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Marketing Channels of Rose and Improvisation of Present Status of Cut Flowers
(FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT)
FOR THE AWARD OF Master of Management Studies
UNIVERSITY OF MUMBAI
UNDER THE GUIDANCE OF Mr. Vishwas Jadhav
SUBMITTED BY Mr. Pravin N. Kokate
DEPARTMENT OF MANAGEMENT STUDIES
SHAH & ANCHOR KUTCHHI ENGINEERING COLLEGE CHEMBUR, MUMBAI ± 400 088
This is to certify that the project work done on ³Marketing Channels of Rose and Improvisation of present status of cut flowers´ is a bonafide work carried out by Mr. Pravin N. Kokate under supervision and guidance of Mr. Vishwas Jadhav. The project report is submitted towards the partial fulfillment of the full time Master of Management Studies programme for the academic year 2009-2010. This work has not been submitted anywhere else for any other degree/diploma. The original work was carried out from 30th December 2009 to 16th January 2010 at National Institute of Post Harvest Technology¶s Horticulture Training Centre, Talegaon-Dabhade, Pune.
Director, NIPHT¶s Horticulture Training Centre,
With great zeal, I present my individual Report in FYMMS on ³Marketing channels of Rose and Improvisation of present status of cut flowers´. If words are considered to be signs of gratitude then let these words convey the very same My sincere gratitude to NIPHT¶s Horticulture Training Centre for providing me with an opportunity to work with HTC team and giving necessary directions on doing this project to the best of my abilities. I convey my deepest gratitude to Dr. Suresh Dhumal, Mr. Vishwas Jadhav, Mr. Vinay Shinde and Mr. Sachin Shirolkar, who have been very co-operative and helpful in providing vital information for my project. This Project Work has imparted me a practical exposure to the Floriculture Market and thus I came to know the process of marketing of the cut flowers. I avail this opportunity to convey my sincere thanks to Dr. M B.SHAH, The Director of Shah and Anchor Kutchhi Engineering College (Department of Management Studies), Chembur, Mumbai. I am thankful to Mr. Vishwas Jadhav my project guide for recommending me the necessary information for the report. His instilling support and enthusiasm, expert guidance and insight have let my project a unique touch. I also express my sincere gratitude to Mrs. Prof Mahalakshmi Iyer, Project Co-ordinator of SAKEC, DOMS, Chembur, Mumbai for providing me an opportunity to undergo this project. At last I am also thankful to my parents, my seniors from College of Agriculture, Dapoli Mr. Varun Inamdar and Mr. Vishal Raskar and my friends who had given me their constructive advice, educative suggestions, encouragement and co-operation to prepare this report.
Floriculture Industry is one of the fastest growing sector amongst all the Agricultural sectors. The revenue from export of the Floriculture produce is increasing gradually. In this project we will see the marketing channels of rose and improvisation of the present status of the cut flowers. This will include general information about the present status of cut flowers. An overview of the Floriculture Industry, facts and figures about the domestic and export market of the cut flowers. Further we will see the Marketing channels of rose, the existing marketing lines both domestic and international. After understanding the concept of the marketing channel the next step is to improve this channel. Various strategies have been suggested for the improvisation of the present status of the Cut flowers. At the end a conclusion has been drawn taking into consideration the facts and figures in the present scenario in the Floriculture Industry.
Sr. No Particulars 1. 2. 3. 4. 5. 6. 7. 8. Introduction Present Status of Marketing in Floriculture Industry Marketing Channel Of Rose Domestic Market for Cut Flowers International Market of Cut Flowers Improvisation of Present Status of cut flowers Conclusion Bibliography
Introduction: Government of India has identified Floriculture as the sunrise industry and accorded it 100% export oriented status. Owing to steady increase in demand of flowers, Floriculture has become one of the important commercial trades in Agriculture. Hence Commercial Floriculture has emerged as a Hi-Tech activity, taking place under controlled climatic conditions inside Greenhouse. Floriculture in India is being viewed as high growth Industry. Commercial Floriculture is becoming important from the export angle. The liberalization of industrial and trade policies paved the way for the development of export oriented production of cut flowers. The new seed policy has already made it feasible to import planting material of international varieties. It has been found that Commercial Floriculture has higher potential per unit area than most of the field crops and therefore a lucrative business. Indian Floriculture Industry has shifting from traditional flowers to cut flowers for export purposes. The liberalized economy has given an impetus to Indian Entrepreneurs for establishing export oriented floriculture units under controlled climatic conditions. Agricultural and Processed Food Products Export Development Authority (APEDA), is responsible for export promotion of Floriculture in India. Maharashtra State Agriculture Marketing Board has setup an International Horticulture Training Centre (ISO 9001:2001 certified) at Talegaon near Pune, for training the farmers about the cultivation practices of cut flowers under controlled climatic conditions in Greenhouse. An Integrated Floriculture Park is setup having tie-up with Maharashtra Industrial Development Corporation (MIDC) near Talegaon having more than 50 hectares of land and more than 40 growers, it is the only such project in all over India. MIDC has given the land for the Floriculture Park on lease for 32 years. The flowers mainly grown in the Floriculture Park are Rose, Carnation and Gerbera. Rose is the major crop taken here. The export quality flowers are produced by majority of the growers. Some of the Greenhouses are even been given on rent by the owners who are not able to utilize the perfect climatic and transport conditions at Talegaon. The cultivation of the cut flowers under controlled climatic conditions is restricted to certain areas of Pune, Sangli and Nashik districts only. Though the prices of flowers are falling from past few years the pricing has not hampered the growth in Floriculture Industry. The area under the cut flower production under controlled climatic conditions is increasing. Farmers having small land holdings are not yet ready to take up the cultivation of cut flowers due to high initial investment and also the pricing is heavily dependent on demand-supply ratio.
Present Status of Marketing in Floriculture Industry
Present Status of Marketing in Floriculture Industry: Marketing of cut flowers is still at the early stage of growth or development. Marketing of Agriculture as well as Horticulture produce has always been an issue of concern in India. Floriculture in India is being viewed as a high growth Industry. Commercial Floriculture has gained importance over the years. According to a report of the National Horticulture Board (NHB), the total area under flower crops in 2007-08 was estimated around 160.7 thousand hectares which is second largest in the world and only next to China though under cut flowers it is only 600 hectares. Production of flowers was estimated to be 870.4 MT of loose flowers and 43417.5 million (numbers) of cut flowers in 2007-08. Fresh and Dried cut flowers dominate Floriculture exports from India. Roses, Marigold, Tuberose, Orchids and Chrysanthemums are the main cut flowers exported from India. India¶s total export of Floriculture produce over the years is shown below; 2006-07 2007-08 2008-09 Floriculture Quantity Value Quantity Value Quantity Value 42545.28 65269.73 36240.71 34014.42 30798.34 36881.41 Note: - Quantity in MT and Value in Lakhs. Source: - DGCIS Annual Report. From the above table it can be clearly seen that there is approximately 8.43% growth in the exports of the Floriculture Produce from 2007-08 to 2008-09 and the Cumulative Average Growth Rate (CAGR) of 24.22 from 2004-2009. Though having a sharp decrease in the exports in 2007-08 there is a marginal growth in 2008-09. There were more than 300 Export Oriented Units (EOU) in India. More than 50% of the Floriculture units are based Contribution in National Exports in South Zone mainly in Karnataka, Andhra Pradesh Agril. Export and Tamil Nadu. Also states Floriculture (14.90%) Export like West Bengal, (0.06%) Maharashtra and Rajasthan have large area under Floriculture. The domestic flower production goes on increasing annually. Total National Export Technical collaborations (85.04%) have been approved for India, in order to increase the total share of India in world trade.
Indian Floriculture Industry is been shifting from traditional flowers to cut flowers for export purpose. The liberalized economy has given an impetus to the Indian Entrepreneurs for establishing export oriented Floriculture units under controlled climatic conditions. In India, Maharashtra, Karnataka, Andhra Pradesh and Haryana have emerged as major Floriculture units in recent times. There are six Agriculture Export Zones set up for floricultural produce in the states of Sikkim, Tamil Nadu, Uttaranchal, Karnataka and Maharashtra. Main export destinations for Indian floricultural products are United States of America (USA), The Netherlands, United Kingdom (UK), Germany and Japan. Under the Foreign Trade Policy for the period from 2009-2014 following steps have been taken to strengthen the Horticulture as well Floriculture Industry in India:y y y The incentive available under Focus Market Scheme (FMS) has been raised from 2.5% to 3%. The incentive available under Focus Product Scheme (FPS) has been raised from 1.25% to 2%. To reduce transaction and handling costs, a Single Window System to facilitate export of perishable Floriculture produce has been introduced. The system will involve creation of multi-functional Nodal agencies which will be accredited by APEDA.
Marketing Channels of Rose
Marketing Channels of Rose: Rose is the main export oriented cut flower of India as well as has a high share in the domestic market. The Marketing Channel of Rose is mainly divided in two types; A. Domestic Market B. Export/ International Market. A. Domestic Market: The cultivation of Rose is majorly in open field conditions. The area under the open field conditions is large as compared to the cultivation under controlled conditions, thus Rose is mainly sold in Local/ Domestic Market. Nearly 90% Rose is sold in Domestic Market including the Roses grown in open field conditions as well as the Roses which don¶t satisfy the export norms grown under the controlled conditions. The price of these Roses is less as compared to the export oriented Roses. The following lines exist in the Domestic Marketing Channel: 1. Type 1: -
a) Producer/ Farmer:Producer or Farmer is a person who grows the Roses. The Roses are generally taken at the rate of 80paise-2rupees per flower. The prices may increase with decrease in supply and decrease with increase in supply. The Roses are transported to the local market by the grower himself or are transported by the commission agent. b) Commission Agent:Commission agent is one who collects the Roses from various growers and sells them to the florists. He takes nearly 10% commission over the total flowers he sells and returns the remaining 90% to the grower. Some of the renowned Commission Agents in Mumbai are Thakur Flowers, Rakshe Flowers, Vivek Flora (all at Dadar), Bacche Flowers (Bhuleshwar). c) Florists: Florists are one who purchase the flowers from commission agent and sells it to the end consumer. The florist generally gets the flowers for 5-6 rupees per flower and sells them for 10 rupees. d) Consumer: Consumer is one who purchases the flowers from the florists. 2. Type 2: -
This type of Marketing Channel is similar to Type 1 but only difference is that the Commission agent himself acts as a Florist to increase his profit margin by taking the flowers for 80paise2rupees/flower and sell them for 8-10 rupees. 3. Type 3: -
This type of the marketing channel is proposed one. In this type the grower can directly send his flowers to the Auction Hall which will be regulated by the Government. Such National Auction Hall is established at Noida, Uttar Pradesh but is yet to open for trading though it has been successfully tested, due the political influence. Similar Auction Hall has been established in Goregaon, Mumbai for growers from Maharashtra but it is also not yet functional. The Karnataka Government has set up an Auction Hall in Bangalore which is still not 100% functional. The main purpose of these Auction Halls is to give proper prices for the growers and thus encourage more and more farmers take up floriculture. B. Export/ International Market: The Roses grown only under the controlled climatic conditions are exported. The Roses have to go through various certifications before export. Only 10% of the Roses are exported out of the total production. Roses are mainly exported to USA, Japan, The Netherlands, UK, Australia, etc. Roses contribute more
than 60% of the total floricultur e produce exported and also similar percentage of export returns. Also area under Rose cultivation is highest amongst all the flowers grown under controlled climatic conditions. The following lines exist in the Export/ International market: 1. Type 1: -
In this type of Marketing Channel the flowers are sent to the International Auction Halls. Roses from India are mainly sent to VBN Auction Hall situated in The Netherlands. This type contributes nearly 90% of the overall export/ international Marketing channel. Wholesalers from all over the world participate in the Auction. The Netherlands is major importer and reseller of
the Roses. Auction takes nearly 27% commissions on the total produce by the grower. 2. Type 2: -
This type of marketing channel contributes nearly 10% of the total export/ international market. This type of marketing channel is gaining momentum and is posing severe competition with the Dutch Auction Halls. The Wholesalers round world purchase the high quality flowers.
Domestic Market of Cut Flowers
Domestic Market of Cut Flowers: The Domestic Market of Cut flowers comprises of mainly the four Metro Politian cities viz. Delhi, Mumbai, Kolkata, Chennai and also other major cities like Pune, Bangalore, Hyderabad, Nagpur and Indore. Delhi is the biggest domestic market for cut flowers. Though having great potential and favorable climatic and geographical conditions the growth of this market is sluggish. The area under cultivation is high but the quality is not up to the mark. The domestic market is not regulated and has many loopholes they are as follows: y y y y y No proper pricing of the cut flowers, High commission from the middle man, Pricing heavily dependent on Demand-Supply ratio, No proper information regarding pricing of the cut flowers to the growers by the commission agent, Cut flowers are mainly grown in Manually Operated Greenhouses so the quality of the flowers does not remain unique.
The auction halls which are setup for the betterment of the Floriculture Industry are not functional though crore of rupees are invested on them. For the namesake the politicians have not yet allowed to open the Auction Hall situated at Noida, Uttar Pradesh, though it has been successfully tested and has state-of-the-art facilities. Though having these many drawbacks Indian Floriculture Industry is growing. The consumption of the cut flowers is growing at the rate of 30%. Farmers have shifted from traditional cultivation to cultivation under controlled conditions. But there is long path ahead and many revolutionary steps to be taken to have proper utilization of this Industry. Consumer Behavior has also changed first consumer use to buy the cut flowers for religious purposes only but now due to influence of the western culture, flowers are used largely in grand weddings, on valentine day, birthdays, Mother¶s Day. Greeting with flowers to the guest is becoming etiquette in the corporate world. The positioning of the cut flowers has been proper over the decade. The number of florists is been increasing. India¶s Domestic flower market which is currently valued at over Rs. 1000 crore has potentiality to grow to Rs. 10,000 crore in the next five years, it would provide millions of job particularly to the women. The domestic demand for the cut flowers would increase with the expansion of organized retail and super market chains, coupled with the rising income of the middle class. If the domestic growers miss this opportunity, India may be flooded with imported flowers.
An International Flora Expo is been organized annually since 2005 which depicts the rise of the Indian Floriculture Industry on the World stage. The growth in the Domestic market will give a fillip for the growers to grow export quality flowers and thus increasing the foreign revenue.
International market of Cut Flowers
International Market of Cut flowers: The International market for Indian Floriculture Industry is mainly The Netherlands, Japan, UK, Australia, Gulf Countries, etc. Cut flowers are the most widely traded floriculture product and the consumption is increasing world-wide. India¶s share in the global market is negligible. The cut flower market is dominated by The Netherlands, which has six International Auction Halls. The Netherlands is the largest retailer of the cut flowers. But now the developing countries are posing a serious threat to The Netherlands. The cut flowers from Kenya, Ethiopia, and Ecuador are on a boom, compared to these countries India has to go long a way. The major growers in Kenya and other African countries are the NRI¶s who have set up large farms in these countries due to the less land cost and perfect climatic conditions. Due to the high altitude the quality of flowers from these countries is best in the world. The bud size and the stem length is eye catching. These growers hire supervisors from India not because they are cheap but they are hard working and are involved in all the activities. This has created an job opportunity to the BSc (Horticulture) graduates to have career in the Floriculture industry. In spite of an abundant and varied production base, India¶s export is not encouraging but is catching up. India¶s share in international cut flowers market is negligible at 0.19%. But with several entrepreneurs establishing export-oriented floriculture units under controlled climatic conditions. India is definitely making an impact in the international market mainly centered The Netherlands. Many export agencies have been set up for the export of the cut flowers.
Top 20 Exporters (FLORICULTURE) 1. 2. 3. 4. 5. RAMESH FLOWERS (P) LTD. VAC INTERNATIONAL TRISTARR SHRIVARDHAN BIO-TECH L.J. INTERNATIONAL LTD.
6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.
BANGALORE HORTI TECH SOEX FLORA PVT. LTD. PROFESSIONAL AGROTECH PVT.LTD IRIS BIOTECH PRIVATE LIMITED FLOWERS VALLEY PVT. LTD. P.P.M.THANGAIAH NADAR JAGDISH DRESSES ESSAR AGROTECH LTD. RAVI DUGAR DECCAN FLORABASE LIMITED VISHAL BHALOTIA ARCHANA SARAF INDO BLOOM LTD. VINAYAKA AGRITECH LIMITED JAIRAMDASS KHUSHIRAM
Thus there is huge scope in exploiting the opportunities in the Floriculture Industry due to the wide open flower market, especially cut flowers.
Improvisation of the present status of cut flowers
Improvisation of the present status of cut flowers: Despite being one of the largest producers of flowers in the world, India¶s export in this sector is minimal. Main challenges faced by this sector in exporting are low productivity as compared to global standards, post harvest handling of the flowers, improper management system and distortion in marketing channels. An Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis of Floriculture Industry shows that India has immense potential for export of Floriculture products Some of the strategies for the improvisation on the present status of the cut flower industry are as follows: y y y y y y y y The first and foremost thing is to start the Auction halls as soon as possible and regulate the cut flower market with strict norms on pricing. Adoption of advanced technologies in production system and post-harvest handling of the cut flowers. Strengthening the cold chain system including insulated refrigerated transportation from place of production to the destination of the export. Enhancing grower¶s awareness and involvement in maintaining quality standards and matching with International standards. Research institutions should develop standard quality planting materials and economically viable cold storage facilities with private sector involvement. Creating necessary infrastructure for pre-cooling at greenhouse level and domestic transfers. Innovation in supply chain management. Attracting Foreign Direct Investment (FDI) from Asian as well as European countries for creation of cold chain infrastructure and quality testing in the greenhouse. Improvement in domestic market channels to increase efficiency in the process of market transactions and help maintain quality. Joint efforts by growers, wholesalers, exporters would help improving efficiency in the marketing channels and reduce the cost substantially. Involvement of growers in the export promotion. Strengthening the role of Agri Export Zones (AEZ) in tandem with market requirements especially to give specific thrust on the quality and supply chain requirements of the target markets. Repositioning the cut flower industry in manner to attract more and more consumers.
y y y y
y y y y y y
Changes in excise and import duty structure, reduction in the import duty of the planting material and the equipments. Air Freight should be reduced at the reasonable level, sufficient cargo space should be provided in the airlines. Establishment of model nurseries to supply genuine planting material. Cooperative florist¶s organization should be established at regional level. Training center¶s for diploma course on the pattern of Industrial Training Institute (ITI) for training the personnel in floriculture should be setup. Last but not the least the mindset of the farmers to take up floriculture should be changed. Implementation of these and many such strategies will bring revolution in the Floriculture industry.
Conclusion: Indian Floriculture Market is growing despite of no government regulations in the pricing and exports. Thus if the Floriculture market is regulated it will grow at a faster pace than the present growth rate. The growers in India are hard working but don¶t take risk to invest in Floriculture Industry as the pricing is not regulated. High initial investment and high bank interest rates are the main reason for the reluctance of Indian farmer to take on Floriculture. The Auction halls which are still not functional are the matter of concern. It is necessary to exploit the potential in this industry. If the industry is regulated many more favorable regions for cultivation of flowers will be identified. The big names in the corporate world will also invest in this industry knowing its potential. Many big companies are diversifying in the agriculture sector, thus Floriculture will be there best bet due to huge global market. Marketing of the floriculture produce should be done. Finally government intervention in pricing policy is the key the success of the Indian Floriculture Industry.
Bibliography: Books: y y y Commercial Floriculture. Export of Agriculture goods. Hand book of Horticulture.
Magazines: y y y Floriculture Today FloraCulture International Agri Export Advantage
Newspapers: y y y y Times of India Maharashtra times Agro One Sakaal
Websites: y y y y y y y y y apeda.com nhb.com fao.com mymps.com eximbankagro.in ilo.org floracultureintl.com pathfastpublishing.com vbn.nl
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