The global economic slowdown has dampened exports of flowers from India
Although India is among the world’s largest flower-producing countries, its share in the international market—which is still negligible—declined further with exports falling by 5% during the year 2008- 09. Flower exports dropped to $80.31 million against $84.5 million the previous year.
Karuturi Global Limited is a large exporter of roses to Germany, Japan and all countries in the northern hemisphere including Russia. Karuturi has an area of 239 hectares under rose cultivation and exports 100% of the 650 million roses produced by it annually. Sai Ramakrishna Karuturi, managing director of Karuturi Global Limited said, “Regretfully, India has no role in international markets. India is an insignificant player in the world flower business. Recession has affected business in a big way. We have good weather but that is not sufficient, we need good infrastructure and Africa offers better prospects.”
For the period between 2004-2008, India’s floriculture exports have been growing at a compounded annual growth rate of 15.79%. India was ranked at the 16th position in the world, with a share of 0.8% of total exports in 2007 (with a total of 161,000 hectares under floriculture cultivation). The global export of floricultural products was $17 billion in the year 2007. World exports are expected to reach $25 billion by 2012 with an annual growth rate of 8%.
Lilies, carnations, orchids and chrysanthemums are the major fresh flowers exported from India but roses dominate India’s production and account for the major share of India’s flower exports. Recently, dried flowers have been forming a large part of floricultural exports from India.
While India has the potential to grow, it still lags behind for several reasons. First, India’s lack of export variety is a major constraint. Second, inadequate infrastructure including improper cooling and storage capacity, high freight rates (50%- 60% higher than the pricing of competitors) and poor transport facilities further impact the business.
Prahalathan Iyer, general manager (research and planning), Exim Bank, said, “India has diverse climatic conditions, favourable to grow large flower varieties. However, it is disadvantageously located, and the cost of freight (especially to the EU and USA) assumes greater role in reducing cost competitiveness, as compared to several African countries. In the last few years, prices of cut flowers in the Dutch auctions have marginally increased. However, industry experts opine that it is not proportionate to the increase in cost of production.”
Mr Iyer added, “The economic crisis has further affected the exportability of flowers produced as there was a decline in demand, in major importing countries such as the EU, USA and Japan. This decline in demand has affected the export levels of Indian floriculture, as also profit margins and employment.”
In order to stay abreast of competition in this industry—where every player is continually innovating with fresh technologies—India must get its act together before it becomes a net importer of flowers.