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Floriculture Industry in India Gets Ready for Export
By
Beena Pandey and Sachin Chaturvedi
 
 
 
Keywords:  India; Flowers/Ornamentals; Policies/Programmes; Public institute; Trade.
Correct citation: Pandey, B. and Chaturvedi, S. (1994), "Floriculture Industry in India Gets Ready for Export." Biotechnology and Development Monitor, No. 20, p. 8-9.

India's floriculture industry is still in its infancy. The rapid changes that have taken place since the late 1980s, however, suggest that India will be able to improve its position on the world market in the next decade. Beside domestic research on the development of new flower varieties, a broad package of governmental policies is contributing to this progress.

The current market for floriculture products in India is estimated at about US$ 80 million, of which US$ 32 million is contributed by modern cut­flowers. A survey conducted by the public Agricultural and Processed Food Products Export Development Authority (APEDA) in 1989, based on data from the Indian universities and the Departments of Agriculture of both central and state governments, indicated that there were about 34,000 hectares of land under flower cultivation (modern and traditional varieties), about half of it concentrated in the three southern states Tamil Nadu, Karnataka, and Andhra Pradesh.
The domestic marketing of floriculture products is mainly controlled by commission agents. The mainly small­scale growers depend on these agents to sell their products, and suffer from delayed payments, price fluctuations and high commission charges. Export, on the other hand, is supported by the Indian government though different ministries and public sector organizations. The Ministry of Agriculture is responsible for the development of the floriculture industry, while trade is organized by the Ministry of Commerce.
The results of these efforts are reflected in the rapid growth of exports over the past 5 years. Exports of floriculture products increased more than 8 times, from less than US$ 0.6 million in 1987­88 to nearly US$ 4.8 million in 1992­93.

Research efforts in India
Notwithstanding the unorganized nature of the sector, there have been co­ordinated efforts to develop a modern floriculture industry by various agencies of the Indian government over the past decade. These agencies support the upgrading of the technological base of the sector, and the expansion of marketing facilities. More recently, efforts have been made by the private corporate sector to contribute to the development of the horticulture sector.
Systematic research on flower crops has been carried out since the early 1960s. In 1972, the All India Coordinated Floriculture Improvement Project of the Indian Council for Agricultural Research (ICAR) was implemented. Currently ICAR, along with the National Botanical Research Institute (NBRI), has taken up this project mainly to improve particularly those ornamentals that have a potential for export. The results include the development of Mohini, a new chocolate brown rose variety and new varieties of gladiolus and chrysanthemum. ICAR is implementing a research project on protected cultivation in greenhouses of cut flowers mainly for export. The NBRI has developed varieties of gladioli suitable for cultivation in the plains of Northern India fed by the waters of the river Ganges.
At present, most of the research on flower improvement is carried out in the agricultural universities and many public­funded agricultural research institutes. Beside ICAR, these include the Indian Institute of Horticultural Research (IIHR), NBRI, the Tropical Botanic Garden and Research Institute (TBGRI), the Punjab Agricultural University (PAU), and the Tamil Nadu Agricultural University (TNAU). These institutes have devised some standardization in technology regarding pre­sowing treatment and land preparation, planting methods, anti­infestation and anti­disease measures, harvesting and cutting flowers at proper time periods, post­harvest care, packaging and transportation.
IIHR has contributed to the development of genetically­engineered varieties of several commercially important ornamental crops, such as rose, gladiolus, tube­rose and bougainvillaea, which are already on the market. In particular, the Institute has made available its rich collection of rose germplasms of nearly 600 accessions to the institutes active in breeding.
TBGRI is working on the development of hybrid varieties of orchids. The first batch of their hybrids would be ready for commercialization at the end of 1995. It is the private sector, however, which has taken the lead in developing hybrid varieties. In fact, India's awareness of the potential of flower export came into effect only when the Indo­American Hybrid Seeds (IAHS) pioneered the production of F1 hybrid seeds for flowers and vegetables in the 1960s.
The development of tissue culture facilities in India was also prompted by private sector participation. In 1984, A.V. Thomas Co. established its first tissue culture laboratory, setting the stage for rapid increases in domestic capacity. At present, India has an installed production capacity of around 120 million plants per year, most of which is geared to exports.

Foreign collaboration
The growing interest of the private sector in the floriculture industry has resulted in a spate of joint ventures for setting up production facilities in India, mainly with Europe­based companies. Through these joint ventures, the European firms transfer their production from Europe to India, while many local partners, for example Indo­Holland Agro Products, have access to technological assistance for standardizing their production technologies. In other cases, however, Indian companies merely work as production units with full technical assistance from their foreign partner and a 100 per cent buy­back arrangement. An overwhelming number of joint ventures are being set up in collaboration with Dutch companies: in 1993, 7 out of the total 9 new joint ventures included a Dutch partner.

Recent initiatives
In response to the encouraging signs on the export front in the past few years, the Ministry of Commerce has identified the potentials of floriculture as an "extreme focus segment". It expects India's floriculture to be competitive in the international market with a variety of products, and to become a major source of foreign exchange earnings.
The Ministry of Commerce's decision followed the recommendations made by an expert group set up by the government in 1989 to suggest policy measures for the development of the floriculture industry in India. This group identified various flowers, plants and bulbs suitable for export production in the long term as well as in the short term. It was also suggested to classify Intensive Floriculture Areas (IFAs) in the country along with the specific groups of flowers to be promoted in each area. In 1992, the group identified a whole set of related measures to be taken:

Several steps have been taken on the basis of the recommendations. Plant quarantine procedures have been simplified. Tariff cuts from 55 to 10 per cent have been affected on imports of live trees and other plants, bulbs, roots, and cut flowers and ornamental foliage. The import of flower seeds and tissue culture material of any plant origin is now allowed without an import permit. The import duties on seed development machinery for soil preparation, certain materials for green houses, pre cooling units and refrigerated transport units have been reduced by 25 per cent.
In order to encourage exports, the Indian government subsidizes airfreight of the export of cut flowers and tissue culture plants at a rate of US$ 0.32 per kilo to Europe and USA and US$ 0.19 per kilo to West and South­East Asia (to a maximum of 25 per cent of the IATA freight rates). APEDA has commissioned the Indian Institute of Packaging to standardize packaging for all floricultural exports. Further, the export­oriented floriculture production units, like the units engaged in floriculture operating in the Export Processing Zones, have been permitted  the benefits of duty free imports.
Apart from rationalizing the procedures relating to trade in floriculture products, India's Eighth Five Year Plan (1992­97) contains a provision of US$ 320 million to boost horticulture and floriculture. Public sector financial institutions such as the Industrial Credit and Investment Corporation of India (ICICI) have started a US$ 20 million Agricultural Commercial Enterprise (ACE) scheme to provide financial as well as technical assistance to acquire the state­of­the­art technologies for post­harvest operations in order to minimize losses in floriculture products. This scheme is funded by the United States Agency for International Development (USAID).
 
Thailand's orchid tissue culture

Thailand is Southeast Asia's leading orchid producer, and contributes 85 per cent of the world orchids exports. Its export markets are the USA, Japan, and Europe. Especially on the latter two markets, Thailand does not experience much competition.
The country's flower exports value is about US$ 80 million annually. The greater part of the flower exports consists of orchids. The local market is worth US$ 40 million. Especially the hybrid Dendrobium is doing well, due to its ability to produce flowers more rapidly than other orchids. Additionally, it can be cultivated the whole year round and the sprays have, compared to other flowers, a long vase life.
Thailand has also become successful in the export of plantlets, produced in tissue culture. The country is one of the world's largest plant cloners, and, moreover, breeds its own orchid varieties. International plant breeders are sending their plants to Thailand for sub­cloning. In 1992, the country had around 12 tissue culture labs. 
The development of such a large tissue culture industry in Thailand is no coincidence. Being a leading orchid breeder and grower, it needed to speed up reproduction. Orchid seeds are difficult to handle and it can take 3 years before a flowering plant is produced by conventional germination. Through tissue culture, the time can be halved. This has made the breeding of new commercial varieties less risky.
Nevertheless, Thailand has encountered the same problem as many other countries: limited airfreight space, which restricts its ability to keep up with the demand. The exporters have only been able to meet 70 per cent of the orders received.
In order to fend off potential competitors in Latin America, and to facilitate the penetration of the US market, the Bangkok Flower Centre has established a farm in Costa Rica.

Source: Paul Handley (1992), "In the pink: Thailand's orchid exports blossom". Far Eastern Economic Review, 27 February 1992, p.58­59. Paul Handley (1992), "Copied to perfection: cloning accelerates breeding process". Far Eastern Economic Review, 27 February 1992, p.59. 

Prospects and limitations
India considers the chances of new entrants quite encouraging. With the export of horticulture products, it is believed that India can earn 25 to 30 times more foreign exchange than with the export of any other agricultural product.
India has many advantages over other large­scale flower producing countries in the world. The varied agro­climatic zones combined with the skilled manpower could give the country a distinct edge over its competitors. Even during winter, most parts of India receive ample sunlight due to which no artificial lighting of green houses would be necessary, while plants obtained from anywhere in the world could easily be maintained, propagated and transplanted.

A problem to be solved is India's lack of adequate knowledge on harvesting, on post­harvest handling of flowers, and on packing according to international standards. In India, there hardly exists means of refrigerated transport or basic infrastructure such as cold storage facilities at airports and seaports. Besides, airfreight out of India to Europe is about 15 per cent higher than from other Asian countries such as Thailand, Sri Lanka and Pakistan. A 10 per cent EU import tax on Indian flowers decreases competitiveness in comparison to, for example, flowers from Israel, Kenya and Colombia.
Till recently the major problem faced by the private Indian floriculture industry was the non­availability of germplasm of established high­quality flower varieties. Due to the increasing number of joint ventures with foreign companies that is taking place, this problem may well be past. Also the introduction of the New Seed Policy of 1988 including increased import possibilities of new seeds and plants, and a modified quarantine procedure can be expected to improve India's access to high quality germplas.
Beena Pandey/Sachin Chaturvedi (RIS)

Sources
J. Prakash and K.R. Bhandary (eds.) (1994), Floriculture: Technology, trades and trends. New Delhi: Oxford and IBH.

Expert Group on Floriculture Development in India (1989), A Report. New Delhi: Government of India, Ministry of Agriculture.

Indian Trade Promotion Organization, Study on Floriculture Industry of India. New Delhi: ITPO.

K.L. Chada (1994), Delayed Recognition of Potential: Horticulture. Survey of Indian Agriculture, The Hindu, pp. 111­118.



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