Employment and working conditions in the Colombian flower industry

SAP 2.75/WP.129

Industrial Activities Branch
Working Paper

Employment and working conditions
in the Colombian flower industry

2. Floriculture in Colombia

2.1 Origins

Thirty years ago flower-growing was merely a household activity in Colombia. Small enterprises produced flowers whose market was exclusively domestic. Only after the mid-1960s commercial expansion of flower-growing was initiated with an emphasis on overseas markets. Oddly, the origin of this can be traced to a graduate thesis from the University of Colorado in the United States which studied the ideal meteorological conditions for the industrial cultivation of carnations. In 1965, an advisor in exports promotion from USAID, familiar with the study, came to Colombia and evaluated the feasibility of launching flower-growing in Sabana de Bogotá (Diaz, 1994). In that year the first 17 tons of fresh Colombian flowers were exported for a total of US$20,000.(2)

In effect, Bogotá enjoys a number of comparative advantages in the production of flowers: cheap labour and ideal climatic conditions (light, temperature, water), good road network, and the presence of an international airport. In addition businesses benefites from fiscal incentives provided by the Vallejo Plan in 1967 an the introduction of a tax credit, in addition to credit programmes, technical assistance and marketing services offered by the recently created Fund for the Promotion of Exports (PROEXPO)(3). This enabled the Colombian floriculture to be from the very beginning highly competitive in international markets to increase its exports orientation and obtain high profitability (Mendéz, 1991).

By 1969 seven enterprises already existed in Sabana de Bogotá, quickly followed by new enterprises in other regions of the country, such as Antioquia, Rio Negro and La Ceja, Cauca (Piedamó), and Valle del Cauca (Buga) (Diaz and Rojas, 1994). In 1981 there were around 130 cultivator-exporters, and today 500. Sabana de Bogotá and the Department of Cundinamarca remain the main areas for flower(4). Close to 90 per cent of the production of fresh flowers originates from the rural zones close to the capital of the republic, with 25 of the 27 municipalities of Sabana participating.

2.2 Production and export trends

Flower-growing in Colombia is truly a success story. Since its inception the sector has been oriented towards external markets; the domestic market, which is supplied with below export-quality products, accounts for 5 to 10 per cent of total production.(5)

In the span of just 30 years, the first US$20,000 of sales abroad have "blossomed" to US$510 million and from simply being one item among many different exports, floriculture today heads the list of non-traditional exports. Currently, receipts from flower exports represent 4.8 per cent of total Colombian exports and 10 per cent of non-traditional exports. Currently, receipts from flower exports represent 4.8 per cent of total Colombian exports and 10 per cent of non-traditional exports (see table 1). The trade balance is highly positive since flower imports do not rise much above US$10 million annually.(6)

Table 1 shows that exports (and, by extension, production) grew impressively until 1974, favoured, apart from the climate and fiscal benefits granted by the Colombian State, by a stable real exchange rate brought about through periodic devaluations. From 1975 until 1983 however, the real exchange rate increased, and at the same time Colombian flower growers started to face protectionist pressures from their counterparts in North America. The emerging tax credit incentive structure in Colombia -- the Vallejo Plan and subsidies from PROEXPO -- was used by flower growers in the United States to plead for the application of compensatory right. Faced with this, in 1974 flower exporters voluntarily refused the benefits of the tax credit. This was reintroduced in 1981, but again in 1982 the growers aschewed its application. The same happened with the fiscal reimbursement certificate which in 1984 replaced the fiscal credit; faced with a threat of compensatory tariffs in the United States, Colombian produzcers relinquished it in 1985. During this period flower exports decreased very slowly, stagnating in 1981 and 1982. (7) Growth recuperated later as a result of the strong devaluation of the peso which enabled Colombian producers to respond to stronger demand for flowers in North America, only for growth to falter in the first part of the 1990s because of the strong re-evaluation of the national currency. In addition, producers in Ecuador and Mexico came on the international market. The decline in the rates of growth of exports could not be stemmed by preferential tariffs granted by the European Union and the United States as a reward for Colombia's fight against narcotraffic. In 1990 the European Union introduced a preferential programme of zero tariffs. The special collaboration programme was renewed in 1994 for another four years. The United States, for its part, in the framework of the law for Andean tariff preferences, in 1992 reduced to zero for a period of ten years the tariff which applied to Colombian flowers. Despite this, the growth in volume of flower exports continued to decrease and again approached zero in 1995 and 1996.

Fresh flower producers in Colombia have always been concerned by developments in the United States market since that market has always been the major destination of Colombia's production. (From the perspective of the US, Colombia is the major source of imported flowers.) In the beginning all commercial production from Colombia was exported to the United States, but since then some diversification has happened. Compared to almost 100 per cent at the start, in 1995 the North American market took 82 per cent of the total exports (and 85 per cent of exports by volume), and in 1996, 77 per cent (80 per cent). The United Kingdom and Germany have been the main buyers of Colombian flowers in Europe. In 1996 the European Union took 14 per cent of Colombian flower exports. Other countries in the world bought the remaining 9 per cent. It is important to note that at the international level Colombia is the second largest exporter of flowers after the Netherlands and its participation in the world flower trade is 11 per cent.

Over time Colombian producers have diversified not only export markets but also their products. Carnations and chrysanthemums were the first flowers produced in Colombia at the end of the 1960s. Later with experience acquired in the production of more fragile flowers and infrastructure investments completed, Colombia started to export roses. In 1996, for the first time sale of roses exceeded those of carnations; indeed in recent years, the most dynamic exports have been non-traditional tropical flowers (Proexport, 1995). Currently, over 50 varieties of flowers are produced (Asocolflores, 1997).

Table 1. Colombian flower exports, 1967-96

			Rates of growth
	Dollars ('000)	Kg ('000)	Value	Kg
1965	20	17
1966	80	55	300.0	223.5
1967	128	78	60.0	41.8
1968	301	155	134.8	98.7
1969	380	240	26.4	54.8
1970	991	736	161.0	206.7
1971	1 777	1 544	79.1	109.8
1972	3 490	2 193	96.4	42.0
1973	9 746	5 578	179.3	154.4
1974	15 925	10 367	63.4	85.9
1975	19 504	11 535	22.5	11.3
1976	26 884	14 670	37.8	27.2
1977	40 168	20 410	49.4	39.1
1978	49 301	26 759	22.7	31.1
1979	78 694	30 400	59.6	13.6
1980	101 361	37 434	28.8	23.1
1981	109 599	37 356	8.1	-0.2
1982	115 605	37 865	5.5	1.4
1983	122 795	42 698	6.2	12.8
1984	132 993	47 987	8.3	12.4
1985	140 778	57 317	5.9	19.4
1986	153 878	69 217	9.3	20.8
1987	174 568	77 201	13.4	11.5
1988	200 534	85 055	14.9	10.2
1989	218 700	93 630	9.1	10.1
1990	228 887	96 473	4.7	3.0
1991	267 317	100 968	16.8	4.7
1992	340 896	124 627	27.5	23.4
1993	381 996	132 514	12.1	6.3
1994	426 837	137 262	11.7	3.6
1995	475 783	138 515	11.5	0.9
1996	509 495	140 591	7.1	1.5

Values in dollars and kg of exports in the period January-December of each year.
Source: 1965-1976, Junguito (1981), table 8; since 1977, Ascolflores, System Department.

Important changes have happened in the size of establishments and concentration of flower production. Up to the 1980s it was possible for a landowner in Sabana de Bogotá to enter into flower production replacing livestock or vegetables. Today few farms of less than 5 hectares can survive (Hoyos, 1996), mainly for reasons of economies of scale achieved by larger establishments. Exchange rate instability and marketing problems of a perishable product also favour large farms. Small establishments which have managed to survive sell their harvest to large establishments which have the necessary installations for grading, packaging and cold storage and which can count on a highly efficient distribution network abroad.

2.3 Employer's associations

Around four-fifths of the fresh flowers are produced by 226 enterprises which are affiliated to the Association of Colombian Flower Exporters, Asocolflores, which was established in 1970 by nine enterprises from the sector. It is a non-profit employers' association whose objective is to represent the interests of the flower growers and exporters in the country and abroad. Its activities include legal advice, promotion and investigation of export markets, technological development and social development in the sector and economic research. Asocolflores works in agreement with three regional associations: flower growers of the north (Aflonordes), centre (Asoflorcentro), and west (Aflocsa). The three associations, created ten years ago, coordinate the activities with regard to the environment, living conditions of workers, labour relations, and relations with municipal and regional authorities. These associations undertook the remuneration studies in the flower-growing sector as part of the statistical input for this paper.

Updated by BR. Approved by OdVR. Last update: 28 September 2000.