Jai Prakash Rao, a rose grower in Bangalore, is slowly looking at the domestic market for selling his roses than relying on exports. The reason is that higher freight charges, rising cost of production and emergence of other low cost producers like Ethiopia and Kenya are taking the edge out of the rose export market.
Rao, who grows roses on five hectares of land on the outskirts of Bangalore, usually exports cut flowers on Christmas, New Year and Valentine’s Day to the US and the European market.
"Higher freight charges, rising cost of production and more competition from other countries are forcing us to rely on the domestic market than going for exports," Rao said. Even the price fetched by farmers in the domestic market was not sustainable in the long run, he added.
According to traders, while the realisation price for export varies from Rs 6.50 per stem to Rs 7.50 for farmers, it ranges from Rs 2 to Rs 4 per stem in case of domestic sale.
"Though price fetched by farmers are higher in case of exports, there are risk factors like perishable nature of roses, lack of proper guarantee, currency risk and demand volatility in exports," G Shankar Murthy, general manager of International Flower Auction Bangalore (IFAB) said.
IFAB is the one of the electronic flower auction centres in the country, which provides assistance to growers for exports. India produces 340 million cut roses per annum out of which 70 per cent cut roses come from Karnataka. The rest is produced in states like Maharashtra, Tamil Nadu and in sporadic patches in the country.
"Though Karnakata, especially Bangalore, is geographically best suited to emerge as the export hub for cut roses, we have lost the competitive advantage to emerging markets like Kenya, Ethiopia etc," R D Reddy, president of South India Floriculture Association (Sifa) said.
The incentives given by those governments to grow cut roses is huge, which gives them definite price advantage, he added. Sifa’s observation regarding flower exports is reflected in the export performance in recent years.
According to the data released by Agricultural and Processed Food Products Development Authority (Apeda), flower exports from India has reached Rs 293.97-crore mark in 2009-10 from Rs 566 crore level in 2006-07, which is a 48 per cent drop in last four years.
Fresh cut flower category, 90 per cent of which comes from cut roses, also registered fall of 12 per cent to Rs 42.68 crore in 2008-09 from Rs 48.75 crore a year earlier. However, the only silver lining in the rose market is the demand growth in the domestic market.
"Fall in rose exports will be offset by domestic demand, which is growing at a healthy 10 per cent rate in last years," Reddy said.
According to Sifa, India exports close to 30 per cent of total rose produce to other nations in a year and this ratio may fall in near future, he added. Karuturi Global, one of the largest exporter of roses in the world, also have similar view about this matter.
"Domestic demand for roses has a sound growth rate, which is more than five per cent annual growth in the global market," Ramakrishna Karuturi, managing director of Karuturi Global said.
He also said that rising flower boutiques along with retail outlets would drive the growth in near future.