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Feature Story
 

Spotlight
on South America
         
by Cynthia L. McGowan


See how Colombia and Ecuador work to grow their share of the floral market.


The floral industry is more competitive than ever. The global economy has made it easy for retailers and wholesalers to get their flowers from a wide variety of sources, from traditional suppliers like the United States, Holland and South America to emerging markets in Africa. And consumers are starting to take more of an interest in how their flowers are grown. Are the workers treated well? Are the farms environmentally friendly?
In this special report, Super Floral Retailing takes a look at what Colombia and Ecuador, the United States’ No. 1 and No. 2 cut flower importers, respectively, are doing to make their flowers stand out in the increasingly crowded floral arena. Together, Colombia and Ecuador contribute about 70 percent of the United States’ total flower supply (domestic production plus all imports), with Colombia’s share at about 50 percent and Ecuador’s at 20 percent, U.S. Department of Agriculture (USDA) figures show.

Colombia: strong partnerships
Colombia increased its cut-flower exports to the United States in 2005 by 23.9 percent from the previous year, sending 3.9 billion stems and bunches and representing 58.1 percent of U.S. flower imports, U.S. Department of Agriculture (USDA) figures show. And Asocolflores, the Colombian Association of Flower Exporters, has several initiatives aimed at growing Colombia’s position in the marketplace even more.

good for business
Augusto Solano, president of Asocolflores, says that although Colombian growers have faced challenges this year such as high fuel prices and the revaluation of the peso, Colombia’s currency, recent events bode well for Colombia’s floral industry:
• The re-election in May of Colombian President ˇlvaro Uribe VČlez. “This will mean more security for the people, more stability for business, economic growth and a good and stable relationship with the United States,” Mr. Solano says.
• The successful negotiation of a free-trade deal between Colombia and the United States. At press time, the U.S. Congress and Colombia’s government hadn’t yet approved the agreement, which would make permanent Colombia’s tariff-free access to U.S. markets. If the deal isn’t approved by Dec. 31, tariffs of 5 percent to 8 percent could be levied on flowers exported to the United States by Colombia.
“This is by far the most important trade agreement ever signed by Colombia and that will be signed in the future,” Mr. Solano says, “because our main trading partner is the United States, not only for flowers but for many other products.”

facing challenges
Despite these successes, Colombia’s growers have faced challenges in the past year. High oil prices have affected growers, mostly in the transportation of their flowers to the market, as well as in prices for agrochemicals and plastic, Mr. Solano says. Because the price increases “have been difficult to pass onto consumers,” he says, growers have absorbed the costs and offset them, in part, with increased efficiency. However, he says, if prices continue to climb, it will be difficult for growers to continue absorbing them.
Another difficult problem is the revaluation of the peso. An influx of U.S. dollars into the Colombian money supply has lowered the price of the peso against the dollar, thus squeezing flower exporters’ incomes.
“Revaluation is the highest hurdle to the trade of our exportable products,” Ernesto VČlez, president of the board of Asocolflores, told the group’s annual meeting in March. “We feel entitled to ask the government and the Central Bank to keep battling revaluation relentlessly, to defend and allow legal exporting businesses to prosper.”
Mr. Solano says Asocolflores has taken a leading role in the effort to fight revaluation by lobbying the government, sponsoring conferences and hiring economists. “It’s a big issue, and we’re very much involved,” he says. “For example, at that annual assembly, there were several government officials there, so that was the place to say what Ernesto was saying.”

diversified selection
Asocolflores also works with growers to increase Colombia’s flower selection. “Because the bouquet and the consumer bunch exports keep increasing, there is always a need for new types of fillers,” Mr. Solano says.
Indeed, Colombia’s bouquet exports to the United States increased 181.9 percent in 2005, to 252.3 million in 2005 from 89.5 million in 2004, according to the USDA. To help growers meet the demand, Asocolflores last year created Ceniflores, the Colombian Center for Innovation in Floriculture, to develop improvements in production, technology, sanitary issues and disease control.
Colombia’s efforts to diversify its selection appear to be paying off. While roses remain the top cut-flower export to the United States—increasing some 29 percent in 2005 to nearly 1.4 billion stems—some specialty flowers desired for upscale bouquets have made strides. Lilies were up 34.1 percent in 2005 to 4.7 million stems, callas were up 22.5 percent to 45.8 million stems and Gerberas increased 8.5 percent to 72.0 million stems, USDA figures show. Orchids, while still a small crop overall, increased 49.4 percent in 2005 to 1.1 million stems and bunches.

spreading the word
To get the word out about Colombia’s diversified selections, Asocolflores attends major floral trade shows such as The Super Floral Show in the United States and the International Horti Fair in Amsterdam and travels to markets like Russia and Japan. But the grower association isn’t content just to raise the profile of Colombian flowers. Asocolflores also is a partner in several programs aimed at increasing flower consumption in the United States. Mr. VČlez told the Asocolflores annual meeting in March, “The demand for flowers in the United States, our main market, seriously affects the future of floriculture.”
To grow consumption, Asocolflores is a major supporter of the Flower Promotion Organization (FPO) and has helped finance the Society of American Florists’ (SAF) Public Relations Fund, two U.S. efforts to boost consumers’ interest in flowers. It also is one of the partners in the new Floral Marketing Funding Coalition Initiative, which seeks funding for programs to boost spending on flowers in the United States. Says Mr. Solano, “We really believe in promotion.”

Colombia facts
• Colombia is the world’s second-largest flower exporter, behind Holland.
• Colombia sent 85 percent of its cut flower exports to North America in 2004.
• Flowers are Colombia’s No. 2 agricultural export, behind coffee.
• Floriculture accounts for 111,000 direct jobs and 94,000 jobs that depend on the industry; 60 percent of the direct jobs are held by women.
• More than 17,000 acres are devoted to flower production.
• Roses represented 32 percent of Colombia’s flower exports in 2005.
• Asocolflores has 215 member companies, representing 308 farms and 9,800 acres.
Sources: Asocolflores, the Colombian Association of Flower Exporters, www.colombianflowers.com.


Proflora 2007
Asocolflores, the Colombian Association of Flower Exporters, is planning Proflora 2007, which will be Oct. 3-5, 2007, in Cartagena, Colombia. “We make it better every time,” Augusto Solano, president, says of the biennial trade show.
Proflora 2005 drew 210 exhibitors and 5,000 visitors, including 1,077 international visitors. Mr. Solano expects to have more exhibitors in 2007, including some from other countries, which will be a new feature.
Mr. Solano says the 2005 event was a great success. “The main point of something like Proflora is to do business,” he says. “A lot of people did real business during the trade show. We’re very satisfied because of that.”
For more information about Proflora 2007, contact proflora@asocolflores.org, or go to www.colombianflowers.com.

Ecuador: on the move
According to Expoflores, the Ecuadorean Flower Growers and Exporters Association, Ecuador’s flower industry has grown from $59 million in exports in 1994 to $354.6 million in 2005, a sixfold increase. Ecuador’s success is “a dream come true,” says BolĚvar Cevallos, Expoflores’ president of the board.
Ecuador supplied 23.2 percent of all U.S. cut flower imports in 2005, sending 1.56 billion stems and bunches here for an increase of nearly 28 percent from 1.22 billion stems in 2004, USDA figures show. Helping fuel that increase was a 207.3 percent rise in bouquet exports to the United States, from 19.9 million in 2004 to 61.3 million in 2005.
Roses, Ecuador’s No. 1 flower export, also saw a large boost, from 915 million stems in 2004 to 1.1 billion in 2005, a 20.8 percent increase. Gypsophila is Ecuador’s No. 2 crop, and its exports to the United States increased 145 percent, from 20.9 million bunches in 2004 to 51.2 million bunches in 2005.

growing more products
But Ecuador’s growers realize that diversification is the key to continue their industry’s growth. The country saw a rise in exports of several specialty cut flowers last year, USDA figures show. Callas were up 69.4 percent, to 18.7 million stems, from 2004’s 11.1 million stems. Delphiniums grew 39.4 percent to 33.0 million stems from 23.7 million in 2004. Irises, while still a small crop at 4.3 million stems, grew 39.5 percent from 2004.
Expoflores is getting help with its promotion efforts from the Corporation of Export and Investment Promotion (Corpei), the country’s private, nonprofit export-promotion agency. Executive President Ricardo Estrada says diversification is one of the reasons Ecuador’s flower industry is growing, and his agency is helping farms expand their products.
New markets also are important to Ecuador’s growth, Mr. Estrada says. Ecuador exports flowers to 72 markets worldwide, including supplying Russia with some 80 percent of its rose imports, Expoflores figures show. The United Kingdom, Sweden, the Middle East and Japan are just a few of the regions that import Ecuador’s flowers.
“We have positioned Ecuador’s flowers as a high-quality product,” he says. Expoflores and Corpei tout the country’s geographic advantages, which include 12 hours of intense sunlight a day and a multitude of microclimates that allow a wide range of flowers to be grown.

importance of free trade
To keep Ecuador’s momentum going, both Corpei and Expoflores are counting on the United States and Ecuador to sign a permanent free trade agreement. Under the current deal, which expires Dec. 31, 2006, Ecuador pays no duties on its exports to the United States. At press time, the talks were stalled after a dispute over a U.S. oil company in Ecuador.
Mr. Estrada is blunt about the impact on growers if the trade deal is not approved. “It will be impossible to compete with Colombia” if Ecuador has to pay tariffs of as much as 6 percent on its flowers, he says. Colombia and the United States have negotiated a deal, but it still had to be approved by both governments at press time.
The impact on Ecuador’s economy also would be severe, Mr. Estrada says. The flower industry employs 60,000 people, 60 percent of them women, and accounts for 100,000 jobs that depend on floriculture, Corpei figures show. Flowers have meant good-paying jobs in rural areas, where in the past, jobs were scarce, says Juan Reece, administrative manager for Expoflores. The farms employ an average of 15 people per hectare (one hectare equals 2.47 acres).

investment in the future
Flowers’ impact extends beyond the farms. A big project under way is the building of a new airport near Quito, the capital. “The new airport depends on flowers to exist,” Mr. Reece says. Currently, the floral industry in Ecuador generates $160 million a year for air transport companies, with 90 percent of the volume going through the Quito airport, Expoflores says.
The new airport will have a longer runway, allowing airplanes to have more cargo capacity, which will lower transportation costs for exporters. Mr. Estrada says freight costs from the current airport are 40 percent higher than those from Colombia.
The airport is being financed entirely from private funds, says Gustavo M. Pinto of Corporation Quiport S.A., the airport administrator. Already, private investors have put $35 million into the project.
Construction has started, and the first phase is expected to be complete by 2010, with three more phases planned. When the first phase is finished, the new airport will serve 50 percent more passengers than the current airport, Mr. Pinto says. The airport will occupy 3,700 acres, 10 times more than the current airport. “We’ve needed a new airport for about 20 to 25 years,” Mr. Pinto says.

Ecuador facts
• Ecuador is the world’s third-largest flower exporter, behind Holland and Colombia.
• The United States receives nearly 75 percent of Ecuador’s flower exports.
• The flower industry accounts for 3 percent of Ecuador’s gross domestic product.
• Floriculture accounts for 60,000 direct jobs and 100,000 indirect jobs that depend on the industry.
• More than 11,000 acres are devoted to flower production.
• Roses comprised 76 percent of Ecuador’s flower exports in 2005.
• Expoflores has 160 member companies.
Sources: Corporation of Export and Investment Promotion (Corpei), www.corpei.org, and Expoflores, the Ecuadorean Flower Growers and Exporters Association, www.expoflores.com.

La Flor de Ecuador, Agriflor 2006
La Flor de Ecuador, Agriflor 2006, the biennial cut-flower trade show organized by Expoflores, the Ecuadorean Flower Growers and Exporters Association, and†trade show company HPP Ecuador, will be Oct. 4-7 in Quito, Ecuador, and sponsors expect more than 150 growers to exhibit their flowers.
Expoflores board member Rodrigo Carrillo says the show will present “a strong industry, with brand new varieties and quality as only we do because we are located in the middle of the world at 2,800 meters of altitude.”
The 2004 trade fair had 400 visitors from 30 nations, and Mr. Carrillo expects the number of visitors to double this year. Features will include:
• Tours of flower farms in five growing regions around Quito
• Grower and breeder competitions
• A Novelties Pavilion showcasing new cut flower varieties
• A seminar on “Development of New Varieties of Flowers,” focusing on the increasing production of Ecuador’s small- and medium-size growers
• A negotiation area for buyers and vendors
• An international flower party
Mr. Carrillo says the show will benefit mass-market buyers because they can “contact directly the producers and see for themselves new varieties, best prices, trends, colors and quantities.”
Admission is free to qualified buyers if they register in advance. A $20 fee will be charged for on-site registration or for registrations taken after Sept. 29. To register, go to www.hppexhibitions.com/floriculture/2006/ecuador.

Colombia: leaving no farm behind
Asocolflores, the Colombian Association of Flower Exporters, has several programs, all with the goal of promoting sustainable floriculture with social responsibility.
The “FlorverdeĆ,” or “Greenflower,” program, which will mark its 10th anniversary in October, requires member farms to adhere to a code of conduct that includes responsible stewardship of the environment and social advances for workers and their families. For workers, that means safety and training programs, fair wages, no employees younger than 18, housing, child care and recreation time. For the environment, it means integrated pest and disease management, waste management and programs to preserve Colombia’s biodiversity.
Companies must go through a lengthy process to gain FlorverdeĆ certification, which is verified by an independent audit company, SociČtČ GČnČrale de Surveillance (SGS) of Geneva, Switzerland. Juan Carlos Isaza, manager of FlorverdeĆ, says of 144 farms in the program, 72 have been certified by SGS, representing 1 billion stems of flowers a year and 3,548 acres, or about 20 percent of Colombia’s flower-producing land. Seventeen farms joined the program just in May, beginning the process to certification.
That process starts with an evaluation, performed both by FlorverdeĆ and the farm. The data is then presented to the farm, whose management decides upon an action plan, facilitated by FlorverdeĆ. Throughout the certification process, FlorverdeĆ provides advice, training and resources.
FlorverdeĆ collects information monthly from all the farms in the program on pesticide use, employee turnover, accidents, and other social and environmental indicators. “We have a lot of information about those farms, and we make a benchmark and identify which farms are strong, what issues there are ... so then the association can have a clear view of where its mission can be executed,” Mr. Isaza says.
The main mission, Mr. Isaza explains, is to improve the social and environmental performance of flower growers in an entire region, not just one farm at a time. “Our issues are wider because we don’t want to leave anyone behind,” he says.
Benefits to farms for joining FlorverdeĆ are threefold, Mr. Isaza says:
• First is the FlorverdeĆ label, which is gaining increasing recognition in the marketplace, especially by United Kingdom retailers like Asda (the British arm of Wal-Mart) Tesco, Marks & Spencer and Sainsbury. Mr. Isaza acknowledges that FlorverdeĆ still is getting the word out to U.S. consumers. FlorverdeĆ also is working to gain recognition by EurepGAP, The Global Partnership for Safe and Sustainable Agriculture. (For more information on EurepGAP, go to www.eurepgap.org.)
• A second benefit is the advice and training the farms receive from FlorverdeĆ.
• The third benefit is the feedback reports the farms receive. “They can compare themselves to more than 100 companies to see how they are performing,” Mr. Isaza says.
FlorverdeĆ also promotes beauty in the workplace as a benefit to workers. “A principle of FlorverdeĆ is that flower farms should be beautiful,” Mr. Isaza says, “because they are producing a beautiful product.”
Other important Asocolflores programs are:
The School of Floriculture It trains people who have been displaced by violence in Colombia’s countryside to work at flower farms. In May, Asocolflores and The Pan American Development Foundation (PADF), with a grant from the U.S. Agency for International Development (USAID) agreed to implement the second phase of the program. The first phase, which began in 2003, benefited 1,150 families, Asocolflores says, and the second phase is expected to help an additional 1,380 families.
Cultivating Peace in the Family This program, which also is assisted with a grant from the USAID, teaches families to resolve conflicts in nonviolent ways.
Augusto Solano, president of Asocolflores, says the U.S. grants are a significant endorsement of the programs. “It is really difficult to get these types of funds,” he says, “and this says a lot about the quality and the importance of these programs.”

Ecuador: encouraging opportunity
The flower industry has meant opportunity to many rural Ecuadoreans who otherwise would have had to leave the country to find better jobs, says Juan Reece, administrative manager for Expoflores, the Ecuadorean Flower Growers and Exporters Association.
“Expoflores has an ethical commitment” to the nation’s 60,000 floriculture workers, he says, and toward that end, it has several programs promoting social and environmental responsibility. Expoflores’ “La Flor de Ecuador,” or “The Flower of Ecuador,” program is mandatory for all 160 members, monitoring farms through audits and electronic verification in such areas as pesticide use, worker safety and training, and community development programs. Companies that meet the standards receive La Flor de Ecuador certification.
“We’re very proud of our flowers,” Mr. Reece says. “We also want to be proud of having a very clean environmental program.”
Super Floral Retailing toured three farms that boast good records on social and environmental issues during an April visit to Ecuador: Esmeralda Farms in El Quinche, Nevado Ecuador in Latacunga and Sierraflor in Lasso. All have received various “green-label” certifications, including endorsement from the Flower Label Program (FLP), the German label attesting to good worker and environmental conditions.
“At Esmeralda Farms, our people are our single, biggest asset. We feel our commitment to social initiatives motivates people to perform their daily functions to the best of their ability, which results in the absolute highest quality product,” owner Peter Ullrich of Miami, Fla., says of the company, which recently received certification from Veriflora, the U.S. label. Concurs Pablo Viteri, general manager of Esmeralda Farms’ operation in El Quinche, “Our work is based on teamwork.”
At Nevado Ecuador, the farm’s motto is “Roses with a Conscience™,” and owner Roberto Nevado has received green-label certification for the farm under eight separate certifying agencies. His next goal is to go completely organic, which he expects to complete within a year. But Mr. Nevado thinks the standards for companies seeking organic status should be strengthened. “My proposal would be that any farm that wants to be organic should be certified first,” like his, he says, to ensure organic farms are being socially responsible, as well as environmentally friendly.
At Sierraflor, owner Tatyana Trepp led a tour of the on-site school and child care center. The school serves 90 children from ages 2 months to 11 years, and a high school is under construction.
The farm has hired top-notch teachers from Quito to give the children a high-quality education. Lessons, which cover the basics from table manners to advanced subjects like higher math, are conducted in English and Spanish. Says Ms. Trepp, “If you have another language, you can do whatever you want.”
The school costs just $5 a month for the families but costs $12,000 a month to run. The farm has established a foundation, Sierraflor Foundation, that takes donations and volunteers to help its mission. Ms. Trepp says, “The only way to make a change in the country is with education.”
Another change Expoflores is working on is eradicating child labor on farms. Elba G·mez, technical secretary for the Floriculture Social Forum, which is implementing the program for Expoflores, explains that some Ecuadoreans feel children should help support their families. Through workshops and communication, she says, the program aims to “change this cultural vision.”
Under Ecuadorean law, children ages 15 to 18 can work under limited conditions. The Expoflores program aims to ensure that no children younger than 15 are working and that workers ages 15 to 18 are in suitable conditions, which means no operating vehicles, no fumigation and no cold-room work. The program also works with 15- to 18-year-olds by encouraging them to stay in school.
Mr. Reece of Expoflores says the program is important to his organization: “We do not want to see children working at flower plantations.”


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