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The world cut flower industry: Trends and prospects

1. Industry overview

   In many countries flowers are grown for commercial purposes for domestic markets, although the size of individual markets or its development are difficult to assess given the lack of consumption and production data. The main consuming countries (Germany is the exception) are largely self-sufficient in flowers. Japan and united States are the largest markets, with, in 1990, over NFI 10,000 million worth of flowers being sold there (compared with NFI 5,000 million in Germany (Rabobank, p.6)). In terms of area under cultivation, China and India dominate (but their yield per hectare is low (1) ). In 1994, China had close to an estimated 60,000 ha under cultivation for flowers and foliage, while India had 34,000 ha (compared to United States at 15,000 ha, and Japan and the Netherlands 8,000 ha (see table 1)). Producers in the first group of countries (the United States, Japan, India and China) have in common that they mainly, if not exclusively, produce for their own market. In Japan, 95 per cent of demand is met by local producers (Rabobank, p.10). In India and China, purchasing power is too low for sizeable imports to take place and quality is too low for sizeable exports to develop. (2)

   A second group of countries are those which have sizeable markets where imports satisfy most demand. Germany is the typical example, with imports making up 70 per cent of total demand. A third group, which includes Colombia and Kenya, is opposite of the second; they have a small home market but a large volume of exports. Colombia is typical of this group -- with exports amounting to 95 per cent of production in recent years. Finally, there is a group with a large home market combined with a large export share. The Netherlands is the best example here.

   The focus of this paper is on internationally traded cut flowers. Exports, imports, the structure, the organization and the prospects of world trade are its key themes. As such, this approach underemphasizes the importance of those producing countries which export relatively little and overemphasizes the importance of those which export most of their production but have no large markets of their own.

   The world cut flower trade is characterized by a high degree of concentration by product and sources. Roses are the main traded product, Germany is the main market for imports, and the Netherlands the world's leading exporter. Figures 1, 2 and 3 give trade flows by main region. They show in Europe the overwhelming share of the Netherlands as a supplier to Germany. Exports from the Netherlands to Germany are a principal component of the world cut flower trade; they made up 43 per cent of total EU exports in 1994. Switzerland, France, and the United Kingdom are the other main markets for Dutch flowers. In the Americas, Colombia stands out as a supplier to the United States (Ecuador is a good second), while in Asia, Japan (Asia's main market) receives its supplies from a more diversified base, with Taiwan (China), New Zealand and Europe being the most important ones.

Table 1. Area under flower and foliage crops (selected countries, in hectares)

   International trade is thus, to a large extent, organized along regional lines. Asia-Pacific countries are the main suppliers to Japan and Hong Kong. New Zealand sells 70 per cent of its exports to Japan; Taiwan over 90 per cent. Hong Kong's principal suppliers are China, Taiwan (China), Malaysia, Singapore and New Zealand. African and other European countries are the principal suppliers to Europe's main markets. Kenya sends over 60 per cent of its exports to the Dutch auctions; Zimbabwe 80 per cent, and Zambia over 90 per cent. The United States is supplied mainly by other countries in the hemisphere for which the United States in turn is their main market, Colombia and Ecuador being typical with over 70 per cent of their exports going to the United States.

Figure 1. Intra-European Exchange of fresh cut flowers, 1996

NL = Netherlands; SF = Finland; N = Norway; S = Sweden; GB = United Kingdom; B-L = Belgium and Luxembourg; DK = Denmark; PL = Poland; D = Germany; F = France; A = Austria; CH = Switzerland; E = Spain; I = Italy; IL = Israel.

Scale: 1 cm width = Sfr.200 million. Source: AIPH, Yearbook of the International Horticultural Statistics, 1997.

Figure 2. Intra-American exchange of fresh cut flowers, 1996

CDN = Canada; JA = Jamaica; MEX = Mexico; GCA = Guatemala; CR = Costa Rica; EC = Ecuador; PE = Peru; CO = Colombia.

Scale: 1 cm width = Sfr.100 million.
Source: As for figure 1.

Figure 3. Intra-Asiatic exchange of fresh cut flowers, 1996

J = Japan; ROK = Republic of Korea; CHN = China; IND = India; MS = Malaysia; T = Thailand; HK = Hong Kong; RI = Indonesia; RC = Taiwan, China; SOP = Singapore; RP = Philippines; AUS = Australia; NZ = New Zealand.

Scale: 1 cm width = Sfr.100 million.
Source: As for figure 1.

   World imports are highly concentrated geographically (table 2). Germany is the largest import market, followed by the United States. The Netherlands, the United States and Japan show fast growth, while German imports stagnated in the first half of the 1990s.

   Europe takes around 70 per cent of world imports (much of which is intra-European trade), Germany alone taking close to one-third. Other sizeable European markets are the United Kingdom and France (both 9.7 per cent in 1995), the Netherlands (8.4 per cent) and Switzerland (4.5 per cent). The Netherlands re-exports a large proportion of its imported cut flowers (70 per cent of all auctioned imports (Protrade, 1996, p. 53)).

Table 2. Main import markets for cut flowers,^a by value (CIF), 1991-95 (in millions of US dollars)

   Most imports into the EU originate in other European countries, although the share of developing countries is growing rapidly. In 1990, developing countries' exports to the EU amounted to 243 million ecus (14.4 per cent of total EU imports). By 1995 these had grown to 409 million ecus, or 20.8 per cent of total EU imports of cut flowers and foliage (Protrade, 1996, pp. 2-3). The main non-EU suppliers of the EU are Israel, Kenya and Colombia. Imports from Ecuador, Zimbabwe and Kenya increased rapidly between 1993 and 1996 while those from Colombia decreased (table 3). Imports into the Netherlands originating in countries outside the EU show a comparable picture. Israel and Kenya are the main suppliers. Ecuador, Zambia and Zimbabwe show dynamic growth, while imports from Colombia are on the decline (table 4).

Table 3. European imports by country of origin ('000 kg)

Table 4. Imports of cut flowers into the Netherlands from countries outside the EU ('000 kg)

 1.2.2 Exports

   Europe is the principal source of the world's exports, albeit with a declining share from the 70 per cent peak reached in 1991. Developing countries as a group saw spectacular increases in market share, in less than four years making up around one-quarter of world exports by 1995. The Netherlands remains the world's leading exporter but again on a declining trend, from 64 per cent share of world exports in 1991 to 57 per cent in 1995. Colombia is second at 14 per cent (table 5). Kenya doubled its share to 2.7 per cent, Ecuador quadrupled, also to 2.7 per cent, while Zimbabwe tripled to 1.3 per cent. New Zealand, Malaysia, Belgium-Luxembourg, India and Guatemala more than doubled their share, but this was still below 1 per cent in 1995.

Table 5. Main exporting countries/areas for cut flowers,^(a) by value (CIF), 1991-95 (in millions of US dollars)

   The main export destinations of EU exports are other EU Member States. Intra-EU exports of cut flowers and foliage account for 82 per cent of total EU exports (1,800 million ecus). Germany is the major market, accounting for around 1,000 million ecus or nearly 50 per cent of the total export value in the EU. Exports from the Netherlands to Germany amounted to about 43 per cent of total EU exports in 1994. Extra-EU exports stood at 304 million ecus in 1995 (Protrade, 1996, pp. 26-27).  1.2.3 Products

   Roses and carnations are the principal traded products, with the share of the former growing steadily and that of carnations stagnating. In 1995, world rose imports totalled Sw.frs.791 million and accounted for 23 per cent of all imports, while carnations had a 15 per cent market share, followed by chrysanthemums 9.5 per cent, orchids 1.7 per cent, gladioli 0.3 per cent and all other flowers 49.9 per cent (table 6). Between them, roses, carnations and chrysanthemums make up close to 50 per cent of the world cut flower trade. Table 6 also shows that preferences can differ markedly depending on the market. In the United Kingdom, for instance, carnations are far more popular than roses, whereas the Swiss buy very few carnations.

Table 6. Markets surveyed: Imports of cut flowers, by flower and value, 1995 (in millions of Swiss francs)

   New entrants into the cut flower trade concentrate on the rose, its favourable value-to-weight ratio and high sales volumes being the main attractions (ITC, 1997). In Ecuador, 54 per cent of the area under cultivation was given over to rose in 1997 and in Zambia even more (80 per cent).

Source: Eurostat.

   There are considerable differences by country in the number and type of flowers that people buy. Within countries purchasing patterns differ by geographical region and income strata: affluent people buy more bouquets with "special" flowers; less affluent people buy simple bunches of flowers. Even colour preferences vary.

   People buy flowers for a number of reasons: as a gift (for a birthday or a special day such as Mother's Day, Valentine's Day, Thanksgiving), for weddings and funerals, or for own use to brighten up the home. Among these, gift-giving (to congratulate, apologize, commiserate, express love and affection) is the most frequently stated reason for buying flowers (over 70 per cent of all purchases in the United Kingdom and Austria; over 50 per cent on average). As such, flowers compete with wine and chocolates, which are bought for the same reason. Still, there are marked differences by country. In Italy, over half of all flowers purchased are for the decoration of graves and funerals while purchases for own use score 20 per cent on average. In Japan, the practice of buying flowers for own use is virtually unknown. Prices are high and points of sale few. The Japanese consumer is very quality conscious. In the United States flowers are expensive. Traditionally, they are seen as luxury items (Rabobank). In the Netherlands, on the other hand, personal use was given as the reason in no less than 50 per cent of all cases (flowers are comparatively cheap in Holland).

Table 9. European Union:^(a) Imports of roses, by major supplier and by quantity, 1991-92, 1994-95 (in millions of stems)

   Overall consumption levels also differ markedly by country. Germany is the largest market, followed by Italy, France and the United Kingdom (table 10). But these figures hide considerable differences in per capita consumption (table 11). The Swiss spend by far the largest amount per person; at 87 ecus, 50 per cent more in 1995 than the Norwegians, who are second at 54 ecus. The Dutch and the Germans buy 40 ecus worth on average, Italians 29 ecus and the French 27 ecus. In the United Kingdom, per capita consumption at 16 ecus lags the other European countries.

   There are indications that consumers are becoming more demanding, particularly in Germany and Switzerland. This is manifested in two ways. There is more attention for the conditions under which flowers are being grown (see also below). And there is a search for new varieties and novelties. The retail market is becoming more sophisticated. As one grower put it: "They used to ask for just red roses; now they ask for Grand Gala ..." (interview with Ned Latif of Inlandes SA Quito, the largest flower growers of Ecuador in Floraculture International, June 1997, pp. 18-21).

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