Floriculture business in the Nilgiris - an economic analysis

T.M. Gajanana, M. Sudha, D. Sreenivasa Murthy and V. Dakshinamoorthy

IIHR, Bangalore

Area and Production of flower cropsYear Area (ha) Production (t)

(lakh No)

1991-92 30,909 1,48,603

(22)

1993-94 53,212 2,32,536.32

(5122.75)

1995-96 81,923 3,33,758.79

(5368.4)

1997-98 65,696 3,65,685

(6121.523)

1999-00 88,607 5,09,193.60

(6806)

2005-06 126235 6,93,401

(27618)

Major flower growing states

State % area under flowers

Tamil Nadu 29.18

Karnataka 22.53

Andhra Pradesh 11.51

Maharashtra 8.09

West Bengal 6.10

These five states account for about 71% area under flowers in the country.

Floriculture Business

Non-traditional floriculture/Hi-tech floriculture(Modern/Cut flowers):

The flowers are usually harvested with a long stem which are used for vase purposes, office arrangements, bouquets, hand posy and for gift purposes.

Modern/Cut flowers : Gladiolihi-tech RoseCarnationGerberaOrchidsAnthuriums

Lilium

Trend in Export of Floricultural products (Rs. Millions)

Particulars 1991-92 1994-95 1997-98 2001-02 CGR* (%)

Cut flowers 3.99 29.98 189.41 557 64.03

Dried flowers

64.35 195.78 581.10 940 33.55

Live plants 40.15 60.43 33.73 15 -12.17

Dried plants

23.99 10.35 48.38 - 9.45

Bulbs, Tubers etc

12.06 11.83 29.81 25 11.93

Total 144.54 308.37 882.43 1535 29.47

* Compound Growth Rate; The total export value for the year 2005-06 is Rs. 2994 million.

Export of Floriculture products

29%

51%

14%

2%4%1996-97

61%

1%

0%2%

36%

2001-02

49%

3%

18%

30%

Cut flowers

Dried flowers

Live plants

Dry plants

1991-92

Floriculture business in the Nilgiris, TN

• Genesis• Established comparative and competitive advantage for Tea• Agro climatic potential for a variety of flower crops– untapped• Changing global order demands crop diversification?

• Objectives• To examine the present production and marketing

opportunities for floricultural crops in Nilgiris district and • To estimate the market potential and there of the marketing

strategies for boosting floriculture business in the district.

Focus Area and crops

• Focus area• Udhagai (42%) Coonoor (19.87%) and Gudalur

(32.9%) – production centres• Bangalore and Coimbatore – Destination centres

• Focus crops• Carnation (28.98%), bird of paradise (22.3%),

anthurium (15.55%), lilium (11.88%), rose (10.8%), alstroemeria (5.19%) and gerbera (2.48%)

Methodology• Survey and Rapid Appraisal

• Detailed costs, returns and profit analysis of selected crops

• Market survey and analysis

• Estimation of demand and supply

• Market potential estimation

Study area

• HADP, Nilgiris

Analytical Tools- Market Supply estimation

• Market supply or production of cut flowers

Sj = Qj x Aj Where

Sj = Total production of jth cut flower crop per annum in lakh numbers

Qj = Yield per hectare of jth cut flower

in lakh numbers

Aj = Area under jth flower crop in hectares

Market demand estimation

Dj = {∑Qij(WS) } + Qj(RL) i = 1 to n markets Where Dj = Demand for jth cut flower crop per annum in lakh numbersQij (WS)= Quantity demanded of jth flower crop per annum by the wholesalers in the ith market in lakh numbersQj(RL) = Quantity demanded of jth flower crop per annum by the retailers in the local market in lakh numbers

Items Carnation Gerbera Lilium Rose (without subsidy)

Rose (With

subsidy)

Costs 187652 149477 1233414 121912 94586

GR 393120 160560 1688000 99750 99750

NR 205468 11083 454586 -22162 5154

Yield (No) 144000 48960 80000 52500 52500

Cost of Production (Rs/stem)

1.30 3.05 15.42 2.32 1.80

Price (Rs/stem) 2.73 3.28 17.10 1.90 1.90

NR 1.43 0.23 1.68 -0.42 0.10

BCR 2.09 1.07 1.37 - 1.05

Comparative Economics of Flowers grown in Ooty (Rs/500 m2)

Margin of wholesaler in cut flower trade

Flower Purchase price

Marketing cost

Selling price

wholesaler’s margin

Carnation

Star Hotels 3.00 - 5.00 2.00(67%)

Bangalore 3.00 0.14 3.50 0.36(12%)

Coimbatore 2.50 0.10 3.00 0.40(16%)

Kolkata 3.00 0.39 4.00 1.00(33.3%)

Gerbera

Bangalore 3.00 4.00 1.00(25%)

Bird of paradise

Star Hotels 10.00 - 15.00 5.00(50%)

Margin of retailer in cut flower sale at Ooty

Flower Purchase price

Marketing cost

Selling price

Retailer’s margin

Carnation 3.00 - 5.00 2.00(67%)

Alstroemeria 1.50 - 2.50 1.00(67%)

Rose 4.00 0.16 6.00 1.84(46%)

Gladioli 4.00 0.16 6.00 1.84(46%)

Margin of retailer in cut flower sale in Coimbatore

Flower Purchase price

Marketing cost

Selling price

Retailer’s margin

Carnation 3.00 0.16 4.00 0.84(28%)

Alstroemeria 1.00 0.10 1.50 0.40(40%)

Bouquets 50.00 - 75.00 25.00(50%)

Bouquet 125.00 - 200.00 75(60%)

Bouquet 150.00 - 300.00 150(100%)

Arrangement 500.00 - 1000.00 500 (100%)

Estimated Supply and Demand for flowers

(Lakh stems)

Cut flower Annual supply

Demand Excess Demand

Carnation 201.15 238.01 36.86 (18%)

Gerbera 10.06 21.98 11.92 (118%)

Lilium 49.50 50.31 0.81 (1.63%)

Rose 31.25 * -

Alstromeria 36.00 39.65 3.65 (10%)

Anthurium 5.60 5.85 0.25 (4%)

Bird of Paradise

2.32 2.94 0.62 (27%)

Sl.No. Year Value (Rs.lakh) Major importing countries

1 1996-97 1808.15 Japan(39), Netherlands(28), UK(8), USA(8), Germany(7), Singapore(3)

3 1998-99 2511.66 Japan(33), Netherlands(19), Singapore(6), Australia(6), USA(6),

UK(6), UAE(4), Switzerland(3)

3 2000-01 3909.68 Japan(23), Netherlands(19), Switzerland(8), Italy(8),

USA(6),Singapore(5), UAE(5)

4 2002-03 4323.38 Japan(49),Netherlands(7), France(7), Germany(4), Australia(3)

5 2004-05 3611.90 Japan (40), Netherlands (19),UAE(5), Australia(5), Singapore (4), Italy(4)

6 2005-06 7413.07 Japan, (72) Netherlands(5), UK(2), USA(3), Australia(2), UAE(3), Switzerland(1), Italy(1),France(1)

Export of cut flowers from India

Recent developments in marketing of cut flowers

• Contract price – carnation, gerbera, lilium, rose, alstromeria

• Infrastructure park – cold storage, packing etc.• Value addition – bouquets, pot arrangements,

office arrangements, • E-marketing – dew drops - online marketing• IFAB – Online marketing of flowers• AEZ – Coorg in Karnataka for Anthuriums, Ooty

in TN for carnation, gerbera, Uttaranchal for Gladiolus

Constraints in production and marketing of cut flowers in Nilgiris

• Quality planting material – bulbs to be imported. • Flower cultivation is capital intensive – lack of

technical knowledge• Problems of pests and diseases - botrytis • Local markets absorb small quantity –

dependence on intermediaries for external demand

• Credit sales of flowers – payment default• Absence of specialized packing and transport –

wastage of flowers• Export of Ooty flowers is not yet a reality

Existing Institutional support for cut flowers in Nilgiris

• Department of Horticulture, Government of Tamil Nadu • Hill Area Development Programme (HADP) and Central

Sector Schemes through Tamil Nadu Agricultural University, Ooty

• UPASI Krishi Vigyana Kendra • Nilgiris Integrated Flori-tech Company Ltd. (NIFCO) -

SHG, women

Future strategy

• Identifying regional specialization pockets • Expansion of area under floricultural crops• Supply of quality planting materials by opening

up of public/private plant material multiplication centre at Ooty itself

• Training growers on production technology and drying of flowers

• Exploring the possibilities of opening up an auction centre for cut flowers in Ooty

Developing working models that integrate

production with marketing

• Model 1: Integrating production with marketing

• Model II : Integrated production with marketing and value addition-Establishing a model ‘Flower boutique’

• Establishing Floriculture Infrastructure Parks (FIP)

• Setting up of e-commerce in cut flower trade

Shade net and open ffield cultivated flowers

Ant huriums Bird of paradise

Carnations

Gerbera

Rose Liliums

Polyhouse grown flowers

Flower packing and arrangements

ACKNOWLEDGEMENTS

• Sri. S.J. Chiru, IAS, Project Director, HADP, Udhagai

• Dr S. D. Shikhamany, Director, IIHR, Bangalore

• Mr. Shivan, NIFCO Flowers• Chairman, CPC, IIHR, Bangalore• Department of Horticulture,

Udhagamandalam and Gudalur• Producers of cut flowers, Nilgiris district• Flower Traders in Ooty, Bangalore and

Coimbatore

Thank You