PROBLEMS AND PROSPECTS ON EXPORTS OF CUT-FLOWER IN

ETHIOPIA

Chapter One
1. Introduction
1.1 Back Ground of the study

For growth and development of a country’s economy the performance of the

export sector is of vital importance. This is particularly true for developing
countries whose economic activity mainly depend on imported materials.

Most of underdeveloped country are engaged in the export of agricultural product

and this product are mostly primary product .Todaro (1994:p407) says

Throughout Africa, Latin-American and Asia primary product export have

traditionalized accounted for a sizable portion of individual gross national
products. In some of the smaller counties ,any were from 25 percent to 40 percent
of the monetary gross national product (GDP)is derived from the overseas sale of
agricultural and other primary product of commodities such as
coffee ,cocoa ,sugar, palm oil and copper.”

Looking at this data the over dependency of Ethiopia export on a few agricultural
commodities cannot be over stated. In connection with this Griogis says

Ethiopians export sector is characterized by over dependences on few

agricultural product, with very limited exports of manufactured and senior
manufactured good (Griorgis Tekle, 1992, P37)

With regard to development in Ethiopia since 1992, no basic up turn has been
circumvented until recently despite changes and policy reforms measures taken by
government .before1999, these were only two private producers and two long –
established state owned enterprises operating in floriculture industry (Ghiorgis
Tekel, 1992, p 53)

All this four companies’ production has been dominated by Open field flowers of
Allium and static with very small plots under green house at Meskel Flowers
P.L.C. (Eskindir Joseph, 1999, p 73)

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1.2 Statement of the Problem

Ethiopian’s export economy is characterized by export of primary agricultural

products. These agricultural products are few in number and of their price is
determined and influenced by the fluctuating world market prices.

To overcome these market hazards producing the best quality product in one
whereas producing new kind of products whose demand is high on the present
world market in the other. Cut flower is one of the blooming new sectors for
export market.

Cut flower exports have an impact on a country’s economy by increasing the

diversification of the country’s export. But, there is a lack of data in which export
of cut flower contributes to the country’s economy. When an increase in the
diversification the country’s export leads to a country enable to adjust the negative
trade balance. In addition to this it also creates job opportunities for
unemployment.

It is not more than a decade since Ethiopia started producing cut flower for export
market. However, compared to other countries Ethiopia’s floriculture industry is
not at the desirable level and it is not exploiting the potential that a country has.
Different problems and obstacles are mentioned for this reason. The bureaucratic
bottlenecks up to shortage and even some times the absence of infrastructure are
the main reasons that hinder the development of the sector.

1.3 Objective of the Study

The general objective of the study is to analyze the problems and prospects of
export of cut flower in Ethiopia.
The specific objective of the study is to:
 Assess the problems related to the production and export of cut
flower

 Investigate the contribution of floriculture in the overall economy

 Analyze the potential and prospects of cut flower industry in

Ethiopia

 Give recommend solution and suggestions

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1.4 Hypothesis of the Study

 Export of cut flower has a major contribution to a country’s
employment and export earnings.

 Export of flower in Ethiopia generally contributes a lot to the

economy.

1.5 Significance of the Study

The significance of this paper is to create awareness to those who are
concerned and involved in the floriculture industry for the
betterment of this sector.

Moreover the study tries to provide information to policy makers

and potential investors about problems to tackle and advantage to
enhance for the overall performance of cut flower industry.

1.6 Scope of the Study

Most recently in Ethiopia cut flower industry is growing in lips and
pounds that means in a fast speed, particularly in the highland Rose
production and export. A lot more new projects are under going in
establishment and pre operational stages.

So, the scope of this paper is restricted to the assessment of problems

and prospects of the sector too.

1.7 Data Sources and Methodology

The analysis of this research conducted through descriptive
technique.

The type of data used is mainly a secondary data sources from

Ethiopian Horticulture Association annual reports and producers
from Export Promotion Agency and Ethiopian Customs Authority.

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Chapter Two
Literature Review
2.1 Historical Evolution of Cut- Flower Industry in Ethiopia

Introduction of cut- flower in to Ethiopia for commercial purpose goes back

to1980/81, which is now twenty eight years ago. The first fresh cut –flower
production was commenced in 1981/82 GC crop season. These had not been cut-
flower production during the emperor era. The ex-government had established
Horti- culture Development Corporation as government parastatals responsible
both the regulation and production over for marketing of horticulture products
including flowers (Sisay Habte, 2001, page 155)

During the trial and adaptation periods about 20 species of different cut flowers
were introduced in to the country from abroad. Some of the species introduce
include carnations, Gladiolus, Deciplinium, Mawcella, Artiflex, Allium, Statice,
Euphorbia, Carthamos, and Amimagus-Din (Sisay Kibret, 1992, p 32)

Based on the trial results, some species and varieties were selected and
recommended species and varieties were discarded from production shortly after
and other lately. In general recommendation and selections by commercial use
were not made through normal regulations. This had created discarding of species
from the production line because of failurities observed in subsequent production
period. (Sisay Kibret, Nov 1992, p48)

Production and export of cut-flower in Ethiopia was not established with well
planned main objectives of profit seeking but foreign exchange earnings. As the
result of this, the industry was one of the highly subsidized sub- sectors during the
previous regime, said Ato Tsegaye, president of Ethiopia Horticultural producers
and exporters association.

“During the Dergue regime command based ambitious outlook of previous

government officials and at large absence of privet sectors driven initial start ups
and in subsequent production export in believed to be the main root cause of flows
and failures faced the industry in the past” (Ato Tsegaye, the president of Ethiopia
Horticultural producers and exporters association)

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For the country to be competent in the world floriculture market without
introduction of necessary and adequate modern technologies, facilities and man
power is impossible. It is hardly to say these was proper and efficient matching of
production and marketing activities. Absence of efficiency management and
supervision, short falls made at trial and adaptation stages of species, and above all
missing the engine role of the private sector together with the aforementioned
reasons brought about unsatisfactory results.

Even though some experiences gain in the past 20 years, the contribution of the
industry to the countries growth has been insignificant. When measured from the
time series view point of long period elapsed.
( Eskinder Joseph, 1999, page 122).

Decline both in land dedicated and production, fluctuation in non productivity

where characteristic features of Ethiopia floriculture industry. (Ethiopian export
promotion Agency, 2004, page 7)

Most recently more numbers of flower projects is springing up particularly in

highland rose production and export investment activities; but it should be noticed
that the countries floriculture

2.2 Regional Distribution of Flower Industries in Ethiopia

Industry is still at the nascent stage, even though the number of approved projects
in increasing rate. (Survey of the Ethiopian economy, journal 1999, page 2)

Regionally all flower projects are concentrated in three regions Oromiya, taking
the largest share followed by Addis Ababa and Southern nations and nationalities
peoples republic. West showa Zones of Oromiya, West showa, East Showa, South
Showa, South West Showa, North Showa, Arsi. And that is why Oromiya region
is considered to be the ideal site of cultivation of the best quality and higher in
quantity flowers in Ethiopia. This is because the region has relatively better
infrastructure, fertile soil, and favorable weather condition for cultivating many
varieties of flowers. (Oromiya investment Bureau report, 2008, p56)

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There are 145 approved projects where 36 projects are operating and the
remaining is under implementation, construction, and some are not implemented
and some projects are abandoned (Oromiya investment Bureau report, 2008, p4).

But most flower industries which have started exporting are located in Addis
Ababa, the capital, with altitude, elevated about 2000 meters, and are the most
suitable place for the production of high quality roses. Besides its suitable weather,
all the infrastructures like roads, power, telecommunication and water have been
availed for the investors in floriculture sector. From the 36 projects that have
started their production and export 25 are located in this area. Generally Ethiopia
highland provides ideal and conductive growing condition including Addis Ababa
and some regions of Oromiya, especially for the production of roses (Oromiya
investment Bureau report, 2008, p6).

Upper Awash valley, Ziway farm and Gibe farms are farms suitable and high
production areas for cut flowers and other vegetables

2.3 Labor –Intensive Method of Production

Daily laborers and skilled workers who are operating the computerized control
system and other works from the time of plantation to the time of harvest perform
major operations in floriculture farms. The following are types of workers to be
done by laborers employed in any flower industries:-
 Canal clearing
 Slashing
 Residual collection and burning
 Residual disposal
 Furrow shaping
 Pre-irrigation
 Bulb grading
 Planting
 Fertilizer application
 Irrigation
 Replanting
 Weeding and cultivation
 Field sanitation
 Spraying

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 Harvesting
 Transport to park house
 Packing and grading
 Stepping and strapping
 Labeling and recording
 Loading
 Dumping spoiled produce
 Crop guarding
Source: - VAATE, labor requirement plan of 2001/02.

Until recently, there was no training program specifically designed to horticulture

(floriculture) production, post harvest and marketing. (Ethiopia export promotion
Agency, 2004, page 12). In addition to all above mentioned types of works to be
performed by laborers, and absence of on job skill updating training aggravated
the problem in the field of horticulture.

Although Harmaya University and Jimma University have started to give training
of students, the training is not as such sufficient enough and the number of
students is not also sufficient enough so as to extract the potential that the flower
industries have with respect to the potential that Ethiopia has (Ethiopian export
promotion Agency, 2004, page 115).

All the above mentioned types of works are performed by workers who are
supplied with labour from competent workers especially in peak seasons. But
majority of labor operations of flowers are performed by workers from the
surrounding and within the farms (children of permanent employees)

There is a great variation is noticed on labor requirement between companies and

types of products they produce and export flower called stat ice requires higher
number of workers. Even though there are acceptable differences based on soil
type, temperature, altitude, diseases and insect pest prevalence level, the land
situation and productivity differences and management efficiency, but it is difficult
to accept and justify such huge gap of 50 % variation between two farms for the
crop. Detail labor operation required per hectare and frequency of operation is
different for different farms (Ethiopia export promotion Agency, 2004, page 123).

2.4 Profile of the world cut-flower industry

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The potential for the production and marketing of floriculture products in the
world market is limited geographically. Western Europe providing the biggest
market of cut- flower in the world followed by Latin America being influenced by
the superior quality of cut-roses from the highland of Ecuador increased its export.
(Sisay Habte, 2001, page 202).
In Africa although Kenya and Morocco started a head new producers such as
Tanzania, Uganda, Zambia, Malawi and Zimbabwe entered the market in around
1990 or latter and their world market shares grow from year to year(Sisay Kibret,
Nov 1992, p49).

Western Europe’s major supply of commercially produced flower from Africa is

Kenya. During the mid 1997s few farmers started growing and exporting flowers
from around Lake Naivasha area (Sisay Habte, 2001, page 73).

Taking the suitable climate and relatively cheap cost of production in to

consideration Kenya’s small and medium scale growers developed approximately
1,200 hectares under flowers. Currently Kenya produces and exports over 40
different varieties of flowers (Sisay Habte, 2001, page 102)
Kenya produces cut-flowers almost exclusively for export, supplying 98 % of its
40 types of flowers to European countries. As the result of the home convention
Kenya does not suffer from import quotas or levies in Europe (Sisay Habte, 2001,
page 37).

Horticulture products of which 35 % are cut-flowers occupy a third position in

Kenya’s exports after coffee and tea. The fact that 1(one) hectare of flowers can
yield as much income as 30 hectares of tea shows that the flower business can be
very profitable. A flower constitutes an industry that earns more than 40 million
USD a year in Kenya (Sisay Habte, 2001, page 122).

The area under production of cut-flowers is above 700 hectare. Carnation, Statice,
Alstromeria and roses are the most important flowers grown. The land used for
flowers cultivation is among the best agricultural areas in Kenya, such as the
irrigated land surrounding Lake Naivasha. This had led people to argue that the
production of flowers is extracting land that was or should be used for food
production (Sisay Habte, 2001, page 142).

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The three other largest companies Sulmac, Oserian and Shalimar have their own
transport and storage facilities such as cold storage were house, and there producer
are dependent on them (Sisay Habte, 2001, page 153).

Sulmac sends most of its product through the distributor Kenya flowers to
Germany while Oserian makes total used of the Dutch auction system. For a part
of the first company of arrival is not its final destination (Ethiopian export
promotion Agency, 2004, page 17).

Kenya and Zimbabwe are the leading flower exporters in Africa. South Africa,
Uganda, Tanzania, and Zambia are major producers, while some other African
countries export a much smaller volume. Two options are open to Africa growers;
to directly market their flowers to consumer countries, or export them through the
Netherlands auctions

2.5 Description, Types, Usage and Quality Requirement

of flowers for trade

The flower industry mainly comprises the cultivation and trade in cut- flowers,
cut-foliage, potted plants and bedding plants. The main representatives of cut-
flowers are: - the rose, Chrrsan, Themum, carnation and Rilz. “Potted plants and
cut -flowers have 80 % share of the world trade in ornamental plant products”
(Agricultural economics Research institute, LEI -DLO, world conference, 2007).

Among different varieties of flowers the most preferable one is that of roses,
which have high demand for and this is due to its attractiveness and the message it
holds.
Although flowers are used for expressing different types of feelings, happiness,
sorrow, love, and other deep feelings these all are included under ornamental
purpose.
These are different types of flowers:-
 Jupiter
 Marie - Claire
 Sweet avito
 Tucan
 Summer flower
 Shanti

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 Respect
 Happy hour
 Carnation
Some meaning and messages signified by flower. In central broadcast institute’s
publication of European Union market survey 2000 for cut- flower species are:-
Flower name Message (meaning) signified
Roses------------------------------------------------Love
Gladiolus-------------------------------------------I would like to go out with you
Lilium ----------------------------------------------Purity
Carnation-------------------------------------------Fancy, misfortune
Viola------------------------------------------------Forget me not
Jasminum------------------------------------------Sensuality.

The significant messages and meanings are also related with the color of flowers.
The percentage share of flowers in the ornamental purpose is to be seen in a
manner that is:-
 45% - for gift
 25 % -for special occasions
 30% - for hotel, home decoration and others.
Source: Agricultural economics Research institute, world
conference, 2007.

Valentine’s Day takes the first share of the gift part of its ornamental purpose
which highly uses rose. This is followed by institutional consumption. Mothers
day, thank giving day, Christmas and other occasions are also account for larger
share.

Flowers should be attractive, and to attract they should be colorful, beautiful, high
quality, fresh and long vase life.

When we see the case of Ethiopian flower industries, they mostly export small
number of varieties of flowers, rose takes the first position. But now the varieties
that Ethiopia is exporting are highly increasing in the past three years.

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Quality Requirements
A. Minimum Requirements
Products most have been carefully cut or picked according to the species, and have
reached an appropriate stage of growth.
B. Classification
Products are classified in to three classes.
First class
Produce in this class must be of good quality. It must have the characteristics of
the species, and where appropriate, of the variety (cultivar). All parts of the cut-
flower must be: - whole, fresh, free from parasites and from damaged caused by
such, unburies, free of residues of pesticides and other extraneous matter affecting
the appearance, free of defects of development.
Second class
In this part produce full fill whole, fresh of animal parasites. And there may be
slight malformation, slight bruising, slight damage, weaker, small marks caused by
treatment with pesticides.
Third class
Is called ‘Extra’, because it fulfils criteria’s of class one without the aid of any
quality tolerance.
European traders and consumers have extremely high quality requirements for
horticultural products. So flower should be harvested at the right time of maturity
where there is enough carbohydrate reserved. Most flowers are best cut in bud
stage and opened after storage, transport or distribution.

Temperature control is the most important measure in post harvest care, the
optimum temperature for most common flowers is between 0 and 5 degree
centigrade.

Generally to keep the quality of the flower care should be given for maturity,
temperature, food supply, light, water supply, ethylene, growth tropism,
mechanical damage and disease.

Vase life is also another quality measure which helps at increasing demand for the
flower and it represents the life of the flower after harvest especially at hand of the
consumer.
Sizing is also another factor for increasing the demand for flowers. Under sizing
there is a code given to flowers.

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Code Length in centimeter (cm)
0----------------------------------------------------------------less than 5 cm
5----------------------------------------------------------------5-10 cm
10--------------------------------------------------------------10 -15 cm
15 --------------------------------------------------------------15 -20 cm
20 --------------------------------------------------------------20 -25 cm
30 --------------------------------------------------------------30 -40 cm
40 --------------------------------------------------------------40 -50 cm
50 --------------------------------------------------------------50 -60 cm
60 --------------------------------------------------------------60 -80 cm
80 --------------------------------------------------------------80 -100 cm
100 ------------------------------------------------------------100 – 120 cm
120 ------------------------------------------------------------More than 120 cm
Source: International trade center, 2007.

2.6 Quality, price trend, growing, post-harvesting and

government factor in cut-flower

2.6.1 Quality
Only top quality flowers are traded internationally because of the increasing
quality consciousness of the customers. Competition is such that anything less
than top quality flowers can at best be sold to less-demanding domestic customers.
Quality has several dimensions. Flowers should be free from plagues and diseases
and they should be undamaged. These elements can be judged on visual
inspection. Other quality aspects, however, are more difficult to judge. For
instance, it is hard to see whether flowers have been correctly handled once cut.
Yet this is an important determinant of vase life and whether or not the bud will
open. It is the reasons why reputation is so important and why growers who have
consistently delivered high quality produce fetch higher prices than little known or
irregular suppliers.

Exporters thus have an interest in building up a good reputation. For producers

who are thinking of starting to export, this may require a change of attitude and
may demand considerable investment. It may mean having to grow more flowers
under cover, concentrating on fewer flower types, working production peaks
around specific date and market, and learning stricter grading. Post-harvest
management including cold treatment, proper packaging and preservatives
application may also need to be strengthened.

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2.6.2 Price trends

World market prices for cut-flowers are basically set at the Netherlands auctions
due to their overwhelming market share. Prices of cut-flowers have several
dimensions:
 Intra-day price fluctuation can be considerable. Owing to the nature of
supply and demand, short-term price fluctuations occur frequently at the
auctions. Climatic conditions can have a strong impact on short-term
price levels.
 Large gaps between the price of new and bulk products. This is another
explanation for the differences between the prices of growers in
different countries, and different suppliers in the same country. New and
“special” varieties can fetch prices that are way above the average. For
instance, in 1992, among large flowered roses a differential of over
seven times existed between the cultivar “Rising Sun” (177 Dutch
cents) and “Royal Dutch” (24 cents) (Ghiorgis Tekle, 1992, p 12).

2.6.3 Government Factor

The cut-flower trade can make a major contribution to country’s employment and
export earnings. In Ecuador, the industry employs 45000 people directly and
contributed over US$ 100 million to overall export earnings in 1991. In Colombia,
the industry is estimated to employ 80,000 people directly and another 50,000
indirectly. In the Netherlands, around that 100,000 jobs are created related to the
flower industry (Ministry of Agriculture, 1991).

Such support usually comes in the form of the provision of infrastructure, financial
research in to the development of better growing techniques and new varieties and
generally in all aspects of quality improvement. In the Netherlands, research is
carried out at the agricultural university of Wageningen and at specialized flori-
cultural research institute, experimental stations, and experimental gardens. The
effect of different glasshouse climate on crops is a priority area of research at the
latter group of entities (Ministry of Agriculture, 1991).

In international trade, governments play a role, on the export side, by assisting in

the gathering of market information and in other marketing effort, and by
facilitating trade finance and infrastructure (like, cold storage at airports).
Governments also facilitate trade in agricultural products brings the attendant risk
of spreading diseases and plagues. New diseases can have great negative
consequences for the cultivation of flowers. The phytosanitary certificate, by
which the exporters guarantee that the product left the country in a healthy

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condition, is a measure which aims to prevent the spread of damaging diseases and
pests in importing countries (Ministry of Agriculture, 1991).

On the import side, “northern” governments use preferential market access to help
the promotion of the industry in selected exporting countries. Custom duties add to
the imported product’s sales price; a high level would weaken the competitiveness
of the country of origin. Reduced import duties or duty-free imports provide a
trade incentive.

Developing country exporters to the EU benefit from several preferential schemes.

Under the generalized system of preference (GSP), imports from a number of
developing countries are admitted at a lower tariff and imports from a group of
least developed countries at zero tariffs. Under the Lome convention, the ACP
countries and overseas countries and territories qualify for duty free access. Since
1992, this zero tariff applies to imports of cut flowers from ten central and South
American countries.

2.6.4 Growing

The successful cultivation of flower requires the following elements:

Good physical condition: high light intensity, abundant water, clean soil,
good climate
Appropriate seeds and planting material
Capital for investment and working capital
Productive labor
Expertise in growing techniques
Good management and organization
Pesticides and other chemicals
Energy for heating
Infrastructure
A high level of quality consciousness all along the production and post
harvesting chain

Each element carries a price. For some this price is the same or similar for all
growers (e.g. planting materials, fertilizers and other chemicals). For others, the
price differs by location. As such, it becomes the source of competitive advantage.
But so does to innovate. Fashions in demand for flowers change more rapidly and
more often than before. New products can fetch way above average.

Closeness to the market and to “world class” research and extension services
constitutes a competitive advantage for producers in established growing

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countries, particularly for those based in the Netherlands. This enables these
growers to quickly detect changes in consumer demand, and more importantly, it
helps them to experiment with new varieties and growing techniques. Together it
allows them to innovate rapidly. Physical infrastructure is of high quality. In
contrast, land is expensive (but yield per hectare is high), and energy (for heating
the green houses and for additional lighting) a significant component of overall
cost. High labor costs (one- third of total cost) constitute a competitive
disadvantage.

Table1. The cost of cut flower production in the Netherlands (by major item; in
percent)
Types of inputs Percent
Labor 35
Interest and depreciation 28
Energy/ transport 14
Plant material 14
Other 9
Total 100
Source: Rabo bank, 1996, p 23

Developing countries benefit from low cost of manual labor, but skilled labor and
technicians can be expensive, particularly when expatriate. They also have
abundant light, good climatic conditions and low land costs. In hilly regions close
to the equator (as in Kenya and Ecuador) farmers can experiment with ideal
growing conditions (interms of soil and microclimate). Nevertheless, despite their
favorable natural growing conditions, an increasing number of these exports are
now producing under plastic or under glass because these allow them better
control over daily (night-day) temperature fluctuations. It also helps to protect
against adverse weather conditions such as frosts and storms, and plague and
diseases and thus ensures a better control of product quality, the key word for all
ambitious growers.

Air fright adds significantly to total cost and makes up by far the largest
component of overall cost to the African producers. For example, cost of air
freight, marketing, handling in Europe and packing make up 50% of all costs for
Kenya and 62% for Uganda (ABN AMRO).The reliability of air connections is an
additional risk factor for experts located far from their main markets.

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2.6.5 Post- harvest handling

Post- harvest handling is as important as growing for delivering an attractive

product to the consumer, if not more so. In the same vein, the reliability of air
connections is as a critical as its costs. Speed of delivery is important since flowers
must be carried to their destination without delay. Only a few hours of in attention
can spoil a flower and ruin months of hard work. Hence, the importance of good
infrastructure and efficient organization, this includes proper transport between
farmers and air ports (good roads, refrigerated trucks).

Many things can go wrong after the harvest, particularly in warm climate where
the chance of disease is great. Flowers are highly perishable in the post – harvest
chain from grower to consumer. Floral organs continue to grow actively. They
have high rates of respiration, which continue after harvest. A flower at 30 degree
centigrade will respire 45 times faster than one at 0oC and consequently will have
a shorter live span. Flowers must be stored and handled at low temperatures.

2.7 countries experience

Ethiopia is new entrant to flower business. So, Ethiopia should share experience of
other countries with relatively similar environmental condition, labour supply, and
other factors. Taking experience of other countries will benefit the country to be
competent in the world market and will reduce the cost that Ethiopia incur. It also
helps to learn what types measures should have to be taken, so as to improve the
country’s current performance and to estimate the future.

2.7.1 Kenya
In Kenya flower industry is expanding in the past two decades at alarming rate
which is 20% yearly by showing growth of volume of export from 1992 -2001,
108% volume growth is seen. Kenya now a day become one of the most promising
African countries by exceeding and over whelming Israel and Colombia and
covering about 25% of European union’s total consumption of flower. The flori-
culture sector following, tea and tourism, in generating foreign exchange and
opening job opportunity for about from 40,000-50,000 employees, especially
women are beneficiaries (Kenya’s Horticulture Crops Development Authority,
2003).

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Table 2 Kenya’s flower export from 1995 up to 2008 in thousands of ton
Year Export volume in ‘000 ton
1995 29.4
1996 35.2
1997 35.9
1998 37
1999 38.8
2000 41.4
2001 52.1
2002 61
2003 65.2
2004 66.4
2005 67.9
2006 69.1
2007 71
2008 72.9
Source: Kenya’s Horticultural Crops Development Association, 2009

Reasons behind the increment in their export volume are strong government
involvement and incentives, profitability of the sector for private investors as an
incentive and other measures taken to be competitive in the world market;
improvements in quality of products, and other measures were taken with respect
to their potential for horticulture.

Chapter Three
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Data Analysis and Interpretation

3.1 Assessment on Cut-Flower Contributions and Problems
in Ethiopia
3.1.1 The contributions of cut-flower industry in Ethiopia
It is an accepted fact that when production costs and business risks get too high in
one country the floriculture industry trends to move elsewhere for the chance to
turn a maximum possible profit. Over the last few years, it is this very tendency
that has copulated Ethiopia in to the spot light as the next potential flower
production hot spot.

To understand the allure of Ethiopia, a bit of a history lesson is in order. As

production costs sky rocketed in Europe (particularly in the Netherlands), cut-
flower growers looked to other continents for more affordable conditions. This has
been especially effective for the rose sector: rose production in East African
countries like Kenya, Tanzania and Uganda is soon expected to surpass the
important of rose growing in the Netherlands in the surface area, production
quantity and value of yearly sales (Ethiopian promotion agency, 2009, p 12)

Of course, before these countries could enjoy such prominence, various political
elements had to be in place. In the case of Ethiopia, these elements began
developing in 1990, when government decided to allow the free movement of
goods lift price controls and provide farmers with the security of land tenure in
hopes of reversing the decade’s long decline of the countries agricultural sector.

But there were many debates as to whether or not these reforms were genuine and
how effectively they could be implemented while this modest increase
wasagricultural output rose from 2 to 3 % in the 1990s not enough to offset a
general decrease in GDP during the same period. The agricultural sector continued
to be dominated by small- scale farmers using traditional low input /output
farming technologies. Despite Ethiopia’s potential, the foreign currency earnings
from the Ethiopian horticulture sector was only $ 4.7 million in 2007/2008
(Ethiopian export promotion agency, 2009, p 6).
Today, the picture is a bit more hopeful. Ethiopian incentives to foreign investors
include an excellent climate for commercial cut flower growing, a five to seven
year tax holiday, an enterprise- friendly government, an improved investment
code, duty -free machinery imports (French green house and Israeli irrigation

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ETHIOPIA
system), easy access to bank loans (local bank financing is available for up to 70
% of at a cost of approximately $ 200 per hectare) and relative proximity to the
markets of Europe (which means lower air fright)(Oromiya investment bureau
report, 2009, p 4).

In addition, there are incentives to invest in Ethiopia from abroad, particularly the
Dutch government, which has offered its citizens sizable development grants to
shift their production area to Ethiopia. But the fact of the matter is that Ethiopia is
still in the beginning stages of developing its overall economy, not to mention its
floriculture industry. There are a number of issues that must be resolved before the
global industry will experience a major shift toward Ethiopian flower production
(survey of Ethiopian economy, journal, 2009).

From all the operating flower farms 26 got their license from the Ethiopian
investment agency while the rest 20 got it from the Oromiya region investment
bureau 19 farms are owned by Ethiopian investors while 25 are owned by
foreigners. 10 of the total flower farms are operating by a joint venture of
Ethiopians and foreigners.

Until March 2008, the total area of land given to flower growers is about 2031
hectares. 50 flower farms get their land from government when the other 12 got
the land from local farmers by negotiating.

We can divide the kind of flowers and the way they grow up in Ethiopia in to three
main categories.
A. Rose flowers that grow up in green houses which cover about 250.7 hectares of
land.
B. Cutting that grows up in green house covers about 38 hectares.
C. Summer flowers that grow up in the open air that cover about 46.75 hectares.

Tables 3: kinds of flower and amount of land it cover

Kinds of flowers Land covered
Rose flower in green house 250.7 hectares
Cutting in green house 38 hectares
Summer flowers of open air 46.75 hectares
Source: survey of Ethiopian economy, 2009

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However the land covered by rose flowers and cutting is less than the land covered
by the green house. This is because their land covered by the green house did not
start operation or planting flowers.

The number of working force that is engaged in this sector is growing fast in the
past three and four years. In flower producing farms which have already started
production are employing 146 with first degree in different fields, 224 holding
diploma and 376 certificates in high school and vocational schools (Oromia
investment bureau report, 2009, p 11).

But when farms that are undergoing in construction start production, they will
demand a high number of educated and skilled workers. Totally the number of
employees working either in farms that have started production or undergoing
construction is about 21.356 up to March 2008, from this the total number of
employees engaged in the farms that produce flowers are about 10,622 from which
64.4 % are female. In farms that are undergoing in construction have 10,734
employees from which 28.6 % are female (Oromiya investment bureau report,
2009, p 13).

From these data we can conclude that the sectors gives better opportunities and
advantages for female workers which are not quite common in less developed
nations.

3.1.2 Major problems of the cut flower industry

A. Government And Infrastructure

While the government of Ethiopia is working to make itself attractive to foreign as

well as local investors, the effort are not consistent. On a basic level, road
infrastructure is poor beyond the capital of Addis Ababa, making travel and
transportation with the country challenging at best. On a policy level, agriculture
credit for flower production is inaccessible to small holders. There is a sever lack
of agriculture sector planning in relation to the flower industry, which means
policy analysis does not touch the sector (Ethiopian export promotion agency,
2009, p 11).

Most of the flower farmers are found a little bit away from the main highways.
Due to absent of all weather roads that lead from the farms to the main asphalt,

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they face challenges of transportation. Joy tech flower, a flower, top flower and
Ethio- plants complain about problems they face especially during the rainy season
(Ethiopian export promotion agency, 2009, p 15).

The following table shows that, only 2 project of cut-flower have improved
transport from the farm gates up to the main asphalt road in Ethiopia in 2009.

Table 4 Problem of infrastructure

N Project of cut-flower From the farm gates to the main asphalt
o road (in Km).
1 MAM Trading 4.2
2 Menagesha flower project 3.6
Source: Ethiopian export promotion agency, 2009

The above table indicates that, among 36 projects of cut-flower the only 2 have
their own sub roads to their production sites. This implies that cut-flowers are
exposing to different problems due to absent of improved transport from the farm
gates to the main asphalt roads. So, all the 34 projects of cut flower have not
improved transport and due to this, flowers face a problem.

B. Cargo Bottleneck

Currently, there is no consistency plan to handle the risk of insufficient cargo

freight capacity, nor a master plan to assure that high volume of cut flower( both
from Ethiopia and those trucked in from Kenya) can be exported on daily basis as
well as during peak holiday period. The airport in Addis Ababa suffers from
insufficient infrastructure, shipment can be delayed and cold storage facilities at
the air port are insufficient if frights are canceled (Ethiopian export promotion
agency, 2009, p 18).

Air transport is vital in flower exportation. Flowers are easily perishable products
that need the fastest transport possible to reach to their destinations.

Ethiopian air line has only one cargo plane that gives series for exporting flowers.
Delay during transportation decrease the quality of flowers and brings
disappointment of customers that distribute flower in Europe and Middle East.

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Other than the above mentioned problems a lot of miscellaneous problems like the
custom authorities old way of transportation, short age of supplies of different
materials used in the production and building of the green house, shortage of land
etc are also problems that can be mentioned as difficulties in the sector.

Inability to satisfy foreign market demands. At its current volume, perishable

products exports from Ethiopia have yet not achieved an economy of scale and the
cost per kilogram of air fright has not yet been reduced to efficient levels. Ethiopia
currently cannot justify more than a few flight per week to European markets. This
will not satisfy the needs of European‘s three biggest flower auctions
(Bloemenveling, Aalsmeer, Flora Holland and the NBV/UGA), nor those of
importing wholesaler and supermarket clients, all of whom prefer flower arrival
five days per week. The limited number of flower and fresh cut foliage species and
mono color shipment return consequently lower per unit flower prices. Bouquet-
making for European wholesalers and supermarkets require a diversified balance
of flower species, and a wide range of rose lengths and colors. This is beyond
current Ethiopian capacity (Ethiopian export promotion agency, 2009, p 8).

With relatively insignificant cut flower exports, Ethiopian flower quality (unlike
the quality of their coffee) is relatively unrecognized in foreign markets. Ethiopia
does not have an image shipping quality of consistency of product, both of which
are essential to potential clients. This means that, flower growers from other
countries must be convinced to invest in Ethiopia, if the country is to reach the
volume and scale necessary to market the flower products efficiently.

Another way to court potential investors would be for local growers to understand
the needs of foreign markets, but that information is currently limited to foreign –
owned farmers.

This also put Ethiopian growers at a disadvantage because they must straggle
together with client information on product preferences and to navigate other
business transportations with foreign companies (such as accounts receivables,
collections and other) (Oromiya investment bureau, 2009, p 12).

Internal straggles, while it provides leadership, the Ethiopian Horticulture

Producers and Exporters Association (EHPEA) are still working to unify itself and
the industry. Outside investors need current reliable statistics on the countries

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flower industry: Ethiopia could also increase its profile with foreign investors if
there was more participation in foreign exhibitions, internally there is a definite
need for an industry advocacy group to lobby for special conditions with the
government, the air lines and the suppliers of input and plants. The country also
needs a flower quality level program of local label that will establish industry
grades and standards (currently handled on a farm-by-farm basis) guarantee fair
treatment for workers. The flower industry has also been inadequate in community
organization and participation (Ethiopian export promotion agency, 2009, p 19).

Quality issues abound: Because they are restricted to older, less productive
varieties, Ethiopia growers face limited potential for high yields. The propagators
do not have easy access to new varieties or high quality plant because breeders
fear patent and loyalty infringements. Quality is also affected by a lack of
technology: pest control methods are harsh at best, with an emphasis on
Methylbromind. Access to new technologies such as integrated pest management
(IPM), composting and other would be more efficient, less expensive and less
harmful to workers and the environment. Crop protection services (agrochemical,
entomology, IPM, pesticide use, post harvest techniques) are not high priorities
and flower farm management and production methodology evaluation is not taught
at institutions of higher learning (Ethiopian export promotion agency, 2009, p 7).

With little access to such training, Ethiopia is woefully of agronomists, which

translates in to low productivity on flower farms.(and considering that the average
adult literacy rate in Ethiopia is 34.7%,the average flower farm worker is probably
illiterate).There is no national training program for farm workers; no national skim
for worker health and social security; no efficient pathology laboratory for cut
flower; and no central library for books on flower crop production .In other word,
there are no facilities in place to train the estimated 50,000 farm workers and
agricultural engineers that will be needed to bring Ethiopia’s industry to its
fullest potential( Survey of Ethiopian economy, 2009)

The following table shows that, cargo bottleneck in Ethiopia in 2009.

Table 5 cargo bottleneck
No Type of flower Volume produced Volume exported
(in tons) (in tons)

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1 Rose 17.2 9.4
2 Viola 15.9 6.9
3 Gladiolus 12.7 5.4
4 Jasminum 11.9 7.4
5 Carnation 10.6 6.8
6 Lilium 9.2 7.6
Tota 77.5 43.5
l
Source: Ethiopian export promotion agency, 2009

From the above table 5, the difference between volume produced and volume
exported is 34 tons of flowers and this are not exported for the world market due
to flowers faces a decrease in quality and disappointment of customers that
distribute flowers in Europe and Middle East. This all the above mentioned
problems are because of Air transport: shipment can be delayed, cold storage
facilities and a single cargo plane for exporting flowers.

C. SHORTAGE OF CAPITAL AND POOR BANKING SYSTEMS

Successful establishment of a viable cut flower operation requires a high initial

capital flow and commitment for a number of years returns are realistic .in recent
times, ruling by the Australian tax office have required growers to demonstrate
more clear the less time for a particular crop to become commercial viable
(Oromiya investment bureau report, 2009, p 6).

one of the poorest nations around the globe it is obvious that lack of capital is one
of the main problems that hinder the growth of the economy as a whole
Particularly for industries like the newly introduced once like cut flower they are
capital intensive and need a huge amount of money for the start of the business.

However, the financial institutions are at their infant stages that they could not
meet the need of the newly established sectors like the cut flower industries.

While the industry has traditionally been served by a number of small operations,
some people believe that the future lies in larger producers with capital and land
investment who are able to take advantage of the obvious economic of scale as
well as consistency of supply.

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Banks, especially government banks are not in a position to offer the desired
amount of money which enables the investors to set up or expand the industry.
Though there are some hops of rays in the private banks to provide a limited
amount of the needed money for investors it must be well develop and should be
also practical among all banks.

Most of the flower farmers complain about lack of capital either to start or expand
their business. It is the biggest problem of the industry and should be taken
seriously by those who are concerned.

The following table shows that, shortage of capital in Ethiopia in 2009.

Table 6 shortage of capital
No Projects of cut flower Amount needed to start Amount in hand to start
the business (in Birr). the business (in Birr).
1 SHR Trading 56,342,925 42,229,346
2 Ethio-plant project 49,234,396 44,215,234
3 NSR Trading 36,393,245 31,225,345
Source: Ethiopian export promotion agency, 2009

On the above table 5, they started the business but they are not fulfilling at
required level. Indeed, they are not built improved transport from the farm gates to
the main asphalt road and they use low packaging system. This is due to shortage
of capital.

D. SHORTAGE OF CHEMICALS AND FERTILIZER

Flower industries use the state of the modern agricultural technology, using
chemicals and fertilizers in one and mandatory for producing qualitative and
competitive products in the world market. However, super arsity flowers, a
flowers, top flowers, Garad flowers, Ethio argil safe and JJ contari flower
producing farmers said that there is only one company called Azrom that supplies
chemicals and fertilizers for the flower farms. However it cannot satisfy the
demand of all the farms. They have asked for supplier companies to supply them
with specific chemicals and fertilizers they need but they could not supply with the
right time and quality (Ethiopian export promotion agency, 2009, p 13).

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The following table shows that, shortage of chemicals and fertilizer in Ethiopia in
2009.

Table 7 shortage of chemicals and fertilizer

No Projects of cut Fertilizer Fertilizer Chemical Chemical
flower needed (in Kg) gained (in needed (in gained (in
Kg) Lit) Lit)
1 MAM Trading 50,499 16,753 20,922 6,345
2 Menagesha 42,365 13,622 22,324 7,985
flower project
3 NSR Trading 41,220 11,292 21,295 6,349
Total 134,084 41,667 64,541 20,679
Source: Ethiopian export promotion agency, 2009

On the above table 7 shows that, 92,417 Kg of additional fertilizer is needed and
43,862 Lit of additional chemical is needed by the projects. So, this implies that
projects of cut flower are not gained the amount they needed. This is because a
single fertilizer company cannot meet the demand for cut flower projects.

E. FLOWER PACKAGING PROBLEMS

The less quality of the package available here decrease the overall quality of
flowers to be exported. Moreover their weight also affects the transportation cost
of the exported flowers that minimizes the competitiveness abroad where others
use high test possible packages that minimizes transport costs and increase price
competitiveness. In addition to this the shortages and their expensive price is one
which hinders the development of the industry by decreasing the competitiveness
of the products share Ethiopia flowers producers and exporters and Jericho flowers
top problem is the problem associated with packaging.

As higher freight costs are affecting all East African exporters, Ethiopia 600 miles
closer to the main European markets than Nairobi, are gaining a cost advantage
over Kenya and is most benefit from these geographical flower production
shifts(according to the weekly news paper, the East Africa,’ freight Accounts for
40% of total floral production costs in Kenya”. In other word, 40% of landed
Europe costs of Kenyan flowers are due to freight costs) (Ethiopian export
promotion agency, 2009, p 15).

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Meanwhile there are sign of saturation in Europe and pricing is being pushed
downwards in the European flower market. These factors may encourage Rose
breeders and rose grower/exporters to move operations to Ethiopia where labor
costs are half those of Kenya.

Ethiopia has many other conditions that favor a cut flower export industry. The
climate for growing Roses is ideal, particularly the country’s abundant unpolluted
water supplies from nine major rivers and twelve major lakes of the 16.5 million
hector are actually in cultivation and it is estimated that only 3% of the irrigable
land is in use for horticulture. Two regions, Lake Ziway in the upper awash valley
and Tefki region in the west, are attracting foreign flower growers interested in
Roses, Allium, Dianthus and Limonium. These foreign growers are leasing land
from the Ethiopian government (Ethiopian export promotion agency, 2009, p 11).

As mentioned above, one major neck for Ethiopian perishables industry has been a
lack of cargo transport capacity. This was somewhat alleviated in 2005, when
Ethiopian Air lines began to offer transport services for cut flower growers . KLM
then initiated service to Addis Ababa with two flights a week. With the
transportation bottleneck removed, at least for now, it appears that cut flower
exports could play a major role in jump starting the country’s agricultural industry
(Ethiopian export promotion agency, 2009, p 11).

The chairman of the EHPEA says 2010 Ethiopian cut flower exports at $25
million\”but an expansion of farm areas by 32existing foreign and local investors
is progressing, the total export income from flowers is expected to reach $100
million by 2011.’’ The chairman says ‘’project from another 100 investors from
the Netherlands, Germany, India, and Israel; who have acquired 450 hectare of
land to prepare farms; should generate another $452 million a year by 2011”. But
he believes even greater growth will in the future.” The aggregate income to be
generated from all farms under production is expected to reach 552 million by
2011.’’(That is, two-times Kenya’s flower exports).At this level, the flower
industry in Ethiopia would need to employee 100000 workers (mostly woman)
and an equal number of ancillary workers. If the EHPEA can encourage the flower
industry to reach its goals, foreign earnings from the export of cut flowers could
rival those of coffee exports, making cut flowers Ethiopia’s most valuable export.

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However, it is worth nothing that no flower exporting country has been able to
expand at this rapid rate (Ethiopian export promotion agency, 2009, p 18).

Institution building within the Ethiopian flower grower exports association is of

prime important to achieve the EHPEA dreams. A survey of the cut flower
industry in Ethiopia would be in order to accurately project the statistics in to the
future in a realistic way. This survey should cover the number and location of
flower farm units, number of hectares under production, number of workers,
percentage of woman workers, flower species produced, percentage of foreign
investment, nationality of managers, training background of managers and
agronomists, other quality scheme. Giving the EHPEA’s hopes the Ethiopian cut
flowers export industry will create job opportunity for 100,000 people,
$400,000,000 in export earnings and power Ethiopia in to a much higher level of
social, technical, and economic development (Survey of Ethiopian economy,
2009).
The following table shows that, problem of packaging in Ethiopia in 2009.

Table 8 problem of packaging

No Projects of cut flower Quality of packaging
Low quality packaging High quality packaging
1 MAM Trading 
2 Menagesha flower 
3 NSR Trading 
4 Ethio-plant project 
5 SHR Trading 
Source: Ethiopian export promotion agency, 2009

On the above table 8 shows that, from 5 projects of cut flower, only one use high
quality packaging and the other uses low quality packaging. This is due to
shortage of supply in high quality packaging.

3.2 Value Share of Cut Flowers Export from Total Export

Table 9. Export statistics at national level
Year Volume (tons) US dollar % share from the

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ETHIOPIA
total export
1982/83 69.89 70162 -
1983/84 87.98 158044 0.094
1984/85 469.35 1470124 1.97
1985/86 849.26 2557590 2.8
1986/87 1028.80 2360000 2.96
1987/88 807.93 1942189 2.51
1988/89 1006.91 1736411 1.92
1989/90 785.94 1634222 2.21
1990/91 620.01 1149069 1.86
1991/92 543.19 696423 1.1
1992/93 385.76 451696 0.47
1993/94 266.02 641007 0.45
1994/95 189.35 405826 0.14
1995/96 97.07 216158 0.08
1996/97 39.77 156601 0.04
1997/98 98.23 246719 0.059
1998/99 136.34 118052 0.03
1999/00 189.14 382346 0.09
2000/01 194.89 391456 0.19
2001/02 201.76 399498 0.27
2002/03 218.54 510432 0.49
2003/04 232.89 621531 0.60
2004/05 242.87 876432 0.99
2005/06 253.32 1086342 1.22
2006/07 271.12 1356789 1.59
2007/08 280.65 1678654 1.74
2008/09 289.34 2056321 2.12
Source; National Bank of Ethiopia, 2009
The share of cut flower from total export was very less. Even the share was
increasing in the beginning years; it was at its higher point in 1986/87 and
declining at a higher rate for the years 1987/88 and 1999/00. After 1990/00 the
export of cut flower was increasing and reaches 2.12% among the total export.
3.3 Benefits of Cut Flower Production and Export over
Extensive Agriculture and Its Economic Contribution

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Floriculture products have several benefits over extensive agricultural and several
economic contributions that will lead the country to economic growth and
development. Among these are;

1. Higher value weight ratio; floriculture produces have comparatively higher

value weight ratio than other agricultural commodities. But this may not always
hold true FOB price comparison for some low value flowers because significant
proportion of sales value is used to cover air flight and foreign costs.
2. Women employment opportunity; major operations in floriculture farms are
performed by women workers. Floriculture investment projects have better
advantages in providing employment opportunity for women who are highly
marginalized from income generating economic activity in Ethiopia.
3. Low level of land usage and irrigation water under green house:
Flower production is under with low level of land than other agricultural products
and low level of irrigation water consumption.
4. Good prospective for employment creation; as the production is labor
intensive. Most of the production process from the plantation time to the harvest
time is processed manually by both permanent and casual worker employed in
daily or weekly basis. Most of workers were unemployed with no income before
the expansion of flower industries.

3.4 Positive Externality

In addition to employment opportunities created for the people living in the

surrounding, other benefits are also acquired both at the regional and federal level
and these benefits are counted as incentives for workers. Most of flower industries
provide many different motivating incentives, among these; road constrictions
drink water, electricity and communication facilities and other benefits such as
knowledge and skill acquisition by farmers, advertisement for other new investors
and the multiplier effect of the investment for the country health service centers
for their own workers and benefiting residents of the surrounding.

3.4.1 Roads
Most of the industries are located far from urban areas with smaller or no access to
transport and communication and these industries construct roads for their fast

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ETHIOPIA
easier transportation of goods and machines with necessary supplies, inputs and
materials. These constructions of roads benefit the surrounding residents or society
directly or indirectly. MAM trading and Menagesha flowers have their own sub
roads to their production sites.
3.4.2 Water
In Ethiopia most of flower industries get water from ground and in most rare case
from irrigation system. And this will help residents of that area to get water which
is pure. MAM trading PLC has already started to give water and some medical
services to residents of that area and other industries also provides services such as
their positive externalities to the society.
3.4.3 Electricity and Communication Facility
All flower industries even in the world use almost the same technology. And most
of the technologies used are computerized and electric power driven. So as to get
power for controlling every activity and to simplify sophisticated process they use
electric power from the EEPCO and the surrounding people will benefits from the
power line that comes for flower industries. In addition to this, communication
facilities that fasten the connection with workers, institutions, market, and
government organizations and this also benefits the society by simplifying
connection and fasten their awareness leading to a more productivity.
3.4.4 Substituting Effect
Most of the employees of flower industries have their own land to cultivate and
they are using this land for the production of flowers by the knowledge acquired
and experience and selling their flower to the flower industries. So, they substitute
flowers for other cereal crops like cash crop which they produce formerly.

3.4.5 Benefited Other Industries

Muger cement industry is one of the industries benefited from the expansion of
flower industries because the demand for its product has increased.

Akaki industry is also highly benefited from the expansion of flower industries by
supplying them different types of materials and it’s trying to and producing
materials for the construction of green house, pipes, and all other necessary metals
and metals products for the industries.

Not only these industries there are also other factories that are benefited from the
production and export of flowers or expansion of flower industries such as

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ETHIOPIA
chemical and fertilizer factories, government owned corporations like Ethiopian
telecom and electric power corporations.

Ethiopian airline is also benefited highly. The benefit is increasing from time to
time with the increment in the productivity of the existing flower industries and
with the increment of the amount of the exported flowers increase, the demand for
cargos also increases.

3.5 Major problems, constraints, and risks in

floriculture industry of Ethiopia
Even though, Ethiopians flower export trend is increasing, it is at its initial stage
as compared to the potentiality of the country and over all comparative advantage
that the country has over other countries, this is due to problems, constraints, and
risks that flower industries face.
The following are major constraints, problems and risks Ethiopian flower
industries face:
 Lack of innovation
 Shortage of skilled and competent man power
 Poor management activities and promotion of works
 Inadequate cargos for transportation of flowers fastly
 Lack of written document that will make clear a everything about the sector
of cut flower
 Absence of institution or limitedness of institutions responsible to the
development of horticulture
 Limited networking
 Management and supervision problems and poor cooperation with
employees and customers as well as related industries
 Absence of research and development activities that will help the sector by
giving development strategy
 Unavailability of inputs, green house structure and high quality packing
materials in domestic market as compared to other competing countries.

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Chapter Four
Conclusion and Recommendation

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4.1 Conclusion
Ethiopia is becoming a potential country in both developing and exporting of
flowers. In this short study I have discovered that the shortage of capital is the
biggest hindrance for local investors to the business hence limited number of
investors does participate even though it is known that the blooming industry is
profitable.

Bureaucratic procedure of the government, though a slight improvement, it is still

a constraint for investors to engage in the business.

Naturally, flowers are easily perishable products; the ups and down in transporting
the flowers from the farming spot to the airport then from the cold rooms to the
airport then from the cold rooms to the cargo plane negatively affect the quality
and competence of the product in the international market.

Flowers are basically grown in green house. However, in construction of the green
house the recent short supply of cement and the rising of its price in the market is
another challenge for the new comers to the industry.

Most of the investors already engaged in the business tend to be foreigners. Even
though foreign direct investment (FDI) is an advisable investment strategy, the
leaking out of the profit abroad on the contrary hinders the development of the
industry by re investing in the country. The country do not benefit entirely from
the profit obtained from the sector as the money is not employed for further
development activities in the country.

The less amount of capital accumulation with limited numbers of investors makes
the business uneasy start.

4.2 Recommendations

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 For countries like Ethiopia it is not easy to transform their economy

from substance agrarian economy to the production and export of
products. The problem particularly will be at its climax when
countries produce and export products like cut-flowers in the
sophisticated and highly competitive dynamic world market.

 Therefore measures should be taken continuously to enhance its

development and expansion for the increment of its contribution to the
overall economy. Policy makers and concerned bodies should
contribute for the well being of the sector.

 By improving the bureaucratic chains to attract investment is one and

actual should a top priority of government policy.

 Even though, investors are attracted easily access to capital is another

problem. Especially government banks have difficulties and longer
processes to give loans for investors (private banks are much for better
than government banks, though we can not say they are good).
Therefore government should facilitate ways by which investors can
get access to capital.

 Air transport and cut flower export are strongly related. Therefore
providing cargo air planes for an exclusive transportation of this
product is mandatory. So, government should facilitate negotiations
and dialogues between exporters and the Ethiopian air lines officials.

 Further studies should conduct on areas such as world flower market

and the share of Ethiopia, flower market demand for Ethiopian flower,
variety of flowers that will grow in Ethiopia and more studies should
done to improve the innovation capability of the countries flower,
industries and methods to increase the number of foreign investors and
market relation with different countries.

 Provision of different infrastructure for the sector is also a vital

measure that should take seriously. Naturally flowers are easily
perishable; transporting the flowers from the farming spot to the air
port then from the cold rooms to the plane takes time negatively
affecting the quality and competence of the product in the
international market. So, improving infrastructure as possible as

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PROBLEMS AND PROSPECTS ON EXPORTS OF CUT-FLOWER IN
ETHIOPIA
contributes a great deal for the development of the industry as a
whole.

 In line with the shortage of telecommunications services around the

farms in the flower is one of the problems discovered in this study.
The shortage of telecommunication services in the farm stations
hinders producers not to have the updated information via telephone,
mobile and by using internet. So the government should urge
concerned bodies or institutions for the provision of consistent
telecommunication services particularly for the cut flower sector.

Bibliography
1. Agricultural economics Research institute, LEI -DLO, world conference, 2007
2. Cut-Flower and Foliage export in Ethiopia, Ethiopian export promotion agency,
2004-2009

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PROBLEMS AND PROSPECTS ON EXPORTS OF CUT-FLOWER IN
ETHIOPIA
3. Eskindir Joseph, Promoting the export sector in Ethiopia, Economic focus,
volume 2, April 1999
4. Ethiopian Customs Authority report, 2004-2008
5. Ghiorgis Tekle (1992) High lights on the state of Ethiopian external trade and
its growth implication, Addis Ababa
6. Kenya’s Horticulture Crops Development Authority, 2003-2009
7. Michael p. Todaro (1994), Economic Development, fifth edition, Long man
publishing, New York
8. Oromiya investment bureau, report 1999-2009
9. Sisay Habte, Ethiopian Cut flowers export industry and international market,
Ethiopian export promotion agency, Dec 2001.
10. Sisay Kibret, the Ethiopian Cut- Flower Export and its impact on economy,
Nov 1992.
11. Survey of the Ethiopian Economy, Journal 1999-2007
12. Ministry of agriculture, 1991

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