POST globalization, floriculture has become one of the important commercial activities in Indian agriculture. Indian floriculture industry comprises the florist trade, nursery plants, bulb and seed production, apart from production of micropropagation material, and extraction of essential oils from flowers. The industry has been growing at a CAGR of 25 percent over the past decade, with production area growing at a CAGR of 6.89 percent since 2000-01.
A number of Export Oriented Units (EOUs) have been set up in the country; most of them are largely dependent on foreign collaborations for technological support. In the recent years, a number of large Corporate Houses such as ESSAR group, TATA group, Birla, Nagarjuna and Pariwala have also invested in the flower sector. Protected cultivation is not a common practice in India, the greenhouse designs and structures for the modern floriculture units are mostly imported from countries like Holland, Israel, France, and the USA. In India, there are three types of greenhouse production technologies, viz., low-tech units, mid-tech units and hi-tech units, with the investment costs varying significantly among the three groups. Marketing of cut flowers in India is much unorganised at present. Packaging and transportation of flowers is also very unscientific. In the metros, however, in the recent years, some modern florist show rooms have come up, where flowers are kept in controlled temperature conditions, with considerable attention to value added services. To facilitate flower trade, two auction centres have also been established one at Bangalore and the other at Mumbai.
Exports from India
Commercial floriculture in India is going through a paradigm shift, where traditional flower cultivation is giving way to modern hi-tech flower cultivation, which is evident from India's rising production and exports. Exports of floricultural products have been growing at a CAGR of 15 percent over the past decade. However, the growth of the industry has been significantly affected by the recent global recession largely due to decline in demand in all major markets. India's exports of floricultural products in the year 2007-08 decreased by 41 percent to US$ 84.5 million (Rs. 340 crores), from US$ 144 million (Rs. 653 crores) in 2006-07, which further decreased by 5.18 percent in the year 2008-09 to US$ 80.19 million. However, in 2008-09, in rupee terms, export of floriculture from India increased marginally. In the recent years, dried flowers and foliage have been forming a large part of floricultural product exports from India. During 2008-09, dried flowers constituted over 60 percent of cut flowers exports, and dried foliage constituted over 95 per cent of total foliage exports from India. Fresh cut flowers are mainly exported from Tamil Nadu, Karnataka and Maharashtra. Dried flowers are exported mainly from Tamil Nadu and West Bengal, with the later accounting for around 70 per cent of the dried flower exports from the country. Europe continues to be the largest destination for Indian floriculture exports. However, in the recent years Indian exports of floriculture products have also been to the Japanese and Australian markets.
India - Outlook
Besides the global recession affecting significantly the Indian floriculture exports, the competition in the international arena has also been increasing with the entry of new African countries, and Asian neighbours in global floriculture trade such as Ethiopia, Tanzania, China, Nepal, Sri Lanka and Pakistan. With international trade in the sector showing not so favourable scenario, the demand in the domestic markets for flowers have been growing, reportedly at 40 percent per annum.
The potential for expansion of commercial floriculture in India, including production for domestic and export sales of cut flowers and plants is unlimited provided the country expands the production of existing products as well as the product range. Further, it has been observed that except for Saudi Arabia and UAE, India has not been able to make its presence felt in the regional floriculture markets such as Japan, Singapore, Korea, and Russia, where China, Thailand and Malaysia are consistent suppliers. Therefore, more concerted efforts are required for the Indian floriculture industry to make a significant mark in the regional, and new and emerging markets, such as those in the Asian region, and in the East European region.
Some of the areas in which market opportunities exist for the Indian floriculture industry are: hi-tech cultivation and product diversification (to competitively grow Orchids, Anthurium, Gladiolus, Tuberose, and Foliage varieties, as the demand for tropical flowers and plants is increasing worldwide); tapping the landscaping opportunities (with growing real estate market worldwide, nursery industry is also opening up for supplying trees, greens and ornamental plants); floral arts-floral designing (which is increasingly getting popular in the events such as weddings and festivities); and catering to the growing demand for custom made products, dry flowers and foliage, flower seed production, flower extracts and essential oil, and natural dye.
The Indian floriculture industry is faced with a number of challenges mainly related to trade environment, infrastructure and marketing issues such as high import tariff vis-a-vis African countries, low availability of dedicated perishable carriers, higher freight rates, inadequate support infrastructure, constraint in achieving economies of scale, and inadequate cold chain management. At the production level the industry is faced with challenges mostly related to availability of basic inputs, including quality seeds and planting materials, quality irrigation and skilled manpower, and ageing plantations. With regard to marketing, major challenges faced by the Indian flower exporters are related to low level of product diversification and differentiation, vertical integration and innovation, and challenges associated with quality and environmental issues. With increasing involvement of supermarkets in flower trade, organizing logistics is also becoming a critical factor for the Indian flower exporters.
Several positive steps are being undertaken by India to develop the floriculture sector as a viable export sector. However, more strategies need to be adopted to consolidate the strengths of India in this sector and create efficient backward and forward linkages. The first and foremost requirement is to develop a state-of-the art Integrated Cold Chain, for flowers right from the point-of-origin (growers) to the pointof- consumption (customers). The freight cost disadvantage can partially be overcome by achieving economies of scale. To minimize the time taken and damages caused during handling, emphasis should be given on improvement of cargo handling facilities and making internal container depots suitable for floricultural products. Besides creating additional cargo space specific to floriculture, efforts may be taken to increase the frequency of international flights and chartered flights handling floriculture cargo.
Government of India may consider making additional efforts towards encouraging private sector for coinvestments in the supply-chain infrastructure. To address the import duty disadvantage faced by India in the international markets, such as Europe, the Government may enhance its efforts in negotiating preferential tariff regimes with such countries. For efficient implementation of developmental initiatives, attempts may be made in creating National Export Promotion Council for development of modern floriculture. Shifting to Integrated Supply Chain Model, integrating small and medium scale growers into large-scale producer supply chains may help in attaining economies of scale in the industry. Periodic re-plantation with appropriate re-plantation support from Government is necessary in order to meet the changing demand in global market for variety and quality.
Developing the non-traditional production areas such as South Gujarat, South Maharashtra, North Karnataka, hilly areas of Tamil Nadu and Karnataka, Uttarakhand, Himachal Pradesh, Jammu and Kashmir, and North Eastern States, which are well endowed to grow flowers and ornamental plants, may help in meeting the growing needs of both domestic and international market. In order to ensure regular supply of quality inputs such as planting material, efforts may be made to develop and propagate varieties indigenously. To help protect breeder's rights, India may consider becoming a member of the UPOV with adequate safeguard mechanism for the Indian growers. Besides, indigenous technology for modern floriculture may be developed to suit the Indian growing conditions. To address the shortage of trained manpower on modern commercial floriculture, training centres and programmes for skill development in floriculture may be established. Marketing initiatives should be suitably designed to meet the market requirements, and yet remain competitive. Attention may be required for achieving the flower labeling and certification requirements, besides, maintaining international quality standards throughout the production chain. Diversification of product mix is also essential considering the changing pattern of demand. Indian floriculture exporters should emphasize developing other diversified products and marketing them through dedicated outlets, thus, expanding the definition of floriculture from just fresh flowers to products and accessories manufactured from flowers.
Establishing a network of support systems with the involvement of Government, private sector and research institutions / universities will be another strategy for development of the floriculture sector. Indian exporters should adopt customized marketing strategies while targeting various markets. There is need to intensify marketing efforts for direct sales in emerging markets, and expand markets outside the traditional markets. Promoting strong brand recognition for Indian cut flowers and flower accessories through designated outlets at the foreign markets, and advance product positioning in these markets would help Indian flower exporters to compete in international markets effectively. A "consortium" approach may be encouraged among the units for branding, grading, packaging, transporting, quality control, supply assurance, market development, market promotion, and research and development.
Indian Flower Auctions - Few thoughts
Karnataka Agro Industries Corporation (KAIC) has started a flower auction centre, which is currently, dealing more with domestic trade, with a volume much lesser than the capacity. However, eventually it is to be converted into an international auction centre. Maharashtra Agro Industries Corporation has also established a flower auction centre at Mumbai, which is yet to be operationalised. Under such situation, the first and foremost requirement is to ascertain what value the proposed auctions in India are likely to create. To make the auctions viable most importantly volumes of flowers to be auctioned needs to be synchronized with the auction infrastructure. Towards this, the traders and growers, currently operating in the existing markets should be facilitated to relocate to the auction centres. A great deal of attention will have to be given to the rules governing auction, transparency in the transactions, and dispute resolutions. Auction should be managed by growers and buyers, and government should act only as a facilitator. A system of reefer transportation also needs to be organized on commercial lines facilitating transfers from production sites to auctions and auctions to the market at an economical cost. Lastly, efforts should be made to develop and strengthen backward linkages on a continuous basis to benefit from export trade. Indian floriculture industry has inherent strengths such as favourable geographical situation, soil and environment, labour costs, and the positive investment sentiments of Indian corporate players. With corporate players getting in on the business, and smaller players consolidating their efforts, India's floriculture sector could expect to blossom over the coming years.