Sarhad J. Agric. Vol. 23, No. 3, 2007

Restructuring of Horticultural Research and Development Project, Agriculture Research Institute, Tarnab, Peshawar -Pakistan

MARKETING OF FLORICULTURE IN NWFP

Jahan Zeb, Zaheerullah Khan and Abdul Samad Khan

ABSTRACT The study was designed to find out the Marketing channels adopted by the growers and determine the performance of existing marketing system in five districts such as Peshawar, Mardan, Haripur, Kohat and Swabi of NWFP during May, 2005. Results accomplished indicate that almost all (95%) of the total respondents grow rose plants, jasmine, Bogun vallia and other ornamental plants on their nursery forms. Beside own produced, 76% of the floricultural growers purchased ornamental plants from Patoki (Lahore) while the remaining 24% purchased ornamental plants from Guli Bagh (Mardan), Tarnab (Peshawar) and Haripur district. The main marketing channels were the whole sale markets , retailers and direct consumers. It is interesting that most of the respondents in the study area purchased plants from one another in the local market to make close contact with the consumers and to fulfill the market demand.

INTRODUCTION An intimate relationship exists between man and plants. In todays stressful life, plants are becoming more highly valued for their positive influence on human behavior. Plants provide a variety of colour, form, texture and pattern in the landscape. Beside these intangible aesthetic values, plants furnish a close contact with nature and enhance our surroundings. They contribute to the beauty of buildings by softening architectural lines and emphasizing structural details. Floriculture plants can be divided into three major groups according to their mode of propagation.

i. Annual plants, whose seed are grown every year, produce blossom the same season, and are killed by extreme weather. Tender perennials, like snapdragons and pansies, are also treated as annuals. According to their flowering season, they are classified as summer or winter annuals. These plants are grown for their aesthetic value, diversity of colour, form, size, growth habits and seasonality.

ii. Perennials plants which live for more than two growing seasons. There is a wide range of ornamental plants in this group, which differ in size, colour, flowering season, foliage and hardness. They are indispensable for landscape planting. Once planted, they remain for several seasons, and can usually be multiplied easily.

iii. Novelty plants, which do not produce seed here in Pakistan and imported such as araucaria and Ponytail palm etc.

The flower farming is an important and profitable enterprise in the Agriculture sector of Pakistan. The area under floriculture is increasing day by day, particularly in the area adjacent to big cities. In fact flower farming is labour intensive as compared to other Horticulture crops particularly vegetables rather, it lies in between the two ends with the skilled labour force and modern techniques, it has been proved that the investment in this sector yields high returns for the growers. It is evident from the increase number of nurseries, green houses, flower markets and flower auction centers and the

production of flowers turn out to be about 10,000 to 12,000 tons per annum (EPB, 2000, Govt. of Pakistan).

In ornamental plants, especially those that have scented flowers or leaves have essential oil, few are used commercially in perfumes, flavor or cosmetic industries. In all the perfumes used in the world today, oil of rose and jasmine are the most delicate perfumes used since the beginning of human civilization. Although it is very difficult to give exact figures of rose oil production, it is estimated that about ten tones of rose oil produced in the world today, of which Bulgaria produces more than five tones followed by Turkey and Morocco (K.L. Chadha et al June,1992).

In Pakistan, rose water is prepared from roses. Rose water is extensively used in flavoring foods, confectionery and funeral ceremonies. While the word Jasmine comes from Arabic word, Yasmine. Although there are several species of Jasmine that have scented flowers and which are used for making garlands and Attars. Flowers have become symbol of sentiments and an essential part of religious and social ceremonies.

Due to the varied agro-climatic conditions and relatively low cost of production, Pakistan has immense opportunities not only to meet the local demands of both traditional and cut flowers but also a high potential for export. Lack of enterprise, technical know-how, standardized methods of growing and harvesting of ornamental flowers of internationally acceptable quality, problem of packing and transportation has been a major impediment in realizing this goal. In spite of these constraints Pakistan made an effort to export ornamental flowers and buds to different countries of the world as shown in Table I.

Floriculture plays a vital role in humans life. Beside beautification it also improves the environment. It can be used as a symbol of sentiments and an essential part of religious and social ceremonies. It is also used in India and Pakistan for making Garlands and Attars.

In Pakistan, most of the flowers are produced in winter season when Europe sinks in the snow and most of the traditional functions are held during that period. Our

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country is rich in resources and has got favorable climate conditions that are very helpful for raising cut flower. Pakistan can earn its foreign exchange in billions of U.S. dollars through export fresh flowers and flower buds like the countries Sri Lanka, Iran, India, Kenya, Singapore and Thailand etc.

However farmers can be encouraged in Pakistan to grow floricultural crops. Many side businesses could also be developed. These may include pots, flower-holding materials (Baskets, vases and chemicals etc.), wrapping material for cut flowers, fertilizer, garden tools and implements etc. All these are expected to up raise the economic status of growers by export and by fulfilling local demands. However, the growers are hampered by certain problems, such as low productivity, inconsistent quality, poor handling, taken up by the Research organization to tackle these problems to reduce poverty in rural communities.

OBJECTIVES i. To describe and analyze the marketing method

followed by the producers. ii. To identify the present marketing channels

adopted by the producer and determine the performance of existing marketing system.

iii. To identify the technical and socio economics constraints in marketing system.

iv. To find out the marketing problems faced by the nurserymen.

v. To make recommendations on the basis of the findings of this research in order to improve marketing system.

MATERIALS AND METHODS An informal survey was conducted by the researchers in the first week of May, 2005. Interviews were conducted informally with individual Nursery men/ growers with out using questionnaires. An effort was made to create a relaxed atmosphere in which respondents would feel free to expresses themselves. A comprehensive questionnaire was designed on the basis of information obtained in the informal survey. For examining the validity and accuracy of the interview schedule, it was pre-tested in the field. After pre-testing, changes and modification were incorporated and interviewing schedule was finalized for the collection of data.

The aim of the study is to assess the existing marketing system of Floriculture in NWFP. However, in an empirical investigation, it is impossible to collect information from the whole population. Therefore, researchers are often forced to make inference based in information derived from representative sample of population. The sample size and variation in data usually affect the quantity and quality of information obtained from the survey. Given the limitations in term of cost, efforts, data management, traveling and time it was decided to interview 100 nurserymen/growers in Peshawar, Mardan, Haripur Kohat and Swabi districts of NWFP as shown in Table II.

Face to face interviews were conducted on marketing system in a specific field as well as general characteristics such as land owner-ship, respondents age, education level and experience in growing floriculture plants.

Analytical Work Frame There are many paradigms to determine the marketing efficiency such as productivity measure, market margin analysis, welfare analysis and structure-conduct-performance (SCP) however, for the present study analysis was confined only to market margin analysis.

Market Margins Analysis Marketing margins are the differences between prices at different market levels. Marketing margins will be estimated on the basis of data obtained on prices at different stages of the marketing chain. Beside this, marketing margins were calculated through computing the absolute margin or price spread, which is essentially the same as the difference between the prices paid and received by each specific marketing agency. The following formula was used to compute percentage-marketing margins as earned by each market intermediary involved in the marketing of floriculture. Mm = (Ps x 100)/Sp Where Mm indicates the marketing margins earned by a specific agency, Ps stands for price spread availed by that agency and Sp represents sale price of the same agency for the same commodity

Net Margin The net margins of a specific agency are the net earnings, which it earns after paying all marketing costs. Net earnings of various market agencies involved in floriculture marketing were computed with the following formula. Nm = Ps Mc Where, Nm stands for net margins, Ps indicates the price spread availed by the specific agency and Mc represents marketing costs incurred by the same agency.

The replies of the respondents were codified and the data was entered in the computer, using SPSS package. Keeping in view the specific objectives of the study data was analyzed using relevant techniques of data analyses, in Statistical Package for Social Sciences (SPSS) soft ware package.

Limitation of the Study Every effort was made to assure the respondents about the purpose of study, however the respondents were hesitant and reluctant to provide information regarding their income and sale price of the plants.

i. The quantitative data given were only estimates to the best knowledge of the respondents, as most of them did not keep records. ii. In two districts such as Kohat and Swabi the sampling plan was not carried out properly because of limited number of nurserymen.

RESULTS AND DISCUSSION Farm Size of the Nurserymen Operational land holding of farmers plays a significant role in the adoption of new technology. Farmers with higher holdings can spare more area than those with smallholdings to grow and cultivate new crops. A number of studies indicated that the size of landholding

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affects the efficient utilization of resources and type of cropping pattern a farmer will follow e.g. Singh, 1981; Chaudry et al., 1985, Mureithi et al., 1992; Kapronczai and Tomka, 1991 and Thakur et al., 1990 and many other researchers reported that small farms were more efficient than large ones. On the other hand, Griffin, 1970; found a positive relationship between farm size and productivity.

Nursery production is mainly depends on farm size. The average own nursery farm size in the research area was 12.8 kanals, while the farm size of leasedin area was recorded 4.6 kanals per floriculture grower and the average size of operational land holding was 8.8 kanals of the sampled respondents in the study area as shown in Table III. In the study area the lease amount was high as compared to agriculture land due to commercial land and the nurserymen got lease land on year basis amounting Rs. 6000/Kanal.

Break Down of Farmers Income From Nursery Farm Various factors are responsible for selection of crop enterprises e.g. irrigation water availability, agro-ecological zone, livestock rearing, markets opportunities and trend in the area. In the study area nursery business was one of the profitable activities, for income generation. In four districts of NWFP where the survey was conducted, 40% of the total respondents stated the ornamental plants as the main source of income, while 36% mentioned forest plants as the main source of their income and the remaining 24% of the respondents were earning income from fruit plants as depicted in figure 1.

Own Production of Floriculture Plants The common plants grown by the nurserymen in NWFP during a year include Rose plants, Jasmine, Bouganvallia and other ornamental plants such as Dracena, Schefflara, Ashoka, Money plants and Elephant Ear etc.

Rose plants are grown by 95% of the total respondents in the research area of NWFP. Rose plants raised from cutting, varies from 200 to 5000 with an average number of 2720 plants. In district Haripur a large number of rose plants (3750) were propagated as compare to other districts as shown in Table IV. More than 95% of the total respondents propagated jasmine, Bouganvallia and other ornamental plants in the research area, while the seasonal plants are only raised in two districts such as Peshawar and Haripur. The result shows that all of the Respondents (99%) grown ornamental plants in the target area. It is remarkable that like all other floral plants, ornamental plants were grown in large number of quantity in district Haripur.

Floriculture plants purchased from other Markets. To fulfill the market demand majority of the sampled respondents purchased ornamental plants from other markets beside their own produced. Seventy six percent of the respondents purchased rose plants (6400) on average from other markets. An average number of Variegated Bouganvellia plants (465) purchased from other markets by 61% of the respondents, while the other ornamental plants (3200) were purchased by 67% of the total respondents from other markets during last season as shown in Table V. Beside their own produced

a large number of floriculture plants purchased from other markets by the nurserymen in district Haripur.

Beside own produced 76% of the floriculture grower purchased ornamental plants from Patooki (Lahore), while the remaining 24% purchased ornamental plants from Guli bagh (Mardan), Tarnab (Peshawar) and Haripur as depicted in Fig. 2. The plants such as Rose, jasmine and bouganvellia, purchased from Patooki (Lahore) market were better in quality and had the ability to attract consumer, while some other ornamental plants (Araucaria and Ponytail Palm) were not propagated in NWFP. Cyprus plants were mostly marketed from Haripur district. It is interesting that some of the rose plants produced by their own left for other season, while the plants purchased from other markets sold during the season because of better quality. The plants left in the season were transferred from plastic bags to pots and marketed in the next season on a higher price.

Marketing Channels A channel of distribution, sometime called a trade channel, for a product is the route taken by the title to the goods, as they move from the producer to the ultimate consumer or final destination. A channel always includes both the producer and the final consumer for the products, as well as all agents and merchant middlemen involved in the title transfer (Khan, 1999). Cox and Thomas (1969) defined marketing channel as: a network of cooperating organizations that together perform all the activities required to link producers of goods and services to the end-users.

Thirty eight percent floriculture growers in NWFP mainly sold their produce to wholesalers and directly to the consumer in the local market or at their farm. Some of the growers (34%) sold their plants directly to the consumers. Those growers, who have nursery farms in the villages or far away from National High Ways, sold their floriculture plants to whole seller (18%) or retailer/consumer (10%) as mentioned in Table VI. In this business retailer are hawkers, selling from barrows consisting of wooden or straw baskets. They move from street to street to offer plants for sale. Retailer buys plants from the whole seller or growers on a credit basis. They repay the amount to the whole seller or growers the next day, after selling the plants. It is interesting that most of the respondents in the study area purchased plants from one another in the local market to make close contact with the consumers and to fulfill the market demand. Marketing Channels of Floriculture in NWFP is also represented in Fig. 3.

Basis For Price Fixation Government has left all marketing activities and exports to the private sector and there is no restriction of its movements from one to another place. Thus, it can be concluded that floriculture marketing is not perfectly competitive, but it is sufficiently competitive to prevent traders from reaping excessive margins. A large number of buyers and seller participate and none is able to corner exclusive access to supplies. There is a competition at each stage of the marketing chain. The prices normally set by supply and demand factors, and

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no intermediaries are able to manipulate prices (Khushk, 2001) In the research area, more than half (54%) of the total sampled had a great competition among each other for the sale price of plants. Twenty three percent fixed prices by frequents visits to market and get information regarding prices, while the remaining 23% fixed prices on the basis of last year prices and with the consultation of fellow producers as shown in Table VII.

Labour Hiring For Floriculture Marketing Data regarding labour hiring for floriculture show that 7% of the floriculture growers did not hire any labour and used only family labour while the remaining 93% used hired labour as well as family labor. Hired labour ranged from 2 to 5 with an average of 2 labour per nursery farm. They are well- experienced labour in nursery farming and getting Rs. 2100/month on average on regular basis. These labour mostly used for growing plants, curing, loading, unloading, and some time to attend the consumer.

Price Spread and Marketing Margin Marketing margins are the differences between prices at two market levels and are commonly used to examine the differences between producer and consumer prices for a commodity. Marketing margins represent the price charged by market agencies for their services including buying , packing, transportation, storage and processing. Under competitive market conditions the market margins are the result of demand for marketing services and equal to the minimum cost of services provided plus normal profit (Scarborough and Kydd, 1992).

Data with respect to marketing of floriculture show that average purchase price of rose plant was Rs. 7 per plant and sale price was Rs.10 per plant. The bougan vellia variegated plant average purchase price was Rs.25 and sale price was Rs.40. The Price spread for rose, Bougan vellia (verigated) and Jasmine plants are given in Table VIII.

Market Margins Analysis Marketing Margins calculated for different agencies in floriculture marketing in the research area are as below.

Marketing Margin (Mm) for rose plant = 70.00 Marketing Margin (Mm) for bouganvellia plant = 62.50 Marketing Margin (Mm) for jasmine plant = 57.14

Net Margin Net Margins calculated for different floral plants in NWFP are as below Net Margin (NM) for rose plant = 1 Net Margin (NM) for bouganvellia verigated plant = 10 Net Margin (NM) for jasmine plant = 2

Credit and Source Of Credit At present a number of agencies (both formal and informal) are extending loans to the farmers to fulfill their financial requirements. Among formal credit sources, banks are the main source for credit in the

country. In the research area only 13% respondents received loan to run their business, while the remaining 87% respondents did not receive any loan. Those who received credit, only 31% from formal source such as banks, while the remaining received loan from informal sources like friends and relatives. In district Mardan the informal credit percentage was greater as compared to other districts of NWFP.

Problem Faced By The Respondents Most of the respondents in the research area stated various problems regarding nursery business. Major problem reported by the respondents (61%) was non-availability of credit facilities. Sixty percent reported electricity bills on commercial basis as a big problem. Non-availability of strong organization, lack of irrigation and national highway Authority were the other main problems reported by 25%, 40% and 24% respondents in the study area respectively.

CONCLUSION AND RECOMMENDATIONS There is tremendous potential for the cultivation of cut flowers on commercial scale due to the prevailing of favorable soil and climatic condition in this part of the world. This makes it possible to produce floriculture plants almost round the year. However there are constraints in the development of floriculture industry due to substandard quality of planting material, inadequate and low financial investments by private sector, insufficient incentives and support from the governments, poor marketing, absence of standardization of packing and post harvest technology, lack of availability of good quality high value plants material and infrastructure facilities for scientific handling transportation and marketing.

Keeping in view of the above points, Government must announce incentives to make this industry profitable by providing seeds, cuttings or saplings etc. for sowing / planting which should be exempted from the whole of customs duty, for the storage of the export consignments, awaiting cargo at international airports, walk-in type cold storage should be set up and a subsidy on air freight should be allowed for the export of cut flowers by air. Moreover, the specified goods for green houses should also be brought down and finally import of flower seeds and tissue culture material of any plant material should be allowed without the need of import permit. In addition to this electricity should be provided on Agriculture basis instead of commercial.

Our country is rich in resources and has got favorable climatic conditions which are very helpful for the cultivation of floriculture crops. Pakistan can earn its foreign exchange in billions of U.S. dollars like the countries Sri Lanka, Iran, India, Kenya, Singapore and Thailand etc. However farmers can be encouraged in Pakistan to grow floricultural crops. Many side businesses could also be developed which include pots, flower-holding materials (Baskets, vases and chemicals etc.), wrapping material for cut flowers, fertilizer, garden tools and implements etc. All this is expected to raise the income of floriculture growers by export and by fulfilling local demands of floral plants.

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Floral Plant Producers

Wholesalers/Consumers

Wholesalers

Retailers/ Consumers

38%

34% 18%

10%

Consumers

Fig-1 Break down of farmers income from nursery farm in NWFP

Fig. --3: Marketing Channels of Floral Plants in NWFP

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Table -I Export of fresh cut flowers and buds from Pakistan 2002-03 2003-04 Items/Countries

Quantity in Kg

Rs Quantity in Kg

Rs

Fresh cut flowers and buds

22528 2,085,000 22425 1,596,000

Australia 7,501 920,000 3,788 379,000 Dubai 6,501 416,000 11,442 694,000

Germany - - 20 2,000 Hong Kong 200 15,000 - -

Japan 1,600 264,000 - - Lebanon 3,650 102,000 2,050 99,000

Netherlands - - 1,000 162,000 Qatar - - 1,000 72,000

Saudi Arabia 2,095 141,000 2,930 172,000 United Kingdom 1,312 226,000 195 15,000 Fresh flowers

And flower buds 82,055 5,999,000 135,333 8,519,000

Australia 7,580 779,000 7,920 788,000 Canada - - 960 95,000 Dubai 32,395 1,149,000 - -

Egypt (U.A.R) 7,000 673,000 29,910 1,319,000 Germany 15,750 1,631,000 37,872 3,471,000

Hong kong - - 300 34,000 Iraq - - 7,950 239,000

Jordan - - 11,261 675,000 New Zealand 8,400 436,000 - -

O Asia (Tai.For.Pe.Ki)

- - 6,000 296,000

Qatar - - 2,600 96,000 Saudi Arabia 50 1,000 17,970 827,000 U.S. America 7,500 1,068,000 3,780 253,000

United Kingdom 3,380 263,000 810 71,000 Yemen - - 8,000 356.000

Source: Export promotion Bureau of Pakistan (2004).

Table- II Distribution of sample for Floriculture Marketing Survey, 2005 Districts Sample size Peshawar 40 Mardan 30 Hari pur 15 Kohat 8 Swabi 7 All 100

Table -III Farm size of the Nurserymen by various districts of NWFP District Owned area in

Kanals Leased

area in kanals Opera

tional area in kanals

Lease Rs/kanal

/year Peshawar 5.7 3.2 4.9 6958 Mardan 7.0 5.2 6.0 5255 Hari pur 30.1 13.6 31.4 3536

Swabi/Kohat 1.0 2.2 2.1 5535 Total 12.8 4.6 8.8 5908

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Table - IV The average number of ornamental plants produced during a year by various Districts of NWFP.

Districts Plants produced Pesha

war M

ardan H

ari Pur Kohat/S

wabi All

Rose plants 2183 3124

3750

2200 2720

Jasmine plants 1900 2127

4520

1215 2305

Bouganvallia 2748 2750

6150

1200 3003

Other Ornamental plants

7400 7865

12600

3366 7716

Seasonal flowers 4166 - 4500

- 4164

Table V An average number of floriculture plants purchased from other Markets during a year by Districts.

Districts Plants purchased Peshaw

ar Ma

rdan H

ari Pur Kohat

/Swabi All

Rose plants 8800 4180

9285

2090 6400

Jasmine plants 780 1240

900

360 800

Bougainvillea 360 380 770

360 465

Other ornamental plants

2250 1585

7450

2830 3195

Table-VI Marketing Channels of Floriculture plants by various districts of NWFP. Districts Marketing

Channels Peshawar Mardan Hari pur

Swabi/Kohat Total

Whole sale market

10.0 35.0 7.0 20.0 18.0

Direct consumer

40.0 21.0 20.0 60.0 34.0

Whole sale market/Direct consumer

38.0 39.0 73.0 - 38.0

Retailer/Direct consumer

13.0 7.0 20.0 10.0

Total 100.0 100.0 100.0 100.0 100.0

Table-VII Prices fixation by various districts of NWFP. District Variables

Peshawar Mardan Hari pur

Swabi/Kohat

Tota l

Last year price

15 13 7 40 17

Market survey

22 17 53 7 23

Competition 63 57 33 47 54 Consultation

with Fellow producer 0 13 7 6 6

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Table VIII Price spread for various plants in floriculture Marketing. Floral Plants Wholesale

Price (Rs) Retail Price

(Rs) Price Spread (Rs)

Rose plant 7 10 3

Bouganvellia (variegated)

25 40 15

Jasmine plant 4 7 3

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