Flower exporters feel the heat of global slowdown

Flower exporters feel the heat of global slowdown

Mansi Goyal & Monica Behura NEW DELHI

THE global flower export market, which is just over Rs 300 crore,has come down by 15-20% this year owing to global recession. Withfertiliser costs also doubling, the industry is facing a crunch andforesees a price rise by 10% to pass the burden on to consumers. VSL Agro Tech's manager V Srinivas says: "Cost of production for asingle stem of rose has increased from Rs 1.50 to Rs 1.70. We havestopped exporting to Japan and Europe which contributed to 60% of ourexport market till march 2008." The overall sales of the industry havealso gone down by 25%. Of the total sales, exports contribute 80% involume terms and 60% in terms of value. N Manjunatha Reddy, CEO of Pushpam Florabase, says: "Our profitmargins have been reduced to half owing to higher delivery andproduction cost." However, the Rs 600-crore domestic market is largely unaffectedwith inflation and is poised to cross the Rs 1,000-crore mark in twoyears, say industry observers. This is despite fertiliser costsspiralling by 100-300% but the industry is yet to increase the priceof flowers. The main sources of these fertilisers were imports from Europe andChina. Earlier, the Chinese had provided 35% subsidy on export offertilisers to their fertiliser companies. However, in order tocontrol pollution levels for the Olympics, China has shut down most ofthese companies and imposed a 35% export duty on fertiliser exports.Moreover, the prices of phosphorous and sulphur have gone up in theinternational market and has further led to an increase in fertiliserprices by up to 200%. Besides, the increase in petroleum prices has led to the increasein packaging material, such as polythene PP covers. Even the price ofcorrugated boxes has doubled. All this has affected exports offloriculture industry to markets like Europe, Japan, China and the US. Shrivardhan Biotech's CEO Ramesh Patil says: "Flowers areconsidered to be a luxury item. The demand for flowers has gone downas buyers are not ready to spend much on them due to their perishablenature. It has badly affected our sales during Christmas, Valentine'sDay and Ohigan (Japanese festival). Our flower sales have dipped fromRs 6.5 crore to Rs 5 crore in the current year." Venkateshwar Rao, owner of Iris Biotech, says: "It is not possibleto increase the current prices due to supply and demand dynamics andso we are absorbing inflation, but we will foresee a price increase of10% in the coming months."