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Transactions on flowers have declined so drastically
that the earnings of flower farms do not even cover
the cost of freight. This is mainly attributed to
the global economic downturn.
Within the last few weeks, for example, the price of
a stem of rose has gone down to as low as o.o6
dollars from about 0.20 dollars in the European
market where consumption has fallen considerably,
according to industry observers.
Whether the problem will be reversed is highly
dependent on the changes in the market dynamics at
export destinations, the observers argue.
Mekonnen Abegaz, owner of Lafto Roses, agrees that
there has been a significant impact on the sector,
which cannot be solved through the capacity of
individual farms, unless there is outstanding
quality and much more variety.
"Flower farms have lives; they continuously demand
inputs," Mekonnen told Fortune. "Therefore
you can't just quit and say let things get better."
The price of flowers in the European market - the
major destination of Ethiopian roses - slid by 15pc
to 20pc from that of last year.
Though there are claims that the reasons are far
removed from the global economic situation, the
sector has started to suffer so much that there have
even been farm foreclosures of late.
The industry is in such gloomy economic
circumstances, testing times for the sector not
helped by the forex crunch at home. It is in this
scenario that last week, the Ethiopian Horticulture
Producer and Exporters Association (EHPEA) hosted 97
foreign and 233 local companies involved in the
sector at a three-day biennial horticulture expo,
Hortiflora Ethiopia 2009.
The flora expo, dubbed “The New Face” of Ethiopia,
was held at the Millennium Hall on Africa Avenue
(Bole Road) from Wednesday, March 25, to Friday,
March 27, 2009.
Officials of the EHPEA seemed to have been prepared
to use the opening of the event, to which key
government and bank officials were invited, to
convey their major concerns. For instance, Prime
Minister Meles Zenawi, ministers of Trade and
Industry (MoTI), Girma Birru, as well as Agriculture
and Rural Development (MoARD), Tefera Derbew, were
in the first row of chairs right in front of the
podium where Tsegaye Abebe, chairman of EHPEA, stood
a few minutes before he invited the Premier for
opening remarks, and appealed for help to save the
sector.
"We ask our bankers to go the hard mile and
cooperate with us so that we can wither the storm
and reap a good harvest of tomorrow," Tsegaye said.
He was referring to the hard conditions,
particularly about four flower farms in Ethiopia,
are for still contested reasons, and the entire
industry which has now significantly started feeling
the pinch of the global economic slump.
Perhaps in words that brought some relief to those
involved in business in the horticulture sector,
Meles told the more than 700 people, including
exhibitors, attending the opening that the
partnership between government and the horticulture
sector remains exemplary.
"That is why we believe the sector has been growing
very fast in Ethiopia," he said in his opening
remark.
All actors in the sector: partners, suppliers,
breeders, growers, investors, transporters and banks
need to share the success, as well as the pain and
difficulties that have been caused by recent
developments in global economy. But Meles was not as
direct as those at the EHPEA in outlining the kind
of assistance the sector should get.
For example EHPEA requested banks that advanced
loans to businesses in the sector to reschedule all
loans until the dust settles and cut down on their
interest rates to help ease the pain on all growers
currently operating in Ethiopia.
This call was in reaction to a development where
four of the 85 flower farms in Ethiopia had been put
up for auction for failing to service their bank
loans.
But Tsegaye argues that it's the farms' own
financial and farm management skill problems that
caused the collapse.
Tefera Derbew, minister of Agriculture and Rural
Development agrees with Tsegaye.
"The challenge is being competitive in the market.
Increasing productivity and diversity, improving
quality and involving in value addition activities
is highly important," Tefera said in an interview
with HortiHolland Magazine published in March 2009.
Considered one of the major export items of the
country, flower is now faced with a serious market
challenge that it is likely to fall short of meeting
the target. From the projected 150-170 million
dollars revenue the export of flowers is expected to
bring into Ethiopia's economy this fiscal year, for
example, the producers expect at least a five to
10pc decline.
During the end of 2008, EHPEA set a target of
generating one billion dollars within five years
from the sector. But the global recession was not
included as part of the factors that may negatively
affect the target.
Ethiopia is the second largest flower exporting
country in Africa, after Kenya. Following a dramatic
growth in the number of farms over the past more
than four years, the government claims that it is an
ideal location for highland and lowland world-class
flowers due to agro-climatic conditions. It has
markets in Netherlands, France, Germany, Italy,
Canada, Norway, Sweden, UK, the US, Middle East, and
other EU and Asian countries, according to an
information sheet printed by the Ethiopian
Investment Agency in 2008.
Horticulture has grown so fast in Ethiopia that it
has started catching up with major export
commodities in terms of the volume of foreign
currency earnings.
Coffee, the top of the major export items, generates
36.3pc, while flowers, as well as fruits and
vegetables, being eighth and 11th down the list,
account for 2.2pc and 1.3pc, respectively. In the
2007/2008 season, Ethiopia earned more than 525
million dollars from coffee, accounting for about
60pc of its hard currency earnings.
Compared to the transactions in horticulture produce
globally, at least in good times, the sector has a
long way to go in Ethiopia.
In the Netherlands, a country with a landmass of
41,500Sqkm, there are 4,715 flower farms, while in
Ethiopia, a country with a size of more than a
million square kilometres wider, there are only 85.
The sector specific exhibition was an opportunity
for businesses involved to voice their concerns.
Most flower growers, farm equipment suppliers,
breeders and sponsors expressed their delight, while
others asked the Prime Minister and Girma Birru,
minister of Trade and Industry, for immediate
solutions for the problems they are faced with.
The 2009 expo, the second held in Ethiopia (a
previous one was hosted in Kenya, Nairobi two years
ago), hosted 130 participants, including local ones
and those from Africa, Europe, the Middle and Far
East.
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