It is a pleasure and privilege for me to welcome you to the Expert Consultation on Cut Flower Production Development in Asia. May I take this opportunity to extend to all of you warm greetings from the Director-General of FAO, from my colleagues in the Regional Office and from myself. Special thanks are due to you all for gathering here to contribute to this important Meeting.
Floriculture has emerged as a profitable agri-business option the world over in recent years, particularly in the developing nations. World floriculture trade totals more than US$ 6,800 million (value of imports during 1995). The Netherlands alone account for nearly half of this trade and countries like Colombia, Italy, Denmark, USA, Belgium, Israel, Costa Rica, Germany, Canada, France, Spain, Kenya and Ecuador all have a share of more than US$ 100 million. Asian countries are also entering the international trade and making their presence felt. Thailand, Malaysia, China, Singapore and India are leading the Asian contribution. However, while their present share of the trade appears insignificant, the growth of these countries in recent years has been very impressive. For cut flowers with a trade of US$ 3,700 million Thailand has a share of 2%. India which now has a share of only 0.3%, had a growth rate of 563% in the 1991-95 period. The other country with impressive growth rate has been Malaysia (259%) over the same period.
Among the growing markets (cut flowers, cut foliage, live plants and cuttings) Germany with a share of US$ 2,000 million was the world's biggest market, followed by USA with a share of US$ 831 million. Japan, though seventh in ranking with a trade worth US$ 314 million, emerged as the fastest growing export market during the 1991-95 period indexing a growth of 162%. Consumption in these three countries are characterized by the domination of middle class population.
The world production of floriculture products at a very conservative estimate is valued at $ 20 billion. Japan with a production value worth US$ 3,736 million leads, and with the Netherlands (US$ 3,558 million) and the USA (US$ 3,270 million) account for nearly half of the world total.
In terms of total area in production, Asia and Pacific with an area of 134,000 ha cover nearly 60% of the total world area. A significant feature of the production area statistics is that in most Asian countries, only a small share of the area contributes to production for world trade (exports). This is because either only a small percentage of the area is under protected cultivation (as in China and India with large total areas) or the production is mainly for the domestic market (e.g. Japan). Global production of floriculture products will continue to expand, especially in new producing countries in Asia, Africa and Latin America, though the traditional large producing countries like the Netherlands will also work towards higher productivity per worker and per unit area. In general, however, the trend in production of cut flowers which is going to be very labour intensive, will tend to be located in areas with lower labour and other production costs. The production strategies will require reduced costs so that the profitability improves. For the purchaser it is not important where the flowers come from. They are mainly interested in price, quality, freshness and variety.
For the growing flower exporting countries of Asia, one of the major barrier in increasing profitability is import duty. Around the world, duties are used to protect the local flower industry from unfair competition. The only exception being Japan, among the leading floriculture markets, which charges no duty as yet. But the total imports of cut flowers into Japan are less than 7% of their trade. It remains to be seen, if Japan will continue to have no non-tariff barriers or restrictions on trade, when China, assisted by Dutch technology and quality propagating material from around the world, increases its exports to Japan, particularly considering that China itself has a duty of nearly 53% (including 13% VAT).
For Asian countries, another hampering factor is the soaring cost of air freight, which may take away the competitive advantage of low cost land, labour and year round growing climate. Various international carriers no longer prefer flowers because they have alternative and more lucrative exotic cargo such as computer chips.
The cut flower trade worth $ 3.7 billion is likely to increase by around 10% annually. The share of the developing countries of the total trade has consistently been around 20%. During the last five years there has been a consistent growth in the number of producing countries particularly among the developing nations in Asia, Africa and Latin America. In general, the world supply is increasing more than demand, resulting in reduced prices per stem. With a highly perishable product like flowers, even a small over-supply can have a dramatic effect on prices. This will require a greater attention to be paid to identifying crops ideally suited for a particular location, as well as product diversification. One must critically analyse the strengths, weaknesses, opportunities and threats before embarking on expansion of the production/trade programmes. Greater attention to high value crops, though traded in lower volumes, will increasingly become more important.
Orchids, while not a major crop in most regions, have a special place in floriculture. Another crop demanding better attention in world trade has been Anthurium. Its world trade is second only to orchids among tropical flowers. Its popularity is increasing, particularly in Asia.
Most Asian countries have potential for growing high value crops and need to devote larger areas mainly to meet the huge growing demand in Asian markets, where their freight rates will also be lower. Countries in Asia also require identification and commercialisation of certain native tropical plants to cater to niche markets in Europe and the USA.
As importers are trying to import from the cheapest country, the Asian growers could easily lose their large European market, in view of the strong competition from growers from Africa and Latin America, who may have lower freight costs and no or little import duty to pay. In addition the growers in Holland, with the advantage of producing right in the heart of the most developed market in the world, with low or no transportation cost or duty, would always enjoy the best marketing opportunity. The Japanese and the US markets with relatively low import volume will continue to satisfy their supplies from nearby countries. The other growing Asian markets like Singapore, Hongkong, South Korea, etc. are hardly in a position to accept large volumes. One also needs to consider the emerging new markets in Middle East countries and Russia. The best option however, would be for all the major flower growing nations in the region to concentrate on developing their own domestic market. With increasing consumer wealth, population concentration in major urban areas and improved living standards, India, China, South Korea among others appear to be potentially important flower consuming countries for the future. In these countries, as also in others, most flower consumption occurs around major holidays, like New Year, Valentines Day, Memorial Day, Mothers' Day, Fathers' Day, Christmas, and in wedding seasons. The governments in these countries are making sincere efforts to develop the philosophy of people with regard to flowers through strong promotional efforts. Foreign investors are being encouraged to help develop their floriculture industry through joint venture projects. All these efforts will hopefully lead to making available quality produce for the consumers. The governments will need to invest more on developing the required infrastructure, particularly for marketing like auction centres etc. (already being developed in Korea and India), and increase access to new and improved technologies and quality inputs. The efforts to develop the competitiveness in the export markets, through providing subsidies for capital investments, air freight etc. should also continue alongside.
With the growth of the flower industry the world over and increased exports, there is need to identify varieties that are most tolerant to the stresses of long shipping and storage. Consumers are seeking products which offer diversity in flower and leaf colour, good texture and form, as well as better performance in interior environments.
Efforts to develop techniques which will reduce the costs of the ultimate product for the consumer will need to be strengthened, with identification of low cost production technologies in protected conditions and refinement and reorientation of imported technology to suit our requirements.
Public concern for the environment will require Asian growers to re-examine and change their irrigation, fertilization and insect control practices. They will also have to reduce the use of pesticides and other chemicals, through effective IPM programmes and increased use of biological control methods. This is important due to the fact that, apart from environmental concerns, developing new pesticides is becoming expensive and governments in several countries are enforcing strict registration requirements for new pesticides, besides removing several pesticides from the market.
Development of the cut flower industry in the Asian region will thus require concerted efforts, not only on the part of the concerned government and growers of a country, but also joint programmes between countries of the region. In view of the commonality of problems and issues, sharing information on initiatives and developing effective networking systems among nations will lead to quicker and less expensive redressals.
Distinguished participants, my intention is not to go into details as I am aware of the fact that you all know much more on this vital subject. We in FAO, and I myself do look forward to your advice and guidance concerning a suitable strategy for the development of the Cut Flower Industry in the region. I can assure you of FAOs full support to your efforts. I wish you success in your present endeavour and a very pleasant stay in Bangkok.