Hi Tech Floriculture

HI-TECH FLORICULTURE
IN KARNATAKA
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Department of Economic Analysis and Research
National Bank for Agriculture and Rural Development
Mumbai
2009
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Rural Development as to the facts cited and views expressed in the paper is implied.
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National Bank for Agriculture and
Rural Development
Department of Economic Analysis and Research
4th Floor, C Wing, Plot No. C-24,
G-Block, PB No. 8121,
Bandra-Kurla Complex, Bandra (East)
Mumbai - 400 051
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Published by the National Bank for Agriculture and Rural Development Department of
Economic Analysis and Research 4th Floor, C Wing, Plot No. C-24, G-Block, PB No.
8121, Bandra-Kurla Complex, Bandra (East) Mumbai - 400 051
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Printed at Karnatak Orion Press, Fort, Mumbai-400 001.
Tel.: 22048843 / 22044578 Mobile : 9833239403
ii
Authors
Dr. M.V. SRINIVASA GOWDA
AICTE Member, Senate of Jadavpur University, Kolkata
SBM Chair Visiting Professor, University of Mysore
Formerly Professor & University Head
Dept. of Agril. Economics, UAS, Bangalore
PREFACE
India has an amazing area under floriculture production, over 1.5 lakh
hectares, producing almost 7 lakh ton loose flowers besides 3.8 billion
cut flowers. Small farms using traditional cultivation practices produce
tons of traditional loose flowers like marigold, jasmine, China aster,
chrysanthemum and crossandra and modern cut flowers including
rose, gerbera, gladioli, lilium, carnation, orchid, anthurium, and bird
of paradise. The infrastructure for production and marketing is poor.
Many farmers load baskets of fresh flowers on trains or buses to go
as far as 650 km to the city street markets, which open only in the
mornings. The domestic Indian market for flowers is growing at 25%
per year in the country, 40% per year in New Delhi, thanks to the
increase in urban incomes coupled with high income-elasticity of
demand for flowers.
The export-geared hi-tech floriculture is not an offspring of this vast
domestic flower industry but something quite apart. For the last one-
and-a-half decades India has built modern greenhouses and borrowed
western floriculture technology. In 2005-06 Indian floriculture exports,
over half of which were dry flowers, amounted to about US$ 68
million. Still, Indias cut flower exports account for only 1% of the
worlds fresh cut flowers trade. Of the 500 hectares devoted to hi-
tech floriculture, almost all is to produce roses.
Hi-tech floriculture industry in India in general and, in Karnataka in
particular, is undergoing lot of ups and downs during the last fifteen
years after its launching. The industry has passed through roughly
three phases since its inception in the early nineties in the wake of
economic reforms. The first phase was characterized by a lot of hype
generated by the declaration of export-oriented floriculture as an
extreme-focus area during the 8
th
Five Year Plan (1992-97) and the
consequent dubbing of the sector as the sunrise industry, when quite
few enthusiastic floriculture enterprises came up mostly with the help
of Dutch technical assistance and associated costly imported planting
materials and green house equipment.
The second phase spanning the late nineties and extending into the
early years of the new millennium was a period of gloom when many
hi-tech floriculture units were struggling to break even, while some
iii
became sick and were on the verge of closure. Many of the initial hi-
tech rose farms failed due to micro-climate problems, lack of
economies of scale, inappropriate technology and the fact that India
is still far from being an infrastructure-driven economy. This prompted
the sponsoring authorities such as the National Horticulture Board
(NHB), Agricultural Produce Processing and Export Authority (APEDA)
and even the major financing institutions including the National Bank
for Agriculture and Rural Development (NABARD) to take a re-look
at the wilting industry.
The third phase, the on-going one, which started about five years ago,
marks a recovery period during which several first-generation hi-tech
floriculture units have apparently made a turn-around, while most
second-generation units are even flourishing. The term first-
generation units is conventionally used in the industry to typify those
units that were started in the early nineties with the technology and
equipment almost totally borrowed from Europe, while the second-
generation units refer to those started from the late nineties onwards
using in large part the cost-effective local technology and green house
equipment. Conditions have improved substantially during the last
few years. APEDA has made important investments in the cold storage,
transport and airport facilities in seven major export cities. In India,
relative returns on labour and capital are almost opposite to those of
Northern Europe.
Hence, Indian rose farms are not highly automated. Hi-tech rose
farms employ on an average over 20 workers per hectare for all
operations including grading and transport. The Indian farm
managers and technicians have now learnt to adapt the floriculture
technology appropriate to the local agro-climatic and labour
conditions, so much so that their presence is very much felt in
floriculture farm management in African countries like Kenya,
Zimbabwe and Ethiopia. They have designed fairly good greenhouse
structures and at one-third the cost of the structures that used to be
previously imported from Europe. Workers are quite productive.
Women figure importantly as both flower farm owners and managers.
Women laborers are an integral part of Indian agriculture in general
and floriculture in particular, as they work with dexterity and alacrity.
The cost of packed Indian roses ranges from $0.04 to $0.10 per stem
iv
ready to be airlifted (depending on whether interest and royalty costs
are included). Freight to Europe is $2.20 to $2.50 per kg or US$0.075
per rose or about the same as the rose production cost. Average return
for exported Indian roses at the Bloemenveiling Aalsmeer (VBA), the
Aalsmeer Flower Auction Center in Amsterdam, during the September
March shipping season, including the benefits of the Valentines Day
export advantage, is around 0.20 ($0.24) per stem.
In Japan, the average price of Indian roses is 25-35 Yen per stem (
0.20). Freight to Japan is about $1.50 per kg or only 60% of the freight
cost per kg to Europe, even though the actual distance to Japan is
greater. So, because of the higher net returns, over half of the Indian
roses are airlifted to Japan. As opposed to the roses, which go mainly
to Amsterdam or Japan, the Indian dry flowers (statice, helichrysum,
bottle gourd, cane and bamboo strips, wheat, corn and barley strips
and a diverse basket of wild native species) are exported to a wide
array of countries.
Three international floriculture exhibitions were held in India for
the last three years in a row. The 1
st
International Flora Expo held
in 2005 at Bangalore followed by the 2
nd
in 2006 at New Delhi
and the 3
rd
in 2007 at Pune, were all intended to showcase the
Indias capabilities, the variety and ability to supply quality flowers
to the international markets. These expos were all apparently a
spectacular success, judged by the crowds drawn by them and the
participation of the domestic and international interests in
floriculture production and exports. Foreign delegations to the 2
nd
Flora Expo came from Europe, Japan and the Middle-east and
included the commercial manager of the VBA, and one of the directors
of the NBV-UGA and the ex-manager of Flora Holland, together with
a phalanx of Dutch vendors of equipment, young plants and
consultancy within the framework of buyback arrangements.
Karnataka is the leading state in India in hi-tech floriculture,
accounting for almost 60 percent of cut-flower exports, of which about
80 percent car are from Bangalore region. The recent turnaround not
withstanding, hi-tech floriculture units are still experiencing several
constraints. This occasional paper attempts to study the strengths and
weaknesses of high-tech floriculture in Karnataka so as to throw light
on its prospects and problems, as well as to suggest policy measures
v
to enable the floriculture industry in the state to gear-up for exploiting
the future opportunities and to tackle the challenges in this endeavor.
The present study is thus a sort of a SWOT analysis for high-tech
floriculture in Karnataka.
I have benefited greatly from several institutions and individuals in
the course of this study. It is my pleasant duty to acknowledge the
same and thank them. First of all I am grateful to the authorities of
the National Bank for Agriculture and Rural Development (NABARD)
for having sponsored this study. I am particularly indebted to Dr.
Y.S.P. Thorat, formerly Chairman of NABARD and subsequently the
Chairman of the Expert Committee on the Sugar Economy in India,
for personally encouraging me to take up this assignment.
I thank Mr. Shankar Reddy, Deputy Director (Statistics), Government
of Karnataka, Dept. of Horticulture, Bangalore for his kind help in
gathering the secondary data on floriculture. My thanks are also due
to Mr. Ravindra, Asstt. General Manager, APEDA, Bangalore Office
and Mr. Singh of the National Horticulture Board, Bangalore Office,
for their kind help in collecting the secondary data for the study. I
place on record my great many thanks the executive officers and
managing directors of the floriculture production-export firms,
individual farmers, wholesalers, retailers and also the consumers of
cut flowers in Karnataka covered in the present study for their kind
interaction and cooperation in collecting the primary data required
for the study. Thanks are due to the officials of the International
Flower Auction Centre, Bangalore (IFAB) and South Indian Floriculture
Association, Bangalore for making available data on cut flowers
auctioned through IFAB over the years. I thank Drs. T.M.Gajanan
and Sudha Mysore, Senior Scientists (Agricultural Economics), Indian
Institute Horticulture Research, Hesaragatta, Bangalore for their kind
interaction and sparing valuable literature on Indian floriculture.
I am grateful to my former colleague, Dr. M.S. Jayaram, currently
Professor of Agricultural Marketing and Co-operation, University of
Agricultural Sciences, Bangalore for his kind assistance in collecting
the primary data for the study and also for the insights provided by
him regarding the floriculture industry in Karnataka. I also place on
record my heart-felt thanks to Mr. Y. Nagaraj, one of my former
students, who is currently Research Associate in the ICAR Cost of
vi
Cultivation Scheme at the University of Agricultural Sciences,
Bangalore for his kind assistance in the statistical analysis of the data.
I must also thank Mr. Prasanna Kumar and Ms. Sunitha, Students
of MSc (Agril.Marketing & Co-operation) at the University of
Agricultural Sciences, Bangalore for their assistance in collecting the
primary data for the present study. Thanks are due to Sri Vinayaka
Printers, Hebbal, Bangalore- 24, for their elegant and expeditious
Printing work.
I must admit here that while the help I have received from all these
individuals and institutions has certainly made the quality of my work
better than it would otherwise have been, I am alone responsible for
the flaws that may still lurk in it.
M.V. Srinivasa Gowda
Bangalore
February 8, 2009
vii
CONTENTS
No. Title Page No.
Preface ....................................................................................... iii
CHAPTER I: INTRODUCTION
1.1 Significance of the Study ............................................................. 2
1.2 Objectives of the Study ................................................................ 4
1.3 Scope of the Study ....................................................................... 4
1.4 Methodology ................................................................................ 4
1.4.1 Data for the study ....................................................................... 4
1.4.2 Study area (for collection of primary data) .................................... 5
1.4.3 Sampling procedure ..................................................................... 6
1.4.4 Collection of Data ........................................................................ 7
1.4.5 Analytical Tools Used................................................................... 8
1.4.6 Flaws in Secondary data Floriculture in India............................. 11
1.5 Organization of the Paper .......................................................... 12
CHAPTER II: GROWTH OF FLORICULTURE INDUSTRY IN INDIA
2.1 Rise and Importance of Floriculture ........................................... 14
2.2 Area under Floriculture ............................................................. 15
2.3 State-wise Area under Floriculture ............................................. 17
2.4 Employment Opportunities in Floriculture ................................. 18
CHAPTER III: DEVELOPMENT OF FLORICULTURE
IN KARNATAKA
3.1 A Peep into Floriculture History of Karnataka ............................. 22
3.2 Trends Area and Production of Commercial flowers
in Karnataka ............................................................................ 22
3.3 District-wise Trends in Area and Production of
Floriculture in Karnataka .......................................................... 23
3.4 Crop-wise Area and Production of commercial
flowers in Karnataka ................................................................. 32
3.5 Trends in Crop-wise Area under Commercial
Flowers in Karnataka ................................................................ 36
3.6 Trends in Crop-wise production of commercial
flowers in Karnataka ................................................................. 41
3.7 Trends in Hi-tech Floriculture .................................................... 46
3.8 Profile of a successful Hi-tech floriculture firm ........................... 48
3.9 South Indian Floriculture Association ........................................ 49
3.10 New Flower Auction Centres in Karnataka .................................. 49
ix
3.11 Flaws in Floriculture Statistics of Karnataka .............................. 50
CHAPTER IV: ECONOMICS OF HI-TECH FLORICULTURE
4.1 Costs of and returns from cut-flower production ........................ 51
4.1.1 Gerbera ..................................................................................... 51
4.1.2 Carnation.................................................................................. 55
4.1.3. Anthurium ................................................................................ 58
4.1.4 Rose .......................................................................................... 61
4.2 Production Constraints faced by Hi-floriculture Units ................. 64
CHAPTER V : MARKETING OF CUT FLOWERS
5.1 Supply Chain for Cut-flowers ..................................................... 66
5.2 Consumers' preferences for cut flowers ...................................... 71
5.2.1 Conjoint Analysis for Rose Consumers ....................................... 72
5.2.2 Conjoint Analysis for Gerbera Consumers .................................. 72
5.3 Constraints faced by Wholesalers ............................................... 74
5.4 Constraints faced by Retailers .................................................... 75
5.5 Constraints faced by Corporate Grower-exporters of cut flowers .. 76
5.6 Trend and Seasonality in flower arrivals and
prices of cut flowers at IFAB ...................................................... 78
5.7 Seasonal pattern in arrivals and prices of selected
cut flowers in IFAB .................................................................... 79
5.7.1 Seasonal pattern in arrivals ....................................................... 79
5.7.2 Seasonal pattern in prices ......................................................... 80
5.8 Pricing Mechanism for flowers in Bangalore ............................... 82
5.8.1 Pricing mechanism at IFAB........................................................ 82
5.8.2 Pricing Mechanism at K.R. Market ............................................. 83
5.9 Marketing margin ...................................................................... 85
5.9.1 Marketing margin in channel I (IFAB) ......................................... 85
5.9.1.2 Producer's Share in Channel I (IFAB) ......................................... 85
5.9.2.1 Marketing Margin in Channel II (KR Market) .............................. 87
5.9.2.2 Producer's Share in Channel II (K.R. Market) .............................. 87
CHAPTER VI: INDIA'S FLORICULTURE EXPORTS
6.1 Trends in India's Floriculture Exports ........................................ 89
6.2 Direction of India's Flower Exports ............................................. 90
6.3 Export Performance of Karnataka State ...................................... 92
6.4. Steps taken by Government to increase Flower Exports .............. 94
6.5 Problems encountered by Indian Cut flower Exporters ................ 95
No. Title Page No.
x
6.6 Measures required raising Floriculture Exports ......................... 95
6.7 Quality Requirements for Export-oriented Floriculture ................ 96
6.7.1 Harvesting of flowers ................................................................. 96
6.7.2 Grading and Packing ................................................................. 96
6.7.3 Cold Room................................................................................. 97
6.7.4 Transportation .......................................................................... 97
6.7.5 Sanitary and Phyto-Sanitory norms ........................................... 97
CHAPTER VII : GOVERNMENT'S POLICIES AND
PROGRAMS FOR PROMOTION OF FLORICULTURE
IN KARNATAKA
7.1 National Bank for Agriculture and Rural Development (NABARD) ... 99
7.2 Agricultural and Processed Food Products Export
Development Authority (APEDA) ................................................. 99
7.3 Scheme for Infrastructure Development ................................... 100
7.4 Scheme for Export Promotion and Market Development ............ 100
7.5 National Horticulture Board (NHB) ........................................... 100
7.6 Indian Institute of Horticultural Research (IIHR), Bangalore ..... 101
7.7 Central Government's Initiatives for Floriculture Development ..... 101
7.8 State Government's Programs for Floriculture Development ..... 103
7.9 Schemes under implementation ............................................... 103
CHAPTER VIII : SUMMING UP
8.1 A Retrospection ....................................................................... 106
8.2 SWOT Analysis for Floriculture ................................................ 109
8.2.1 Strengths ................................................................................ 110
8.2.2 Weaknesses............................................................................. 111
8.2.3 Opportunities .......................................................................... 112
8.2.4 Threats ................................................................................... 115
8.3 Steps to strengthen Hi-tech Floriculture ................................... 116
8.4 The Way Forward .................................................................... 122
REFERENCES ......................................................................... 125
ANNEXURES ........................................................................... 133
No. Title Page No.
xi
LIST OF TABLES
No. Title Page No.
Table 2.1 : Growth of Area and Production of Commercial
Flowers in India ................................................................ 16
Table 2.2 : State-wise Area and Production of
flowers in India: 2007-08 .................................................. 19
Table 3.1 : Trends in Area and Production of Commercial
Flowers in Karnataka from 1990-91 to 2004-05 ................. 24
Table 3.2a : District-wise Trends in Area under Floriculture in
Karnataka (1993-2005) ....................................................... 25
Table 3.2b : District-wise Trends in Area -1998-2005
(For new Districts formed since 1998) ............................... 27
Table 3.3a : District-wise Trends in Flower Production in Karnataka
(1993-2005) ........................................................................ 28
Table 3.3b : District-wise Trends in Production -1998-2005
(For new districts) .............................................................. 31
Table 3.4 : Crop-wise Area and Production of Commercial
Flowers in Karnataka - 2006-07......................................... 32
Table 3.5 : Percentage Shares of Different Commercial
Flowers in the Total Floriculture Area,
Production and Value in Karnataka, 2006-07. .................... 34
Table 3.6 : Trends in Crop-wise Area under Commercial
Flowers in Karnataka from 1994-95 to 2004-05 ................. 37
Table 3.7 : Crop wise production of commercial flowers in
Karnataka from 1994-95 to 2004-05 (Production in Tons) .. 42
Table 3.8 : Disrict-wise Distribution of Hi-Tech Floriculture
Units in Karnataka in 2005-06 .......................................... 47
Table 4.1 : Per-acre Establishment cost of Gerbera ............................. 53
Table 4.2 : Per-acre Cost of Production of Gerbera .............................. 54
Table 4.3 : Per-acre Yield and Returns from Gerbera .......................... 54
Table 4.4 : Per-acre Establishment cost of Carnation .......................... 56
Table 4.5 : Per-acre Cost of Production of Carnation ........................... 57
Table 4.6 : Per-acre Yield and Returns from Carnation ....................... 57
Table 4.7 : Per-acre Establishment Cost of Anthurium........................ 59
Table 4.8 : Per-acre Cost of production of Anthurium ......................... 60
xii
Table 4.9 : Per-acre Yield and Returns from Anthurium ...................... 60
Table 4.10 : Per-acre Establishment Cost of Rose .................................. 63
Table 4.11 : Per-acre Cost of production of Rose ................................... 63
Table 4.12 : Per-acre Yield and Returns from Rose ................................ 64
Table 4.13 : Problems faced by Hi-tech Floriculture Units (n=30) ........... 65
Table 5.1 : Results of Conjoint Analysis for Rose Consumers ............... 73
Table 5.2 : Results of Conjoint Analysis for Gerbera Consumers .......... 73
Table 5.3 : Constraints faced by wholesalers (n = 10) .......................... 74
Table 5.4 : Problems faced by Retailers/Florists (n = 15) ..................... 75
Table 5.5 : Constraints faced by Corporate Grower-exporters of
Cut flowers (n = 15) ........................................................... 77
Table 5.6 : Linear Trend in monthly Arrivals and Prices of
Cut flowers at (IFAB) .......................................................... 78
Table 5.7 : Linear Trend in monthly Arrivals of Select
Cut flowers at IFAB............................................................ 79
Table 5.8 : Linear Trend in Prices of Select Cut flowers at IFAB .......... 79
Table 5.9 : Indices of Arrivals and Prices for Roses at IFAB................. 80
Table 5.10 : Indices of Arrivals and prices for Gladiolus at IFAB ........... 81
Table 5.11 : Seasonal Indices of Arrivals and prices for
anthodium at IFAB ............................................................ 81
Table 5.12 : Difference between IFAB and K.R. Market, Bangalore ........ 84
Table 5.13 : Price and Market Margin of cut flowers at different levels .. 86
Table 5.14 : Shares of Producer and Intermediaries in Consumer
rupee of Cut flowers in Market Channel I (IFAB) (%) ....... 86
Table 5.15 : Price and Marketing Margin of cut flowers at
different levels In Channel II (K.R. Market) ........................ 88
Table 5.16 : Shares of Producer and Intermediaries in Consumer
rupee of cut flowers in Channel II (K.R. Market) (%) ........ 88
Table 6.1 : Trends in India's Flower exports ........................................ 89
Table 6.2 : Direction of India's cut Flower Exports............................... 90
Table 6.3 : Major Destinations of India's Flower
Exports over the years ....................................................... 91
Table 6.4 : Export Performance of Karnataka State.............................. 93
No. Title Page No.
xiii
LIST OF FIGURES
Sr. No. Title Page No.
1 Fig.2.1: State-wise Area under flowers in India:
2007-08 (Hectares) ................................................................... 20
2 Fig.2.2 : State-wise Production of loose flowers
in India: 2007-08 (MT) ............................................................ 20
3 Fig.2.3: State-wise Production of cut flowers in
India: 2007-08 ('000s) ........................................................... 21
4 Fig. 3.1: Trends in Area and Production of Commercial
flowers in Karnataka from 1990-91 to 2004-05 ......................... 24
5 Fig. 3.2: Percentage Shares of Different Commercial
Flowers in the Total Floriculture Area in Karnataka, 2006-07. .. 35
6 Fig. 3.3: Percentage Shares of Different
Commercial Flowers in the Total Floriculture
Production in Karnataka, 2006-07. .......................................... 35
7 Fig. 3.4: Percentage Shares of Different
Commercial Flowers in the Total Value of
Floriculture products in Karnataka, 2006-07. ........................... 36
8 Fig. 3.5: Trends in Area under Rose in Karnataka
from 1994-95 to 2004-05 ......................................................... 38
9 Fig. 3.6: Trends in Area under Gerbera in
Karnataka from 1994-95 to 2004-05 ........................................ 38
10 Fig. 3.7: Trends in Area under Carnation in
11 Fig. 3.8: Trends in Area under Anthurium in
12 Fig. 3.9: Trends in Area under Jasmine in
13 Fig. 3.10: Trends in Area under Marigold in
14 Fig. 3.11: Trends in Area under Gladiolus in
Karnataka from 1994-95 TO 2004-05 ....................................... 41
15 Fig. 3.12: Trends in Production of Rose in
xiv
16 Fig. 3.13: Trends in Production of Gerbera in
Karnataka from 1994-95 to 2004 -05 ....................................... 43
17 Fig. 3.14: Trends in Production of Carnation in
18 Fig. 3.15: Trends in Production of Anthurium in
19 Fig. 3.16: Trends in Production of Jasmine in
20 Fig. 3.17: Trends in Production of Marigold in
21 Fig. 5.1: Backward flow of Information on Cut flowers .............. 67
22 Fig. 5.2: Backward flow of Money ............................................. 67
23 Fig. 5.3: Supply Chain for Cut-flowers from
Producer to Consumer ............................................................. 67
24 Fig. 5.4: Supply Chain for Cut-flowers from
Greenhouse to Aircraft ............................................................. 70
25 Fig. 6.1 Direction of India's Flower Exports
(Quantity, 2006-07) ................................................................. 91
26 Fig.6.2 Direction of India's Flower Exports
(Value, 2006-07) ...................................................................... 92
Sr. No. Title Page No.
xv
CHAPTER 1
INTRODUCTION
The Background
Floriculture may be defined as the art, science and business of growing
and marketing flowers. As an art, it refers to the cultivation of flowers;
as a science it systematically studies botanical aspects of flowers and
plants; and as a business it deals with the costs of production of and
income from flower production and marketing. The term flowers is
used to cover flowers both fresh and dried as also ornamental
plants and the filling material/foliage used for floral decorations.
In the wake of the new economic policy (NEP) introduced in India in
the early nineties covering virtually only the manufacturing and service
sectors, perhaps the only cognizable new program that was
contemplated by the Indian policy makers for the agricultural sector
was the development of commercial, or, what is otherwise called the
high-tech, floriculture. This was in view of the assumed vast export
potential of this sub-sector of agriculture in the country. In the band
wagon was the Karnataka Government which in fact led the other
states in India to provide a number of incentives to the newly
discovered hi-tech floriculture sector which was supposed to provide
not only additional source of foreign exchange but also help raise farm
incomes in the process. The initial policy euphoria and the resultant
financial thrust given to this sun-rise industry, however, did not last
for long, since the basic problems/handicaps associated with the
export-oriented floriculture industry were neither adequately
understood nor appropriately tackled. As a result, many of the
commercial floriculture enterprises established/promoted during the
initial years of the NEP could not survive for long. Obviously, the
institutional finances provided to many of the high-tech floriculture
units ran the risk of becoming nonperforming assets.
Most high-tech floriculture units established in a sort of a hurry, and
what with the rather heavy investments made for the modern
greenhouse set-up most of which was imported, to cash-in on the
expected burgeoning export market, ended up with a struggle to
dispose off the output even in the local markets and the number of
sick floriculture units went on growing towards the late 1990s. As
far as Karnatakas floriculture is concerned, although the State in
general apparently enjoys several natural and infrastructural
1
advantages over the other states, the progress made in high-tech
floriculture is not quite extraordinary.
Nevertheless, in view of the overcoming of the two major logistic
bottlenecks for export-oriented floriculture namely the lack of an
international airport and of an auction centre overcome in the form
of the establishment of Devanahalli International Airport on the one
hand and the construction in Bangalore of a state-of-the-art flower
auction centre similar to Alsmeer centre of Amsterdam, high-tech
floriculture in Karnataka in general and, around Bangalore in
particular, has a great prospect which needs to be tapped.
The purpose of this occasional paper, therefore, is to examine the
strengths and weaknesses of high-tech floriculture in Karnataka so
as to throw light on its prospects and problems, as well as to suggest
policy measures to enable the floriculture industry in the state to gear-
up for exploiting the future opportunities and to tackle the challenges
in this venture. The present study is thus a sort of a SWOT analysis
for high-tech floriculture in Karnataka.
1.1 Significance of the Study
The existing literature on the prospects and problems of high-tech
floriculture in Karnataka is rather scanty and much of what is
available appears to be either impressionistic or confined to the
traditional open field floriculture that caters to the traditional domestic
market. Although there is no dearth of literature on the technical
aspects, i.e., the production aspects, of high-tech floriculture, there
is a yawning gap in the literature on its economic and marketing
aspects especially in the context of its export prospects. Therefore, a
study based on field survey of a representative sample of the existing
high-tech floriculture enterprises across different regions/districts in
the state would be of lot of policy significance, not only for the
government but also for the institutions financing high-tech
floriculture. The study is intended to provide a database on the costs,
returns, profitability and export prospects as well as problems of high-
tech floriculture in Karnataka, which could be of great use for
professionals, academicians, policy makers and stakeholders including
financial institutions.
Karnataka ranks first in the country in the production and export of
cut flowers. The area under flowers both loose and cut - has
increased from about 4 thousand hectares in 1978-79 to 23 thousand
2
hectares in 2006-07. Out of this, about 200 ha are under hi-tech
floriculture. During the same period, the production has increased
from 21 thousand tons to 1.92 lakh tons valued about Rs.360 crore.
In terms of its share in the country, Karnataka accounted for 27 per
cent of the area and 35 per cent of the production during 2003-04.
The conducive climate prevailing in the 6 agro-climatic regions spread
across 10 Zones in the state is responsible for this impressive growth.
The growth of this crop in the state is also highest compared to other
food crops as well as horticultural crops. On the export front, its
performance is commendable. In 1999-2000, about 58 million stems
were exported from the state, fetching Rs.41 crore in foreign exchange
which accounted for about 50 per cent of the countrys total flower
exports and formed about 2 per cent of the total agricultural exports
of Karnataka. However, the growth within the state has not been
uniform across the districts. Hi-tech floriculture is concentrated in
not more than 10 of the present 29 districts in the state, although
the cultivation of traditional flowers is fairly well spread across all the
districts.
Indias share in the world trade of fresh flowers is less than 0.5 per
cent as compared to the Netherlands 65 per cent, Columbias 12 per
cent, Italys 6 per cent and Israels 4 per cent. Even among developing
countries, those like Kenya and Zimbabwe have a higher share than
India in the world flower trade. India has a larger area under
floriculture than many countries, the area under protected cultivation
is limited. The proportion of the area under protected floriculture to
the total floricultural area is 99 per cent in Colombia, 70 per cent in
the Netherlands and 58 per cent in Italy, whereas in India it is hardly
0.56 per cent (Thippaiah, 2005). The investments in this sector and
per capita consumption of flowers are also considerably lower than
those in developed countries.
Indian floriculture is constrained by lack of awareness about its
potential, lack of quality planting materials, inadequate infrastructural
support, lack of post-harvest facilities, absence of organized markets,
exploitation by middlemen, weak database, and absence of information
on income and employment generation from cultivation of different
flowers and also export barriers. Majority of the growers of traditional
flowers are small and marginal farmers who experience lot of
problems. Many of the studies conducted so far have covered only
the economics of production and marketing of traditional flowers, while
3
those on hi-tech floriculture are few and far between. Hence an
attempt has been made in this study to analyze the economics of
hi-tech floriculture in Karnataka state.
1.2 Objectives of the Study
1) To assess the costs, returns and profitability of high-tech
2) To document the production and marketing constraints and
problems encountered by high-tech floriculture units in
Karnataka.
3) To draw a database as well as inferences on high-tech
floriculture; for use by the industry, financial and research
institutions and, by policy makers.
1.3 Scope of the Study
Floriculture in India comprises both traditional and modern flower
crops. Most traditional flowers are grown in open fields while modern
flowers are grown under protected conditions. The traditional flowers
grown in the open include chrysanthemum, jasmine, crossandra, rose,
tuberose, aster, marigold, champaka, etc. A large number of small
and marginal farmers as well as small traders (forming the
unorganized sector) are eking out a living in the sector compared to
hi-tech floriculture. The traditional flowers are grown in all districts
of the state. The traditional floriculture is still predominant in the state
in terms of area and production. However, there are a few exceptions
to this general practice in Karnataka. For instance, roses (as cut
flowers) are also grown by small and marginal farmers under open
conditions, while traditional flowers like chrysanthemum are grown
by large growers under poly-house conditions. The chief flowers grown
under greenhouse conditions are rose, gerbera, carnation, bird of
paradise and anthurium. The present study is focused on the hi-tech
1.4 Methodology
1.4.1 Data for the study
The study was based on both the primary and secondary data.
Secondary data were collected from published sources and also from
IFAB, SIFA, the regional offices of NHB and APEDA at Bangalore,
4
Indian Institute of Horticulture Research, Hesaraghatta, Bangalore
and, Karnataka State Department of Horticulture, Lalbagh, Bangalore.
The primary data used for the present study relates to the year 2006-
07, whereas the secondary data relating to area, production and
exports pertain to the periods ranging from 2003-04 to 2007-08
depending on the data made available by the concerned sources.
1.4.2 Study area (for collection of primary data)
Cut-flower cultivation in Karnataka is concentrated in the districts
of Bangalore (both urban and rural), Belgaum, and Kodagu because
of favorable climate and easier access to the market. Hence, Bangalore,
Belgaum and Kodagu districts were selected for this study. Any
production system, especially the one which is biological in nature,
is influenced by the agro-climatic environment in which it operates.
An understanding of these factors and region would be useful to
understand the production system and the environment influencing
the decision making process. Commercial production of flowers
especially under greenhouse conditions is concentrated in the districts
mentioned above. Hence these districts were purposively chosen for
the study. The agro-climatic features of these districts are presented
below.
i) Bangalore district: Although administratively Bangalore district has
been bifurcated into Bangalore Urban and Bangalore Rural districts,
for the purpose of the present study it was treated as one unit.
Bangalore district is located at the south-east border of Karnataka
state. The district lies between 12
0
1 and 13
0
3 North latitude and
70
0
7 and 78
0
4 east longitude. The geographical area of the district
is 8,005 sq.km. The average annual rainfall of the district is about
793.60 mm. Generally, heavy rainfall occurs during the months of
September and October. The temperature ranges between 18
0
C and
36
0
C.
The district enjoys more or less pleasant climate with cool winter
(November to January) and warm summer months (March to June).
The bulk of soil is red sandy loam. The other major types of soil in
Bangalore are red loamy soils, laterite and laterite-gravelly soils. Kharif
is an important season, which starts from middle of June and extends
up to middle of September. The rabi season begins from mid
September and extends up to mid February. This is followed by
summer season. Both these seasons are not important since rain fed
5
agriculture is practiced in this district.
Cereals like rice, ragi and maize are cultivated in the district. Besides,
gram, tur, groundnut and sugarcane are also cultivated. Coconut,
tamarind, mango, jack fruit, papaya, potato, tomato, brinjal and beans
form the major horticultural crops cultivated in the district. Flower
crops like rose, chrysanthemum, aster, jasmine, crossandra and
marigold are also cultivated extensively in open conditions.
ii) Belgaum district: Belgaum district is located in the interior of
the Deccan Peninsula and lies between North Latitude 15 23 and
16 58 and East Longitude 74 05 and 75 28. Climate wise the
district is divided into three zones viz. Hilly zone, North transition zone,
North dry zone. The average annual rainfall distribution is 808 mm.
The temperature ranges from 19.5
0
C to 35.7
0
C.
There are three main types of soils namely black, red sandy and sandy
loam. The soils are slightly acidic and are good in organic matter. The
main food crops are jowar, paddy, bajra, maize, wheat and other
cereals. Among the commercial crops tobacco, cotton, sugarcane are
more popular. Major fruit crops grown are grape, mango, sapota,
guava, papaya and pomegranate.
iii) Kodagu district: Kodagu is a small, highland district situated in
the south-western part of Karnataka state and lies between 11
0
50
and 12
0
50 north latitude and 75
0
25 and 76
0
14 east longitude,
covering an area of 4109.73 sq.km. Nature has richly endowed the
district with horticultural wealth. Its west, northwest and southwest
boundaries run along the fort of the Western Ghats. On the north
and east, for short distance the Cauvery and Hemavathy rivers mark
the boundary between Mysore and Kodagu. On the south, the
Brahmagiri range of hills forms the line of division from the Kerala
state.
1.4.3 Sampling procedure
A two-staged sampling procedure was employed in the present study.
In the first stage, villages were randomly selected and in the second
stage farmers were randomly selected. Keeping in view commercial
production of cut flowers under greenhouse condition, Bangalore,
Belgaum and Kodagu were selected for Rose, Gerbera, Carnation and
Anthurium. A list of villages growing flowers was obtained from the
Department of Horticulture, Government of Karnataka. Sample flower
6
growers were randomly selected from each village depending upon the
availability of flower growers. The sample size consisted of 55 farmer
respondents spread over the three sample districts: Bangalore,
Belgaum and Kodagu. Out of the total respondents, the data obtained
related to 10 Rose, 15 Gerbera, 15 Carnation and 15 Anthurium.
Although it was originally intended to collect primary data from 15
floriculture exporters, in the course of the field visits it was found
that most hi-tech floriculture production units were exporters as well,
and accordingly opinions on exports were elicited from the same set
of sample respondents.
In order to analyse the marketing aspects including the supply chain
of cut flowers from producers to consumers, 10 wholesalers, 15
retailers and 10 corporate companies engaged in export of cut flowers
were selected at random spread over the entire Bangalore city. Data
on consumer preference for Rose and Gerbera were obtained from 40
consumers from Bangalore city. The reference year of the study was
2006-07 and the collection of data was carried out during March -
October 2007.
1.4.4 Collection of Data
The primary data required for the study were collected by the survey
method from the sample flower growers by the personal interview
method using a pre-tested structured schedule. Five separate
interview schedules were used covering cut flower grower-exporters,
wholesalers, retailers and consumers. In order to get better
co-operation and reliable data from the respondents, the purpose of
the study was clearly explained to the respondents prior to the
interview.
The schedule used for producer-exporters was structured in such a
way as to obtain information on inputs used, cost of inputs,
production materials and creation of the structure for the greenhouse.
Information on cold storage, processing, cost of marketing and exports
was also gathered from the respondents. In order to get information
about flower marketing, questionnaire was prepared for the
wholesalers, retailers and consumers. The schedule for consumers
covered aspects like education, income, factors influencing their
purchase of cut-flowers like rose and gerbera.
7
1.4.5 Analytical Tools Used
Tabular analysis was used to arrive at the establishment costs,
maintenance costs and returns of flower growers under greenhouse
condition. Further the constraints faced by the flower growers were
analyzed on an average basis.
i) Costs and Returns Concepts
The costs were classified into variable and fixed costs. Variable costs
are defined to include costs incurred on fertilizers and pesticides,
irrigation, electricity, transportation and marketing and labour. Fixed
costs included amortized cost of establishment of structure and
planting materials, interest on fixed capital and depreciation on fixed
assets. The measurements and definitions of various cost components
are as follows:
Variable Cost Components
a) Fertilizers and pesticide cost: the cost of fertilizers and
pesticides were considered by taking the amount actually paid
by the sample farmers.
b) Irrigation and miscellaneous charges: irrigation charges
considered on the basis of the cost incurred on the electricity.
The expenditure on traveling, repairs, stationary, land revenue
and taxes paid were considered under the miscellaneous
head.
c) Transportation and marketing costs: these costs were
computed by taking into account the actual amount paid for
marketing their flowers including transportation, packaging,
loading and unloading and commission charges paid at the
market.
d) Labour charges: wages for hired labour were computed by
taking into account the wages paid by the sample farmers
for different operations. The wage bill for the family labour
was calculated by imputing at the prevailing wage rate.
e) Interest on working capital: interest on working capital was
calculated at the rate of 12 per cent per annum since the
commercial banks charge at this rate for most agricultural
loans. This was calculated depending on the duration of the
crop.
8
Fixed Cost Components
a) Interest on fixed capital: This includes interest on loans
raised for greenhouse structure, irrigation system, fencing and
other implements and calculated at 14 per cent per annum.
b) Amortization of establishment cost: Amortized cost is the
annual fixed cost component of establishment, it includes all
material costs. Due to declining yield levels, the amortized
cost varied with the economic factors such as year of
establishment, average life span of the respective items used
in greenhouse construction.
c) Depreciation charges: depreciation on building, equipment,
implements and machinery was calculated by straight-line
method i.e., by dividing the original cost less junk values of
the implements by their expected life. This was apportioned
to individual crop in proportion to the acreage under these
crops.
ii) Gross Returns
Gross returns from cut-flower enterprises were calculated by
multiplying the total production of cut-flowers with the corresponding
price per unit realized by farmers in the market.
m
GR = PY
j
Y
j
j = 1
where, P = Price
Y
j
= Y
1
, Y
2
, Y
3
..Y
n
iii) Profits or net returns
Profits or net returns were arrived at by subtracting the annual total
costs of cut-flower production from the annual total returns derived
from the sale of cut-flowers.
9
Conjoint Analysis:
Conjoint analysis is a versatile marketing research technique used
for a variety of purposes. It is extensively used in consumers
evaluation and value judgements on product quality and attributes.
In the present study it was used to measure the consumers
preferences for the traits of cut flowers like rose and gerbera.
One of the important requirements in the conjoint analysis is the
identification of appropriate attributes that describe the product and
the specific and feasible levels of attributes. On the basis of objective
attributes, representative indicators for a given variety attribute are
chosen. Further, the overall judgement of the consumer is broken
down into the contribution of each attribute level. Another important
requirement for the study is the specification of the basic form of
relationship between the product attributes and overall judgement.
In the present study, the additive conjoint model was used instead of
other forms like the interactive and the multiplicative model. Further,
in this model, the omission of the attribute does not have a major
impact on the part-worth estimates.
The additive part-worth model assumes that the part-worth of each
attribute level is independent and that total utility is the sum of the
attribute level part worth. Assuming five attributes (A to E), a traders
preference for a particular product combining the attribute i from A,
attribute j from B, attribute k from C, attribute l from D and m from
E is
Pref
ijklm
= a
i
+ b
j
+ c
k
+ d
l
+ e
m
...................... (1)
Where,
Pref
ijklm
= consumers total utility or preference rating for a
product combining attribute levels ijklm from the
attributes A, B, C, D and E respectively.
a
i
= utility or part worth of attribute level i from attribute
A.
b
j
B
c
k
C
d
l=
utility or part worth of attribute level i from attribute
D.
e
m
E.
10
The model has been formulated as:
n m
Y= Vij X
ij
(2)
I=1 j=1
Where,
Y = consumers overall evaluation of the product alternative
V
ij
= part worth associated with j (1,2,3. m) of attributes i.
(i= 1,2n)
X
ij
= dummy variable representing the preference of the j
th
level
of i
th
attribute.
For the present study, in order to determine the quality preference of
rose and gerbera cut flowers, four distinct attributes were considered
i.e., colour, variety, suitability for floral arrangement and price. The
computer software SPSS was employed to generate a set of 16 product
profiles. Each profile was described on a separate card called the plan
card. The randomly selected mixed cards were shown to the
respondents and were asked to arrange them in the order of their
preference. Before administering these cards, initial briefing regarding
the meaning of the cards and the purpose of the study was given so
that the respondents could understand the meaning and purpose of
the exercise. The ranks given by them to each of these 16 cards were
noted down. Varietal attributes and their levels were identified through
discussions with the growers and the traders.
1.4.6 Flaws in Secondary data Floriculture in India
The statistical data on floriculture in India needs to be taken with a
pinch of salt. The situation is no different in Karnataka. The State
Directorate of Economics and Statistics arrives at the data on
horticulture crop area including floriculture based on the area under
season-wise horticulture crops recorded by village accountants in the
survey number-wise RTC. The area, thus recorded, in the RTC is being
aggregated at the village, village panchayat, hobli and taluka levels
by the statistical inspector working at the taluka level and the same
is placed before the Tehsildar who is also the chairperson of the
11
committee on reconciliation of crop area statistics. Upon detailed
discussion with the Senior Asst. Director of Horticulture of the
concerned taluka, the area under horticulture crops in the taluka is
being finalized. However, several flaws are associated with the
collection of data on horticulture area in the state. Important among
them are as under:
i) The village accountant often fails to record the horticulture
area in the RTC properly.
ii) Most horticulture crops are raised as mixed crops and as such
the crop area is not appropriately bifurcated and recorded in
the RTC.
iii) As horticulture crops, particularly commercial flower crops,
attract higher land revenue than the other crops, farmers tend
to under-report the area in respect of the horticulture crops.
Village accountants hardly make field visits to verify the crop
area and they are also not trained to understand intricacies
of estimating.
iv) The village accountants often leave out poly-house floriculture
units by misconstruing them as industrial ventures.
For these and other reasons, the data base published by the national
Horticultural Board often fails to truly reflect the ground reality.
Obviously the analysis based on the published secondary data needs
to be interpreted with great caution and such data may also send
wrong signals for policy purposes. Hence, the importance of field
based studies, especially on activities like floriculture.
1.5 Organization of the Paper
For analytical convenience the paper has been organized into six
chapters. Chapter I covers the preliminaries of the study including
an introduction to the status of floriculture in the country as well as
in Karnataka, the significance of the study, the objectives, scope and
methodology of the study. Chapter II presents an overview of the
floriculture development in India. Chapter III gives an account of
floriculture development in Karnataka. Chapter IV, one of the core
chapters, presents the results of the present study based on the
analysis of primary data collected from the sample hi-tech floriculture
production-export units. This chapter examines the economics of
12
floriculture covering costs, returns and profitability of hi-tech
floriculture units. This chapter also examines the problems faced by
flower growers in general and hi-tech floriculture enterprises in
particular. Chapter V analyses the domestic marketing of cut flowers.
Chapter VI examines the trends, problems and prospects of flower
exports. Chapter VII gives a brief account of the major policies and
programs initiated for the promotion of floriculture in India in general
and in Karnataka in particular. Chapter VIII attempts a retrospection
to throw light on the general problems and prospects of hi-tech
floriculture in Karnataka. To conclude the study, this chapter also
attempts a SWOT analysis of the hi-tech floriculture industry and
discusses the way forward.
13
CHAPTER II
GROWTH OF FLORICULTURE INDUSTRY IN INDIA
This chapter gives a brief rsum on the development of floriculture
in India, especially since the introduction of economic reforms in the
early nineties.
2.1 Rise and Importance of Floriculture
Since the mid-nineties, floriculture is emerging as an important
commercial crop in India for both domestic and foreign markets. The
industry is gaining prominence from three broad counts: creating
more employment, ensuring higher incomes to rural people and
earning more foreign exchange. Floriculture also provides raw
materials for the manufacture of essence, perfumes, medicines and
confectioneries for direct consumption by the society as an item of
aesthetic beauty.
According to the Indian trade classification made by the Government
of India based on Harmonized System (HS) of commodity Description
and Coding Systems, floriculture covers a vide variety of flowers such
as bulbs, tubers, live plants, shrubs, bushes, roots, cut flowers, flower
bulbs, dried, bleached flowers and foliage etc. The major floriculture
products are as under:
a) Bulbs, tubers and Tuberose roots: These are products that may
be planted in pots, boxes or similar containers.
b) Live plants: These are plants that are used for permanent or semi
permanent decoration in offices, homes and buildings. These are
whole plants, which are suitable for planting or for ornamental
purposes.
c) Cut-flowers: These are flowers and flower buds with a suitable
stem of varying length, which makes them suitable for bouquets
or for ornamental purposes. Examples of cut-flowers are roses,
carnations, chrysanthemums, orchids, gladiolus etc.
d) Cut foliage: These are leaves, twinges grasses, shoots etc. The
economic value of these lies not in the decorative effect of the
blossoms but in its colour and shape.
14
e) Others: These include dried flowers and foliage, propagation
materials, tissue culture plants and starter and adult ornamental
plants including houseplants. (Dattatreyulu, 1997).
Although production of flowers in India is an age-old occupation, the
growing and selling of flowers was confined to a few families. The
markets were localized and limited. However, the situation changed
considerably since the mid-nineties. Now, farmers are growing a wide
range of flowers for both domestic market and export. The economic
reforms introduced since 1991 and the vastly liberalised foreign trade
policy since then have given a great fillip to this sector. Consequent
upon liberalization, the Government of India identified floriculture as
a sunrise industry and accorded it 100 per cent export-oriented status.
Growing domestic and global demand coupled with relatively much
higher returns per unit of land than from other agricultural activity
has prompted some farmers to take up floriculture. The demand for
flowers has increased on account of rapid urbanization, increase in
individual purchasing power among middle-income groups as a result
of increase in GDP, increase in the number of corporate bodies, hotels,
tourists, temples, and changing life-styles/ social values among the
people.
The Five-Year Plans which had given little attention to this crop in
the past have started giving more attention to it on account of its
growing importance as a thrust area. In the Ninth Five Year Plan,
about Rs. 40 crore were allocated to this sector as against Rs. 17 crore
in the Eighth Five Year Plan. This positive attitude enabled the country
to expand both the area and production during the last one and a
half decades.
2.2 Area under Floriculture
As already mentioned, the data on the area under floricultural crops
are not accurate. Nevertheless, the available literature reveals various
estimates on area at different points of time. It was estimated that
the area under floriculture in India was 4,000 hectares in 1962 and
7,500 hectares in 1976 (National Commission on Agriculture (NCA)
1976). Subsequent estimates by APEDA put the area at 34,000
hectares in 1995 accounting for about 15 per cent of the worlds
floricultural area (Thippaiah, 2005). Indias floriculture area was lower
than in China with 60,000 hectares. Recently, the National
Horticulture Board (NHB) provided more reliable data on floriculture.
15
According to this, the area under floriculture at all India level had
increased from 53,000 hectares in 1993-94 to 1.54 lakh hectares in
2007-08(Table 2.1). The annual compound growth rate (ACGR) of the
area was 6.65 percent, while the ACGRs of production of loose and
cut flowers were 8.87 percent and 17.43 percent respectively. The
high rate of growth in the production of cut flowers is obviously due
to the steadily growing domestic and export demand for these flowers.
The area under high-tech floriculture in India is very small compared
to other countries. The proportion of the area under high-tech
floriculture to the total floriculture area is 70 per cent in Netherlands
and 90 per cent in Colombia, whereas in India it is hardly 500 hectares
accounting for just 0.56 per cent of the total area under floriculture,
while the rest was under traditional flowers (Thippiah, 2005)
Table 2.1 : Growth of Area and Production of Commercial
Flowers in India
Area Production
Year (In 000 ha)
Loose flowers
( 000MT)
Cut flowers
(Million No s)
1993-94 53 233 555
1994-95 60 261 519
1995-96 82 334 537
1996-97 71 366 615
1997-98 74 366 622
1998-99 74 419 643
1999-00 89 509 681
2000-01 98 556 804
2001-02 106 535 2565
2002-03 70 735 2060
2003-04 101 580 1793
2004-05 118 659 2071
2005-06 126 694 2762
2006-07 147 778 3650
2007-08 154 805 3772
ACGR(%) 6.65 8.87 17.43
ACGR= Annual Compound Growth Rate.
Source: National Horticulture Board, Indian Horticulture
Data Base 2006 and 2007-08.
16
Note: Equation used for computing ACGR:
Y = ab
t
e
Where Y is dependent variable
a is intercept
b is Regression coefficient
t is Time (independent) variable
e is Error term.
In log form the above equation becomes: lnY = ln a + t ln b.
The ACGR (in percentage) is: ACGR = (Anti ln of b -1) X 100.
Regression Results: (n =15)
Dep. variable R Square Adjusted R
2
Standard
Error
Area 0.821126 0.807366 0.139402
Production
( Loose flowers) 0.928589 0.923095 0.109376
Production
(Cut flowers) 0.874798 0.865167 0.282137
The production of loose flowers increased from 2.33 lakh tons to 8.05
lakh tons and that of cut-flowers increased from 5,550 lakh numbers
to 37720 lakh numbers during the period 1993-94 to 2007-08. The
major traditional flowers grown are marigold, Jasmine, Rose, Aster
and Crossanda and the cut-flowers with stem include Rose, Gladiolus,
Tuberose and Carnation, Hibiscus, China Aster, several annuals such
as Gonphera, Cocks Comb, Golden Rod, Dahlia, Zinnia and
Sunflowers. The favourable factors such as warm temperature, soil
conditions, and relatively cheap labour, wide-ranging agro-climatic
conditions have helped the growth in the area and production of
flowers in the country.
2.3 State-wise Area under Floriculture
Among the various states in the country, the highest area under
floriculture in 2007-08 was found in Tamil Nadu with 27,800 hectares,
followed by Andhra Pradesh, Karnataka and West Bengal in that order
(Table 2.2). Three southern states together accounted for almost half
of the floriculture area in the country. A larger proportion of the area
under floriculture in many states was concentrated around the
17
suburban or urban areas in view of the proximity to the urban markets
where the demand for flowers is growing steadily.
2.4 Employment Opportunities in Floriculture
Floricultural crops are highly labour intensive and have the capacity
to generate substantial direct and indirect employment in rural areas
as well as in urban areas. Estimates across different states in India
indicate that the employment generation of flower crops cultivation
was higher than other horticulture crops, food crops and commercial
crops. According to estimates, the employment generation of
floricultural crops cultivation was 913 man-days per hectare in
Crossandra and 1,210 man-days in Jasmine (Rao, 1997). A Study by
UAS Bangalore, in Chitradurga district showed that the employment
generation of one hectare of Crossandra was 1,461 man-days per year.
Of this, the female workforce accounted for 65 percent.
It was estimated that conventional (traditional) floriculture provide a
decent standard of living for nearly 10,000 farm households and
employment to 80,000 farm labourers and 2.5 lakh small retailers and
flower vendors in the state of Karnataka (Prakash, 2002). In contrast
to the traditional floriculture, the modern floriculture generated more
employment. The range of employment per hectare in this activity was
7,121 mandays (Thippaiah, 2001) to 7,468 man-days /hectare
including technical labour (Prakash, 2002), whereas the food crops
generated 860 mandays per hectare per annum as against 143
mandays for cereal crops (GOI 1996), Paddy 175 man-days, and
Sugarcane 285 days (Rao, 1997), to 305 mandays (Algumani, 1997),
Groundnut 105 (Rao, 1997) to 225 (Alagumani, 1997) per hectare of
land.
The high-tech floriculture employs more labour. However, the cost of
generating a human labour day is Rs. 1886 in high-tech floriculture
compared to Rs.87 in conventional floriculture and Rs.217 in
commercial floriculture (Chengappa and Reddy 2000 and Prakash
2000). This means that cost incurred by high-tech floriculture to
generate one human day is capable of generating employment to nine
labourers in the cultivation of field roses and 22 labourers in
conventional floriculture. There are no estimates on total labour
required in modern floriculture. But some case studies indicate that
the total labour in 10 sample units in Bangalore were 981 which
18
Table 2.2 : State-wise Area and Production of
flowers in India: 2007-08
Area Production
States
000
Hectares
% Loose(MT) % Cut(000's) %
Andaman & Nicobar
0.0 0.0 0.0 0.0 2.54 0.00
Andhra Pradesh
23.5 15.3 126.3 15.6 3.3 0.00
Arunachal Pradesh
0.0 0.0 0.0 0.0 0.0 0.00
Assam
1.0 0.6 0.0 0.0 0.0 0.00
Bihar
0.2 0.1 2.3 0.3 10.6 0.00
Chandigarh
0.0 0.0 0.0 0.0 0.0 0.00
Chhattisgarh
2.2 1.5 8.6 1.1 0.0 0.00
D & N Haveli
0.0 0.0 0.0 0.0 0.0 0.00
Daman & Diu
0.0 0.0 0.0 0.0 0.0 0.00
Delhi
5.5 3.6 5.7 0.7 1038.0 0.03
Goa
0.0 0.0 0.0 0.0 0.0 0.00
Gujarat
8.4 5.5 49.5 6.1 5063 0.13
Haryana
5.7 3.7 64.5 8.0 1150 0.03
Himachal Pradesh
0.5 0.3 0.0 0.0 530.75 0.01
Jammu & Kashmir
0.3 0.2 1.3 0.2 218 0.01
Jharkhand
0.0 0.0 0.0 0.0 0.0 0.00
Karnataka
22.3 14.5 169.1 21.0 5550 0.15
Kerala
0.0 0.0 0.0 0.0 0.0 0.00
Lakshadweep
0.0 0.0 0.0 0.0 0.0 0.00
Madhya Pradesh
3.8 2.5 2.0 0.2 0.0 0.00
Maharashtra
16.7 10.9 69.5 8.6 5728 0.15
Manipur
0.5 0.3 0.7 0.1 0.0 0.00
Meghalaya
0.1 0.1 0.0 0.0 32.4 0.00
Mizoram
0.0 0.0 0 0.0 36.6 0.00
Nagaland
0.0 0.0 0 0.0 16.5 0.00
Orissa
1.9 1.2 9.2 1.1 0.0 0.00
Pondicherry
0.0 0.0 0.0 0.0 0.0 0.00
Punjab
1.0 0.6 5.6 0.7 0.0 0.00
Rajasthan
4.3 2.8 6.2 0.8 0.0 0.00
Sikkim
0.1 0.1 0.0 0.0 33.8 0.00
Tamilnadu
27.8 18.0 226.8 28.1 0.0 0.00
Tripura
0.0 0.0 0.0 0.0 0.0 0.00
Uttar Pradesh
8.4 5.5 12.4 1.5 3752 0.10
Uttranchal
0.9 0.6 0.7 0.1 1455.45 0.04
West Bengal
18.7 12.1 44.2 5.5 13100 0.35
19
Fig. 2.1: State-wise Area under flowers in India: 2007-08 (Hectares)
0
.0
2
3
.5
0
.0
1
.0
0
.2
0
.0
2
.2
0
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0
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0
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8
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5
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0
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0
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0
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0
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0
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0
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0
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0
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7
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0
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8
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0
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1
8
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2
2
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0.0
5.0
10.0
15.0
20.0
25.0
30.0
A
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W
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S
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States
H
a
Fig. 2.2 : State-wise Production of loose flowers in India: 2007-08 (MT)
1
2
6
.
3
0
.
0
2
.
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0
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.
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A
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States
T
o
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s
20
Fig. 2.3 : State-wise Production of cut flowers in India: 2007-08 (000s)
2
.
5
4
3
.
3
0 1
0
.
6
1
0
3
8
.
0
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2000
4000
6000
8000
10000
12000
14000
A
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B
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A
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States
L
a
k
h
s
(
N
o
s
)
worked out to 98 persons per unit, the proportion of permanent
labourers being 43.73 per cent (Thippaiah, 2001). But the study of
Prakash (2002) shows the proportion of permanent labour at 8 per
cent and they were given industrial type of benefits. Several studies
(for instance Alagumani et al, 1997) have revealed that, in addition
to generating more employment, the flower crops enhance the
productivity per unit of land resulting in higher incomes to the
farmers.
21
CHAPTER III
DEVELOPMENT OF FLORICULTURE IN KARNATAKA
This chapter gives an account of the development of floriculture in
Karnataka. First of all, it gives a brief account of the historical
background of the floricultural development in the state. Secondly, it
analyses the growth in the area, production and value of commercial
flowers in Karnataka at both the state and district levels.
3.1 A Peep into Floriculture History of Karnataka
Karnataka is well known for floriculture right from the 18th century
onwards. During Hyder Ali and Tippu Sultan periods and also during
the regime of Mysore kings, floriculture received great impetus and
the colonial government also evinced lot of interest in this sector. The
Lalbagh and Cubbon Parks established in Bangalore and the
Brindavan Gardens established in Mysore in the early 20
th
century
are testimony to these efforts. The flower shows are organized by the
Mysore Horticultural Society, Bangalore twice a year at the historic
Lalbagh Glass House.
The farmers in the state have been growing traditional flowers such
as rose, chrysanthemum, tuberose, aster, jasmine, crossandra,
marigold, champaka, gladiolus, and bird of paradise in the open fields.
Some of these flowers are also being cultivated as cut-flowers in recent
years. Rose, carnations, gerbera, and anthurium were grown under
protective covers and these have gained momentum in the last 10
years. Recently, new crops like lilies, calla lily, iris, limonium,
alstroemeria gypsophila, liatris, lisianthus and freesia have also
emerged as potential cut-flowers in the state. Modern cut-flowers are
relatively better in quality, have longer vase life and always fetch high
unit price in the market. All these new trends have turned floricultural
activity as an important agri-business activity in the state.
3.2 Trends in Area and Production of Commercial flowers in
Karnataka from 1990-91 to 2004-05
There has been a steady increase in the area under commercial flowers
in Karnataka (Table 3.1 and Fig 3.1). The area has increased from
22
12,000 hectares in 1990-91 to 21,000 hectares in 2004-05 with a
compound growth rate of 3.72 percent per annum. However, the area
had come down to 18,000 hectares in 2002-03 from 21,000 hectares
in the year 2001-02 due to drought. The production of commercial
flowers increased from mere 61,000 tons to 151,000 tons during the
same period with a compound growth rate of 6.59 per cent per annum.
Thus, although the growth in the area under flower crops has
increased at a slow pace, flower production has gone up at a fairly
brisk pace.
3.3 District-wise Trends in Area and Production of Floriculture
in Karnataka
Although the overall area under floriculture in the state has gone up,
certain districts have witnessed a fall in the area. The annual
compound growth rates of the area under floriculture are negative for
many districts (Table 3.2), the rate of decline being the highest in
Raichur (ACGR = -26.52) followed by Dharwad (ACGR = -25.02).
Among the districts registering positive growth rates, Dakshina
Kannada stands first with the ACGR of 18.25 per cent. Among the
newly formed districts, Koppal has recorded the highest ACGR of 23.34
percent (Table 3.2b).
Flower production in the state has also followed similar pattern, with
the growth rates for most districts being negative, except for the
districts closer to Bangalore namely Bangalore (both rural and urban),
Kolar, Tumkur and Chitradurga, and Bellary among the northern
region.
23
Table 3.1 : Trends in Area and Production of Commercial
Flowers in Karnataka from 1990-91 to 2004-05
SL. No. YEAR
AREA
( 000 ha)
PRODUCTION
( 000 tons)
1 1990-91 12 61
2 1991-92 13 73
3 1992-93 14 81
4 1993-94 15 86
5 1994-95 17 102
6 1995-96 19 108
7 1996-97 21 116
8 1997-98 19 97
9 1998-99 21 128
10 1999-00 21 132
11 2000-01 21 157
12 2001-02 21 157
13 2002-03 18 147
14 2003-04 21 151
15 2004-05 21 151
CGR 3.72 6.59
Source: National Horticulture Board, Bangalore
Figure 3.1: Trends in Area and Production of Commercial
flowers in Karnataka from 1990-91 to 2004-05
Area and Production of major flowers in Karnataka
0
20
40
60
80
100
120
140
160
180
1990-
91
1991-
92
1992-
93
1993-
94
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
A
r
e
a

i
n

t
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a
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d

h
a
c
,
P
r
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i
n

t
o
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s
AREA PRODUCTION
24
T
a
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3
.
2
a
:

D
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K
a
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(
1
9
9
3
-
2
0
0
5
)
25
Table 3.2a: Regression Results ACGR (n=12)
District R square Adjusted R
2
Standard Error
Bangalore U 0.858500 0.710725 0.134987
Bangalore R 0.494443 0.168921 0.209863
Kolar 0.463668 0.136487 0.302375
Tumkur 0.511156 0.462272 0.249907
Chitradurga 0.032645 -0.06409 0.326163
Shimoga 0.288067 0.216874 0.621963
Mysore 0.542542 0.496796 0.471776
D. Kannada 0.427411 0.370152 0.898085
Kodagu 0.061477 -0.03238 0.486684
Mandya 0.013239 -0.08544 0.456559
Hassan 0.388377 0.327215 0.904952
Chikkamagalore 0.533728 0.487100 0.232987
Bijapur 0.246736 0.171410 0.258623
Dharwad 0.70253 0.672783 0.776391
U. Kannada 0.358278 0.294106 0.889072
Gulbarg 0.127253 0.039979 0.409199
Raichur 0.565459 0.522005 1.021719
Bellary 0.016232 -0.08214 0.192812
Bidar) 0.165413 0.081954 0.862674
26
Table 3.2b : District-wise Trends in Area -1998-2005 (For new
Districts formed since 1998)
District
Davangere
21
Chamaraja-nagar
22
Udupi
23
Bagalkot
24
Gadag
25
Haveri
26
Koppal
27
1998-99 816 719 456 331 615 1348 228
1999-00 893 1325 505 447 678 1182 175
2000-01 418 2802 505 302 947 1581 199
2001-02 332 1080 427 221 923 2051 219
2002-03 705 1122 371 221 648 1586 314
2003-04 633 1410 453 304 762 1550 227
2004-05 212 489 1470 342 1618 421 1158
ACGR(%) 13.95 -6.7 11.24 -3.44 10.34 -9.98 23.24
Table 3.2b: Regression Statistics for ACGR (n=7)
District R Square Adjusted R
2
Standard Error
Davangere 0.376737526 0.252085032 0.457610713
Chamarajanagar 0.075012125 -0.109985451 0.578111572
Udupi 0.2512805 0.1015366 0.435472617
Bagalkot 0.403352035 0.284022442 0.283361156
Gadag 0.194458045 0.033349653 0.506842769
Haver 0.486814713 0.384177656 0.507779763
27
T
a
b
l
e

3
.
3
a
:

D
i
s
t
r
i
c
t
-
w
i
s
e

T
r
e
n
d
s

i
n

F
l
o
w
e
r

P
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o
d
u
c
t
i
o
n

i
n

K
a
r
n
a
t
a
k
a

(
1
9
9
3
-
2
0
0
5
)
28
T
a
b
l
e

3
.
3
a

C
o
n
t
d
.
29
Table 3.3a: Regression Results for ACGR (n=12)
2
Standard
Error
Bangalore U 0.189275085 0.108202594 0.46588577
Bangalore R 0.06477311 -0.02874958 0.406724318
Kolar 0.027314394 -0.06995417 0.448796596
Tumkur 0.258739828 0.184613811 0.395655927
Chitradurga 0.022648283 -0.07508689 0.533502628
Shimoga 0.046159735 -0.04922429 0.783867462
Mysore 0.233734975 0.157108472 0.678520061
Mandya 0.004982726 -0.094519 0.675325564
Kodagu 0.031080658 -0.06581128 0.73341631
D.Kannada 0.229179267 0.152097193 1.100955469
Hassan 0.187810313 0.106591344 1.167728361
Chikkamagalore 0.018623 -0.07951 0.777596
Belgaum 0.435976 0.379574 0.478825
Bijapur 0.084412 -0.00715 0.297474
Dharwad 0.348634 0.283498 1.23975
U.Kannada 0.391903 0.331093 0.90919
Gulbarga 0.001225 -0.09865 0.919273
Raichur 0.529512 0.482463 1.15568
Bellary 0.225056 0.147562 0.444223
Bidar 0.028469 -0.06868 0.887133
30
Table 3.3b : District-wise Trends in Production -1998-2005
(For new districts)
Year Davangere Chamarajanagar Udupi Bagalkot Gadag Haveri Koppal
1998-99 5647 2499 1922 2209 1829 7555 770
1999-00 4968 6824 2132 2423 2212 7913 1065
2000-01 2646 27602 2738 2039 6091 15128 1113
2001-02 3172 10286 2047 1386 6149 18477 1189
2002-03 6056 10748 1976 1386 6079 13886 1904
2003-04 4498 11592 2163 1889 4472 12592 1208
2004-05 897 3743 12976 2535 15645 2301 9928
ACGR (%) -16.02 4.85 21.4 -1.66 32.22 -9.26 35.27
2
Standard Error
Davangere 0.321731623 0.186077948 0.600106001
Camarajanagar 0.016689535 -0.179972558 0.861845223
Udupi 0.36926975 0.2431237 0.599983916
Bagalkot 0.021622668 -0.174052798 0.268003476
Gadag 0.707947353 0.649536823 0.425855108
Haveri 0.08891294 -0.093304472 0.736734016
Koppal 0.586100937 0.503321124 0.600807969
Table 3.3b Regression Results for ACGR (n=7)
Among the old districts, Raichur district witnessed the highest
negative ACGR of -27.67 percent followed by Dharwad and Uttar
Kannada districts in that order. Interestingly, four of the seven newly
formed districts have registered positive growth in flower production
(Table 3.3b), Koppal district showing the highest positive ACGR of
35.27 percent followed by Gadag and Udupi in that order.
31
3.4 Crop-wise Area and Production of commercial flowers in
Karnataka
The latest data (Table 3.4) shows that the total area under commercial
flowers in 2006-07 was 23,017 hectares with a production of 1,91,940
tons. The area under flowers was dominated by Marigold with almost
a quarter of the total area under flowers (24.19%), followed by Jasmine
(19.19%) and chrysanthemum (17.28%). Most of the small farmers
grow these traditional flowers under open conditions. Production of
marigold was the highest (44397 tons) in the year 2004-05
followed by chrysanthemum (41843 tons) and Jasmine (27586 tons).
From the point of view of the value of flowers produced, jasmine
accounted for the highest proportion of the total value of flowers, 25.42
percent, followed closely by Chrysanthemum, with 23.39 percent
(Table 3.4) among cut flowers, rose occupies the first position in the
area (1815 hectares) followed by Carnation (173 hectares), gerbera (71
hectares), bird of paradise(47 Hectares) and Anthurium (37 hectares).
Production of rose stood at 4510 tons in the year 2006-07, while that
of anthodium, carnation and gerbera was 97, 73 and 71 tons
respectively.
1 Aster 1542 15203 1498
2 Crossandra 2131 10112 2174
3 Marigold 5664 57329 4151
4 Jasmine 4493 29090 9052
5 Chrysanthemum 4046 56474 8329
6a Tuberose: Single 966 9382 1804
6b Tuberose: Double 152 272 78
7 Gladiolus 216 498 323
8 Rose 1815 4510 1980
9 Bird of Paradise 47 61 3
Contd.
32
Note : (1) Area figures for Flower Crops viz., Orchids, Carnation,
Anthurium, Gerbera and Statice should not be taken
up for totaling. Tube - Rose (double), Gladiolus, Rose,
Bird of Paradise, Golden Rod, Calla Lilly, Orchids,
Carnation, Anthurium, Gerbera and Statice Crops
should not be considered while totaling, for the
reason that the area and productionfigures for these
cannot be given in terms of hectares and tons
respectively.
(2) Data include the area, production and value of cut flowers
grown under hi-tech floriculture also and they cannot be
separated from the aggregate data for reasons explained
elsewhere.
Source : Karnataka, Dept. of Horticulture, Horticulture Crop
Statistics of Karnataka State at a Glance 2006-07,
Bangalore.
10 Salldago / Golden Rod 24 62 26
11 Calla Lilly 5 16 240
12 Orchids 0.2 0 1
13 Carnation 173 73 283
14 Anthurium 37 97 492
15 Gerbera 71 71 62
16a Statice: Free flower flowering Variety 67 94 3
16b Statice : Seasonal variety 50 39 1
17 Other Flower Crops 1916 14349 5113
Total - Commercial Flower Crops 23,017 1,91,940 35,953
33
Table 3.5 : Percentage Shares of Different Commercial
Flowers in the Total Floriculture Area, Production and
Value in Karnataka, 2006-07.
Sl.
No.
Flower
Percentage to total
area
Percentage
to total
Production
Percentage
to total
Value of
Production
1 Aster 6.59 7.69 4.21
2 Crossandra 9.10 5.11 6.10
3 Marigold 24.19 28.99 11.66
4 Jasmine 19.19 14.71 25.42
5 Chrysanthemum 17.28 28.56 23.39
6a Tuberose: Single 4.13 4.74 5.07
6b Tuberose: Double 0.65 0.14 0.22
7 Gladiolus 0.92 0.25 0.91
8 Rose 7.75 2.28 5.56
9 Bird of Paradise 0.20 0.03 0.01
10 Salldago / Golden Rod 0.10 0.03 0.07
11 Calla Lilly 0.02 0.01 0.67
12 Orchids 0.00 0.00 0.00
13 Carnation 0.74 0.04 0.79
14 Anthurium 0.16 0.05 1.38
15 Gerbera 0.30 0.04 0.17
16a Statice: Free flowering
Variety 0.29 0.05 0.01
16b Statice: Seasonal
variet Variety 0.21 0.02 0.01
17 Other Flower Crops 8.18 7.26 14.36
Total - Commercial
Flower Crops
100 100 100
Source: Government of Karnataka, Dept. of Horticulture, Bangalore
34
Fig. 3.2 : Percentage Shares of Different Commercial Flowers in the
Total Floriculture Area in Karnataka, 2006-07.
1
5
4
2
2
1
3
1
5
6
6
4
4
4
9
3
4
0
4
6
9
6
6
1
5
2
2
1
6
1
8
1
5
4
7
2
4
5 0
.
2
1
7
3
3
7
7
1
6
7
5
0
1
9
1
6
0
1000
2000
3000
4000
5000
6000
A
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r
C
r
o
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a
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M
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Flowers
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(
H
a
)
Fig. 3.3: Percentage Shares of Different Commercial Flowers in the Total
Floriculture Production in Karnataka, 2006-07.
1
5
2
0
3
1
0
1
1
2
5
7
3
2
9
2
9
0
9
0
5
6
4
7
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9
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2
4
9
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6
1
6
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1
6
0 7
3
9
7
7
1
9
4
3
9
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4
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4
9
16
10016
20016
30016
40016
50016
A
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p
s
Flowers
P
r
o
d
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i
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n
(
T
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n
s
)
35
Fig. 3.4: Percentage Shares of Different Commercial Flowers in the
Total Value of Floriculture products in Karnataka, 2006-07.
1
4
9
8
2
1
7
4
4
1
5
1
9
0
5
2
1
8
0
4
7
8 3
2
3
1
9
8
0
3 2
6
2
4
0
1
2
8
3
4
9
2
6
2
3 1
5
1
1
3
8
3
2
9
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
A
s
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M
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:
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R
s
.
3.5 Trends in Crop-wise Area under Commercial Flowers in
Karnataka
Trend analysis was used to find the growth in the area under
commercial flowers in Karnataka from 1994-95 to 2004-05 (Table 3.6).
The trend showed that the area under rose has decreased at a
compound growth rate of 1.26 percent. The area under other loose
flowers has increased as indicated by the ACGR. The area under
Jasmine has increased at 1.15 percent annually. Similar trend was
observed for the area under Aster (CGR 1.08%), Marigold (CGR 7.28%)
and Gladiolus (CGR 23.9%). There was a negative growth in the area
under other loose flowers such as Chrysanthemum (-0.4) and
Crossandra (-0.89%).
The area under cut flowers gerbera and anthurium has increased.
While the area under gerbera went up at the rate of 14.65 percent
per annum, that of anthurium rose at the rate of 7.70 percent.
However, the area under Carnation decreased at the rate of 3.60
percent.
36
T
a
b
l
e

3
.
6
:

T
r
e
n
d
s

i
n

C
r
o
p
-
w
i
s
e

A
r
e
a

u
n
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r

C
o
m
m
e
r
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i
a
l

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l
o
w
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s

i
n

K
a
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n
a
t
a
k
a

f
r
o
m

1
9
9
4
-
9
5

t
o

2
0
0
4
-
0
5

(
A
r
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a

i
n

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e
c
t
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)
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o
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e
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n
t
,

L
a
l
b
a
g
h
,

B
a
n
g
a
l
o
r
e
37
Fig. 3.5: Trends in Area under Rose in Karnataka
from 1994-95 to 2004-05
Fig. 3.6: Trends in Area under Gerbera in Karnataka
from 1994-95 to 2004-05
Area under Gerbera in Karnataka
0
10
20
30
40
50
60
70
80
90
100
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
A
r
e
a

i
n

H
e
c
t
a
r
e
s
Area under Rose in Karnataka
1000
1100
1200
1300
1400
1500
1600
1700
1800
1900
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
A
r
e
a

i
n

H
e
c
t
a
r
e
s
38
Fig. 3.7: Trends in Area under Carnation in Karnataka from 1994-95
to 2004-05
Are a unde r ca rna tion in Ka rna ta ka
0
1 0
2 0
3 0
4 0
5 0
6 0
1 9 9 4 -
9 5
1 9 9 5 -
9 6
1 9 9 6 -
9 7
1 9 9 7 -
9 8
1 9 9 8 -
9 9
1 9 9 9 -
0 0
2 0 0 0 -
0 1
2 0 0 1 -
0 2
2 0 0 2 -
0 3
2 0 0 3 -
0 4
2 0 0 4 -
0 5
Ye a r
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
Fig. 3.8: Trends in Area under Anthurium in Karnataka
from 1994-95 to 2004-05
Area under Anthurium in Karnataka
50
70
90
110
130
150
170
190
210
230
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
39
Fig. 3.9 : Trends in Area under Jasmine in Karnataka
from 1994-95 to 2004-05
Fig. 3.10: Trends in Area under Marigold in Karnataka from 1994-95
to 2004-05
Area under Jasmine in Karnataka
2000
2500
3000
3500
4000
4500
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
Area under Marigold in Karnataka
2500
3000
3500
4000
4500
5000
5500
6000
6500
7000
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
40
Fig. 3.11: Trends in Area under Gladiolus in Karnataka
from 1994-95 TO 2004-05
Area under Gladiolus in Karnataka
50
250
450
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
04
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
3.6 Trends in Crop-wise production of commercial flowers in
Karnataka
Trend analysis was used to compute the growth in production of
commercial flowers in Karnataka from 1994-95 to 2004-05 (Table 3.7).
The trend analysis showed that the area under rose decreased at the
annual compound growth rate of 3.66 percent. The production of other
loose flowers was also on an increase during the period under study.
The production of loose flowers namely Jasmine, Chrysanthemum,
Crossandra and Marigold increased at 12.34, 3.16, 12.47 and 9.50
percent respectively per annum. There was a decrease in the
production of aster by 1.03 percent annually.
The production of cut flowers such as gerbera has increased at the
rate of 1.28 percent annually. On the contrary the production of
carnation and anthurium decreased at the rate of 16.3 and 8.7 percent
respectively per annum.
41
T
a
b
l
e

3
.
7

:

C
r
o
p

w
i
s
e

p
r
o
d
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n

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f

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i
a
l

f
l
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s

i
n

K
a
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k
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f
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m

1
9
9
4
-
9
5

t
o

2
0
0
4
-
0
5

(
P
r
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d
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c
t
i
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n

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T
o
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s
)
S
o
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:

G
o
v
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m
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k
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e
p
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f

H
o
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t
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c
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e
,

L
a
l
b
a
g
h
,

B
a
n
g
a
l
o
r
e
42
Fig. 3.12: Trends in Production of Rose in Karnataka
from 1994-95 to 2004-05
Fig. 3.13: Trends in Production of Gerbera in Karnataka
from 1994-95 to 2004 -05
Production of Rose in Karnataka
2000
2250
2500
2750
3000
3250
3500
3750
4000
4250
4500
4750
5000
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
2004
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
Production of Gerbera in Karnataka
0
50
100
150
200
250
300
350
400
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
2004
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
43
Fig. 3.14 : Trends in Production of Carnation in Karnataka from
1994-95 to 2004 -05
Production of Carnation in Karnataka
0
50
100
150
200
250
300
350
400
450
500
550
600
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
2004
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
n

t
o
n
s
Fig. 3.15: Trends in Production of Anthurium in Karnataka
from 1994-95 to 2004 -05
Production of Anthurium in Karnataka
0
50
100
150
200
250
1994-
95
1995-
96
1996-
97
1997-
98
1998-
99
1999-
00
2000-
01
2001-
02
2002-
03
2003-
2004
2004-
05
Year
P
r
o
d
u
c
t
i
o
n

i
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Fig. 3.16: Trends in Production of Jasmine in Karnataka from 1994-
95 to 2004 -05
Production of Jasmin in Karnataka
9000
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Fig. 3.17: Trends in Production of Marigold in Karnataka
from 1994-95 to 2004 -05
Production of Ma rigold in Ka rna ta ka
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45
3.7 Trends in Hi-tech Floriculture
Karnataka is a pioneer state in India in the cultivation of commercial
flowers. Although the commercial flowers occupy hardly 1.5% of the
total area under horticulture crops in the State, they generate an
annual revenue of over 300 crore. This speaks of the high
remunerative nature of the commercial flower crops. The average size
of holding of the traditional flower crops is hardly half an acre. As
many as 50,000 farm families are totally depending on flower
cultivation in the State, and more than 2 lakh people are indirectly
involved in the flower trade (Thippaiah, 2005).
Hi-tech flower cultivation in India first started in Karnataka. During
1960s itself, M/s. Indo American Hybrid Seeds, Bangalore, started
producing flowers in the green house. Perhaps, this is the beginning
of hi-tech floriculture in India. This success story paved way for large-
scale hi-tech flower production during the 1990s. Even now,
Karnataka is the leading hi-tech flower producer in the country, with
a share of over 40% of the total production. The first flower to be
brought under protected cultivation was rose which, even today, is
the leading cut flower produced in the State.
The other cut flowers such as gerbera, carnation, green house
chrysanthemum, anthurium and orchids are also under hi-tech
cultivation. There are at present over 100 hi-tech units in Karnataka
(Table 3,) with a total value of cut flowers of over Rs.70 crore per
annum. Some cut flowers are grown under open conditions also, the
most important among them being: rose, gladiolus, bird of paradise,
statice, golden rod, gypsophyla, limonium, double tuberose, etc. The
estimate is that more than 200 small farmers are involved in the
production of cut flowers under open conditions.
In the wake of liberalization and globalization, thrust was given to
hi-tech floriculture. About 170 hi-tech floriculture units were
established in the country. In Karnataka, 35 units accounting for
about 21 per cent of the countrys total, covering an area of 150
hectares with an investment of Rs.500 crore were started by private
entrepreneurs and corporate houses (GOK, 2000). Most of these units
were concentrated particularly around Bangalore and Kolar.
Out of the 35 units that came up in Karnataka, 14 were located in
one taluka, i.e., Doddaballapur taluka of Bangalore rural district.
46
These 14 units purchased altogether about 250 hectares at the cost
of about Rs. 45,000 per hectare in the mid-nineties. But the actual
average flower cultivated area is 3.21 hectares investing about Rs.3
crore per hectare (Thippaiah, 2005). Thus, there is considerable under-
utilization of capacity especially among the first generation units.
Besides these, another 50 cost-effective green houses (protective shade
net) came up in the regions around Bangalore (Roses), Belgaum
(Carnation, Gerbera), Kodagu (Anthuri um), Chi kkamagal ur
(Anthurium) Dakshina Kannada and Uttar Kannada (Orchids) districts
for cultivating modern flowers.
Table 3.8: Disrict-wise Distribution of Hi-Tech Floriculture
Units in Karnataka in 2005-06
Sl.No. District Number of
Floriculture
units
Flowers grown
1 Bangalore (Urban) 20 Rose, Anthurium, Carnation,
Gerbera, Chrysanthemum
2. Bangalore (Rural 25 Rose, Carnation,
Anthurium,Gerbera,
Chrysanthemum
3. Kolar 2 Rose
4. Shimoga 5 Anthurium
5. Dakshina Kannada 5 Archids
6. Kodagu 10 Anthurium
7. Udupi 5 Archids
8. Dharwad 5 Anthurium, Gerbera
9 Mysore 5 Anthurium, Gerbera
10 Mandya 1 Carnation, Gerbera
11 Belgaum 20 Carnation, Rose, Anthurium,
Gerbera
Total 103
Source: Government of Karnataka, Dept.of Horticulture, Bangalore
47
Most of the hi-tech floriculture units in Karnataka are owned and
organized as private limited companies ostensibly to take advantage
of the industrial benefits and subsidies provided by the central
government on the one hand, and the liberal land ceiling policy of
Karnataka Government introduced in the early nineties according to
which non-agricultural private/public limited companies are permitted
to acquire large acreages of agricultural lands for hi-tech floriculture
purpose. An interesting feature of the hi-tech floriculture units that
have come up in and around Bangalore district is that a large majority
of these are owned and organized by entrepreneurs from Andhra
Pradesh, who, in the local horticulture industry parlance, the
expatriate entrepreneurs in hi-tech floriculture in Karnataka.
Of course a few of them have established similar units in the
Hyderabad region as well. One major Bangalore based firm, Karuturi
Floritech Limited, has even gone global, acquiring major chunk of
equity in floricultural companies in Kenya and Ethiopia. It is major
hi-tech producer and exporter of cut flowers in Karnataka. Bangalore-
based Karuturi Networks of the Karuturi Group, is reported to be the
worlds largest rose-producer, with offices in Bangalore, Dubai,
Amsterdam, Nairobi and Addis Ababa. Worldwide, though, cut-roses
from countries such as Ethiopia and Kenya, form the largest global
suppliers. In 2007, the company acquired the 188-hectare, Kenya-
based Dutch rose farm, Sher Agencies, for US$73 million and says it
has capacity to produce 1 million stems daily by March 2008.
3.8 Profile of a successful Hi-tech floriculture firm
Karuturi Floritech Limited whose farm located near Doddaballapur
in Bangalore District, India with an annual capacity to produce 12
million premium cut roses at the state-of-the-art production facility
was established in 1994-95. By the year 1999, Karuturi Floritech had
increased the cultivation to 10 hectares and in 2003; it became the
largest rose producer in India. In 2004, Ramakrishna Karuturi, the
chief of the firm, set up a wholly owned subsidiary in Ethiopia, Africa,
Ethiopian Meadows Plc - to cultivate roses with a special focus on
HT (Hybrid Tea) roses. The company has expanded to other related
businesses since then.
Karuturi Floritech Limited, is a leading Indian cut flowers grower with
global presence. Karuturis products are exported to Holland,
Germany, United Kingdom, Italy, Singapore, Hong Kong, Taiwan,
48
Bahrain, Muscat, Dubai, Australia and North America. Karuturi is a
listed Company with its scrip listed in Mumbai, Chennai and
Bangalore Stock Exchanges of India. It has offices in the UK, Australia
and North America. The Company has a production facility with an
investment of US $3 million, set up in technical collaboration with
Horticulture and Agriculture Technology and Trade, Holland and has
a production capacity of 10 million stems per annum. The Company
has an internal R&D facility allowing for creative re-engineering and
indigenisation.
Ramakrishna Karuturi, the head of Karuturi Floritech, who is a
Bachelor of Mechanical Engineering from Bangalore University and
an MBA graduate from Case Western Reserve University, Cleveland,
Ohio, USA, has been instrumental in making the firm go global.
Karuturi now has 325 hectares under cultivation, of which about 100
hectares are in Ethiopia, 185 in Kenya and 40 in India. The output
in Ethiopia has grown by 100 per cent since the acquisition, and by
December 2009, Karuturi Global is contemplating to have 300
hectares in the country. Ramakrishna Karuturi together with his
Karuturi Networks Limited is the largest cultivator of quality cut-roses
in the world.
3.9 South Indian Floriculture Association
South Indian Floriculture Association (SIFA) is a formal organization
set up by hi-tech floriculturists in South India with its head quarters
in Bangalore. It has 36 registered members who have a total of 120
hectares of area under flower cultivation. The majority of the SIFA
members are involved in cultivation and export of cut roses. Only a
few SIFA members grow flowers other than roses. The other flowers
being cultivated are carnation, gerbera and anthurium, mainly for
exports, says Mr. Namdeem Ahmed, the President of SIFA. Not all
hi-tech units in Karnataka are members of SIFA and almost all the
registered members have their units located close to Bangalore.
3.10 New Flower Auction Centres in Karnataka
To tap the potential in the floriculture sector, the Union Government
has sanctioned six flower auction centres to the State under the
Rashtriya Krishi Vikas Yojana (RKVY). The centres would come up at
Sirsi in Uttara Kannada; Madikeri in Kodagu; Chikkanayakanahalli
in Tumkur; apart from Udupi, Belgaum and Bagalkot. These districts
49
are known for large areas under floriculture, and several people in
the floriculture business have set up hi-tech units. Flower growers
lacked awareness about market conditions because of poor linkages
in the distribution chain and had poor access to cold storage facilities,
leading to seasonal gluts and price variation. The auction centres
provided all facilities, including storage. There is considerable scope
for tapping the Rs. 600-crore domestic market in the floriculture
sector. At present, only 2.5 per cent of the flower sales were in the
organised retail sector.
3.11 Flaws in Floriculture Statistics of Karnataka
The State Directorate of Economics and Statistics arrives at data on
horticulture crop area including floriculture based on the season-wise
horticulture crop area as recorded by village accountants in the RTC
survey number wise. The area thus recorded in the RTC is being
aggregated at the village, village panchayat, hobli and taluka levels by
the statistical inspector working at the taluka level and the same is
placed before the Tehsildar who is also the chairperson of the
Committee on Reconciliation of Crop Area Statistics. Upon detailed
discussion with the Senior Asst. Director of Horticulture of the
concerned taluka, the area under horticulture crops in the taluka is
finalized. However, several deficiencies are associated with the
collection of data on horticulture area in the state. Important among
them are as under:
1. The village accountant fails to record the horticulture area
in the RTC accurately.
2. Most horticulture crops are raised as mixed crops and as such
the crop area is not appropriately bifurcated and recorded in
the RTC.
3. As horticulture crops, particularly commercial flowers, attract
higher land revenue than the other crops, farmers tend to
under-report the area in respect of the horticulture crops.
Village accountants hardly verify the crop area and they are
also not appropriately trained to understand intricacies of
estimating.
4. The village accountants often leave out poly-house floriculture
units by misconstruing them as industrial ventures.
(The general shortcomings of the horticulture database in India are
discussed in Annexure 1 of this paper).
50
CHAPTER IV
ECONOMICS OF HI-TECH FLORICULTURE
This chapter presents the results of analysis of the field data
pertaining to the cost of production, returns and net returns from
hi-tech floriculture units. The results of the study are presented under
the following heads:
4.1 Costs of and returns from cut flower production under greenhouse
condition.
4.2 Problems encountered in production and marketing of cut flowers.
4.1 Costs of and returns from cut-flower production
The average costs incurred and returns realized in the production of
the prime cut-flowers namely Gerbera, Carnation, Anthurium and
Rose grown under greenhouse condition have been worked out and
are presented as under.
4.1.1 Gerbera
Gerbera, (Gerbera L) is a genus of ornamental plants from the
sunflower family (Asteraceae). It was named in honour of the German
naturalist Traugott Gerber, a friend of famous Swedish botanist
Carolus Linnaeus. It has approximately 30 species in the world,
extending to South America, Africa, Madagascar, and tropical Asia.
The first scientific description of a Gerbera was made by J.D. Hooker
in Curtiss Botanical Magazine in 1889 when he described Gerbera
jamesonii, a South African species also known as Transvaal daisy or
Barberton Daisy.
Gerbera is very popular and widely used as a decorative garden plant
or as cut flowers. The domesticated cultivars are mostly a result of a
cross between Gerbera jamesonii and another South African species
Gerbera viridifolia. The cross is known as Gerbera hybrida. Thousands
of cultivars exist. They vary greatly in shape and size. Colours include
white, yellow, orange, red, and pink. The center of the flower is
sometimes black. Often the same flower can have petals of several
different color shades and hues.
Gerbera is also important commercially. It is the fifth most used cut
flower in the world (after rose, carnation, chrysanthemum, and tulip.
51
It is grown under a wide range of climatic conditions. It is widely used
as cut flower due to its myriad colours and forms. Its hardy upright
leafless stem with inflorescence makes it an attractive flower. The
cut blooms have long vase life of about 10 to 15 days. Best quality
gerbera can be obtained under greenhouse conditions. Gerbera blooms
throughout the year with a spare flower production during rainy
season. In Karnataka it is grown mostly in Bangalore and Belgaum
districts under the greenhouse condition. Economic bearing of the
plant is 4 years. An attempt has been made to workout the economics
of cultivating gerbera in a greenhouse of one acre. Details regarding
gerbera cultivation are presented in Tables 4.1, 4.2 and 4.3.
i) Per-acre Establishment cost of Gerbera under Greenhouse
The establishment cost components of Gerbera under greenhouse
condition has been presented in the Table 4.1. The per-acre
establishment cost of gerbera under greenhouse condition worked out
to be Rs.29.7 lakh. The highest proportion of this cost is accounted
for by greenhouse structure, which accounts for 49.49 percent
(Rs.14.7 lakh) of the total establishment cost. While the planting
materials constitute about 23.64 percent (Rs.7.02 lakh), land
development constitutes 10.54 percent of the total establishment cost.
Other costs like irrigation and misting system, store room/grading
hall/packing units and sprayers constitute 10.51, 4.21 and 1.62
percent of the total establishment cost respectively.
ii) Per-acre Cost of production of Gerbera under Green House
The details of costs incurred and returns realized on one acre of
Gerbera production under greenhouse condition were analyzed and
the results are presented in Table 4.2 and Table 4.3 respectively. The
total cost can be categorized under two heads i.e., fixed costs and
variable costs. The fixed costs accounted for 63.95 percent of the total
cost of cultivation and include interest on fixed capital (26.72 percent),
amortized establishment cost of structure and planting materials
(23.56 percent) and depreciation of equipment (13.67 percent). The
variable costs accounted for 36.05 percent of the total cost and
include cultivation and marketing expenses. Among the cultivation
expenses, expenditure on labour is 13.94 percent and it includes
labour utilized for production, grading and packing operations.
Expenses including interest on working capital, fertilizers, pesticides,
FYM and oilcake and electricity charges accounted for 3.87, 2.19, 3.53,
52
1.43 and 4.96 percent respectively of the total cost. The cost of packing
and grading accounted for 1.08 percent. The labourers employed for
grading and packing were semi-skilled workers. The cost of
transportation and marketing accounted for 5.84 percent of the total
cost.
iii) Per-acre Yield and returns from gerbera under greenhouse
Table 4.3 throws light on the total yield and returns from an acre of
gerbera under greenhouse condition. The yield from an acre of Gerbera
under greenhouse cultivation was about 8.32 lakh stems per year.
The average price realized per stem in the market was Rs.2.25. As
revealed from Table 4.3, a net return of Rs.7.6 lakh per acre was
realized from these farms after meeting both the variable and fixed
costs.
Table 4.1: Per-acre Establishment cost of Gerbera
Particulars
Cost
(Rs. in lakhs)
Percentage
to total
i) Land development 3.13 10.53
ii) Green house structure 14.7 49.49
iii) Store room/grading hall/
Packaging units
1.25 4.21
iv) Sprayers 0.48 1.62
v) Irrigation and misting system 3.12 10.51
vi) Planting materials 7.02 23.64
Total 29.7 100.00
53
Table 4.2: Per-acre Cost of Production of Gerbera
Particulars
Cost
(Rs. in lakhs)
Percentage
to total
A. Fixed costs
Interest on fixed capital (@10 % p.a.) 2.97 26.72
Amortized establishment cost of
structure & planting material
2.62 23.56
Depreciation of equipment 1.52 13.67
Total fixed cost 7.11 63.95
B. Variable costs
FYM and oil cakes 0.15 1.34
Fertilizers 0.23 2.07
Pesticides 0.36 3.23
Electricity charges 0.52 4.68
Labour cost 1.55 13.94
Interest on working capital @ 11% p.a. 0.43 3.87
Grading and packing 0.12 1.08
Transportation and marketing cost 0.65 5.84
Total variable costs 4.01 36.05
Total annual costs (A+B) 11.12 100
Table 4.3: Per-acre Yield and Returns from Gerbera
Number of plants in Greenhouse 26,000
Number of flowers per plant/year 32
Total yield/year (Nos) 8,32,000
Sale price per flower (Rs.) 2.25
Gross returns (Rs. in lakhs) 18.72
Cost of cultivation(Rs. in lakhs) 11.12
Net returns (Rs. in lakhs) 7.6
54
4.1.2 Carnation
Carnation (dianthus caryophyllus L) is indigenous to the
Mediterranean region. It is one of the most important cut flower crops
in the world. It is the second choice of entrepreneurs only after rose.
This is mainly due to its excellent keeping quality, availability in wide
range of varieties and colours, ability to with-stand long distance
transportation and remarkable ability to hydrate after long distance
shipping. It can be grown all round the year. Economic bearing of
the plant is 3 years. An attempt has been made to workout the per
acre economics of cultivating carnation under greenhouse. Results of
the analysis are presented in the Tables 4.4, 4.5 and 4.6.
i) Per-acre Establishment cost of Carnation under Greenhouse
Table 4.4 presents the establishment cost of carnation cultivation
under greenhouse condition. The per-acre establishment cost of
carnation under greenhouse condition worked out to be Rs.32.19 lakh.
The major proportion of this cost is incurred on the greenhouse
structure as it accounts for 52.68 percent (Rs.16.43 lakh) of the total
establishment cost while planting materials constitute about 25.39
percent (Rs.7.92 lakh). Expenditure on land development constituted
8.46 percent of the establishment cost (Rs.2.64 lakh). The cost of
irrigation and misting system was Rs.3.12 lakh which constituted 6.80
percent of the total establishment cost. The other establishment costs
like store room/grading hall/packaging unit and sprayers constituted
a lesser percentage, 5.13 and 1.54, respectively.
ii) Per-acre cost of production of Carnation under Greenhouse
The cost of cultivation of carnation under greenhouse condition can
be categorized as fixed costs and variable costs. It can be observed
from Table 4.5 that the average annual cost of cultivation per acre of
carnation under greenhouse worked out to Rs.12.03 lakh. The fixed
costs accounted for 66.18 percent of the total cost of cultivation and
that includes the interest on fixed capital (26.62 percent), amortized
establishment cost of structure and planting materials (24.35 percent)
and depreciation of equipment (15.21 percent). The variable costs
accounted for 33.82 percent of the total cost. They included both the
cultivation and marketing expenses. Among the cultivation expenses,
expenditure on labour was 14.79 percent and that included labour
utilized for production and grading and packing operations as well.
55
Expenses on fertilizers, interest on working capital, pesticides, FYM
and oilcake and electricity charges accounted for 2.09 percent, 3.57
percent, 3.53 percent, 1.36 percent and 4.72 percent respectively of
the total cost. The cost of packing and grading accounted just 1.01
percent. The labour utilized for grading and packing consisted of semi-
skilled workers. The cost of transportation and marketing accounted
for 3.74 percent of the total cost.
iii) Per-acre yield and Returns of Carnation under Greenhouse
Table 4.6 throws light on the yield and returns per acre of carnation
under greenhouse condition. The yield from an acre of carnation under
greenhouse cultivation was about 7.04 lakh stems per year. The
average price received per flower was Rs. 3. As it can be found from
the table, net returns of Rs.9.09 lakh per acre were realized from
greenhouse farms after meeting both the variable and fixed costs.
Table 4.4: Per-acre Establishment cost of Carnation
Particulars
Cost
(Rs. in lakhs)
Percentage
to the total
iii) Store room/grading hall/
Packaging unit
1.6 5.13
iv) Sprayers 0.48 1.54
v) Irrigation and misting system 3.12 6.80
vi) Planting materials 7.92 25.39
Total 32.19 100.00
56
Table 4.5: Per-acre Cost of Production of Carnation
Particulars
Cost
(Rs. in lakhs)
Percentage
to total
A. Fixed costs
Interest on capital (@10 % p.a.) 3.2 26.62
structure & planting materials
2.93 24.35
Total fixed cost 7.96 66.18
B. Variable costs:
FYM and oil cakes 0.15 1.24
Interest on working capital
(@ 11 % p.a.)
0.43 3.57
Transportation & marketing costs 0.45 3.74
Total variable costs 4.07 33.82
Total annual costs (A+B) 12.03 100
Table 4.6: Per-acre Yield and Returns from Carnation
Number of plants in Greenhouse 88,000
Number of flowers per plant/year 9
Total yield/year(Nos) 7,04,000
Sale price per flower (Rs.) 3
Gross return (Rs. in lakhs) 21.12
Cost of cultivation (Rs. in lakhs) 12.03
Net returns (Rs. in lakhs) 9.09
57
4.1.3. Anthurium
Anthurium is a large genus of about 600 - 800 (possibly 1,000)
species, belonging to the arum family (Araceae). Many species are
undoubtedly not yet described and new ones are being found every
year. The species has neo-tropical distribution; mostly in wet tropical
mountain forests of Central America and South America, but some
in semi-arid environments. Most species occur in Panama, Colombia,
Brazil, the Guiana Shield and Ecuador. According to the work of the
noted aroid botanist Dr. Tom Croat of the Missouri Botanical Garden,
this genus is not found in Asia. Some species have been introduced
into Asian rain forests, but are not endemic.
An interesting feature of Anthurium production in Karnataka is that
it is grown mostly in Kodagu, Chikkamagalore and Shimoga districts
coming under the Western Ghats which, agro-climatically, resemble
the wet tropical mountain forests of Central America and South
America. It is grown as a perennial crop with an economic bearing of
7-8 years and a gestation period of one year. The crop is cultivated
both under shade net and under greenhouse. In the present study
the economics of Anthurium under greenhouse condition was
analysed and results are presented below.
i) Per-acre Cost of Establishment of Anthurium under Greenhouse
The cost of establishment of one acre of Anthurium under Greenhouse
condition is presented in Table 4.7. On an average the growers
incurred about Rs. 41.85 lakh for the establishment of Anthurium
plants in one acre under greenhouse condition. The cost of seedling
(Rs.20.86 lakh) accounted for 49.85 percent of the establishment cost.
Anthurium greenhouse formed about 31.23 percent (Rs. 13.07 lakh)
of the total establishment cost. Land development accounted for 6.83
percent, the material inputs like coir pith, manure, bricks, sand, FYM
accounted for 1.07 percent and grading/packing hall accounted for
3.49 percent of the total establishment cost.
ii) Per-acre cost of production of Anthurium under Greenhouse
The cost of cultivation of Anthurium is presented in Table 4.8. Fixed
costs form the major component in the cost of cultivation, constituting
76.25 percent (Rs. 9.44 lakh). Fixed costs include depreciation on
assets, interest on capital and amortized establishment cost of
structure and planting materials. Amortized establishment cost was
58
Rs. 4.08 lakh which constituted 32.95 percent of the total cost of
cultivation. Interest on fixed capital and depreciation constituted 30.7
percent and 12.6 percent respectively of the total establishment cost.
The total variable costs worked out to Rs.2.94 lakh (23.75 per cent).
Variable costs included expenditure on fertilizer, interest on working
capital, plant protection chemicals, electricity charges, labour, grading
and packing, transportation and marketing costs. Labour cost was
the major item in the variable costs; it constituted about 8.23 percent
of the total cost. Electricity charges, fertilizers, interest on working
capital, plant protection and grading and packing constituted 4.44,
1.53, 2.54, 2.26 and 0.96 percent respectively of the total cost.
Transportation and marketing costs amounted to Rs.0.47 lakh. The
total cost of cultivation was Rs. 12.38 lakh.
iii) Per-acre Yield and Returns from Anthurium under Greenhouse
Table 4.9. throws light on total yield and returns from an acre of
Anthurium under greenhouse condition. The yield from an acre of
Anthurium under greenhouse cultivation was about 2.0 lakh spikes
per year. The sale price of each flower on an average was Rs.11.25.
It can be found from the table net returns amounting to Rs.10.12 lakh
per acre were realized from these farms after meeting both the variable
and fixed costs.
Table 4.7: Per-acre Establishment Cost of Anthurium
Particulars
Cost
(Rs. in lakhs)
Percentage
to the total
1. Land development 2.86 6.83
2.Green house structure 13.07 31.23
3. Grading/Packing hall 1.46 3.49
3. Irrigation and misting system 3.15 7.53
4. Seedling 20.86 49.85
5. Material inputs (Coir pith,
manure, bricks, sand, FYM etc )
0.45 1.07
Total Cost 41.85 100
59
Table 4.8: Per-acre Cost of production of Anthurium
Particulars
Cost
(Rs. in lakhs)
Percentage
to the total
I. Fixed cost:
Interest on fixed capital 3.8 30.7
Depreciation on assets 1.56 12.6
structure and planting materials
4.08 32.95
Total fixed costs 9.44 76.25
II. Variable costs:
Interest on working capital
@ 12 % p.a.
0.31 2.54
Transportation and marketing costs 0.47 3.79
Total Variable costs 2.94 23.75
Total costs 12.38 100
Table 4.9: Per-acre Yield and Returns from Anthurium
No. of plants/acre 25,000
No. of flowers/plant/year 8
No. of flowers/acre/year(lakh) 2.00
Sale price per flower 11.25
Gross returns / acre( Rs. in lakhs) 22.50
Total costs( Rs. in lakhs) 12.38
Net returns /acre ( Rs. in lakhs) 10.12
60
4.1.4 Rose
Rose is the most popular cut-flower the world over. In India it is grown
both in the open fields and under the greenhouse condition. While
the openly grown roses cater to the domestic markets, greenhouse
rose are produced for both domestic and international markets. It is
a perennial flowering shrub or vine of the genus Rosa, within the
family rosaceae, that comprises over 100 species. Most are native to
Asia, with smaller numbers of species native to Europe, North
America, and northwest Africa. Natives, cultivars and hybrids are all
widely grown for their beauty and fragrance. Species from different
parts of the world easily hybridize, giving rise to the many types of
garden roses.
Rose is an amazingly multi-use flower. The attar of rose is the steam-
extracted essential oil from rose flowers that has been used in
perfumes for centuries. Rose water, made from the rose oil, is widely
used in Asian and Middle Eastern cuisine. The plants fleshy edible
fruit is called a rose hip. Rose hips are sometimes made into jam,
jelly and marmalade or brewed for tea, mainly for their vitamin C
content. They are also pressed and filtered to make rose hip syrup.
Rose hips are also used to produce an oil used in skin products (For
more details about rose, see Wikipedia). In India rose is used
extensively in the preparation of a variety of Ayurvedic medicines and
tonics including Gulkand.
i) Per-acre Cost of Establishment of Rose under Greenhouse
The details of the average establishment cost of an acre of Rose under
greenhouse are presented in Table 4.10. On an average the total
establishment cost of an acre of rose under greenhouse worked out
to be Rs.47.09 lakh. The cost of greenhouse structure and planting
materials formed the major part of the establishment cost. The costs
incurred on greenhouse structure and planting material were Rs.
19.27 lakh and 10.46 lakh respectively. The cost of refrigerated van
used for transportation formed 16.99 per cent of the total
establishment cost. The establishment cost of cold storage formed 9.03
per cent of the total establishment cost. Cost of grading and packing
units accounted for 5.14 per cent of the total establishment cost. The
cost of irrigation system and land development accounted for 5.72
per cent of the total establishment cost.
61
ii) Per-acre Cost of production of Rose under Greenhouse
The details of cost of cultivation of rose under greenhouse condition
are given in the Table 4.11. The cost of cultivation of rose under
greenhouse condition can be categorized into variable costs and fixed
costs. It is observed from the Table 4.11 that the average annual cost
of cultivation per acre of rose under greenhouse worked out to Rs.
24.74 lakh. The variable costs accounted for 55.63 per cent of the
total cost. This included the cultivation and export expenses. Among
the cultivation expenses, production expenses on fertilizers and
pesticides accounted for 6.14 percent of the total cost where the
expenditure on labour accounted for 7.55 percent. This included
labour used for production and grading operations also. Expenses on
electricity and interest on working capital accounted for 3.31 and 5.78
percent respectively of the total cost. The cost of grading and packing
accounted for 4.24 percent of the total cost. The labourers utilized
for grading and packing were semi-skilled workers. The cost incurred
on export of rose spikes accounted for 27.67 percent of the cultivating
expenses. The export cost includes the freight charges, insurance, Port
clearance, commission paid both at the domestic and export market.
The total fixed costs accounted for 44.37 percent of the total
establishment cost and the interest on fixed capital accounted for
16.45 percent of the total cost and amortized establishment cost on
structure and planting materials accounted for 16.81 percent of the
total establishment cost. The depreciation of equipment accounted
for 11.11 percent of the total establishment cost.
iii) Per-acre Yield and Returns from Rose under Greenhouse
Table 4.12 throws light on the yield and returns per acre of rose under
greenhouse condition. The yield from an acre of rose under
greenhouse was 5.47 lakh stems per year. Out of the total yield
realized from an acre of greenhouse, 71.5 percent was exported and
30.35 percent was marketed domestically. The average price realized
per spike in the export market was Rs.8.70 and in domestic market
it was Rs.2.65. It can be found from the above table that net returns
of Rs. 12.99 lakh per acre were realized from rose farms after meeting
the variable and fixed costs.
62
Table 4.10: Per-acre Establishment Cost of Rose
Particulars
Cost
(Rs. in lakhs)
Percentage
to the total
iii) Cold storage structures 4.25 9.03
iv) Grading & Packaging units 2.42 5.14
v) Irrigation system 2.24 4.76
vi) Refrigerated Van 8 16.98
vii) Planting materials 10.46 22.21
Total 47.09 100.00
Table 4.11: Per-acre Cost of production of Rose
Part i culars
Cost
(Rs. i n lakhs)
Percent age
t o t he t ot al
A. Fi xed cost s
Interest on capital (@14% p.a.) 4.07 16.45
structure & planting material
4.16 16.81
Tot al f i xed cost 10.98 44.37
B. Vari able cost s:
Fertilizers & pesticides 1.52 6.14
Interest on working capital @ 12% p.a. 1.43 5.78
Domestic marketing charges 0.23 0.94
Freight charges 4.02 16.26
Commission 0.3 1.21
Export marketing charges 0.29 1.19
EEC Cess 2.23 9.01
Tot al v ari able cost s 13.76 55.63
Tot al annual cost s (A+B) 24.74 100
63
Table 4.12: Per-acre Yield and Returns from Rose
Description Exports Domestic sales Total
Yield (lakh stems) 3.84 1.63 5.47
Price(Rs./Spike) 8.7 2.65
Gross Returns(Rs.lakhs) 33.408 4.32 37.73
Total Costs(Rs. lakhs) -- -- 24.74
Net Returns(Rs. lakhs) -- -- 12.99
4.2 Production Constraints faced by Hi-Tech-Floriculture Units
The major problems faced in the production of cut-flowers as indicated
by the hi-tech growers included huge investment in cut-flower
production (reported by 83.63 per cent of the respondents), irregular
supply of electricity required for irrigation (reported by 81.81 per cent),
scarcity of labour (reported by 74.54 percent), non-availability of
quality indigenous planting material (according to 67.27 per cent), poor
harvest during the rainy season (opined by 63.63 per cent) and pest
and disease attack on crops (reported by 47.27 per cent).
With regard to marketing, the prominent constraints expressed by the
sample growers included, seasonality in demand (reported by 96.36
per cent of the respondents), frequent power cuts affecting irrigation
of the standing crop, adequate cold storage facilities(reported by 81.81
percent) and price fluctuations (54.54 per cent).
Almost all the growers opined that there should be an exclusive flower
market in Bangalore on modern lines with all requisite infrastructure
facilities. The need for developing general infrastructure and setting
up of cold storage facilities was expressed by the majority, i.e., 89.09
percent and 83.63 per cent respectively of the sample respondents.
Adequate Government support for export promotion and improving
the facilities and competitiveness at the IFAB were suggested by 58.18
per cent and 45.45 per cent respectively of the sample growers.
64
Sl.
No.
Particulars
Percent
of Growers
reporting
A Problems
I Relating to Production:
1 Huge investment requirement 83.63
2
Non-availability of quality indigenous planting
material
67.27
3 Scarcity of labour 74.54
4 Irregular supply of electricity 81.81
5 Pest and diseases attack 47.27
6 Poor harvest during rainy season 63.63
II Relating to Marketing:
1 Price fluctuations 54.54
2 Seasonal demand 96.36
3 Absence of organised retail markets 85.45
4 Lack of adequate cold storage facilities 74.54
B Suggestions
1
An exclusive organized domestic retail market for
cut flowers
100.00
2 Improve facilities and competitiveness at IFAB 45.45
3
Establish adequate cold storage near the retail
markets
83.63
4 Develop overall infrastructure for floriculture 89.09
5
Adequate Government support for export
promotion
58.18
Table 4.13: Problems faced by Hi-tech Floriculture Units (n=30)
65
CHAPTER V
MARKETING OF CUT FLOWERS
Since the hi-tech floriculture is concerned with growing as well as
marketing of cut flowers, an analysis of the marketing of cut flowers
would be quite relevant in this context. In this chapter, an attempt
has been made to analyse the marketing aspects of cut flowers,
including the supply chain of cut flowers from farmers to consumers,
consumer preference for cut flowers, and the problems encountered
by growers in production and marketing of cut flowers.
As the IFAB is supposed to be the key organized wholesale market
established exclusively for modern cut flowers with an intention to
provide better marketing infrastructure and prices to the growers, the
present study also attempted an analysis of the trend and seasonal
pattern in flower arrivals and prices as well as the marketing margins
at IFAB vis--vis those at K.R. Market, the major unorganized cut
flower market in Bangalore. It must be noted here that the results
presented in this section are based on the sample survey of the market
for cut flowers in Bangalore only. For this purpose, 30 farmers, 20
wholesalers and 25 retailers and 30 consumers were randomly
selected. The results of the study are presented below.
5.1 Supply Chain for Cut-flowers
In order to ascertain the supply chain of cut flowers from producers
to consumers, information from growers, wholesalers, retailers and
consumers in Bangalore was collected and analysed. The results of
analysis are summarized below.
i) Flow of Information: Information flow in the supply chain is
backward flow. It is depicted in the Figure 5.1. Growers are getting
production and marketing information from National Horticultural
Board, SIFA and APEDA.
ii) Flow of money: Money flow in the supply chain is backward flow.
It is depicted in Figure 5.2. Money is first transferred from the
consumer to retailer then to the wholesaler then from the wholesaler
directly to farmers or through auction centers. In each stage they will
get profit as margin.
66
Fig. 5.1: Backward flow of Information on Cut flowers
Consumer NHB/SIFA/APEDA/ Hoti.Dept/Flower Expo Grower
Fig. 5.2: Backward flow of Money
Consumer Retailer Wholesaler Grower
Fig. 5.3: Supply Chain for Cut-flowers from Producer to Consumer
Grower
KAIC Auction Centre /
K.R. market
Wholesaler
Retailer
Consumers
Figure 5.3 shows how cut-flower moves from the grower to the
consumer. Solid arrow shows the preferred option of buying flowers
where curved arrow shows alternative option of buying flowers. The
figure also shows where wholesalers buy the product from. Most of
them usually buy from KAIC auction centre (IFAB) and K.R market,
but others also buy directly from growers. Wholesalers serve as
middlemen by gathering floriculture products in bulk from the local
or distant producer and selling them in smaller units to the retail
florist customers. The basic function of a typical flower wholesaler is
to provide cut flower to the retail flower industry. The wholesalers
product, often on consignment from the grower, is sold at the best
67
possible price, and then the payment, as a portion of the sale price,
is made to the grower.
One of the important roles of the flower wholesalers is to identify the
emerging market trends from the retail florists, and then pass this
information on to growers. The farm, in turn, can modify production
to meet perceived changes in demand. The wholesalers operating in
IFAB (organized wholesale flower market) receive cut flowers from
individual growers as well as corporate growers located in and around
Bangalore while in K.R. market, Bangalore ( among of the biggest
unorganized markets in India), traders receive flowers not only from
growers in and around Bangalore but also from outside Bangalore.
The retailers purchase cut-flowers from the wholesalers in K.R market
and also in the KAIC auction centre. Very few retailers purchase
directly from farmers. The retailers or florists sold their cut flowers
in loose form as well as in the form of floral arrangements to the
corporate and household consumers. Out of the 15 florists visited,
12 bought their flowers from the K.R market and only 3 bought from
the KAIC auction centre. Florists like the idea of purchasing directly
from growers. However purchasing small quantity of flowers from
growers is not convenient since the growers are reluctant to sell small
quantities to the retailers. So they buy from wholesalers rather than
from the growers. Rose and gerbera are the main products preferred
by the florists. The other major flowers dealt in by retailers are
carnation, bird of paradise, Lilly, Gladiolus and Anthurium.
Consumers purchase mostly for personal use and as corporate gifts.
Corporate display, festivities, weddings and public functions were also
some other common uses. Florists reported that their customers
belong to upper-middle and higher income groups and that they
purchase mostly for personal use and for gifts. Most of the customers
buy bouquets rather than the loose flowers. Florists also reported that
their more frequent clients are females and tele-phonic orders are
becoming more frequent.
Marketing of cut flowers takes place under two broad channels namely
export marketing and domestic marketing. Most of the cut flower
growers sell their flowers to overseas buyers as exports right from their
establishment in the early nineties. In the meantime, the domestic
68
demand for quality cut flowers has also been growing at a faster rate.
This facilitates flower growers to capture and develop the domestic
market. In fact, the domestic market in India has turned to be a
residual claimant for cut flowers which are otherwise not accepted
for exports.
Some growers sell their flowers, which are rejected as per the
international standards to big domestic organizations like hotels, etc.,
while other growers would sell their produce in domestic markets like
the IFAB and K.R market. The IFAB is meant exclusively for selling
the cut flowers grown under greenhouse condition for supplying to
the other markets in the state and to the outside markets of Delhi,
Pune, etc. Corporate growers mainly export international quality
flowers, while the rejects are sold in bulk either in IFAB or in the K.R
market, but prominently in the former.
Figure 5.4 describes the domestic part of the export supply chain.
The large-scale hi-tech flower companies have vertically integrated
most of the marketing functions described above. By far the greatest
proportion of Indias flower exports go to markets in Europe. The
Dutch flower auctions have historically been the most important
channels through which Indian flowers have reached export markets.
However, changing consumption patterns and supermarket supply
chain rationalizations are beginning to erode the Dutch auctions
importance. In a few importing countries, particularly the UK, buying
behaviour has changed away from occasional purchasing towards
regular flower purchasing. This has increased not only the volume of
purchases but also the importance of supermarkets as retail outlets.
Simultaneously, several large European supermarkets have simplified
their horticultural supply chains by establishing direct links with
producers. Overseas supermarket chains like TESCO, Sainsbury, Wal-
Mart and Metro are looking for large quantities of flowers, latest
varieties and well-defined supply chain.
69
Fig. 5.4: Supply Chain for Cut-flowers from Greenhouse to Aircraft
Greenhouse
Packing house or grading
shed
Insulated/ refrigerated
truck
Aircraft
Outgrower
-Pack
-Pre-cool
-Store
-Grade
-Bunch
-Place in buckets with treatment
solution
- Record arrival temperature
- Inspection
- Documentation
- Palletize
- Record temperature before loading
Freight handlers
Road Transport
Cold room
70
5.2 Consumers preferences for cut flowers
Consumers perceptions about cut flowers and their preferences for
flowers possessing specific attributes/qualities are of great importance
not only to the producers of modern flowers but also to the floriculture
scientists and policy makers to evolve and popularize flower varieties
with particular attributes preferred by the consumers. Consumers of
modern cut flowers are by definition quite literate and knowledgeable.
This coupled with their high incomes which gives them the ability to
buy expensive cut flowers, makes them the connoisseurs of the flowers
they buy. Since cut flowers are things of visual charm and delight,
the preferences of well-to-do and literate people for certain attributes
in flowers are a crucial determinant of the demand for cut flowers.
Conjoint analysis was attempted to ascertain the consumers overall
quality evaluation on the basis of their rankings given to the selected
attributes of cut flowers. Four important attributes were considered
for this purpose. The attributes considered were: the colour of the
flower, the flowers suitability for floral arrangement, stem length of
the flower and the price of the flower. To ensure that conjoint analysis
is meaningful, the literacy and income levels of the sample consumers
under study were ascertained. The study found that all the 40 cut
flower consumers (end users) in Bangalore surveyed randomly
literates; 35 of them were post-graduates or graduates constituting
about 88 per cent of the total. About 10 per cent had education up
to the pre-university level and only 1 respondent had education below
secondary school level.
The study also found that, of the 40 cut flower consumers (end users)
in Bangalore surveyed randomly, only 12 belonged to the lower
income group (up to Rs.6000 per month) with an average income of
Rs.5050 per month constituting 30 per cent of the total respondents.
Thirteen respondents (32.5%) belonged to the medium-income group
(Rs.6001 to 12000 per month) with an average income of Rs.11,000
per month and fifteen respondents were in the high-income group
with an average income of Rs.21,000 per month constituting 37.50
per cent of the total. The results of conjoint analysis for the two
selected cut flowers namely rose and gerbera are given in the Tables
5.1 and 5.2.
71
5.2.1 Conjoint Analysis for Rose Consumers
Table 5.1 reveals that among the four selected attributes of rose,
variety was the most important floral product attribute influencing
the consumers flower purchase choice. The relative importance
attached to variety by the respondents was 35.12 per cent, followed
by colour (32.98%), price (23.83 %) and suitability for floral
arrangements (8.07 %) respectively. The relative utility score revealed
that red (1.0289) was the most preferred colour, whereas pink colour
had a relative utility score of 0.5256 and white colour had negative
utility of -1.5545. With respect to variety, hybrid variety was preferred
over local variety with a utility score of 1.3568. Bouquets were
preferred more with a utility value of 0.3408 compared to loose
bunches which had a negative utility score. Low prices of roses were
naturally preferred over the high priced roses by all the consumers
with a utility value of 0.8432. For the entire consumer group the value
of Spearmans p(rho) was 0.934 and all the utility values were found
statistically significant.
5.2.2 Conjoint Analysis for Gerbera Consumers
Even in the case of gerbera, variety was found to be the chief attribute
with a relative important score of 36.05 per cent followed by price
(27.80%) and colour (26.21%). Least importance (9.94%) was given
to suitability for floral arrangement. Pink was the most preferred colour
with a relative utility of 1.0876, followed by deep red colour (0.359),
while off-white had a negative utility value. Hybrid (exotic variety, in
consumers language) gerberas were given higher utility value (1.8693).
Bouquets of gerbera showed positive utility value of 0.4391. Low-
priced gerbera yielded highest relative utility value of 1.2169, whereas
medium-priced and high-priced ones had relative utility values of
0.2393 and -1.4562, respectively. The Spearmans p(rho) for the entire
consumer group was 0.927 indicating a strong relation between
consumers ranking and judgments of attributes.
72
Table 5.1: Results of Conjoint Analysis for Rose Consumers
Factors Attributes/Utility
Averaged
Importance
-Colour-
Red
White
Pink
1.0289
-1.5545
0.5256
32.98
-Variety-
Hybrid
Local
1.3568
-1.3569
35.12
-Suitability for Floral Arrangements-
Bouquet
Loose bunches
0.3408
-0.3408
8.07
-Price-
High
Medium
Low
-1.1313
0.2811
0.8432
23.83
Factors Attributes/Utility Averaged Importance
-Colour-
Deep red
Off-white
Pink
0.3590
-1.4466
1.0876
26.21
-Variety-
Hybrid
Local
1.8693
-1.8693
36.05
-Suitability for Floral Arrangement-
Bouquet
Loose bunches
0.4391
-0.4391
9.94
-Price-
High
Medium
Low
-1.4562
0.2393
1.2169
27.80
Table 5.2: Results of Conjoint Analysis for Gerbera Consumers
73
5.3 Constraints faced by Wholesalers
The main constraints of wholesalers related to lack of infrastructure
and non-availability of good flowers (Table 4.17). The infrastructural
problems comprised inadequate facilities for storage, packing,
transportation and grading. Nearly two-thirds of the sample
wholesalers pointed out that these problems hampered their
wholesale activity. About 80 percent of the wholesalers reported about
the problems pertaining to sourcing of quality flowers related to high
price fluctuations, 70 percent of them complained of high transport
costs, 60 percent reported lack of good varieties, and 50 percent
reported lack of quality flowers and irregular supply.
The need for a separate market for cut flowers was expressed by all
the sample wholesalers. Need for cold storage, grading, packing and
regular supply of cut-flowers were expressed by nearly 80 per cent
and 60 per cent of the wholesalers respectively. The need for
government support in terms of proper policy was felt by about 40
per cent of the sample wholesalers.
Table 5.3: Constraints faced by wholesalers (n = 10)
Sl.
No
Particulars
Number of
wholesalers
reporting
Percentage
to the total
A Constraints:
I Lack of infrastructure
1 Storage 8 80
2 Transportation 6 60
3 Packaging materials 6 60
4 Grading 7 70
II Non-availability of good quality flowers
5 High price fluctuations 8 80
6 Lack of good varieties 7 70
7 Lack of continuous supply 5 50
8 Lack of quality flowers 6 60
B Suggestions for improvement
1 Exclusive market place for cut-flowers 10 100
2 Need for cold storage unit near market 8 80
3 Proper grading, packaging and continuous supply 6 60
4 Government support in terms of proper policy 4 40
74
5.4 Constraints faced by Retailers
The problems of retailers/florists engaged in cut flower business
broadly related to procurement and selling of cut flowers (Table 4.18).
More than 93 per cent of the sample retailers/florists engaged in cut
flower business reported about wide price fluctuations in the flower
prices. Nearly 80 per cent of the retailers surveyed reported about lack
of regular supply, while 73.33 per cent complained of quick
deterioration in flower quality and 66.66 per cent expressed about
lack of new varieties. Majority (86.66 per cent) of the florists/retailers
opined that there are lack of regular customers and that there is quite
a bit of wastage of flowers as most of them carry on their business
on pavements, exposing flowers to outside atmosphere including
sunshine, wind, dust, etc. These factors naturally prompt the
retail ers/florists to charge high prices especially for floral
arrangements like bouquets, wreaths, tent decorations, etc., which
the consumers of cut flowers consider very exorbitant.
Table 5.4: Problems faced by Retailers/Florists (n = 15)
Particulars Number
Percentage
to the Total
A. Problems relating to:
I. Procurement of cut flowers
1. Price fluctuations 14 93.33
2. Quick deterioration in quality 11 73.33
3. Lack of new varieties 10 66.66
4. Lack of regular supply 12 80.00
II. Selling of cut flowers:
1. Wastage of flowers 9 60.00
2.Lack of awareness among consumers 10 66.66
3. Lack of regular consumers 13 86.66
B. Suggestions:
Introduce new varieties 14 93.33
Generic promotion 10 66.66
Development of more customers contacts 12 80.00
75
5.5 Constraints faced by Corporate Grower-exporters of cut
flowers
The flower exports from India are hampered by a number of
bottlenecks. Some of the major constraints as expressed by the sample
corporate growers are presented in Table 4.19. The major problems
were lack of regular cargo flights to the required destination, very high
freight cost, very severe competition from other countries, non-
availability of new varieties to cater to the changing preferences of
overseas customers, lack of strict phytosanitary regulations in the
country, lack of adequate government support, high import duties in
the major overseas markets like the European Union, non-availability
of good planting materials indigenously, costly royalty for imported
planting materials, and non-availability of quality pesticides
appropriate for raising exotic varieties of cut flower.
Faster, more reliable and direct flights to different destinations are a
pre-requisite for quick disposal of fresh flowers and for realization of
better price. But, in India these facilities are inadequate. There are
no direct flights to international markets such as Amsterdam and
Japan and this results in deterioration in the quality of flowers. High
freight charges are affecting the viability of the export-oriented
floricultural units. It was reported that the freight charges for
transporting 1 kg of flowers was Rs.100.
Another major problem is imposition of heavy import duty on Indian
exports by the European countries during the peak-demand season
which pushes up marketing costs. Adding to this problem is the
discrimination that the European Union is not imposing any import
duty on floricultural imports from Israel, and African and Latin
American countries thus making them much more competitive than
India. The competitiveness of Indian flower exports is further eroded
by the exorbitant royalty paid for the import of patented planting
materials from Europe and elsewhere. At present there are few
indigenously patented plant varieties from India doing well in the
international market.
All corporate growers i.e., 100 percent, opined that the quality of the
produce needs to be improved because quality matters a lot in the
international markets. About 80 per cent of the respondents
expressed that there is urgent need for introducing new varieties that
are acceptable in the international market and for promoting research
and development on new crops and varieties to diversify the product
range. About 60 per cent of the corporate growers expressed the need
76
for more active involvement of the government in exporting so that
the growers can only concentrate on production and quality aspects.
About 40 per cent of the respondents opined that there is need for
proper selection of planting materials and technology suitable for
Indian conditions.
Sl.
No.
Particulars
Number of
firms
Reporting
Percentage
to the total
A. Problems
1. Lack of regular cargo flight to the required
destination
15 100
2. Very high fright cost 15 100
3. Very high competition from other countries 12 80
4. Non availability of new varieties 9 60
5. Lack of proper strict phytosanitary
regulations of the country
3 20
6. Lack of government support 9 60
7. High import duties 12 80
8. Non availability of good planting materials 9 60
9. Non availability of quality pesticides 3 20
10. High royalty for imported planting materials 3 40
B. Suggestions:
1. Improving the quality of the flowers 15 100
2. Involvement of government in exporting 9 60
3. Introducing of new varieties that are
acceptable in the international market
9 80
4. Proper selection of planting materials and
technology
6 40
5. Funding more on research & development
on new crops and varieties to diversify
the product range
12 80
Table 5.5 : Constraints faced by Corporate Grower-exporters of
Cut flowers (n = 15)
77
5.6 Trend and Seasonality in flower arrivals and prices of cut
flowers at IFAB
Trends in arrivals of cut flowers were estimated by fitting a linear trend
equation for the entire group as well as for each of the three major
cut flowers namely: rose, gladiolus and anthurium separately. The
results of analysis are presented in Table 5.6. The intercepts were
found to be positive and significant for all types of cut flowers. On an
average 7 lakh flowers used to arrive in the IFAB annually. The b
co-efficients were also found to be positive and significant for cut
flowers as a group.
To discover the trend in individual cut flowers, analysis was also made
for the individual flowers. The arrivals and prices of rose, gladiolus
and anthurium are given in Tables 5.7 and 5.8. Only the rose arrivals
were increasing significantly over the months, on average the monthly
arrival amounted to 65,000 flowers with around 35,000 additional
flowers arriving over the months. The analysis for rose arrivals was
found significant at 1 per cent, but for other flowers it was not found
significant.
The results obtained by fitting of linear trend equations for the prices
of different cut flowers indicate that the intercepts were positive for
all varieties but were not significant. The slope co-efficients were also
positive but not significant at the conventional level of significance.
Table 5.6: Linear Trend in monthly Arrivals and Prices of
Cut flowers at (IFAB).
Particulars Intercept Slope R
2
Arrivals (Nos)
723173.2*
(10.53)
33714.99*
(11.84)
0.782
Prices (Rs)
2.49*
(9.50)
0.007
NS
(0.67)
0.012
Note: Figures in the Parentheses are the t values
1) * - significant at 1 percent
2) NS not significant
78
Table 5.7: Linear Trend in monthly Arrivals of Select
Cut flowers at IFAB
2
Roses
649981.70*
(9.83)
34447.62*
(12.55)
0.80
Gladiolus
12010.11*
(2.793)
7.07
NS
(0.039)
0.1
Anthurium
1816.78**
(2.444)
19.38
NS
(0.628)
0.04
1) * - significant at 1 percent
2) ** - Significant at 5 percent
3) NS not significant
Table 5.8: Linear Trend in Prices of Select Cut flowers at IFAB
2
Roses
1.975
(9.129)
0.003
(0.410)
0.04
Gladiolus
1.133
(9.208)
0.003
(0.634)
0.1
Anthurium
4.387
(6.453)
0.015
(0.538)
0.07
5.7 Seasonal pattern in arrivals and prices of selected cut flowers
in IFAB
5.7.1 Seasonal pattern in arrivals
In order to study the seasonal pattern, seasonal indices were
computed (Tables 5.9 to 5.11).
Seasonality was observed for all the cut flowers. For rose the arrivals
reached a peak in February followed by another peak in December-
January, while they were lowest in March. The Indices of rose arrivals
range from 85 to 123.
79
Arrivals reached a peak during January-February for Gladiolus. The
seasonal indices for gladiolus arrivals ranged from 17 to 285, the
highest being, during February (285) followed by January (215) and
the lowest in May (17).
The arrivals of anthurium reached a peak in the months of October,
November and December, with the seasonal indices of 130, 144 and
132 respectively. The arrivals reached the minimum in the month of
March with an index of just 42.
The analysis revealed that in general the cut-flower arrivals are higher
during November-February season. The rose arrivals were found to
be more stable compared to other two flowers.
5.7.2 Seasonal pattern in prices
Looking at the seasonal indices of prices (Tables 5.9 to 5.11); one can
observe that all the prices of all cut flowers fluctuate widely, while
anthurium prices fluctuate more widely.
Table 5.9: Indices of Arrivals and Prices for Roses at IFAB
Month Arrivals Prices
January 113.56 138.82
February 122.76 136.90
March 84.53 62.98
April 92.55 67.81
May 94.16 96.65
June 99.93 70.76
July 94.78 69.26
August 102.19 92.23
September 102.77 96.16
October 92.63 83.90
November 98.29 130.64
December 110.80 153.91
80
Table 5.10: Indices of Arrivals and prices for Gladiolus at IFAB
Table 5.11: Seasonal Indices of Arrivals and prices for
anthodium at IFAB
Month Arrivals Prices
January 215.48 138.11
February
285.11 116.66
March
157.88 105.47
April
105.58 69.10
May
16.75 83.21
June
17.28 76.85
July
36.78 90.77
August
47.63 79.30
September
55.59 82.11
October
40.96 86.08
November
103.87 123.90
December 117.08 148.42
Month Index of Arrivals Index of Prices
January 114.67 157.51
February 117.79 113.31
March 42.27 117.05
April 71.02 62.75
May 83.58 110.07
June 88.46 94.85
July 70.33 71.59
August 105.51 105.71
September 99.17 69.48
October 132.00 107.81
November 144.53 63.31
December 130.69 126.56
81
Indices of rose prices ranged from 62.98 to 153.91, peaking in
December and reaching the bottom in March. Gladiolus prices reached
the peak in December followed by January while they were the lowest
in April. The price indices for Gladiolus ranged between 69.10 and
148.42. Anthurium price indices ranged from 62.75 to 157.51, the
peak being in January followed by December and the bottom in April.
To sum up, it was observed that the seasonality in cut flower arrivals
at IFAB does not vary much. The index for arrivals is higher in the
November-February season. The seasonal pattern of prices was more
or less similar, with prices being higher during the December-February
season. Anthurium flowers experienced higher price fluctuations
followed by Gladiolus and rose in that order.
5.8 Pricing Mechanism for flowers in Bangalore
There are two major flower markets in Bangalore, one is the organized
market namely the International Flower Auction Bangalore Limited
(IFAB) and the other, the unorganized market at the Krishna Rajendra
Market (locally called K.R. Market). A comparison of the two markets
is presented in Table 5.12.
5.8.1 Pricing mechanism at IFAB
The International Flower Auction Bangalore Limited (IFAB), is a new
flower auction centre set up in 2003 on the lines of the world famous
Bloemenveiling Aalsmeer (VBA), the Aalsmeer Flower Auction Center
in Amsterdam. IFAB is a joint venture of the Karnataka Agro-
Industries Corporation Ltd. (a Government of Karnataka undertaking)
and the private flower growers, established to provide an organized
wholesale market for cut flowers. It has created a level-playing field
for both growers and buyers trading in quality cut flowers for both
exports and domestic markets. IFAB hopes to attract buyers from
neighboring countries like Singapore and Middle East in course of
time. Flowers auctioned at IFAB would reach almost all corners of
the country and the aim is to make them reach all corners of the world
in the years to come.
Built at a cost of Rs. 10 crore, of which Rs. 3.57 crore is APEDAs
contribution and rest is borne by the State Government, IFAB is
centrally located and near the Bangalore International Airport. It is
one of three such centres in the country and the largest flower auction
centre in Asia. The other two are in Mumbai and Noida. IFAB has
82
had a chequered history and had been in the works for over six years
due to bureaucratic bungles.
IFAB acts as commission agent between the farmers and traders. It
follows Dutch auction system of pricing, in that the price of a specified
batch of flowers is set at the highest, it is brought down from highest
to the lowest, and the buyer bids the price and quantity for the flower
of specified quality. Registration is compulsory for each buyer and
seller. The buyer has to pay Rs. 5000 as an one-time registration fee.
Upon registration each buyer is allotted a code called buyers code.
Everyday buyers have to sit in their respective code-wise seats and
bid the price and quantity of flowers.
At IFAB the flowers arrive from morning till evening. Flowers arrivals
in the morning are sold on the same day. Flowers arriving in the
evening are stored in the IFABs cold storage overnight and are sold
the next day. The auction takes place all the seven days in a week.
The auction starts at 8 am and it may continue up to 12 noon
depending on the quantity of flower arrivals. Buyers bid the price
for different quantity for different flowers. After the auction is over
the buyer has to pay commission of Rs. 20 irrespective of the quantity
of buying. IFAB charges a commission of 5% of the transaction from
each farmer.
5.8.2 Pricing Mechanism at K.R. Market
K.R. Market is an informal market but the major market, in the state
dealing in for all types of flowers loose as well as cut. It is perhaps
the biggest unorganized cut flower market in India. Flowers sold here
include not only the traditional cut flowers but also commercial flowers
including rose, gladiolus, anthurium, orchids, gerbera, lilium, bird of
paradise and also filler materials for floral decorations.
The pricing mechanism of cut flowers in KR Market is open and
straight-forward, the price is determined based on demand for and
supply of cut flowers. KR market has all the important features of
perfect competition. The entry and exit are free; the price is fixed by
the open bargaining between the seller and the buyer. Selling of
flowers starts from morning 4 am and it often continues till 8-9am
till all the arrivals of the day are disposed off. All types of buyers -
wholesalers, retailers, marriage contractors, decorators, florists, etc
purchase from this market.
83
Table 5.12: Difference between IFAB and K.R. Market, Bangalore
IFAB K.R. Market
It is a joint organization of
Karnataka Agro-Industries
Corporation Ltd (KAIC) and Hi-tech
flower growers established in 2003
It is not a formal organization but
an informal market for flowers
evolved and functioning for pretty
long time
Dutch auction system of pricing is
adopted
Conventional demand-supply
determined free pricing
mechanism is followed
Registration is compulsory for the
each buyer and seller
Registration is not necessary.
Entry of sellers and buyers is
absolutely free
Each register buyer has a buyer
code
There was no such code
Only the registered buyer can buy
the produce
Any one can come and buy the
flowers. Entry is free for buyers
A commission of 5 percent of the
sale proceeds is charged from the
sellers
No commission paid by the sellers.
A commission of Rs. 20 is charged
from the buyers for each purchase
No commission is charged from the
buyers
Daily auction takes between 8.00
am and 12 noon
Daily trading starts early in the
morning at about 4.00 am and
lasts till about 9.00 am
Only wholesale trading in modern
cut flowers is permitted
Deals in both wholesale and retail
trade in modern cut flowers as well
as traditional loose flowers
All transactions including flower
arrivals and prices are
documented
Arrivals and prices are not
documented
Cash and carry condition for
buyers while growers are paid once
in a week
Absolute cash and carry system
IFAB serves as an agent between
growers and buyers
Direct sale by between sellers and
buyers.
84
There is no designated spot for selling flowers here. Sellers bringing
flowers from far and near from various parts of Karnataka and
outside Karnataka keep their produce all along both sides of a small
stretch of S.J.P. Road starting from the corner of K.R. Market and
they have to sell, there is no taking back the produce unsold. An
interesting finding in the course of the survey of K.R. Market was that
quite often the wholesalers who happen to buy cut flowers from IFAB
at a lower price in bulk sell them the next morning at this market for
higher prices and thus earn a margin! Thus, eventually quite a chunk
of the cut flowers grown under high-tech conditions find their way
into the unorganized market. This also means that although by
definition the organized flower market, IFAB, is supposed to ensure
for cut flowers a higher price than that realized in the unorganized
market, in reality it may often turn out to be otherwise.
5.9 Marketing margin
5.9.1 Marketing margin in channel I (IFAB)
Marketing margin refers to the share of the different market
intermediaries in a particular produce. Marketing margin is the
difference between the sale price and the purchase price of the
wholesaler and the retailers. The margin for the retailer is usually
more than that for the wholesaler. The prices and marketing margins
in rupees as well as in percentages are depicted in Tables 5.13 to 5.16.
The average price and margins received by the farmers, wholesalers
and retailers in channel I are given in the Table 5.13. On average the
price received by the farmer was Rs. 2.71, Rs. 2.87 and Rs. 5.36 in
the case of rose, gladiolus and anthurium respectively. The margins
received by the wholesaler were Rs. 1.30, Rs. 2.44 and Rs. 5.06, with
an average price of Rs. 4, Rs. 5.31 and Rs. 10.42 in case of rose,
gladiolus and anthurium respectively. The margins received by the
retailers were Rs. 1.78, Rs. 3.31 and Rs. 5.06, with an average price
of Rs. 5.93, Rs. 8.71 and Rs. 14.88 respectively in the case of rose,
gladiolus and anthurium.
5.9.1.2 Producers Share in Channel I (IFAB)
The table 5.14 reveals that 46 percent of the sale price of rose is
passed on to the grower. The share of the wholesaler is 22 percent
and that of the retailer is 30 percent in channel I (IFAB).
85
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86
5.9.2.1 Marketing Margin in Channel II (KR Market)
The average price and margins received by the farmers, wholesalers
and retailers in Channel II are given in the Table 5.15. On an average,
the price received by the farmer was Rs. 2.85, Rs. 4.27 and Rs. 5.45
in the case of rose, gladiolus and anthurium respectively. The margins
received by the wholesaler were Rs. 1.30, Rs. 2.44 and Rs. 5.06, with
an average price of Rs. 4.01, Rs. 5.31 and Rs. 10.42 in case of rose,
gladiolus and anthurium respectively. The margins received by the
retailers were Rs. 1.78, Rs. 2.35 and Rs. 5.56, with an average price
of Rs. 5.93, Rs. 8.71 and Rs. 14.88 respectively in the case of rose,
gladiolus and anthurium.
5.9.2.2 Producers Share in Channel II (K.R. Market)
The producers share and marketing margins in channel II namely the
K.R. Market were also computed and the results are presented in Table
5.16. The table reveals that the share of the producer in the selling
price in channel II (48%) was interestingly higher than that (46%) in
channel I. Wholesalers and retailers share in the selling price was
lower in channel II compared to channel I.
87
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CHAPTER VI
INDIAS FLORICULTURE EXPORTS
This chapter attempts to examine the trends in Indias floriculture
exports during the last fifteen years of the policy thrust given to the
sector. Since this sector was picked up by the planners and policy
makers for avowed purpose of exploiting its export potential, a more
detailed review of the export performance of the sector is deemed
useful to facilitate drawing further policy guidelines for future state
action in the matter.
6.1 Trends in Indias Floriculture Exports
At the beginning of the nineties (1991-92), India exported hardly Rs.
14.8 crore worth of floriculture products. As a result of the
Table 6.1: Trends in Indias Flower exports
Export s
Year Quant i t y
(met ri c t ons)
Value
(Rs.Crore)
1991-92 NA 14.8
1992-93 NA 14.9
1993-94 NA 18.84
1994-95 NA 30.83
1995-96 NA 60.14
1996-97 NA 63.39
1997-98 NA 81.2
1998-99 NA 96.6
1999-00 NA 105.15
2000-01 NA 123.12
2001-02 NA 115.39
2002-03 NA 165.86
2003-04 30659.53 249.55
2004-05 27769.06 221.11
2005-06 35186.00 299.41
2006-07 42016.60 649.83
ACGR -- 25.25
89
promotional policies and programs introduced by the government, as
part of the new economic policy, the floriculture exports went up
briskly to reach Rs. 649.83 crore in the year 2006-07. This meant an
annual compound growth rate (ACGR) of as high as 25.25 percent
(Table 6.1).By any means this is no mean achievement, considering
the fact that India is a novice in the international cut flower trade.
The government has set a target to achieve Rs 1,000 crore cut flower
exports by 2010.
6.2 Direction of Indias Flower Exports
An analysis of the direction of Indias floriculture exports reveals that
the USA, Japan, Netherlands, the UK and Germany are the major
destinations for our floriculture products. However, a perusal of the
direction of exports over the years points to the changes in the
direction towards countries like Japan in view of the higher air cargo
costs to the distant markets (Table 6.2).
Table 6.2: Direction of Indias cut Flower Exports
(Qty in MT, Value in Rs. lakhs)
2004-2005 2005-2006 2006-2007
Destination
Country
Quantity Value Quantity Value Quantity Value
Japan 1585 3385 5641 8323 32554
U.S.A. 7897 5169 13176 7588 9652 7499
Nether-Lands 2526 2894 2233 2741 4334 4472
U.K. 3379 2657 3792 3085 4298 3600
Germany 2437 2200 2986 2433 3849 3097
Ethiopia 0.7 0.24 55 323 361 1127
Other
Countries 9790 7605 9559 8130 11200 12634
Source: APEDA
90
Table 6.3: Major Destinations of Indias Flower
Exports over the years
YEAR DESTINATION
1992-1993 U.S.A., Netherlands, U.K., Germany, Russia
1993-1994 U.S.A., U.K., Germany, Netherlands, Russia
1997-1998 U.S.A., Netherlands, Germany, Japan, U.K.
2001-2002 U.S.A., Netherlands, U.K, Italy, France, Japan,
2002-2003 U.S.A., Netherlands, Japan, Germany, U.K.
2003-2004 U.S.A., Netherlands, U.K., Japan, Germany
2004-2005 U.S.A., Netherlands, UK, Germany, Japan
Fig. 6.1: Direction of Indias Flower Exports (Quantity, 2006-07)
JAPAN
20%
U.S.A.
23%
NETHERLANDS
10%
U.K.
10%
GERMANY
9%
ETHIOPIA
1%
OTHER COUNTRIES
27%
91
Fig. 6.2: Direction of Indias Flower Exports (Value, 2006-07
JAPAN
49%
U.S.A.
12%
NETHERLAND
S
7%
U.K.
6%
GERMANY
5%
ETHIOPIA
2%
OTHER
COUNTRIES
19%
GERMANY
5%
6.3 Export Performance of Karnataka State
Since Karnataka is the leading cut-flower grower and exporter in the
country, it is pertinent to look at the export performance of the state.
The available data (Table 6.3) indicates that the value of the floriculture
exports from the state went up from Rs. 40 crore in the year 2000-01
to Rs. 50 crore in 2006-07. The latest rough estimates put the states
floriculture exports at Rs. 70 crore for the year 2007-08. According
to APEDAs data, Karnatakas percentage share in the Indian
floriculture exports during 2004-05 was 60 while that of rest of India
was just 40. The Bangalore region accounted for as much as 80
percent of Karnatakas floriculture exports in the same year. Almost
the entire portion of this consignment consisted of roses.
92
Table 6.4 Export Performance of Karnataka State
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Commodity
Value in
Rs.Crs
Value in
Rs.Crs
Value in
Rs.Crs
Value in
Rs.Crs
Value in
Rs.Crs
Value in
Rs.Crs
Value in
Rs.Crs
Coffee Products 957.53 881.42 730.65 757.57 705.65 1103.94 1476.65
Silk Products 772.39 672.24 746.09 967.99 898.80 1050.68 1273.94
Cashew &
Cashew Kernels
187.98 163.54 279.83 265.72 518.35 521.81 552.78
Agricultural &
Processed Food
Products
237.91 349.51 366.99 361.25 362.41 384.11 395.61
Spices 73.74 69.12 91.65 99.58 109.54 169.98 219.72
Tobacco/Beedi 3.23 2.70 3.72 - - - -
Bangalore Rose
Onion
38.62 48.35 39.38 51.50 52.57 74.26 59.31
Gherkins - 120.00 139.00 140.70 141.30 213.96 313.34
Flowers 40.00 40.00 42.00 44.00 50.00 50.00 50.00
Total Agri Exports 2311.40 2346.88 2439.31 2688.31 2838.62 3568.74 4341.35
Total Exports 16027.46 20145.58 29897.99 41670.24 62638.56 82279.60 105850.24
% of Agri Exports
in Total Exports
- 11.65 8.15 6.45 4.53 4.33 4.10
Source: Karnataka State Agricultural Produce Processing and Export
Corporation Limited (KAPPEC), Bangalore.
93
6.4 Steps taken by Government to increase Flower Exports:
The Government of India is working hard at getting the European
Community (EC) to reduce the high rate of import duty on Indian
Cut Flowers. According to Commerce Ministry, the current rate
of import duty is fixed at 20% and 15% according to season.
To further promote the Floriculture, the Commerce Ministry is
contemplating duty exemption on the import of materials for
Green House and Tissue Culture Labs considering the huge
capital inputs.
The Government is also working out a Scheme to impart training
to the Farmers and Entrepreneurs.
Setting up of cold storage unit at International Airports.
The Government is working for an air freight subsidy for export
of Cut Flowers and exemption of export oriented units from
requirement of customs bonding.
APEDA is planning to step up Flower exports to West Asia and
make an entry into the market in Australia and New Zealand.
Farmers are allowed to sell even upto 50% of their produce in
domestic market.
The total quarantine procedures have been simplified and made
easy for the expeditious clearance, for the import of seeds and
planting materials.
Import permit for flower Seeds and Tissue Culture materials of
Plant origin has been waived.
Import duty on Floriculture planting material has been reduced
from 55% to 10%.
Import duty of Seed development machineries and specified goods
for Green House has been brought down from 136% to 25%.
Import duty on pre-cooling units and refrigerated transport units
has been reduced to 25%.
Floriculture units can avail of the benefits of duty free imports if
they export 50% of their production.
For export of Tissue Culture Plants, and Cut Flowers by air,
subsidy on air freight has been allowed upto a maximum of 25%
of the international freight rate.
94
The Central Government has plans for setting up model
Floriculture Regional Centres at Chennai, Bangalore,Trivandrum,
Pune, Lucknow, Calcutta, Mohali, Srinagar and Gangtok to
conserve important varieties of masamoth flower crops of the
Region and arrange for large-scale multiplication.
6.5 Problems encountered by Indian Cut flower Exporters
Inspite of measures taken by the government to improve the export
competitiveness of Indian cut flowers, our exporters continue to face
one or the other problem. Flower exporters reported that there was a
20 per cent rejection of Indian roses exported to Europe in 2007
Valentines season due to quality concerns. Some exporters also said
that they were informed about the rejection of flowers after three
months, which should ideally be within 15 days. The market
facilitation centre (MFC) in Holland, set up by Agricultural and
Processed Food Products Export Development Authority (APEDA), to
scale up flower exports has failed to locate more buyers and get the
right prices, traders have alleged.
All the flowers were routed through a company - IGX - at lesser price
than what other countries receive in Holland market. Indian roses are
sold at an average of 25 euro cent per stem, which is one-fourth of
what exporters of Africa received in this years Valentines season, an
exporter said requesting not to be named. Most of the flower exporters
prefer MFC to independently doing the business as there is an
assurance of payment, the exporter said.
Over 95% of Indian cut flower exports comprise of different varieties
of roses. The potential is enormous which can be exploited
scientifically with proper management of resources and technology.
Efforts by some successful growers have demonstrated the feasibility
of entering this trade on a very large scale.
6.6 Measures required for raising Floriculture Exports
If India has to achieve the ambitious export target of Rs1000 crore
by 2010, key issues need to be addressed: economies of scale,
product range, incorporation of latest varieties and quality control
and certification and creation of effective cold chain management.
Bottlenecks like inadequate infrastructure, inappropriate plant
material and good production technology and non-availability of
95
basic inputs would have to be removed and promotion activities
of floriculture product exports would have to be taken up.
For boosting its floriculture exports, India should go in for
potential export items like cut flowers, dry flowers, seeds potted
plants and micro-propagated plantlets.
Efforts like setting up the export promotion council, establishing
appropriate marketing and distribution channels, abolishing
import duty on inputs and reducing existing airfreight tariff
structures are needed to promote floriculture exports particularly
to countries like the Netherlands, Germany, France, Italy and
Japan.
6.7 Quality Requirements for Export-oriented Floriculture
6.7.1 Harvesting of flowers
For getting good quality, flowers should attain the right stage for
harvest. Harvesting needs to be done in the evening or early morning
with the long stem. The lower end of cut stems are immediately placed
in clean plastic buckets containing a clean solution of 500 ppm citric
acid or in chrysal-RVB and then they are moved to cold room where
they will be stored overnight at 8
0
C temperature to make them rigid/
stiffer for easy handling. The next day flowers will be moved to the
grading room, where they are graded and packed. At times when large
quantities are required and are not available in-house, then they are
sourced externally from the other producers, especially the small-scale
ones, to supply the required volume.
6.7.2 Grading and Packing
Flowers need to be graded into different classes according to their
quality /length of stem. Grading is done either on a mechanical grader
or by hand grading tables. Packing process comprises three steps:
bunching, wrapping and packing. The heads of the flowers are evened
up and their stems are tied together with a rubber band into bunches
of 10s, 20s, 30s, or 50s depending on the requirements of ultimate
market. They are cut so that all the stems are of uniform length. The
bunches are placed in a preservative solution and may be shifted to
cold store if they are to be shifted to the market. They are brought
back to the packing hall and then flowers are wrapped. Different types
of paperboard boxes are used for packing. Depending upon the
96
market, the box is packed with either one colour of a particular grade,
or mixed colours but of grade only. All these are specialised activities
and require training to perform. Accordingly, labourers are trained to
carry out these activities with deftness and speed. Cleaning and
packing including water plugging off the flowers are the two activities
that consume a lot of time.
6.7.3 Cold Room
Immediately after harvest, flowers should be graded, packed, and pre-
cooled before keeping in the cold store or transportation by refrigerated
vehicle. Pre-cooling reduces the heat produced by respiration, which
prevents moisture from condensing on flowers and reduces the
amount of ethylene inside the package. As such, it is very important
for longevity of cut-flowers. After pre-cooling, flowers should be kept
under continuous refrigeration during the distribution for maximum
benefit. Pre-cooling is of little use if low temperature is not maintained
during subsequent periods. The recommended temperature for storage
is around 2
0
C.
6.7.4 Transportation
Transportation from the farm to the airport should be in a refrigerated
van. Temperature within the box should be around 2 - 4
0
C. In case
of a delay in flight, flowers should be put in cold storage at the airport.
Some airlines have arrangements for maintaining temperature of the
flower boxes within the safe limits.
6.7.5 Sanitary and Phyto-Sanitory norms
The export cargo is subject to sanitary and phyto-sanitory norms
requiring customs clearance, quarantine inspection and certification
about the residues of plant protection chemicals. For exports to Japan,
fumigation has to be done by a designated government agency.
Exports to Australia require dipping in a solution of water with
approved chemicals only. For exports to Singapore, no pre-shipment
fumigation is necessary. Then the flowers catch the flight for required
destination. Flowers go on the planes as perishables where the
required temperature and relative humidity specifications are to be
maintained. There have been several instances in the recent past in
which the export consignments of Indian flowers have come in for
severe scrutiny thus adversely affecting Indias cut flower exports.
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CHAPTER VII
GOVERNMENTS POLICIES AND PROGRAMS
FOR PROMOTION OF FLORICULTURE IN KARNATAKA
This chapter gives a brief account of the major policies and programs
initiated for the promotion of floriculture in India in general and in
Karnataka in particular. With the declaration of floriculture as a
priority sub-sector within agriculture in the early nineties, the
Government of India as also the various state governments have
introduced from time to time several policies and programs for the
promotion of flower production and exports. For this purpose the
Central Government has set up specialized agencies such as
Agricultural and Processed Food Products Export Development
Authority (APEDA), National Horticultural Board, etc, to provide
various forms of assistance including the development of infrastructure
facilities.
A National Horticulture Mission has been launched as a Centrally
Sponsored Scheme to promote holistic growth of the horticulture
sector through area-based regionally differentiated strategies. The
scheme is fully funded by the Government and different components
proposed for implementation financially supported on the scales laid
down.
The government of India has introduced a scheme for promoting
commercial floriculture in various states in the country. Under this
scheme, the Government of Karnataka received allocations for
floriculture development right from the Eighth Five Year Plan onwards.
From 1993-94 to 1999-2000, the allocations to floriculture in the state
amounted to Rs. 231.91 lakh for area expansion and establishment
of a Model Floriculture Centre. The entire amount came from the
centre till 2001 and thereafter the centre and the state shared the
amount in the ratio of 90 per cent and 10 per cent. Against the total
allocation of Rs. 231.91 lakh from 1993-94 to 1999-00, only Rs.159.22
lakh accounting for 68.66 per cent of the allocations have been spent.
It is observed that in the case of physical achievements, about
Rs.3,040 lakh hectares of land have been covered under the area
expansion program as against the target of 3,662 lakh hectares which
accounted for 83 .01 per cent of the target.
98
The year-wise expenditure and physical achievement indicates that
the targets were not realized even in a single year except in the year
1993-94, that too mostly in respect of expenditure. If we look at the
budgetary allocations to floriculture, it is found inadequate and
insignificant. The amount allocated to this sector right from 1997-98
to 2002-2003 was Rs. 392.78 lakh accounting for just 11.63 per cent
of the total horticultural outlay. Although this allocation was
inadequate, its proportion from year to year has been increasing. It
was just 0.43 per cent in 1997-98 which increased to 8.02 per cent
in 2001-2002. Out of the funds released by the centre, the State has
established a model floriculture centre and it is functioning fairly well
(Thippaiah, 2005).
7.1 National Bank for Agriculture and Rural Development(NABARD)
NABARD is playing a vital role since its inception in 1982 in providing
credit support to agriculture including production and marketing of
horticultural crops. Since the 1990s it is focusing more on horticulture
in general and floriculture, in particular. The disbursements for
plantation and horticulture in India increased from Rs.10,493 lakh
in 1992-93 to Rs. 24,603 lakh in 2000-01. It provides refinance up
to Rs. 2 lakh with 14 per cent interest to the 100 per cent export-
oriented flower units. During the same period disbursements for
floriculture increased from Rs. 93.52 lakh to Rs. 1,555 lakh accounting
for 0.86 per cent and 6.32 per cent of the total disbursement to
plantations and horticulture.
The share of floriculture in the NABARDs total disbursements to
horticulture, increased from 3.96 per cent and 11.59 per cent
respectively in 1992-93 and 2000-2001. This shows the growing
importance of floriculture. A major share of these funds has been given
to floriculture in Karnataka where a large number of the units of the
country are concentrated.
7.2 Agricultural and Processed Food Products Export
Development Authority (APEDA)
APEDA was established in 1986 to enhance the countrys foreign
exchange earnings through increase in agricultural exports and to
provide better incomes to the farmers. In order to fulfill this task, it
has drawn up several schemes for assistance to the exporters and
their associations, farmers and cooperative etc. A few of these schemes
have been extended to floriculture sector too. The specific schemes
99
for the sector are: (a) Scheme for Feasibility Studies, Surveys,
Consultancy and Database Upgradation, (b) Scheme for Infrastructure
Development, and (c) Scheme for Export Promotion and Market
Development.
7.3 Scheme for Infrastructure Development
Under this scheme, financial assistance is provided to the floricultural
units for the purchase of refrigerated trucks for transport of cut-flowers
from farm or cold storage to the airports. The scale of assistance is
25 per cent of the cost subject to a ceiling of Rs. 2.50 lakh per
beneficiary. In addition to this, there is also a provision for assistance
for setting up post-harvest handling facilities such as air conditioned
packing and grading house, cold storage at the floriculture farm. The
scale of assistance for this activity is restricted to 50 per cent of the
capital cost subject to a limit of Rs. 5 lakh per beneficiary.
7.4 Scheme for Export Promotion and Market Development
Financial assistance is available under this scheme for the supply of
flower product samples for the purpose of test marketing, product
information and market promotion. The assistance under the scheme
is limited to Rs.50,000 per beneficiary covering the cost of samples
or freight or both. They have to be decided on case-to-case basis.
Assistance is also available under the scheme for publicity and
promotion in preparation of the product literature and publicity
material for the distribution among importers and consumers for
export publicity. The scale of assistance is 40 per cent of the cost,
subject to a ceiling of Rs. 2 lakh per beneficiary. This assistance is
made available to those whose projects, have been approved earlier,
and the costs will be reimbursed after completion of the work.
7.5 National Horticulture Board (NHB)
NHB was established by the Central Government in April 1984 with
its headquarters at Gurgaon, Haryana in order to prevent post-harvest
losses of horticultural crops and promote development of horticultural
crops. The NHB has introduced a scheme not only to encourage
private investment in the sector but also to reduce post-harvest losses
of flower produce and promote its exports. Under this scheme,
financial assistance is extended up to 40 per cent of the loan for the
project subject to a limit of Rs.1 crore at the rate of 4 per cent service
charges per annum. Till 1996-97, it had extended a financial
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assistance of Rs. 5,306.33 lakh for 69 floricultural units in different
states. Karnataka had received about Rs.816.60 lakh for 9 units up
to 1996-97. The latest information shows that up to 1998-99,
Karnataka received a cumulative assistance of Rs. 1,747.60 lakh for
24 units.
However, the repayment of these loans was very poor. The extent of
overdues in the state has been about 70 per cent of the demand. On
account of mounting overdues, the scheme was modified and now,
the floricultural units are being given 20 per cent of the project cost
with a maximum limit of Rs. 25 lakh in the country and Rs. 30 lakh
in North eastern/ tribal/ hilly areas.
7.6 Indian Institute of Horticultural Research (IIHR), Bangalore
IIHR is an organ of the Indian Council of Agricultural Research, and
has been spearheading research and development of wide-ranging
flowers. The scientists of the ornamental crops division of the
organization have been successful in evolving varieties, hybrids and
cultivars of various flowers from time to time. Since 1972, 6
Bougainvillea, 4 China Aster, 11 Chrysanthemum, 14 Gladiolus, 25
Hibiscus, 3 Roses and 2 Tuberose varieties have been developed. These
varieties are not only high yielding, but also have highly improved
quality attributes, disease resistance and are suitable for different
agro-climatic Zones. However, the IIHR is yet to introduce
internationally popular varieties of cut flowers, to save the huge
amounts of royalties now being shelled down by the Indian hi-tech
floriculture firms to the multinational floriculture companies.
7.7 Central Governments Initiatives for Floriculture Development
Considering the favourable agro-climatic conditions to floriculture and
its immense potentialities in earning high profits, creating more
employment and earning more foreign exchange from its exports, the
Government of India has started offering many subsidy schemes for
ensuring institutional infrastructure to the farmers and other form
of support to the farmers who have ventured into this field. Many
programmers have also been introduced to tap the potential of the
sector and promoting this promising industry. In the VIII plan, an
amount of Rs. 17 crore for the setting of 11 model floricultural centres
and another Rs. 40 crore in the Ninth Plan were allocated under the
centrally sponsored scheme for commercial floriculture.
101
Eleven Model Floricultural centres (MFCs) in public sector have been
opened in Srinagar in Jammu and Kashmir, Bangalore in Karnataka,
Trivandrum in Kerala, Pune in Maharashtra, Mohali in Punjab,
Gangtok in Sikkim, Ooty in Tamil Nadu, Lucknow in Uttar Pradesh
and Calcutta in West Bengal, AP and Himachal Pradesh. However,
many of these are not operational. In the 9th Plan also, it was
proposed to set up another 5 MFCs in addition to strengthening the
existing ones with an outlay of Rs.40 crore. Recently, the Government
of India sanctioned 45 Agriculture Export Zones (AEZ) in 19 states
which are acting as the rural motors of export economy and are
expected to be the vehicles of growth. Out of these, 5 are exclusively
sanctioned for floriculture with Rs.188.09 crore. One of these zones
has been sanctioned for Karnataka.
With the introduction of new economic policies in 1991, Indian florists
began to export the modern flowers in large scale to other countries,
particularly to the Netherlands, where the auctions take place. Over
a period of time, the exporters experienced a whole lot of problems
in the auction centre resulting in fewer profits. In order to overcome
these problems, APEDA has opened a Market Facilitation Centre in
Amsterdam to provide market infrastructure, reducing handling costs
and avoiding middlemen and helping the exporters in smooth
marketing of their produce.
Apart from these, the Government of India has initiated the following
actions:
(i) Import duty on plant and materials has been reduced from 55
per cent to 10 per cent to reduce the cost of the project after the
new economic policy.
(ii) Import duty on pre-cooling units and refrigerated transport units
has been reduced by 25 per cent. Floricultural units can avail of
the benefits of duty-free imports if they export 50 per cent of their
production.
(iii) For export of Tissue culture plants and cut-flowers by air, subsidy
on airfreight has been allowed up to a maximum of 25 per cent
of the international freight rate.
(iv) Farmers are allowed to sell even up to 50 per cent of their produce
in domestic market.
102
(v) Plans have been initiated for setting up of floriculture market
centres in Bangalore, Mumbai and NOIDA.
(vi) Efforts have been made for the setting up of cold storage and cargo
handli ng facil ities at Mumbai, New Del hi, Bangalore,
Thiruvananthapuram, Chennai and Hyderabad airports.
(vii) The institutions started for the promotion of exports and
Horticultural exports such as APEDA, NHB. NAFED have been
strengthened over a period of time.
7.8 State Governments Programs for Floriculture Development
Many State Governments have also started special programmers for
the development of this industry. In Karnataka, Karnataka State
Industrial Investment Development Corporation Ltd. has accorded
industrial status to floriculture. Karnataka Agro-Industries
Corporation has started floriculture auction centre, IFAB, on the lines
of Aalsmeer Auction Centre at Amsterdam.
Perhaps the most important legislative measure taken by the state
government to promote hi-tech floriculture in the state was the
amendment of the Land Ceiling Act, on the recommendation of the
1995 Agricultural Policy. The State Government has effected an
amendment to the existing Karnataka Land Reforms Act, 1966, and
under the Section-108 of this amended Act, the entrepreneurs
(companies) can purchase land up to 20 units (108 acres), for the
purpose of production of flowers for export. Several entrepreneurs have
already availed the benefit of this provision and this has helped for
the growth of floriculture industry in Karnataka. This amendment
came as a big boon to the corporate firms for setting up modern
floricultural units in the state.
7.9 Schemes under implementation
During the year 2005-06, the State Department of Horticulture
implemented a Central Sector Macro Mode Scheme namely,
Commercial Floriculture. The total financial allocation for this
scheme is Rs.219.2 lakh, of which Rs.176 lakh are provided under
Zilla Panchayat sector and Rs. 43.2 lakh under the State sector.
103
Under this scheme, the following components are included.
a). Subsidy to the growers of traditional and hi-tech flowers.
b). Subsidy for the construction of green houses and shade houses/
pandals.
c). Training to the flower growers.
d). Conducting seminars/symposiums on flowers.
e). Conducting educational tours/trips for farmers.
f). Maintenance of model floriculture centers and production of
flowers at the hill stations maintained by the State Department
of Horticulture.
The Department has already established 5 Model Floriculture Centers
(MFCs) at Nagarur Horticulture Farm, Bangalore Rural District,
Kannamangala Horticulture Farm, Bangalore Urban District,
Indiranagar Horticulture Farm, at Bangalore, Pampavana, Munirabad,
Koppal District, and Navanagar Horticulture Farm at Bagalkot. At
these Model Floriculture Centers, the mother plants (germplasm) of
various ornamental plants and commercial flowers have been planted,
maintained and their multiplication is being taken up on large scale.
Necessary infrastructural facilities have been created in these Model
Floriculture Centers.
The demonstration plots have also been laid out for the benefit of
farmers. The model cultivation of hi-tech flowers in a smaller area is
also being done. The planting materials propagated in these Model
Floriculture Centers are being distributed to the beneficiaries under
the Macro Mode Scheme on Commercial Floriculture. The farmers can
avail training in these Model Floriculture Centers on various essential
aspects of cultivation and post harvest operations. With effect from
2006-07, the maintenance of these Model Floriculture Centers is being
taken up under NHM scheme.
Under the new Seed Policy of Government of India-1988, any
interested flower growers/nurserymen can import the planting
materials (seeds, live plants, T.C. plants, etc.) easily. The Department
of Horticulture registers such importers and allots a registration
number. After this, the importers can get the import licenses and
import the planting materials. This has helped a great lot in the
introduction of many new flower crops for adoption to the commercial
cultivation in Karnataka.
104
Under the National Horticulture Mission, the following floriculture
promotional activities have been included.
a) Subsidy to the growers of cut flowers, bulbous flowers and loose
flowers.
b) Establishment of floriculture nurseries in public sector.
c) Subsidy to the small private floriculture nurseries.
d) Subsidy for creation of water harvesting structures (Farm ponds).
e) Subsidy to green houses, shade houses and mulching materials.
f) Assistance for building pack houses.
g) Setting up of market intelligence centers.
For implementing the above programs under the NHM during the year
2005-06, a financial allocation of Rs.454 lakh was made.
The State Horticulture Department has recently provided assistance
of Rs. 18 lakh to establish model floriculture nurseries in the two
universities of agricultural sciences, Krishi Vigyan Kendras and State
departmental farms under the National Horticulture Mission. The
private entrepreneurs could also avail themselves of assistance of Rs.
9 lakh to set up model nurseries.
In order to tap the potential in the floriculture sector, the Union
Government has recently sanctioned six flower auction centres to the
State under the Rashtriya Krishi Vikas Yojana (RKVY).
The floriculture enterprise will continue to be a challenge until the
chain of activities right from post-harvest to buyers is properly
handled. Keeping this challenge in view, the state government has
decided to establish auction centres on the lines of Agricultural
Produce Marketing Committees (APMC) in six districts. The Centre
has accepted the proposals made by the State Government and agreed
to release Rs. 8 crore for establishment of auction centres. The centres
would come up at Sirsi in Uttara Kannada; Madikeri in Kodagu;
Chikkanayakanahalli in Tumkur; apart from Udupi, Belgaum and
Bagalkot. These districts are known for large areas under floriculture,
and several people in the floriculture business have set up hi-tech
units. For this purpose the Centre has released Rs. 6 crore in the
current financial year and Rs. 2 crore in the next fiscal year.
105
CHAPTER VIII
SUMMING UP
This chapter is not precisely a summary of the study, but a
retrospection meant to throw light on the general problems and
prospects of hi-tech floriculture in Karnataka, based on the data
analyzed and discussed in the foregoing chapters. Since, after all the
situation prevailing in Karnataka is not much different from that
prevailing elsewhere, the observations made here should as well apply
to the entire country as such. To conclude the study, this chapter
also attempts a SWOT analysis of the hi-tech floriculture industry.
The last two sections include the steps to strengthen the hi-tech
floriculture industry and the way forward.
8.1 A Retrospection
In the year 1988 the Government of India setup an expert group to
look into the various aspects of the development of the floriculture
industry. By June 1988 the expert group submitted its report stating
that there was a great potential for the development of floriculture in
India. The report envisaged the participation of large business houses
to bring in the use of appropriate technology and introduce new and
profitable flower varieties into the country.
Accordingly, starting with the 8
th
five year plan, floriculture industry
was recognized as one of the extreme focus sectors and the
government introduced a variety of concessions, subsidies and
schemes to give a big boost to hi-tech floriculture. To take advantage
of these benefits, as many as 170 hi-tech units came up in many parts
of the country, with state of Karnataka in the vanguard. Apparently
there are some comparative advantages for the sector, but there are
many handicaps as well. Although the world trade in floriculture is
close to 5 Billion Dollars, Indias share is negligible. Around 70% of
the worlds trade is accounted for by Columbia, Holland, Israel, Italy,
Thailand, Kenya and some other African countries.
The floriculture industry in Karnataka, like elsewhere in India, has
registered considerable growth during the last one-and-a half decades,
and has emerged as a sunrise industry with apparently vast potential
to grow further. It has contributed to the States economy in several
ways including generating employment opportunities and additional
incomes in rural areas and fetching valuable foreign exchange.
106
Floriculture provided a seemingly viable diversification option for the
otherwise shrinking agricultural sector. Over 10,000 tons of cut and
loose flowers are produced in Karnataka on an area of around 21,000
hectares and Bangalore Rural district alone contributes over 7,000
tons. Right from the early nineties, the central and state governments
have introduced a number of policies and programs to promote the
export-oriented hi-tech floriculture, and enormous government outlays
have been made during the last three five year plans in expectation
that the sector would make a remarkable export breakthrough.
Inspite of these efforts, Indias share in the worlds cut flower exports
has hardly crossed even half of one percent. India continues to be a
negligible player in the worlds cut flower market, not withstanding
the massive area it has under flower cultivation. The reasons for the
lack of major strides in the export driven hi-tech floriculture are many.
A few of the general bottlenecks associated with the development of
floriculture industry in India are as under :
1. At present, the cultivation of flowers in greenhouses is still
largely dependent on foreign technology, as we are yet to
adopt the indigenous technology successfully. The initial
investment is, therefore, very high. Most of the green house
equipment required continues to be imported, thereby leading
to high establishment cost.
2. Since flowers are highly perishable, when grown in a
protected environment, they need to be transported in similar
conditions to maintain their quality and freshness. For this,
refrigerated vans for road transport and adequate
warehousing space at the airport till they are loaded to the
aircraft, are required. There is dearth of warehousing space
at the airports.
3. Cut flowers need to be stored at a temperature of 2-4
o
C even
during transit by air cargo. Limited availability of cargo space
in planes for the bulky products like flowers is a drawback.
The certification procedures related to phyto-sanitary and
custom formalities are tedious. There is no direct air service
from Bangalore to the major flower markets like Amsterdam,
Copenhagen, etc. This results in inordinate delay in sending
consignments to these markets, and leads to considerable
pre-auction wastage.
107
4. High air freight in India and inadequate cargo space for
flowers are the twin problems to be sorted out with the airline
firms including Air India. Since international airlines operate
at high costs, the onus in subsidizing the air cargo charges
obviously falls on the government. Incidentally, the peak
season for flowers, i.e. December to February, coincides with
that of huge garment exports from Bangalore.
5. The growers do not get sufficient information about export
market trends, demands, prices, consumer preferences, etc.
Many growers, especially the small-scale ones, have reported
in the course of the field survey that the market intelligence
and information system for floriculture exports is either
lacking or ineffective.
6. The procurement cost of flowers by exporters is very high due
to low productivity and high transport charges. The
production units are small and they lie scattered, with no
proper linkages between producers, processors and exporters.
The rough estimate is that in Karnataka the total area brought
under green house floriculture by 100 odd firms is about 250
hectares. In the course of field visits it was found that hardly
a third of the green house area designated for floriculture is
utilized for flower cultivation. This under-utilised capacity
leads to diseconomies of scale and consequent high unit
costs.
7. Hi-tech floriculture is a capital-intensive industry with long
gestation period. For example, the cost of grading centre is
Rs.6.5 lakh; a good refrigerated van may cost Rs.6 lakh and
pre-cooling unit around Rs.6 lakh. The per-hectare capital
cost would be Rs.1.80 crore to Rs.2.50 crore. Cheap and
convenient finance is not easily available.
8. Lack of international quality plant materials and exotic
varieties is one of the major drawbacks of the export-oriented
floriculture. The international varieties entail prohibitive
patent royalties, while pirating attracts huge penalties. The
only solution for this problem is to come up with the improved
indigenous varieties that can match the international
specifications. This requires huge Research and Development
expenditure which the private sector can hardly afford. The
108
Indian Institute of Horticulture (IIHR) and State Agricultural
Universities (SAUs) are starved of funds required to evolve
exotic varieties.
9. Domestic marketing of cut flowers is not free from problems
either. Estimates show that the domestic demand for cut
flowers is growing at a pace of more than15 percent and the
pace is expected to pick up further, since the income elasticity
of demand for cut flowers is high and the urban incomes are
growing fast. There is considerable scope for tapping the Rs.
600-crore domestic market in the floriculture sector. At
present, only 2.5 per cent of the flower sales are handled by
the organised retail sector. But to cash in on this burgeoning
domestic market, there is urgent need for organized cut flower
markets in maj or cities and towns with adequate
infrastructure.
In Bangalore city, for instance, of the two markets currently dealing
in cut flowers, the IFAB handles a miniscule proportion of the total
cut flower trade in the city, inspite of having world class infrastructure
facilities. On the contrary, the facilities at K.R. Market, perhaps the
biggest unorganized cut flower market in India, are just awful. There
is scope for establishing at least four organized cut flower markets in
different parts of the city. Like it is done in respect of other
infrastructure projects, the government can promote these new cut
flower markets on the public-private partnership (PPP) basis. The PPP
arrangement in infrastructure projects is becoming the order of the
day as the cooperative and government market models had failed.
Speaking of retail trade in cut flowers, there are nearly 1,000 florist
stalls in Bangalore and most of them are operating on the open
pavements with no basic infrastructure facility. Further, many cut
flower growing areas do not consume all their production within those
areas. For instance, Kodagu is not a big consumer of anthurium
although it produces it in plenty. Mysore could be the nearest market
for anthurium growers; but Mysore city lacks an organized cut flower
market.
8.2 SWOT Analysis for Hi-tech Floriculture
SWOT analysis for the Indian hi-tech floriculture in Karnataka is
attempted below. It must be mentioned here that this analysis is not
designed to determine whether an enterprise or industry is good or
109
bad. It is just a tool used to map the different forces acting on the
industry at a given moment.
8.2.1 Strengths:
Varied Agro Climate conditions: For the production of flowers
climatic conditions are very important. The temperature profile,
humidity and abundant sunlight play a very vital role in
deciding the quality and quantity of the flowers. The three
major hi-tech floriculture regions in Karnataka namely
Bangalore, Belgaum and Madikeri do have salubrious climate
for the purpose.
Many flower-growing areas of the west have extreme winters
with sub-zero temperatures and hardly any sunlight. This
results in the seasonality of the flowers and the growth of the
flowers throughout the year is not possible. For instance,
Europe, the major consumer of cut flowers, confronts adverse
cold conditions during the season of peak demand for flowers
during December-March. On the contrary, India has varied
climate and soil conditions, which are conducive to the
production of cut flowers. In south India winters are not severe
and there is abundant sunlight. Therefore production of flowers
throughout the year is possible. This is the major strength and
competitive advantage for India in general and Karnataka state
in particular.
Geographical Location: Flowers are a perishable commodity
and 40% of the cost is incurred on the post-harvest operations.
Therefore it is imperative that the production centres are
located nearer to the main markets of Europe, Japan and USA.
The details given here under show that India has a strategic
location advantage compared to the other major producing centers.
Air Distances between Producing Centres and Amsterdam
Country Place Distance
South Africa Johannesburg 5608 miles
Kenya Nairobi 4148 miles
Brazil Rio de Janeiro 5943 miles
Costa Rica San Jose 5763 miles
India Bombay/ Delhi 4262/ 3954 miles
110
Further, India has advantage of the least flying duration (6
hours) with respect to Japanese market. Other far eastern
markets as also the gulf countries are within 3 to 5 hours flying
time. This is again a major advantage as it means significant
savings in terms of freight and transport.
Availability of labour at low costs: Floriculture industry is
basically a labour-intensive industry since the plants require
24 hours-a-day care and attention and the protected green
houses system needs people to manage the production process
at different stages. There is no dearth of unskilled labour in
India especially in the rural areas.
Well established infrastructural facilities: For the success
of floriculture industry, availability of infrastructural facilities
such as steel, aluminum, irrigation system, fertilizers,
pesticides, testing labs, air-conditioning and refrigeration
equipment are very important. Unlike countries like Zimbabwe
and Costa Rica, India has all the above infrastructure facilities
and inputs which can help effect a major saving in the project
cost.
8.2.2 Weaknesses
Poor airfreight capacity: Currently there is a shortage of air
freight capacity especially during the peak period leading to a
backlog at the airports. This could be a serious disadvantage
for a perishable product like cut flowers. The Government of
Karnataka has addressed the problem by upgrading the airport
and now the flights to Europe have increased. In the near
future, the possibility of floriculturists chartering flights to
deliver their cargo expeditiously does not seem too remote.
Exorbitant Air freight cost: Air freight rates for transporting
flowers from India are very high. The concessional freight rate
of Rs.42/- per Kg. is applicable to plants and seeds, but not
to cut flowers and therefore the general rate of Rs. 75/- per
Kg, is applicable to flowers. APEDAs announcement of Rs.10/
- per Kg., freight subsidy showed some silver line in the
otherwise cloudy air cargo atmosphere. But almost every
sample hi-tech floriculture unit surveyed in the present study
has serious complaints to narrate against APEDAs procedures
in this regard. The solution lies in creating volumes and
111
frequency so that better rates can be negotiated with the cargo
carriers. This seems quite possible as quite a few floriculture
units are coming up in India and the volumes and frequencies
are bound to increase resulting in lower freight rates.
Airport infrastructure: Air cargo handling capacity and cold
storage facilities for perishables are almost non-existent at the
international airports. The government is already taking steps
to create cold storage facilities at the airports located near the
floriculture zones. Wall-in-cold storage facilities are already
operational at Mumbai, Delhi and Bangalore.
EEC customs duty on imports from India: Currently all
exports from India to the EEC are subject to custom duty at
15% during summer and 10.5% in winter. Countries such as
Israel, Columbia, Kenya and Zimbabwe do not pay this levy.
Thus the EEC discriminates against India. The commercial
attachs of the Indian diplomatic missions abroad need to seek
parity or obtain concessions through bilateral and multilateral
talks.
8.2.3 Opportunities
There is a vast sustainable opportunity in floriculture because of the
following factors:
A growing world market for flowers in which demand exceeds
the supply, and the world demand is estimated to grow
anywhere between 15 and 25 percent per annum. Demand
rising at this pace cannot be completely met by the present
major players in the years to come. India can and must grab
on such an opportunity. With production in traditionally strong
markets (the Netherlands and the US) have reached threshold
levels, developing countries like Columbia, Israel, South Africa
and Kenya have emerged as the new production centres. Most
flowers are grown under protected conditions in covered
structures like green houses and poly/glass houses in
European and other countries. Due to intense cold, high energy
cost, production in these countries is limited during winter
months. Thus they have to depend largely on imports to meet
their domestic demand as most of the festivals fall during this
period when the demand of flowers is at its peak. Against this
background India which currently has less than 1 percent
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share of the world market, has a strong chance of entering the
market and creating a strong position for itself.
High cost of production in the developed countries is providing
an opportunity for labour-abundant countries like India. The
labour cost in India is only a fraction of the cost in the
Netherlands and elsewhere in Europe. For instance, the cost
of skilled, qualified supervisory manpower in India is only one-
tenth of that in the Netherlands.
Most major flower producing countries at present are
industrialised countries and are small in area. The land
available for cultivation is shri nking in favour of
industrialization and infrastructure development. The soaring
real estate prices induce farmers to sell their land. The
acquisition cost of land is therefore very high and this makes
it unattractive to set up floriculture units in these countries.
With ample agricultural land at its disposal and driven by the
need to diversify its agriculture into more remunerative
commercial crops, India has a great opportunity bank upon
floriculture.
Stringent environmental laws and restrictions in the developed
countries will lead to further escalation of production cost and
the floriculture units in these countries have to pay heavily for
pollution abatement. For example, the Dutch government has
prescribed certain strict norms for reducing environmental
hazards in the production of cut flowers and ornamental plants.
They are: i) More than 50% of the chemical substances
currently used in floriculture is forbidden, ii) With effect from
the year 2000, carbon emissions must be reduced by 4%, iii)
Nitrate and phosphate emission must be reduced, iv) 30% of
the irrigation water has to be re-circulated.
Obviously, once all the above steps are introduced, the
production of cut flowers in the Netherlands at the present
prices will no longer be profitable or viable. This condition is
more or less applicable to all the EEC countries. Therefore these
countries will have to purchase more flowers from the
developing countries to run the auction houses and distribution
networks all over the world. This presents an excellent
opportunity for India to concentrate on floriculture as a thrust
area.
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In India environment norms are yet to be extensively and
strictly followed, thus still permitting the hi-tech floriculture
units a leeway to escape from environment mandates. This
enables Indian floriculture units to continue to produce at a
comparative cost advantage. Moreover, the magnitude of
environmental pollution created by the Indian hi-tech
floriculture producers is much less than that by the European
producers.
Contract farming can be a step to overcome the diseconomies
of small scale production and also to ensure quality as well as
to provide the much needed technical know-how in floriculture.
For instance, to reap the benefits of the economies of scale and
also to boost exports, one of the Bangalore-based floriculture
company - Sunblossom Florals Ltd has planned to increase
its volumes by going in for contract farming with small scale
farmers. Sunblossom Florals is a 100% floriculture EOU near
Bangalore for cut roses. Developing vertical integration and
joint ventures is an alternative strategy that could be adopted
by Indian growers, as they need to increase the volume of their
sales to reap the benefits of economies of scale. Although
Indian rose production is comparable and competitive in terms
of costs and returns, increasing export volume will help to
achieve higher profitability.
Many cut flower producers who have tried direct marketing/
exporting have opined that contract floriculture facilitates
production units, especially the small scale ones, to concentrate
exclusively on production while either a large scale unit or an
exclusive marketing/exporting agency can take up export
task. Producers have also reported that as exports are not
channeled through reputed agencies, they have often been
either rejected or offered prices much lower than the ruling
international prices. The quality aspect of Indian cut-flower
exports needs urgent attention. The state certifying agency only
certifies phyto-sanitary norms but fails to certify the quality of
flowers.
One of the ways to overcome the problem of unstable export
market for the Indian flower growers is to diversify production
and not to depend on cut rose production alone. The Indian
growers need to explore other high-value product alternatives,
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such as propagating materials of speciality crops for exporting
purposes. This could be achieved through licensing and
contractual agreements with foreign collaborators. Having
appropriate intellectual property regimes in place will be
necessary to help Indian growers in such ventures. Since India
does not have appropriate intellectual property protection
mechanisms for plant materials, foreign breeders are often
reluctant to sell new varieties to Indian growers for fear of illegal
proliferation through asexual propagation.
8.2.4 Threats
Although there is vast scope for the floriculture industry, steps
are necessary to develop the industry to meet the quality
requirement of the international flower auction houses. It
requires adoption of modern technology and protected
environment, which are very costly. The same opportunity is
also available for other developing countries such as Zambia,
Morocco, Malaysia, Sri Lanka etc. Both land and labour are
cheaper particularly in the African countries than in India.
India must establish its presence in the market before other
countries and capitalize on this opportunity. Some African
countries like Ethiopia and Kenya have gone rather aggressive
in pushing through hi-tech floriculture at all costs, and they
appear to have met with a great success as well. So it is
necessary that India watch out these imminent threats and
take timely measures to thwart the consequences of such
threats.
The days of seemingly cheap labour are not likely to continue
in future. Several floriculture units operating in urban fringe
areas, especially in the Bangalore region, have already started
feeling the heat of frequent labour shortage and high attrition
rate in view of the wide range of more lucrative urban fringe
jobs available now. Even in Madikeri and Belgaum regions the
cut flower growers have reported increasing labour problems
particularly in wake of the extensive implementation of the
National Rural Employment Guarantee Scheme.
Plant Breeder Rights:
India has to recognize plant breeder rights otherwise it may
be cut off from the latest technology. Since India is a signatory
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to GATT, plant breeder rights will have to be recognized and
abided by the Indian government. Pirating of foreign plant
patents and violation of breeder rights has become increasingly
punitive at the international level.
High Cost of Finance:
Floriculture is essentially a capital-intensive industry. With
inflation persisting, financial institutions have hardened the
rates of interest. As it is, the cost of capital is much higher in
India than in the developed countries. So, high interest cost is
a disadvantage which threatens to eat into the profits of
floriculture units.
8.3 Steps to strengthen Hi-tech Floriculture
The hi-tech floriculture industry in Karnataka, as also elsewhere,
appears to have overcome the initial hick-ups and is about to take-
off. However, its growth calls for concerted efforts to seize the
opportunities and tackle the constraints mentioned in the foregoing
sections. The critical aspects which need attention are discussed
below.
Economies of scale
Small size of the hi-tech flower unit in India is also considered a
constraint leading to absence in economies of scale. The average size
of Indian farms is approximately 4 hectares as compared to the size
of 40 hectares in some African countries. Increase in size also enables
units to integrate and move up in the value chain. Vertical integration
between producers and buyers for instance, has helped East African
units to effectively control the distribution and marketing process with
direct interaction with the buyers.
At present hi-tech floriculture units lie scattered in different districts
and many are located far away from the airport. Scatteredness tends
to raise certain critical items of costs to the individual floriculture
units, such as cooling chambers, fertigation, grading platforms,
containerized vehicles, etc. Collective ownership/use of such facilities
by a group of production units would help cut costs. But such
arrangement requires a cluster approach so that a number of
floriculture units can be located in a cluster with cost advantages in
investments, common irrigation, cooling chambers, fertigation, grading
platforms, containerized vehicles, etc.
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Tanflora Model
In this context Tanflora Infrastructure Park Ltd, a joint venture
floriculture project of TIDCO (Tamilnadu Industrial Development
Corporation) and M. Naseem Ahmed & Associates, a private-sector
floriculture firm, deserves a special mention. Located at a village
namely Amudhagondapalli near Hosur, Tamil Nadu - about 45 kms
from Bangalore International Air Port, with centralized infrastructure,
state-of-the-art post-harvest logistics and marketing facilities provided
by Tanflora, flower cultivation here is undertaken by 25 independent
growers having 2 hectares of production area each. Total annual
production capacity is 70 million roses from 50 hectares (present
production level is 30 million per annum).
The salient features of the project are: Tanflora made a lay-out on
250 acres of land, developed 50 hectares of production facilities,
divided the project into 25 units of 2 hectares each (total 50 hectares)
and retained 4 hectares for self production, thus creating the total
production facilities to 54 hectares. Besides, Tanflora provides its 25
growers: (i) central packing house - 80000 sq.ft. of fully insulated
building to handle and process fresh cut roses, (ii) 19000 sq.ft of CFC
free state-of-the art cold room, (iii) Tanflora-maintained uninterrupted
cold chain with the help of dock shelters and packaging in cold rooms,
(iv) infrastructure facilities like roads, drains, water, technical support,
one stop shop, laboratory etc., (v) rainwater harvesting facilities with
the installed capacity to harvest over 100 million litres, (vi) common
fertigation and drip irrigation facilities leading to great economies in
the use of water and other inputs, and (vii) on-farm professional
expertise and monitoring in the production process round the year.
Tanflora is reportedly Asias largest cut-rose project having wide
varieties of quality roses and its capital requirements are met by State
Bank of India (Agri Development Branch), Hosur, Krishnagiri District,
Tamil Nadu, in addition to the incentives extended by the APEDA and
the National Horticultural Board. Packing, logistics and marketing
are undertaken by Tanflora under its brand name. Revenue is shared
between Tanflora and the Growers in 25:75 ratio on FOB basis. It is
Indias first project in Agri Export Zone scheme for cut flowers. It
endeavors to develop varietal portfolio as per the market trend in
Japan and Europe and facilitates export of roses round the clock. It
has even evolved and patented it own special rose variety for
international markets namely, Taj Mahal Rose, and the same was
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released on May 8, 2008 in Sydney, Australia. Maharashtra
Government has set up a similar floriculture park at Ambe village near
Talegaon, in Pune district. This park has given a major boost to the
floriculture exports from that state.
Although Karnataka was in fact the first state to enter hi-tech
floriculture industry in a big way in the early 1990s, it has faltered
midway through, while the state of Tamil Nadu has of late stolen the
limelight, thanks to concerted efforts of its government in creating an
atmosphere very conducive for successful establishment of cut-flower
industry in Hosur taluk. A similar park was contemplated for
Karnataka and was to come up in Doddaballapur taluk of Bangalore
rural district where most of the present hi-tech floriculture units are
located. But several extraneous factors seem to have shelved the
proposal. Similar such projects need to be set up in Karnataka,
keeping the cluster approach in mind. The cluster approach would
ensure facilities such as water, power, security and post-harvest
facilities to the growers at lower costs. Such an approach would also
enable the floriculture units to adopt branding, grading, packaging,
transporting, quality control, supply assurance, market development,
market promotion, and research and development.
Diversification of production
Selection of product mix and variety is one of the crucial factors for
the success of a floriculture project. Over 90% of the projects presently
operating in India have chosen production of rose. Diversification of
production is also essential, considering the changing pattern of
demand. New varieties fetch higher prices, which could be upto seven
times higher than those of regular varieties. Elite new varieties
suitable for export need to be developed so as to slowly replace the
patented varieties. An interface with R&D organizations, farmers and
the industry is necessary to promote large scale production of
pharmaceutical and nutraceutical flowers on contract farming
movement.
Besides cut flowers and dry flowers there is a need to promote other
sectors like florist and floral decorations, pot plant production and
rentals, bedding plant production, corporate landscaping, turf
industry, essential oil extraction, aroma therapy, pot pourri, natural
pigments and dyes and flower seed production. Experts maintain that
the Indian exporters had not realized the potential of many lily and
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orchid varieties thriving in the lap of the ecologically diverse and
biologically rich Western Ghats and Nilgiri hills.
Supply of Quality Inputs
Cut flower projects aimed for exports should follow the latest trend
in demand and produce the popularly preferred varieties of plants
being imported by various markets. Accordingly, floriculture projects
should import the planting material from abroad. Varieties could also
be developed through tissue culture laboratories in India.
Establishment of model nurseries for supplying genuine planting
materials, and distribution of environment friendly production and
packaging materials are thus important parameters to achieve
internationally acceptable quality.
Research and Development
There are a number of State Agricultural Universities (SAUs) in India
including two in Karnataka, (apart from the Indian Institute of
Horticultural Research (IIHR) located right in the outskirts of
Bangalore city), which are involved in research and development of
exotic cut flower varieties. However, in these endeavors there is general
lack of orientation of R and D towards export purposes. Entrepreneurs
of this industry have reported that there is an urgent need for R and
D center, which would not only give inputs / solutions to the problems
faced by the industry, but would also develop exotic varieties suited
to the local environmental conditions.
The overseas market for cut flowers is highly competitive in which
importers are continually seeking new and special products. They tend
not to change easily from one rose supplier to another but co-operation
with a company supplying a new product is considered attractive. The
market is clearly searching for novelty products. New varieties also
offer the prospect of making higher profits than those from old
varieties. Demand for foliage varieties is still increasing in Europe,
particularly for small leafed foliage for use in bouquets. Furthermore,
European importers do not have any hesitation about using tropical
foliage. The opportunities are considerable for tropical countries like
India in supplying products during periods when these products are
scarce in the western markets. In order to compete, Indian exporters
must be able to supply products of consistent quality and on a regular
119
basis. With a strong preference for direct marketing and private R &
D for developing proprietary products, the industry will have to develop
a unique selling strategy to increase the competitiveness. Joint
initiatives may be taken for creation of appropriate infrastructure for
production, post-harvest handling and transportation of floriculture
products.
Development of Indigenous Greenhouse Technology
During the last few years, some of the early starters in this industry
have indigenised their technology requirements, like poly houses and
parent plant material, and developed local cultivation and post-harvest
techniques. However, when a new entrepreneur wants to start, the
technology is required to be imported either from The Netherlands or
Israel. The project cost becomes very high with imported green houses
/ technologies. Hence, indigenous technology for the construction of
green houses/glass/poly/ shade houses are required to be developed
to suit the Indian climate conditions.
Quality Control and Labeling
Only high-quality flowers are traded internationally. Indian exporters
must ensure that their produce is free from disease and that it is
carefully treated once harvested. Exporters should also plan and
monitor effective quality control measures right from production to
post harvesting, storage, and transportation. Post-harvest
management, including cold treatment, proper packaging and
application of preservatives, need to be strengthened. Attention is also
required for achieving the flower labeling and certification
requirements. There is need for an independent quality certification
agency for cut flowers destined for exports.
Human Resource Development
To cater to the increasing global trade, there is a need for trained
personnel at various levels. Private initiatives to train individuals in
the floriculture sector could be beneficial to the industry in the long
run. Training centres for diploma courses, on the pattern of ITI, for
training the personnel in floriculture may be set up to address this
challenge. APEDA, in association with the IIHR and SAUs may set up
training centres to provide orientation to Indian growers and training
120
to the employees regarding production and post-harvest handling of
cut flowers so that they conform to international standards.
Marketing Strategies
The consumption channel for floriculture business is gradually shifting
from speciality shops and florist shops to the super market chains,
mainly in Europe. Supermarket chains are mass consumers and seek
importing of large quantities of flowers, with latest varieties and a well
defined supply chain network. Indian exporters should adopt
customized marketing strategies while targeting various markets.
Selling through agents has now been taken over by direct marketing
in many regions. Direct marketing gives better remuneration,
eliminates middlemen and provides flexibility to position in niche
markets, thereby avoiding the risk of excessive concentration on a
single market. The use of information technology, and particularly,
Internet for trading should also be promoted. Co-operative florist
organizations may be established at regional level, to pursue business
interests of member organizations and to act as supply chain.
Ecological ramifications of floriculture industry
Questions have been raised by environmentalists and food security
specialists on the appropriateness of investing vast sums of money
in hi-tech floriculture enterprises that import plant materials,
pesticides and greenhouse equipment. Internationally-known green
campaigner and food security specialist Vandana Shiva says if the
resources used for floriculture, particularly the hi-tech one, were
instead allocated to food production, India could produce four times
more food than it could buy on global markets from the earnings of
its flower sales. In terms of national food security, export-oriented
agriculture destroys more than it creates, she says. Shiva also
contends that export-oriented agriculture is creating an agricultural
apartheid, with Third World countries being asked to stop growing
food staples and instead grow luxury products for the rich North.
However, the floriculture industry seems to be fairly ecologically aware.
Wastage of water and excessive use of fertilizers are avoided through
a controlled drip irrigation system. Pesticides are applied only if
necessary. Vermi-composting, farmyard manure, water recharge
channels and natural composting of rose-leafs are some features. We
are one of the most efficient users of water, chemicals and soils. If
121
we dont see to our soils, we will be out of business in two years,
said Mr. Reddy, the Managing Director of Meghna Floritech, which is
one of the reputed floriculture units in Bangalore. Karuturis
Ramkrishna, who has water-recharging check dams in his farm in
Bangalore and who also has Sher rose-farms adjacent to Lake
Naivasha in Ethiopia agrees that the industry is responsible, and
needs to be held accountable, for leaching nitrates into the lake, but
not for any of Naivashas other ills, which he blames on official
corruption. He says Shers farms store rainwater and, like his
Bangalore farm, has check dams for water recharge.
A Separate Board for Floriculture?
The floriculture industry has been clamoring for an exclusive National
Floriculture Board, as it feels that the range of commodities covered
by the NHB and APEDA are far too wide and the problems to be
tackled are too complex to do justice to floriculture. An apex body for
floriculture, it is argued, would be able to better understand the
production and export problems of the industry and hence would help
make it more competitive domestically as well as in the international
markets. This proposal needs consideration by the Union
Government. As far as Karnataka is concerned, since the State Dept.
of Horticulture happens to look after many horticultural products, it
is feasible to extend the functions and operations of Karnataka State
Agricultural Produce Processing and Export Corporation Limited
(KAPPEC) to cover floriculture processing and exports. KAPPEC has
already set up expertise and gained experience in the processing and
export of other horticultural products including fruits, vegetables and
certain plantation products.
8.4 The Way Forward
Floricultural exports from India appear to have been hit during 2007-
08 on account of a number of adverse factors including the
appreciation in the value of the Rupee, fast rising airfreight cost and
withdrawal of the air freight subsidy by the Government. Statistics
by APEDA reveal that the export of floricultural products from India
during 2007-08 came down by over 40% in comparison to 2006-07.
This downturn is due not only to the hardening of the rupee against
the dollar, but the inability of the flower exporters to innovate, diversify
and keep abreast of the dynamics of the global floricultural market.
The current global recession which has greatly affected consumer
122
spending in developed countries has also contributed to the decline
in Indias floriculture exports.
However, the saving grace for the cut flower producers is that the loss
on the export front during 2007-08 has been made more than good
by the growing demand, in fact a doubling of sale of the flowers in
the domestic market. None the less, there is concern over the closure
of a few export-oriented floricultural units around Bangalore and Pune,
the two major flower growing centres in the country. At the same time,
the Union government has approved over 150 export-oriented
floricultural units. But only time will tell how many of these will
actually take off and do well in the global floricultural market.
A lions share of the flowers, meant for export, is primarily
airlifted between December and February. However, APEDA feels that
expansion of the state-of-the-art floricultural production in green
houses along with diversification and innovation could enable large
off-season production leading to larger surplus for export. Clearly,
there is a growing realization on the part of the floricultural exporters
that they need to come out with new products if they want to stay
competitive in the global market.
Currently, the States of Karnataka, Maharashtra and Andhra Pradesh
account for much of the cut-flowers exported. But then as exporter
of cut flowers points out, we are facing stiff competition from African
countries which have now started exporting to the Middle East as
well. Air freight to Europe, which happened to be the hub of global
horticulture floriculture trade, from African destinations such as
Ethiopia and Kenya, which are our major competitors, is US $ 1.60
a kg as against US $ 3 from India.
Indian floricultural products account for only around 0.18% of the
global trade in flowers and serious efforts are being made to capture
at least one per cent of the total market. However, there is a question
mark whether India will be in a position to realize this goal.
Interestingly, the export target for 2010 has been set at Rs.10,000-
million. But this too appears a difficult task to achieve. The ground
reality is that at present India lags behind many third world countries
including Israel, Kenya and Colombia in the export of floricultural
products. In the given scenario and with a view to boosting the export
of floricultural products, APEDA has submitted a proposal to the
Union government for introducing a scheme for the procurement of
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planting materials for increasing productivity. Re-plantation of certain
flowers is not being carried out as importing the plantation material
is far too expensive. As it is, difficulties in getting the right type of
planting materials are a major challenge facing the floricultural export
venture.
Meanwhile, in a significant development, many Indian floricultural
firms including M/s Karuturi Floritech from Bangalore are setting up
high-tech floricultural enterprise in Ethiopia. In fact, now one notices
a number of Indian-owned export-oriented floricultural units outside
the capital city of Addis Ababa. The Ethiopian Government now offers
large tracts of land to floricultural companies on a very attractive lease
terms, with a view to give a boost to floricultural farming. Moreover,
the Indian-owned floricultural units which have set up facilities vouch
that they dont face any bureaucratic hassles and corruption in their
business. Not many are aware that Ethiopia has a climate conducive
for the growth of high quality cut flowers. Indian growers expect to
reap the low freight cost advantage by operating from Ethiopia, till
the Union government puts its house in order.
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132
ANNEXURE 1
HORTICULTURE DATA BASE - PROBLEMS AND
IMPERATIVES
Note: This is an abridged part of the observations and
recommendations contained in Chapter XIII of the Report
submitted to the Planning Commission by the Working Group on
Horticulture, Plantation Cropsand Organic Farming for XI Five
Year Plan (2007-12). (For the f ull report please ref er:
http://planningcommission.nic.in/aboutus/ committee/
wrkgrp11/wg11_aghorti.pdf)
For a realistic and effective planning and policy making in any sector
of the economy, the quality of relevant data is extremely important.
It is rather ironical that despite unambiguous importance of
horticulture data recognized and articulated repeatedly in different
forums, there has been no systematic policy or conscious effort to
address the underlying issues to improve either its reliability or
quality. It is, thus, extremely important to consider various issues and
problems relating to horticulture data through appropriate measures
during the ongoing XI Plan so as to establish reliable horticulture
database that includes data on floriculture also.
National Horticulture Board (NHB) is the main source of data on fruits,
vegetables potato, spices, flowers and plantation crops as collected
from State Horticulture departments. It compiles, checks, does
necessary revision and publishes these data on area, production,
productivity, prices etc. Similar data is also collected under a scheme
called Crop Estimation Survey for Fruits and Vegetables, which is in
operation in some States and financed by the Ministry of Agriculture,
for selected crops. Directorate of Economics and Statistics (DES) in
the Ministry of Agriculture also collects such data for some crops.
Further, some data such as area covered under different crops
(operational holdings) are also available through Agriculture Census
at a 5-year interval.
Reliability of data is one of the most crucial requirements for effective
policy formulation. Significant variations are observed in the data
provided by different agencies. Even temporal inconsistencies exist
in the data obtained from the same source due to periodic revision of
data. In the absence of appropriate validation mechanism, it is often
133
difficult to validate or reconcile variations or the inconsistencies in
the data or determine their reliability. While correct data are crucial
and are required to set right policy direction, wrong data can result
in policy drift causing misplacement of priorities.
Constraints in Data Collection
There are several constraints that restrict development of proper
horticulture data system.
The administrative constraints include lack of suitable authority
in the absence of mandatory provision, to collect data that requires
willingness and meaningful participation and coordination of
others, systematic erosion of role, relevance and prestige of data
collection personnel leading to their de-moralization and
demotivation.
Financial constraints include absence of dedicated or exclusive
funding, in most cases, for activities related to data development
and management unlike specific allocations made for different
activities or components such as rejuvenation, post-harvest
management, protected culti vati on etc. under National
Horticultural Mission.
This means the present financial support or funding mechanism
for development of horticulture data base is merely a kind of
secondary support, at best, which is bound to cause the data
development activities to suffer the most whenever funds become
scarce or whenever the economy measures have to be enforced.
Technical constraints i nclude l ack of well-established
methodology, improper or ineffective application of methods and
procedures, inadequate training and HRD development and
dwindling willingness to innovate.
Infrastructural constraints include prolonged vacancies,
constraints on acquisition of necessary equipment required for
modernization of office.
The important remedial measures suggested are:
i) Necessary capacity and capabilities for data system for which
necessary policy intervention will be most crucial including
134
providing sufficient financial support for acquisition of necessary
equipment and creating basic infrastructure,
ii) Review the present policy and approach to ensure that the above
objectives are fulfilled,
iii) Suitable directives may have to be issued to all concerned with
the horticulture development as data partners have equal
responsibility to cooperate and provide basic data,
iv) Adequate financial support is critical to allow effective
accomplishment of the task,
v) The most immediate priority is to reverse the process of neglect
and degeneration of the data sector that has happened so far.
The setting up of extensive network of proper horticulture data
establishments called Horticulture Information Systems (HIS) units
in all the districts and at State level, preferably under the purview of
State Horticulture Departments therefore gains importance. In
addition, there should be an apex unit (A joint secretary level post
has already been provided in the Division of Horticulture of the
Ministry of Agriculture) at the Centre in the Ministry of Agriculture
to coordinate, organize, consolidate, analyze data obtained from the
States and disseminate the same that could be treated as official data
for the benefit of various users and for reference purposes.
The proposed network of horticulture data establishments should have
collective role and responsibility to plan, collect, compile and
coordinate horticulture data required for various policy planning
purposes on area, production, productivity, import, export of different
horticultural commodities. Besides, it should also incorporate other
ancillary data such as commodity prices, storage capacities, stocks,
market arrivals, employment generation, cost of cultivation and
economy of farming, marketing facilities, institutional support
including training or technical support available for the farmers etc.,
to develop more robust horticulture data system.
Horticulture census needs to identify and designate nodal agencies
in all the States to coordinate data collection, compilation and
scrutiny, at district level data, for further consolidation to derive State
level data. It is imperative to initially conduct Horticulture Census
with the objective of generating reliable base-line horticulture data,
135
particularly at Panchayat level, that is currently non-existent. There
is also an urgent need to collect authentic district level data classified
by different components.
The major objectives of HIS would be:
i) To fill up serious gaps in horticulture data that continue to haunt
the policy planners in making correct assessment about the
current status of horticulture and its growth in the country.
ii) To generate reliable horticulture data to attempt effective forward
production planning and determining prospective investment
policies to exploit huge horticulture potential, besides regulating
marketing, transportation and distribution of horticulture
commodities and products in the emerging dynamic scenario.
iii) For developing more robust and responsive data system to meet
the emerging data needs, periodic workshops and conferences
would be conducted to accomplish the task.
iv) To study international data collection methodologies and
practices, especially in some developed countries and/or equally
placed countries in the context of planning, development and
management of our horticulture data system, which will help in
building greater compatibility and comparability with the
international data.
For sponsoring comprehensive study on the data collection system
by the expert agencies, adequate funds have to be earmarked. The
tentative financial requirements for setting up a network of
Horticulture Information System (HIS) at districts, States and Centre
are estimated at Rs 300 crore during XI Plan. For horticulture census
Rs. 250 crore is envisaged. For studying methodology by expert
agencies Rs. 30 crore has been earmarked.
136
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139
ANNEXURE 5 : Country-wise Percent Share of Floricultural Trade in
the World During 2002-03
SL. NO. COUNTRY PERCENT SHARE
1 Holland 60
2 Comombia 09
3 Italy 06
4 Isarael 04
5 Kenya 01
6 Others 20
Total 100
Source: Indian Horticulture Database - 2004
ANNEXURE 6 : Floricultural Exports from India
from 1993-94 TO 2004-05 Value in Crores
Year Floricultural Products
1993-94 18.83
1994-95 30.83
1995-96 60.14
1996-97 63.39
1997-98 81.20
1998-99 96.60
1999-00 105.15
2000-01 123.12
2001-02 115.39
2002-03 156.86
2003-04 249.55
2004-05 221.10
2005-06 299.41
2006-07 649. 84
Source: APEDA, Bangalore
140
ANNEXURE 7: Flower Destinations of India
Source: APEDA
YEAR DESTINATION
1992-1993 U.S.A., Netherlands, U.K., Germany, Russia
2000-2001 Netherlands, U.S.A., Japan, U.K., Germany
2001-2002 U.S.A., Netherlands, Japan, U.K, Italy, France
2002-2003 U.S.A., Netherlands, Japan, Germany, U.K.
2003-2004 U.S.A., Netherlands, U.K., Japan, Germany
2004-2005 U.S.A., Netherlands, UK, Germany, Japan
141
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142
ANNEXURE 9 : Karnatakas percent Share in Indian Floricultural
Exports during 2004 - 05
State
Percent Share in
Exports
Karnataka 60 (80)
Other States 40
Total 100
Source: APEDA
Note : The figure in the parenthesis indicates percent share of Bangalore to
Karnatakas total Floricultural Exports
143
ANNEXURE 10 : Picture of cut flowers under study
ANTHURIUM
144
CARNATION
145
GERBERA
146
ROSE
147
ANNEXURE 11: District Map of Karnataka State
148

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