Addis Fortune (Addis Ababa) - 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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