcome the                  equipments and cargo management.
disadvantage of distance with
Europe, Japan, and other distant               The infrastructure at airports,
countries, APEDA and the exporting        including perishable cargo handling
firms may take advantage of facilities    facilities also needs to be improved
provided by the Dubai Flower Centre       besides creating additional cargo
(DFC). DFC being four hours by air        space specific to floriculture. Efforts
from India can act as a transit hub       may be taken to increase the
providing cost effective trans-           frequency of international flights and
shipment to Indian flower exporters
                                          chartered flights handling floriculture
to countries in Europe and America.
                                          cargo. The enormous time taken in
India can also increase their access
                                          handling and loading also need to be
to Middle East markets through DFC.
Further, Indian floricultural exporters   reduced considerably.
can also leverage upon Dubai’s                 There is a need for operating an
connectivity to global markets
                                          efficient       commercial        inland
through more number of airlines
                                          transportation system. For a micro-
operating from the Dubai International
                                          unit, an individually owned reefer van
Airport. For instance, in 2006, first
consignment of 1,000 cut flowers          represents a fixed cost of around
originating from North Eastern States     Rs.15 lakh or more and the effort in
of Mizoram and Meghalaya were             organizing every trip to the airport
flown from Kolkata to Dubai.              adds up to that cost even more.
                                          Thus, there is ample scope for
     To minimize the time taken and       operating commercially viable reefer
damages caused during handling,
                                          transportation services consolidating
emphasis should be given on
                                          small volumes with individual
improvement of cargo handling
                                          packaging. If there be need, the
facilities and making internal
container depots suitable for             flowers can be stored in the cold
floricultural products, These could be    storage at the airport for connecting
achieved through installation of          to the flights. The airlines, in the
appropriate technology and                process of consolidation and
equipments in adequate number,            palletization, do mix cargo but each
ensuring timely availability of           lot still retains its identity since the
equipments         and      services,     packages already have labels for
recruitment of qualified workforce to     identification.




208
Government support                        coherence in the developmental
The Government of India has been          activities. Multiplicity of agencies
providing financial assistance at         involved in the sector may be
several stages of value chain such        avoided. For instance, certain
as Transport Assistance Scheme            infrastructure         and     market
(air freight support), financial          development schemes, such as
assistance for packaging, setting up      setting up of cold storage are covered
of phytosanitary labs at farms, pre-      under schemes operated by both
cooling facilities at farm, setting up    National Horticulture Board (NHB)
of cold storages, refrigerated            and also APEDA, which requires
transport,        research        and     consolidation         for    effective
development, quality control              implementation.
procedures and certifications, and             Success of modern floriculture
marketing (international expositions      industry depends upon creating an
and trainings). Though these had          effective backward and forward
been supporting the floriculture          linkage, which means development
growers and exporters, in the long-       at both producer and market levels.
term such government support may          Attempts may be made in creating
lead to imposition of countervailing      National Export Promotion Council for
duty in some markets.                     development of modern floriculture,
    The strategy may thus be              and all the developmental schemes
towards encouraging private sector        for the sector (both at producer level
for co-investments in the supply-         and market levels) may be
chain infrastructure. Besides, the        channelled through one agency. Also,
Government        may     continue        flower traders and wholesalers may
increasing investments in creating        be encouraged to trade their
basic infrastructure such as roads,       produces through the auction
connectivity to airports and              centers. It may be observed that one
telecommunication.                        of the main reasons for non-
                                          functioning of the Auction Centre
      In order to address the import
                                          established in Mumbai has been the
duty disadvantage faced by India in
                                          unwillingness of the flower traders in
the international markets, such as
                                          the city/region to relocate themselves
Europe, Government may enhance
                                          from the existing flower market at
its efforts in negotiating preferential
                                          Dadar, Mumbai, where they have
tariff with such countries.
                                          been trading since ages. Dadar has
    To bring about an efficient           been developed as one of the main
implementation of the Government’s        regional business centre for the
developmental initiatives in this         western region by virtue of its
sector, there is a need for bringing      connectivity in the Maharashtra and




                                                                            209
Gujarat region. However, the flower       Re-plantation
trading in Dadar market is                Periodic re-plantation is necessary
unscientific and disorganized, with       in order to maintain the acceptable
majority of the trading taking place in   freshness in variety and quality. The
temporary establishments, and with        existing varieties often become
only few permanent shops. Shifting        obsolete with the constantly
this trading to the Auction Centre        changing market trends and
would help in improving the quality of    consumer demands. High capital
flowers, through effective way of         costs for re-plantation is one of the
storage and handling, thereby, also       major hurdles, which may be
help fetching better market prices.       tackled with appropriate re-
The Auction Centre being relatively       plantation       support        from
closer to the Mumbai International        Government.
Airport may also help in increasing
international trade.                      Enhancing Production Capacity

Production and Economies of               Production base and capacity also
Scale                                     need to be increased in order to
                                          meet the growing needs of the
Scale economies also enable the           markets.       State     horticulture
floriculture units to integrate and       departments, may particularly, take
move up in the value chain. Vertical      advantage of the programmes
integration between producers and         under the National Horticulture
buyers for instance, has helped           Mission and give greater attention
East African units to effectively         to non-traditional areas such as
control the distribution and              South Gujarat, South Maharashtra,
marketing process through direct          North Karnataka, hilly areas of Tamil
interaction with the buyers.              Nadu and Karnataka, Uttarakhand,
    Shifting to Integrated Supply         Himachal Pradesh, Jammu and
Chain Model may help in attaining         Kashmir, and North Eastern States,
economies of scale in the industry.       which are well endowed to grow
Large cut flower growers may identify     flowers and ornamental plants, to
ways to help integrate small and          meet the growing needs of both
medium scale growers with large-          domestic and international market.
scale producer supply chains, and         These emerging production centres
thereby help integrate technology         have advantages such as
and stricter environmental standards      availability of labour, good growing
into production practices. For            conditions such as quality water
example, small-scale growers could        and soils, and ample sunlight. Given
contribute in providing fillers and       proper support, the farmers in
additional varieties to large-scale       these regions are ready to diversify
producers.                                their cropping patterns towards



210
floriculture and thus, sustain the          require training before they can be
growth of this sector.                      used effectively in greenhouses.
                                            Technology for the construction of
Supply of Quality Inputs                    green houses/glass/poly/shade
Cut flowers from India are mostly           houses, that are being imported,
grown for exports and hence,                need to be dovetailed to Indian
should follow the latest trend in           climatic conditions. Low cost green
global demand, and produce the              houses need to be developed using
popularly preferred varieties of            indigenous R & D. Though raw
plants. It may be mentioned that,           materials and packaging materials
floriculture projects are largely           are available locally, high-grade
dependent on the globally preferred         materials have to be imported. Thus,
variety and quality of the planting         low cost suitable packaging material
material. The planting material used        needs to be developed indigenously
in Indian floriculture industry is          for being cost competitive in the
mostly imported and thus, are               international markets. Establishment
faced by supply and cost                    of model nurseries for supplying
constraints. Efforts should be made         genuine planting materials, and
to develop and propagate varieties
                                            distribution of environment friendly
indigenously. India may consider
                                            production and packaging materials
becoming a member of the UPOV
                                            are thus important parameters to
with      adequate       safeguard
                                            achieve internationally acceptable
mechanism for the Indian growers,
                                            quality in production.
that would help protect breeder’s
rights, and thus, win confidence of              Supply of quality water, free from
foreign breeders, enabling smooth           bacteria, and any undesirable
transfer of propagating technology          sedimentation, is another key
and varieties.                              requirement for quality in production
     Although availability of land is not   of floriculture, thus, reducing the
a major constraint, varying cost of         requirement of reverse osmosis
land is increasingly becoming a             process for water filtration. Similarly,
major       constraint.       Besides,      cost of irrigation largely depends
restrictions in land holding patterns       upon choice of technology and the
and conversion of agricultural land         accompanying process controls.
into industrial land, before use for        Depending upon whether monocrop
floriculture, have restricted entry of      or polycrop, an appropriate irrigation
new entrepreneurs in this field.            system should be designed and
Similarly, though the availability of       installed to avoid waste of expensive
labour is not a constraint, they may        fertigation and chemicals.




                                                                                211
Research and Development                cost becomes high with imported
There are several agriculture           green houses / technologies.
universities carrying out research      Hence, indigenous technology for
related to floriculture in most         the construction of green houses/
regions of India. However, the          glass/poly/shade houses are
orientation of such research is not     required to be developed to suit the
much       towards      commercial      Indian climatic conditions. The raw
purposes, and hence their findings      materials and technical know-how
are not directly related to the         required to build greenhouses are
production in greenhouses. A strong     available in India now.
need is felt by the entrepreneurs of
                                        Human Resource Development
this industry that there should be a
common           research       and     To cater to the increasing global
development centre which would          trade, there is a need for trained
not only give inputs / solutions to     personnel at various levels. One of
the challenges faced by the             the major challenges faced by India
industry, but would also develop        is shortage of trained / experienced
good varieties suited to local          technical      and      commercial
environmental conditions.               managers in the operations of this
                                        sector. Thus, private initiatives to
     Select Indian Agriculture          train individuals in the floriculture/
Universities could establish            horticulture sector may be
partnership with overseas research      encouraged to benefit the industry
institutes, viz., PTC+, Holland, for    in the long run. Training centres for
developing new varieties of flowers     diploma courses, on the pattern of
and foilages.                           ITI, for skill development in
                                        floriculture may be set up to
Technology Development                  address this challenge. APEDA in
During the last few years, some of      association with respective state
the early starters in this industry     agencies may provide orientation to
have indigenised their technology       Indian growers on the need to
requirements, like poly houses and      conform to International Union for
parent plant material, and              the Protection of New Varieties of
developed       local    cultivation    Plants (UPOV) and Breeders
technology and post harvest             Rights, and quality requirements
techniques. However, when a new         governing      the     international
entrepreneur wants to enter this        floriculture trade. Additionally,
sector, the technology is required to   training on modern floriculture such
be imported either from the             as green house management,
Netherlands or Israel. The project      integrated pest management, and




212
packaging techniques also need to        Quality and Labeling
be provided.                             Only high-quality flowers are traded
                                         internationally. Production conditions
Developing Joint Ventures
                                         are also becoming a new dimension
Indian firms need to increase the        of quality. This has led to initiatives
volume of sales in order to achieve      by traders and growers alike to
economies of scale. Although Indian      provide consumers with a
Rose production is comparable and        guarantee that the flowers they buy
competitive in terms of costs and        are clean. MPS flower label is
returns, increasing export volume        increasingly getting international
would help in achieving higher           acceptance in the flower business.
profitability. Developing vertical       MPS is a collection of labels in
integration and joint ventures is thus   various classifications (MPS A, B,
another strategy that could be           C) for environmental management,
adopted by Indian growers.
                                         social and human resource
                                         management in the flower sector.
Environmental Strategies
                                         MPS was originally developed in the
Flowers are often offered as gifts       Netherlands, and applied by Dutch
for special occasions. The               producers, but has now been
consumers want to be seen as             successfully applied by producers
giving an item that is of high quality   of other countries as well.
and environmentally friendly.
Adequate care must be taken in               Indian exporters must ensure
usage of chemicals and pesticides.       that their produce is free from
Besides, it is recommended that          disease and that it is carefully treated
the floriculture projects should be      once harvested. Exporters should
geographically spread out in order       also plan and monitor effective quality
to avoid other environmental issues.     control measures right from
Considering the cost of production       production to post harvesting,
and utilization of common facilities,    storage, and transportation. Post
the model of co-operative farming        harvest management, including cold
in select areas would be ideal for       treatment, proper packaging and
implementation.                          application of preservatives, may
                                         need to be strengthened. Attention
Marketing                                may also be required for achieving
                                         the flower labeling and certification
Marketing initiatives should be
                                         requirements.
suitably designed to meet the
market requirements, and yet                  Grading,      according       to
remain competitive. Some of the          international standards, is important
strategies to achieve both these         to make the consignment
goals may include:                       acceptable. Independent quality



                                                                             213
inspection can increase the              Kashmir, may scout for alternatives.
marketability of the products. When      Growers in these centers may
propagation material or end products     explore other high value product
are inspected at borders or at the       alternatives, such as propagating
customers’ base, the process would       materials of specialty crops for
take shorter time when it is inspected   export purposes. This could be
by an accredited quality inspection      achieved through licensing and
organisation in the exporting country.   contractual agreements with foreign
This kind of inspection also may         collaborators. As direct marketing is
assure the exporting party that the      growing as a major sales channel,
product may not be returned on           production and export of varieties of
account of quality.                      flowers rather than concentration on
                                         Rose would position India
Diversified products and                 advantageously.
selection of product mix
                                              In addition to fresh cut flowers,
Selection of product mix and variety     Indian floriculture exporters should
is one of the crucial factors for the    emphasize developing other
success of a floriculture project.       diversified products and marketing
Over 90 percent of the projects          them through dedicated outlets. This
presently operating in India have        would expand the definition of
chosen production of Rose in their
                                         floriculture from just fresh flowers to
projects. Rose has the major
                                         products        and      accessories
market share, and hence,
                                         manufactured from flowers, which
marketing it internationally would not
                                         would enable them to enhance their
pose any challenges for the Indian
                                         returns from floriculture trade.
producers. However, diversification
                                         Diversified opportunities, where India
of product mix is also essential
                                         has potential and can be developed
considering the changing pattern of
                                         commercially, include bouquet
demand. New varieties fetch higher
prices, which could be upto seven        preparation,         mixed       floral
times higher than those of regular       arrangements, bonsai, filler crops,
varieties. While projects located in     dried flowers and foliage including
specific areas, such as Hyderabad        potpourri, pine cones, wood rose,
and Delhi, may be suitable for           draft wood, greeting cards using
growing Roses and offer little scope     floral arts, and concept marketing.
climatically to grow other products,
other production centers, like           Packaging
Bangalore and Pune, and emerging         In an industry where non-price
producing regions, such as North-        factors are the basis for
Eastern States, and Jammu and            competition, distinguishing quality




214
products and the use of innovative         airfreight. However, care has to be
packaging are other ways of gaining        taken so that quality of Roses is not
competitive advantage. The                 compromised         by    crowding.
floriculture industry needs to             Thornless varieties and thorny
examine     current    packaging           varieties should not be packed
practices and learn from the               together.
success of other countries.
                                           Establishment of Support
     Packaging, apart from catering
                                           Systems
to the preservation requirements,
must also be perceived as being            The greenhouse industry in India
environmentally friendly, while            has great potential for growth,
catering to the European markets.          provided it is supported by
The German market prefers to               institutional systems. Establishing a
receive floriculture products in aqua-     network of support systems with
packs, as this facilitates their           the involvement of Government,
transportation to various outlets          private sector and research
within the country. UK is less             institutions / universities would be
concerned with aqua-packs, but             another strategy for development of
requires customized packaging, co-         the floriculture sector. This would
designed with the various retail           help the industry to plan forward
chains for easy distribution. It is also   and evaluate the business plans
necessary to keep in mind when             periodically. A number of private and
standardizing box sizes and design.        Government agencies provide such
The wholesale outlets in Japan prefer      support system in the green house
small sized boxes as compared to           industry in USA. A network of agri-
their European counterparts.               business consultants and academia
    In a box of 15 kg, 500 million large   provide specialized services for skill
Roses can be packed. This number           development of the industry in USA.
would increase for small, medium
and thorn-less Roses. There is not         Requirements for the Indian
much sale now for Roses less than          Auctions
50 cm, but Indian exporters continue       Karnataka      Agro   Industries
to export that length. Number of           Corporation (KAIC) has started a
flowers packed per box is important        flower auction centre, which is
since the airfreight is charged by         currently, dealing more with
volume. More the number of stems           domestic trade, with a volume
per box, lower are the freight per         much lesser than the capacity;
stem. So, instead of packing 400           however, eventually it is to be
stems, 500 stems per box saves             converted into an international
approximately 25 percent on the            auction centre. Maharashtra Agro




                                                                             215
Industries Corporation has also                great deal of attention may
established a flower auction centre            have to be given to the rules
at Mumbai, which is yet to be                  governing           auction,
operationalised. In order to make              transparency      in      the
these auction centers a successful             transactions, and dispute
proposition following challenges               resolutions;
need to be addressed with priority:
                                           ●   Ideally the auction should be
●     Developing              physical         managed by growers and
      infrastructure like buildings and        buyers, with a commercial
      auction halls and acquiring              objective, and the Government
      equipment such as auction                could play a facilitating role;
      clocks may not be so difficult;
                                           ●   The premise that these
      however,          the       sheer
                                               auctions       would      enable
      organization of the auction
                                               international buyers to buy
      may require a great deal of
                                               flowers directly may not work
      learning. To begin with, the
                                               out in actual practice unless
      volumes of flower to be
                                               strong        linkages        are
      auctioned        has     to    be
                                               established. While the auction
      synchronized with the auction
                                               would provide access to
      infrastructure;
                                               supplies, the small volumes
●     More importantly, the traders            that are currently available, may
      and operators, currently                 not justify additional cost on
      operating in the existing                the part of the overseas
      markets need to be relocated             buyers. Thus, efforts should be
      to the auction centres to                made to develop and
      increase the volume at the               strengthen backward linkages
      auctions. This may be possible           on a continuous basis.
      only through encouragement
                                           ●   A     system      of     reefer
      and incentives;
                                               transportation would have to be
●     The clock auctions in the                organized on commercial lines
      Netherlands and in other                 to transport flowers from
      countries create and add a               production sites to auction
      certain halo of unfailing quality.       centres. Presently, individuals
      It would be a long way to                do so in their reefer vans.
      replicate the Dutch auctions, its        Equally important is to develop
      efficiency, and the business             such a transportation system
      they generate. Nevertheless,             from auctions to the market.
      efforts may be taken to                  The flowers sold through
      replicate such infrastructure. A         auction may need to be




216
    transported to the markets in            countries as far as Poland and
    a cool chain at economical               Czechoslovakia, and delivered
    cost and the retail markets              in less than 24 hours. Such
    may also need to have cool               speedy transportation on
    outlets so that the flowers are          commercial        terms      and
    not damaged. The current                 economical rates would
    practice of not emphasizing              definitely help the industry.
    usage of cold chain at any
                                         ●   In the local metro markets,
    stage of transportation for
                                             creation of infrastructure at the
    domestic sales leads to much
    lower value realization.                 retail level may be a private
    According to the industry                endeavor; however, some
    observers, the consumers in              suitable common storage
    India may be reluctant to pay            facilities for bulk storage may
    higher prices that would result          have to be created through
    from transporting through a              collective efforts or at
    cool chain. Creating an                  Government level. The cold
    efficient, cost effective,               stores presently do not have
    economical cool chain on                 multi-chambers so as to store
    purely commercial lines is the           different kinds of cargo each
    key infrastructure issue for the         requiring different temperature
    floriculture industry in realizing       and        humidity      levels.
    additional revenues even from            Encouragement may thus be
    the domestic market.                     given to establish multi-
                                             chamber cold stores both at
●   While road transportation                collection stage and at
    through reefer vans may be
                                             transportation stage. Again
    most economical, railways
                                             these endeavours need to be
    could provide reefer wagon
                                             at the private sector level and
    facilities on the super fast
                                             strictly on commercial lines.
    trains to carry flowers, for
    example, from Bangalore to           ●   While          infrastructure
    Delhi, Pune to Delhi or beyond.          development has to be
    In certain Western countries,            synchronized      with     the
    block trains move from sea               development of business, it is
    ports to cities under reefer             important that the flowers be
    conditions. The perishable               treated as a high value cargo
    cargo that arrives at the Port           and handled with the objective
    of Bremerhaven, Germany is               of adding more value at each
    carried by dedicated block               segment of the transportation
    trains to destinations in                chain and storage. The private




                                                                          217
      infrastructure service providers    such as Eastern Europe, South Asia,
      may      have     to    develop     Russia, and the Middle East.
      processes and systems for               Increasing utilization of direct-to-
      ensuring this. In the final         retailers channel, where India has
      analysis, the price that the        advantage over regional competitors
      consumer pays would be a            by virtue of the presence of large
      reflection of how much value        population of Indian Diaspora, could
      has been added through the          help expand market reach, and
      infrastructure of auction, reefer   overcome the challenges of regional
      transportation and cold storage.    competition.
      In a truly competitive market,
                                              Promoting strong brand
      undistorted marketing spread is
                                          recognition for Indian cut flowers and
      the only alternative for this.      flower      accessories       through
                                          designated outlets at the foreign
The ‘Brand India’ campaign
                                          markets, and advance product
Indian exporters should adopt             positioning through international
customized marketing strategies           lobbying by the industry associations,
while targeting various markets.          would help Indian flower exporters to
Selling through agents has now            compete in international markets
been taken over by direct marketing       effectively.
in many regions. Direct marketing
gives      better  remuneration,          Consortia Approach
eliminates middlemen, and provides        “Consortium” approach may be
flexibility to position in niche          encouraged among the units for
markets, thereby avoiding the risk        branding, grading, packaging,
of excessive concentration on a           transporting, quality control, supply
single market.                            assurance, market development,
                                          market promotion, and research
   There is need to intensify             and development. For this purpose,
marketing efforts for direct sales to     it is necessary to encourage some
emerging markets, and expand              of the successful and experienced
markets outside the traditional           entrepreneurs to take a lead in
European markets, to cover regions        forming such consortia.




218
CONCLUSION



    The world floriculture industry is       The shift in production locations
in an unstable condition, with drastic   has mainly been driven by the
changes in supply and demand             existence of more abundant labour
positions. New markets as well as        and land, and has been made
new suppliers are emerging and           possible by developments in air
disappearing in short span of time.      transportation and refrigeration. The
                                         impact of growing price competition
     Estimates of the annual
                                         has been different for various regions.
consumption of commercially grown
                                         While producers in Latin America
flowers worldwide vary by source
                                         have benefited from relatively
and range from US$ 40 billion –
                                         constant prices in the US market, the
US$ 60 billion. On the demand side,
                                         impact of new African suppliers has
around 80 percent of the
                                         been reflected in a downward
consumption is accounted for by six
                                         movement of prices, in European
countries, viz. Germany, USA, UK,
                                         markets.
France, the Netherlands and
Switzerland. While worldwide                  In the recent years, two
consumption has been on the rise,        developments have had a significant
consumers have also become more          effect on the global floriculture
refined in demanding new products        industry. The first is growing
- for example, the Russian market        competition in production and
and its preference for very large        distribution. In this regard, the
flower buds. In addition, niche          established producers such as
markets in the Eastern Europe are        Ecuador, Kenya, Malaysia and
becoming prime growth regions. To        Thailand have been facing challenges
meet this growing and changing           from the growth of the industry in
demand, production has continued         China and India. China, in particular,
to move from countries that have         is reportedly envisaging quadrupling
traditionally been consumers and         annual exports of flowers to US$ 200
growers, such as the Netherlands,        million or more than a billion stems
to other relatively new producing        by 2010. On the distribution side, new
countries such as Colombia,              flower centres have emerged in
Ecuador and Kenya.                       locations such as Dubai, Tel Aviv




                                                                            219
(Israel), and Kunming (China). These       competitiveness in international
centres are expected to influence          markets. There has also been a
overall efficiency and lower               motivation to breed hybrids and new
transaction costs for distant              varieties. Major selling agents of
producers, resulting in increased          breeders have realised increased
pressure on prices of cut flowers and      sale of planting materials while
foliage.                                   reducing the prices. The industry is
                                           witnessing healthy exchange of
     The      second        important
                                           breeders’ material and collaborative
development, is linked to a large
                                           breeding programmes around the
extent with the considerable progress      world. Such initiatives are getting
that has been made in consolidation        further momentum due to
and vertical integration. For instance,    protectionist policies for new plant
the merger of the two largest Dutch        varieties under TRIPS (WTO).
cooperative flower auctions                Respecting plant patent rights is thus
(FloraHolland and Bloemenveiling           becoming an important parameter to
Aalsmeer) has given rise to the            establish global credibility and
world’s largest flower market place        providing access to the latest
called FloraHolland, with combined         varieties.
sales of about US$ 4.68 billion.
Furthermore, worldwide, large                   Floriculture activity has been
retailers such as Wal-Mart and Tesco       traditionally attracting newer
have increased the amount of               participants. However, only alert
purchases acquired directly from the       market participants have been
growers under long-term contracts.         witnessing success, as the product
As a result, the producers have also       is highly perishable and vulnerable to
                                           quality parameters, and price
been increasingly integrated. For
                                           fluctuations, including intra-day price
example, Dole Fresh Flowers has its
                                           fluctuations. Productivity is a crucial
own chartered carrier for flowers for
                                           aspect in this industry. Hence,
daily deliveries in the USA.
                                           successful producers have been
     With regard to production, the        investing in more labour-saving
competition in the floriculture industry   techniques in order to cut down the
is fierce, continuously testing the        cost and increase the profitability.
adaptive capacity of the actors            Quality is of paramount importance
involved. There has been a levelling       in the international trade of floriculture
off of the competition on                  products. Producers, thus, need to
technological grounds over the last        conform to stringent phyto-sanitary
few years. However, infrastructure         requirements and must ensure that
and policy support have become             their produce is free from disease
important parameters in judging the        and that it is carefully treated once




220
harvested. To guarantee a minimum              The opportunities are optimal for
number of days of vase life,              tropical countries like India in
supermarkets and other competitors        supplying products such as summer
demand reduction in supply lead           flowers, Orchids and tropical
time.                                     foliages, particularly during the
                                          periods when these products are
    Many small units have been
                                          scarce in the western markets.
facing     challenges      due       to   Demand for certain tropical varieties
uneconomic returns and high               is still increasing in Europe,
overheads leading to reorganization       particularly for tropical Orchids such
and restructuring of product portfolios   as Cymbidium, and small leafed
by entrepreneurs. However, there is       foliage for use in bouquets. There are
ample scope for even small and            also opportunities for increasing
marginal entrepreneurs to exploit the     production of value-added products
global demand of flowers, with            such as dry flowers, seeds, potted
improvements in quality of planting       plants, and micropropagants.
material, infrastructure, training        Opportunities also exist in exploring
programmes         in    production,      and developing new markets such as
harvesting and post-harvest               Russia and other Eastern European
management techniques, backed by          countries, expanding in Asian
adequate marketing support.               markets.
                                               In order to compete, Indian
OPPORTUNITIES FOR INDIA                   floriculture exporters must be able to
The market for cut flowers consists       supply products of consistent quality
a range of product groups, which          and on a regular basis. With a strong
offer diverse opportunities for           preference for direct marketing and
countries like India, as potential        private R & D for developing
suppliers. It is a highly competitive     proprietary products, the industry will
market in which importers are             have to develop a unique selling
continually seeking new, special          proposition to increase the
and different products. They tend not     competitiveness. Joint initiatives may
to change easily from one supplier        be taken for creation of appropriate
to another, but co-operation with a       infrastructure for production, post-
company supplying a new product           harvest handling and transportation
is considered attractive. The market      of floriculture products. The
is clearly searching for novelty          marketing and distribution channels
products. A new product also offers       are also to be strengthened. With all
the prospect of making higher             such initiatives, it may be deduced
profits than those gained from            that the structure and composition of
selling conventional floricultural        the Indian floriculture industry may
products.                                 undergo major changes in the future.



                                                                             221
REFERENCES



    Gebreeyesus Mulu, United Nations University Maastricht Economic and
Social Research and Training Centre on Innovation and Technology (UNU-
MERIT), and Sonobe Tetsushi, Foundation for Advanced Studies on
International Development (FASID) and National Graduate Institute for Policy
Studies (GRIPS), Tokyo, 2009, ‘Governance of global value chain and firms’
capability in African floriculture’.
    Hornberger Kusi, Ndiritu Nick, Ponce-Brito Lalo, Tashu Melesse, Watt
Tijan, 2007, Kenya’s Cut Flower Cluster, Final Paper for Microeconomics of
Competitiveness.
    Wijnands Jo, 2005, Sustainable International Networks in the Flower
Industry, International Society for Horticultural Science.
     Mysore Sudha and Wen-fei L. Uva, 2000, International Competition in
the Greenhouse Production of Floriculture Products – Lessons for New York
and India, Department of Agricultural, Resource and Managerial Economics,
Cornell University, New York.
   Asopa V.N., Indian Institute of Management Ahmedabad, Creating
Competitiveness in Indian Floriculture.
   Indian Horticulture Database, National Horticulture Board (NHB),
Government of India.
    Directorate General of Foreign Trade (DGFT), Ministry of Commerce
and Industry, Government of India.
   Agricultural and Processed Food Products Export Development Authority
(APEDA), Government of India.
      Trade Map Database, International Trade Centre, UNCTAD/WTO
      United Nations Commodity Trade Statistics Database (UN COMTRADE)




222
ANNEXURE 1: MAIN SPECIAL OCCASIONS
            IN EUROPE HAVING
            INFLUENCE ON FLORICULTURAL
            TRADE (2009)

Date          Holiday                 Country
January:
1 January     New Year’s Day          International
6 January     Feast of the Epiphany   Greece, Spain, France, Germany,
                                      Finland, Italy, Slovakia, Slovenia,
                                      Romania, Sweden, Austria
21 January    Grandmother’s Day       Poland
22 January    Grandfather’s Day       Poland
February:
14 February   St. Valentine’s Day     International
23 February   Rose Monday             Denmark
March:
1 March       Grandmother’s Day       Denmark, France
8 March       Women’s Day             International
17 March      St. Patrick’s Day       United Kingdom, Ireland
19 March      Father’s Day            International
22 March      Mother’s Day            United Kingdom, Ireland
25 March      Mother’s Day            Slovenia
25 March      Independence Day        Greece
April:
4 April       Palm Sunday             France, Portugal, Germany, Denmark
10 April      Good Friday             International
12 April      Easter                  International
16 April      Secretary’s Day         International
17 April      Good Friday             Greece
19 April      Easter                  Romania
23 April      Saint George’s Day      United Kingdom, Spain, Romania
25 April      Revolution Day          Portugal
25 April      Liberation Day          Italy
27 April      Liberation Day          Slovenia
30 April      Queen’s Day             The Netherlands




                                                                            223
 May:
 1 May       Labour Day            International
 3 May       Constitution Day      Poland
 4 May       Commemoration Day     The Netherlands
 4 May       Mother’s Day          Portugal, Hungary, Spain
 5 May       Liberation Day        The Netherlands
 8 May       Liberation Day        France, Czech Republic
 10 May      Mother’s Day          Belgium, Austria, Czech Republic,
                                   Denmark, Italy, Greece, Finland,
                                   The Netherland, Slovakia, Denmark
 16 May      Mother’s Day          Finland
 21 May      Ascension Day         Belgium, Denmark, France, Austria,
                                   The Netherlands, Finland, Sweden
 21 May      Father’s Day          Denmark
 26 May      Mother’s Day          Poland
 31 May      Pentecost             Slovenia, The Netherlands, France,
                                   Hungary, Sweden, Slovakia, Belgium,
                                   Austria, Denmark,
 31 May      Mother’s Day          Sweden
 June:
 5 June      Father’s Day          Denmark
 7 June      Teacher’s Day         Hungary
 7 June      Father’s Day          France
 11 June     Corpus Christi        Austria, Denmark, Portugal, Poland
 14 June     Father’s Day          Belgium
 15 June     Publication of        The Netherlands
             final exams results
 16 June     Grandparents’ Day     Spain
 21 June     Father’s Day          United Kingdom, Ireland, France,
                                   The Netherlands
 23 June     Father’s Day          Poland
 25 June     Day of Slovenia       Slovenia
 July:
 24 July     Women’s Week          Finland
 21 July     National Holiday      Belgium
 August:
 15 August   Assumption Day        International
 20 August   Constitution Day      Hungary




224
September:
13 September     Patient’s Day               Belgium, The Netherlands
15 September     Assumption Day              Slovenia
19 September     Grandparent’s Day           United Kingdom, Ireland
October:
1 October        Day of the Elderly          The Netherlands
2 October        Grandparents’ Day           Italy
2 October        Teacher Appreciation Day    International
5 October        Saint Fleur                 France
12 October       National Holiday            Spain
14 October       Teacher’s Day               Poland
23 October       National Holiday            Hungary
26 October       National Holiday            Austria
28 October       Independence Day            Czech Republic
31 October       Halloween                   The Netherlands, Romania,
                                             United Kingdom, France,
                                             Belgium, Ireland
31 October       All Saint’s Day             Sweden, Finland
31 October       Halloween                   International
November:
1 November       All Saints’ Day             International
1 November       Memorial Day                Slovenia
2 November       All Soul’s Day              International
8 November       Father’s Day                Finland
9 November       Father’s Day                Sweden
11 November      Independence Day            Poland
11 November      Armistice                   France, United Kingdom,
                                             Belgium
15 November      Grandparent’s Day           Belgium
25 November      Sainte Catherine            France
29 November      Advent                      Hungary, Sweden
30 November      St. Andrew’s Day            United Kingdom, Romania
December:
1 December       Day of the Reunion          Romania
1 December       Independence Day            Portugal
6 December       Saint Nikolas               Belgium, Austria, Denmark,
                                             Slovakia, Slovenia
8 December       The Immaculate Conception   Austria, Spain, Italy, Denmark
25/26 December   Christmas                   International
28 December      St. Stephen’s Day           United Kingdom, Ireland
31 December      New Years’ Eve              International



                                                                         225
ANNEXURE II: FLOWER USAGE BY
             SEASON - JAPAN



 Holiday Season              Date                 Colours Associated          Flowers in Use
 New Year’s                  January    1st-3rd   Red, white, yellow, green   Chloranthus glaber
                                                                              (red & green)
                                                                              Chrysanthemum
                                                                              (yellow/white)
 Adult’s Day                 January 15th         Pink                        Tulip, general
                                                                              traditional flowers
 National Foundation Day     February 11th        Nothing specific
 Valentine’s Day             February 14th        Red, pink                   Rose, tulip, general
                                                                              traditional flowers
 Vernal Equinox Day          March 20th           White, yellow, red, blue    Chrysanthemum, Iris
 O-Higan                     March 21st           White, yellow               Lily, Iris {ensata},
                                                                              Carnation
 Greenery Day                April 29th           Green                       Green Pot Plants &
                                                                              Foliage
 Constitution Memorial Day   May 3rd       Nothing specific
 People’s Holiday            May 4th       Nothing specific
 Children’s Day Holiday      May 5th       Blue, red, yellow, purple          Large Japanese Iris
 Mother’s Day                Second Sunday Light pink                         Carnation, Spray
                             of May                                           Carnation
 Weddings                    June          Red, white, pink                   Roses, Carnations,
                                                                              Anthurium
 Father’s Day             Third Sunday            Yellow                      Roses, Oncidium
                          of June                                             (C.V.S)
 O-Chugen (Mid-year Gift) July 1-15th             Light blue, pink            Oriental Lily
                                                                              (Lilium spp), Roses
 The Star Festival           July 7th             Green                       Bamboo stem/leaf
 (Tanabata)
 Obon                        August 13-15th       White, yellow, red, pink    Chrysanthemum,
                                                                              Carnations, Lily
 Respect of the Aged Day September 15th           Various colours             Casablanca, others
 Autumn Equinox Day      September 23rd           White, yellow, red pink     Chrysanthemum,
                                                                              Carnations, Lily
 Health-Sports Day           October 10th         Red                         Traditional flowers,
                                                                              general
 Culture Day Holiday         November 3rd         Various colours             Traditional flowers,
                                                                              general
 Labour Thanksgiving Day November 23rd            Light blue, pink,           Traditional flowers,
                                                  white & red                 general
 O-Seiba                     December             Nothing specific            Traditional flowers,
 (Year-End Present)                                                           general
 Emperor’s Birthday          December 23rd        Nothing specific            Traditional flowers,
                                                                              general
 Christmas Day               December 25th        Red, green, white           Roses

 Source: Fukuoka-Ken Kaki Ryutu Centre



226
ANNEXURE III: SPECIAL OCCASION IN USA
              INFLUENCING FLOWER TRADE



Occasions                Days

New Year’s Day           December 31st & January 1st
Martin Luther King Day   January (3rd Monday)
Inauguration Day         January 20th (every 4th year)
Valentine’s Day          February 14th
Washington’s Birthday/   February (3rd Monday)
President’s Day
Easter                   April (Sunday varies year-to-year)
Mother’s Day             May (2nd Sunday)
Memorial Day             May (last Monday)
Father’s Day             June (3rd Sunday)
Independence Day         July 4th
Labour Day               September (1st Monday)
Patriot Day              September 11th
Columbus Day             October (2nd Monday)
Veteran’s Day            November 11th
Thanks giving Day        November (4th Thursday)
Christmas Day            December 25th




                                                              227
ANNEXURE IV: AGRI EXPORT ZONES*



1.    AGRI EXPORT ZONE FOR                       have been effected till March
      FLOWERS (TANFLORA) IN                      2008. Cut flowers have been
      TAMIL NADU                                 exported to Japan, Singapore,
                                                 Malaysia, Dubai, Jeddah,
      This project entails a total
                                                 Riyadh, UK, Germany and
      investment of Rs. 24.85 crores
                                                 Australia.
      with a contribution of Rs. 3.48
      crores from the Government of         2.   AGRI EXPORT ZONE FOR
      India. The investment level of             FLORICULTURE IN
      Rs.22.47 crores has already                MAHARASHTRA
      been achieved. About 198.73
                                                 This Agri Export Zone entails
      acres of private land has been
                                                 an investment of Rs. 13.34
      acquired by the TANFLORA
      company and a Central                      crores out of which Rs. 7.23
      Packing House has been                     crores will flow from various
      completed. Around 15 Grower                Central Government Agencies
      Park units of 2 hectares each              and the remaining Rs 10.66
      have started construction of               crores will come from the
      the poly-houses. Tamil Nadu                private sector. In all 96
      Electricity Board (TNEB)                   applicants have been allocated
      power connection has been                  land for setting up of projects.
      obtained for 50 hectares of                Few entrepreneurs have
      area covered under poly house              already started development
      cultivation for production of              work for setting up of green
      fresh cut roses. About 15                  house structure. Around 300-
      Farmers who have taken up                  500 farmers will be directly
      30 hectares (2 Ha/Unit) in the             benefited and it is likely to lead
      park will be given training in             to an employment generation
      hitech floriculture. It is expected        of around 4,800 persons.
      that export of flowers during              Internal roads developed within
      the first five years would be              the AEZ; work on road and river
      more than Rs. 158.76 crores.               bridge completed for joining the
      Exports worth Rs.39.40 crores              National Highway. It is expected

*     SOURCE: APEDA


228
     that the export of flowers from          out of which around Rs.8.09
     this Agri Export Zone will be            crores will flow from the
     around Rs. 75 crores in the              Central Government agencies,
     next five years. Exports worth           Rs. 2.40 crores from State
     Rs. 35.50 crores have been               Government agencies and the
     effected till March 2008. An             remaining Rs 21.82 crores will
     amount of Rs. 5 crores has               come from the private sector.
     already been sanctioned for              The investments in this Zone
     setting up of a floriculture             would lead to a direct
     auction center in Mumbai.                employment of around 1,500
                                              people apart from the indirect
3.   AGRI EXPORT ZONE FOR
                                              employment of around 3,500
     FLOWERS IN UTTRANCHAL
                                              persons. There would be job
     A total investment of around             opportunities available for more
     Rs.13.76 crores is envisaged             than 200 educated un-
     with a contribution of around            employed youth as well. The
     Rs.1.55 crores from the                  state level nodal agency will be
     Central Government Agencies.             providing land, financial support
     The      State    Government             and supply of green house and
     Agencies will contribute                 drip irrigation materials,
     Rs.1.43 crores and the                   besides training of farmers.
     remaining Rs.10.78 crores will           Export of around Rs. 45.08
     come from the private sector.            crores worth of orchids are
     More than 1,000 farmers are              anticipated from this Zone in
     likely to be benefited from this         the next 5 years (starting from
     project. There is also likelihood        June 2006). An investment of
     of an indirect employment for            Rs. 1.15 crores has so far
     3,500 persons. Export of                 been achieved.
     around Rs.28.28 crores is
                                         5.   AGRI EXPORT ZONE FOR
     anticipated from this AEZ in the
                                              FLORICULTURE IN
     next five years. Exports worth
                                              KARNATAKA
     Rs 0.04 crore have been
     executed from the Zone until             Agri Export Zone for floriculture
     March 2008. A total investment           in Karnataka entails an
     of Rs. 10.19 crores has been             investment of around Rs.29.28
     achieved so far.                         crores, out of which Rs. 11.71
                                              crores will come from the
4.   AGRI EXPORT ZONE FOR
                                              Central Government agencies,
     FLORICULTURE (ORCHIDS)
                                              Rs.7.37 crores from State
     IN SIKKIM
                                              Government agencies and the
     The project envisages an                 remaining Rs.10.20 crores will
     investment of Rs. 32.31 crores           come from the private sector.



                                                                           229
      This Zone will benefit around       6.   AGRI EXPORT ZONE FOR
      1000 farmers apart from                  FLOWERS IN TAMIL NADU
      generating a lot of indirect
      employment. The perishable               This     zone     entails     an
      cargo handling facility has              investment of around Rs. 15.88
      already been set up at                   crores out of which Rs. 5.23
      Bangalore Airport to facilitate          crores will flow from Central
      exports. A marketing facilitation        Government agencies, Rs. 2
      centre has also been set up at           crores from State Government
      Amsterdam, the Netherlands               agencies and around Rs. 8.65
      for the benefit of the growers           crores from private sector
      of the Bangalore and Hosur               agencies. Investment level of
      area. Central Government has             Rs.5.50 crores has already
      sanctioned Rs. 3.57 crores for           been achieved in this Zone.
      setting up of a Floriculture             Around 500 farmers are likely
      Auction Centre in the premises
                                               to get benefited. It is expected
      of Karnataka Agro-Industries
                                               that setting up of this zone will
      Corporation, at Bangalore.
      Exports worth Rs 31.74 crores            lead to an export of around
      have been executed from the              Rs. 109.88 crores in the next
      Zone till March 2008. The                5 years. A total export of Rs.
      investment in the zone has               44.56 crores has been till date
      been Rs 3.57 crore till March            effected and an investment of
      2008 for setting up of the               Rs.5.50 crores have been
      Flower Auction Centre.                   achieved in the zone.




230
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 119.   Indian Pharmaceutical Industry : Surging Globally
 120.   Regional Trade Agreements: Gateway to Global Trade
 121.   Knowledge Process Outsourcing: Emerging Opportunities for India
 122.   Indian Mineral Sector and its Export Potential
 123.   SAARC: An Emerging Trade Bloc
 124.   Indian Capital Goods Industry - A Sector Study
 125.   Financial Liberalization and Its Distributional Consequences
 126.   ECOWAS: A Study of India’s Trade and Investment Potential
 127.   Indian Textile and Clothing Industry in Global Context: Salient
        Features and Issues
 128.   Fair Trade : Fair Way of Enhancing Export Value
 129.   Indian Automotive Industry: At The Crossroadss
 130.   CARICOM : A Gateway to the America
 131.   IBSA : Enhancing Economic Co-operation Across Continents
 132.   MSMEs and Globalisation: Analysis of Institutional Support System in
        India and In Select Countries
 133.   International Trade, Finance and Money: Essays in Uneven Development
 134.   Sikkim: Export Potential and Prospects
 135.   Mizoram: Export Potential and Prospects



232
                                  EXPORT-IMPORT BANK OF INDIA
                                        HEADQUARTERS
                                                Centre One Building, Floor 21,
                                                World Trade Centre Complex,
                                                Cuffe Parade, Mumbai 400 005.
                                                Phone : (91 22) 22172600
                                                Fax : (91 22) 22182572
                                                E-mail: cag@eximbankindia.in
                                                Website : www.eximbankindia.in
Indian Offices                                                        Overseas Offices

AHMEDABAD                                                             DAKAR
Sakar II, Floor 1,                                                    1st Floor, 7,
Next to Ellisbridge Shopping Centre,                                  rue Fe,lix Faure,
Ellisbridge P. O., Ahmedabad 380 006.                                 B. P. 50666,
Phone : (079) 26576852/43; Fax : (079) 26578271                       Dakar, Senegal
E-mail : eximahro@eximbankindia.in                                    Phone : (00 221 33) 8232849
                                                                      Fax : (00 221 33) 8232853
BANGALORE                                                             E-mail : eximdakar@eximbankindia.in
Ramanashree Arcade, Floor 4,
18 M. G. Road, Bangalore 560 001.
Phone : (080) 25585755/25589101-04; Fax : (080) 25589107              DUBAI
E-mail : eximbro@eximbankindia.in                                     Level 5, Tenancy 1B,
                                                                      Gate Precinct Building No. 3,
CHENNAI                                                               Dubai International Financial Centre,
UTI House, Floor 1,                                                   PO Box No. 506541,
29, Rajaji Salai, Chennai 600 001.                                    Dubai, UAE.
Phone : (044) 25224714/49                                             Phone : (00 97 14) 3637462
Fax : (044) 25224082                                                  Fax : (00 97 14) 3637461
E-mail : eximchro@eximbankindia.in                                    E-mai : eximdubai@eximbankindia.in
GUWAHATI
Sanmati Plaza, Floor 4,                                               DURBAN
Near Sentinel Building,                                               Suite 117, Aldrovande Palace,
G. S. Road, Guwahati 781 005.                                         6, Jubilee Grove
Phone : (0361) 2462951/2450618; Fax : (0361) 2462925                  Umhlanga Rocks, 4320
E-mail : eximgro@eximbankindia.in                                     Durban, South Africa.
HYDERABAD                                                             Phone : (00 27 31) 5846118/19
                                                                      Fax : (00 27 31) 5846117
Golden Edifice, Floor 2,
                                                                      E-mail : eximdurban@eximbankindia.in
6-3-639/640, Raj Bhavan Road,
Khairatabad Circle, Hyderabad 500 004.
Phone : (040) 23307816-21; Fax : (040) 23317843                       LONDON
E-mail : eximhro@eximbankindia.in                                     88/90, Temple Chambers,
KOLKATA                                                               3-7, Temple Avenue,
                                                                      London EC4Y OHP,
Vanijya Bhawan, Floor 4, (International Trade Facilitation Centre),
                                                                      United Kingdom.
1/1 Wood Street, Kolkata - 700 016.
                                                                      Phone : (00 44) 20 73538830
Phone : (033) 22833419/22833420; Fax : (033) 22891727
                                                                      Fax : (00 44) 20 73538831
E-mail : eximkro@eximbankindia.in
                                                                      E-mail : eximlondon@eximbankindia.in
MUMBAI
Maker Chambers IV, Floor 8,                                           SINGAPORE
222, Nariman Point, Mumbai 400 021.
                                                                      20, Collyer Quay, # 10-02, Tung Centre,
Phone : (022) 22823320/92/94; Fax : (022) 22022132
                                                                      Singapore 049319.
E-mail : eximwrro@eximbankindia.in
                                                                      Phone : (00 65) 65326464
NEW DELHI                                                             Fax : (00 65) 65352131
Ground Floor, Statesman House,                                        E-mail : eximsingapore@eximbankindia.in
148, Barakhamba Road, New Delhi 110 001.
Phone : (011) 23326625/6254
Fax : (011) 23322758/23321719
                                                                      WASHINGTON D.C.
                                                                      1750 Pennsylvania Avenue NW,
E-mail : eximndro@eximbankindia.in
                                                                      Suite 1202, Washington D.C. 20006,
PUNE                                                                  United States of America.
44, Shankarseth Road, Pune 411 037.                                   Phone : (00 1) 202 2233238
Phone : (020) 26403000; Fax : (020) 26458846                          Fax : (00 1) 202 7858487
E-mail : eximpro@eximbankindia.in                                     E-mail : eximwashington@eximbankindia.in



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