Say It with FLOWER...

Floriculture becomes the blooming sector of India

India has an ancient heritage when it comes to floriculture. Floriculture has emerged as an economically viable diversification option in the Indian agribusiness and has captured the interests of many new entrepreneurs into agricultural sector in recent times. With perception on floriculture business potential rapidly changing, the corporates have increasingly forayed into the sector. Indian roses, carnations, orchids, gladioli and anthurium are being well received in Japan, Netherlands, USA, Germany and France. Besides flowers, India also exports seeds, bulbs, dried flowers, ferns, leaves and grass. Floricultural crops like roses, gerberas, carnetions etc. are grown in green houses. The open field crops are chrysanthemum, roses, gaillardia, lily, mary gold, aster, tube rose etc.

The floricultural production has doubled during the last ten years and production of cut flowers and loose flowers have been growing at 15 to 20 per cent every year. The area under floriculture increased from 53,000 ha in the year 1993-94 to 1, 61,000 ha during 2007-08, which is more than 300% increase in the span of 15 years. There is tremendous increase in loose flower as well as in cut flower production. Similarly, the floricultural exports have taken a quantum jump in the last decade from 14.45 crores in 1991-92, it has been increased to Rs. 652.69 crores in 2006-07. The industry is mostly characterized by sale of mostly loose flowers (rose, chrysanthemum, jasmine, marigold, crossandra, tuberose etc.) and cut flowers (rose, carnation, chrysanthemum, gladiolus, gerbera, orchids, anthuriums, liliums, alstroemeria, tulip etc.). India is secomd in loose flowers production after China. About 1,26,000 ha area is under floriculture, producing 6,94,000 MT of loose flowers annually. The production of cut flowers increased over the years to touch a production of 2,762 million flowers. Tamil Nadu is the leading producer of loose flowers closely followed by Karnataka. Nearly 77 per cent of area under floricultural crops is mainly concentrated in seven states comprising of Tamil Nadu, Karnataka, Andhra Pradesh, West Bengal, Maharashtra, Haryana, Uttar Pradesh and Delhi.

Currently, flower trade has attracted the largest demand from an estimated 300 million middle-class flower-loving people with consumption in the cities and major towns at 40 per cent per annum. Flower retail shops have mushroomed all over the place from major metros to market shops and flower boutiques. Further the supermarket/hypermarket retail chains have fueled the growth in the consumption. Cashing in on this trend, the Minister of State for Commerce also feels that floriculture is all about creating new employment opportunities in far flung areas - rather than talking about Dollars, the focus should be on a million jobs! Additionally, supermarket chains overseas like TESCO, Sainsbury, Wal-Mart, Asda, Sears, Carrefour, Metro, K-Mart and the likes are looking for large quantities of flowers, latest varieties and a well-defined supply chain. Therefore, floriculture in India is becoming an attractive commercially viable diversification option. Several companies involved in agri business are set to venture into this sunrise industry.

Importantly, owing to favourable policies of the Indian Government, Corporate Houses are encouraged to set up units with global scale and size, so they can meet the volume, consistency and quality demands of the global buyers. For instance, companies like Reliance, ITC, Tata Tea, Bharti Group/Field Fresh and Thapar Group are planning investments in the flower sector.

Various initiatives that are being proposed are: - Owing to the diverse climates available for producing a range of crops, it was proposed that mapping of the country is important to identify specific zones suited for a particular product. Around these zones, common facilities will be built for handling and technology transfer.

- APEDA, the nodal agency has helped set up six Agri Export Zones for floriculture – export-dedicated enclaves. Here units have come up in clusters of large flower farms, with common infrastructure facilities thrown in – all offering much needed benefits of economy of scale.

- Owing to 100% foreign direct investments, contract farming, joint ventures and foreign investments are being planned which have led to smoothening of the investment, thereby foreign investors are welcome to come here, produce floriculture products, perhaps cheaper than they are used to, and then supply them to third countries – a sort of outsourcing hub.

- Some key Indian airports like New Delhi, Mumbai, Hyderabad, Bangalore, Chennai, Thiruvananthapuram and Cochin now have cold storage and cargo handling facilities. More airports will have these facilities in the future.

- Among other things, flower Auction Centres are also coming up in Bangalore, Mumbai, Noida, near Delhi, and Kolkata. These are ready made market facilities for trading and price discovery for a variety of flowers, both for export and domestic markets

- Additionally, outside the country, APEDA is running a Market Facilitation Centre at Aalsmeer, Holland, to support the export efforts by Indian producers in Europe. The agency is happy with the way the things have gone on there. Similar centers may now be on their way for Japan and Middle East markets as well.

- Thanks to the variety of agro climatic zones within, India today is in a unique position to grow a large number of flowers, including temperate flowers in high altitude states. In India, we can now cultivate a wider variety on a commercial basis – an impressive range — of carnation, gerbera, lilium, orchids, anthurium and many others. Interestingly, we have genetically designed flowers – ones with unique shape, petal size, pleasing colours with longer shelf life and of course pleasant fragrance – a rose, for instance, that will be equally attractive to the humans and the bees.

Hence the growth in floriculture cultivation has been phenomenal in the last decade or so and the area under flower cultivation has doubled from 53,000 hectares (1993-94) to 103,000 hectares (2001-02).

Six Agri Export Zones have been set up in the states of Sikkim, Tamil Nadu, Uttaranchal, Karanataka and Maharashtra. APEDA has also taken number of measures to facilitate floriculture exports. Besides setting up cold storage and cargo handling facilities at the key airports of New Delhi, Mumbai, Hyderabad, Bangalore, Chennai, Trivandrum and Cochin. Proposals are under consideration for setting up of such facilities at Goa, Calicut and Coimbatore Airport.

Roadblocks:

Today the industry faces many issues (apart from the primary infrastructural issues), which have constrained its growth potential. Recognizing the importance of the sector’s contribution to national agricultural economy, the Government of India has introduced many developmental programmes mainly through the schemes of Ministry of Commerce (APEDA) and Ministry of Agriculture (National Horticulture Board, etc.). Most of the state governments have also initiated their own programmes providing technical and financial assistance to the millions of small and large producers. Prominent schemes of APEDA to promote this sector are the Transport Assistance Scheme and other schemes to promote floriculture exports, infrastructure development/upgradation assistance (including special schemes for the North East States), promotion of Agri Export Zones for floriculture, etc. Separately, NHB/Ministry of Agriculture has various schemes to promote this sector including a subsidy scheme for encouraging growth of new floriculture units.

The Indian floriculture industry is worried about the present state of affairs. In addition to the usual domestic infrastructure and marketing-related problems, the price realization this year for Indian flowers touched a new low, hit by some unusual international conditions. Off take is much lower than usual and competition is fierce. The severe winter in the consuming countries resulted in fewer people going out on the streets to buy flowers, according to industry sources. A general feeling of depression runs through the industry. The units have still to contend with various infrastructure and marketing problems. The air freight charges, already high, have been hiked again. Most of the carriers do not maintain the cold chain, which is absolutely essential if the flowers are to remain fresh until they reach their destination.

The industry has listed the kind of support required from the Government creating adequate infrastructure, rescheduling the re-payment schedules to financial institutions, increasing the soft loan assistance of the National Horticultural Board, providing insurance cover for perishables, among others. National Bank for Agriculture and Rural Development (NABARD), the Indian apex bank for agriculture development and finance, in its Strategic Action Plan addressing the State and Union Governments, highlights the problems faced by entrepreneurs in these non-traditional farming sectors. It makes out a special case for setting up an international airport in Bangalore, besides the proposed horticulture and floriculture board. It has identified over 20 problem areas to be reviewed, some through suitable policy decisions.

The recommendations include duty and freight relief, timely flight connections, infrastructure facilities, research support, and also the setting up of a body to review and support the growing sector. At the state government level, it has suggested that the projects be exempted from power cuts, tariff variations, purchase and sales tax.

Along with this, the Central Government has been urged to take up the heavy 15 per cent import duty that the European Community imposes only on flowers from India, while those from Israel, Colombia and African nations are exempt. The airlines should operate sufficient morning flights to Mumbai, from where the commodities are flown out, to meet the schedules for the perishable goods, it has recommended.

The floriculture industry's fear that airline companies, which carry flowers to Holland, are operating in a cartel has been reinforced by the ongoing battle between Air France and Bangalore-based companies. The silver lining in the entire affair is that all the companies have joined together. The individual companies in the fledgling industry are too small to be of consequence and ever since the formation of the SIFA, they have been working together to transport cargo and even market flowers abroad.

Four breeders of roses - De Ruitar, Tan Tau, Meilland and Kordes - hold the patents for most of the existing rose varieties in India. Some growers have been propagating well known varieties from these breeders without paying royalty on the mother plants. The raids had been deliberately planned in the period around Valentine's Day - when prices are almost ten times those of ordinary times - so that the losses would be felt more keenly by the offenders.

The news of fake Grand Gala variety found in an export consignment from Bangalore has shocked the floriculture industry here. Government organisations such as the FIEO and APEDA have not accorded the matter much importance, however.

The general feeling is that it is only a small case and is unlikely to affect the industry as a whole. It is only a temporary phenomenon and those who are not violators have nothing to worry about, said an industry source.

The Way Ahead:

In the global floriculture industry, competitive advantages can be created and retained only by achieving a critical mass of production and our country has natural advantages that can be harnessed to create such competitive advantages in the production and exports of cut flowers. The international trade in floriculture is large and estimated to grow to USD 16 billion by the year 2010 from the present level of USD 11 billion. Although, the value of exports of floriculture products from India has shown very significant growth, from Rs.18.83 crores (1993-94) to over Rs.305 crores (2005-06), India is still a marginal player in the world floriculture trade indicating the strong potential that can be exploited in the sector.s

If India has to achieve the ambitious export target of Rs.1,000 crores per annum over the next 5 years, a paradigm shift is required. The key issues that need to be addressed in the Indian context are - Economies of scale, Product range/ Latest varieties, Year round exports, Quality control and Certification, Cold chain management. APEDA has been addressing these issues through various forums on a concerted basis given its mandate to promote floriculture exports from India.

Abid Hussain