THE global flower export market, which is just over Rs 300 crore, has come down by 15-20% this year owing to global recession. With fertiliser costs also doubling, the industry is facing a crunch and foresees a price rise by 10% to pass the burden on to consumers.
VSL Agro Tech's manager V Srinivas says: "Cost of production for a single stem of rose has increased from Rs 1.50 to Rs 1.70. We have stopped exporting to Japan and Europe which contributed to 60% of our export market till march 2008." The overall sales of the industry have also gone down by 25%. Of the total sales, exports contribute 80% in volume terms and 60% in terms of value.
N Manjunatha Reddy, CEO of Pushpam Florabase, says: "Our profit margins have been reduced to half owing to higher delivery and production cost."
However, the Rs 600-crore domestic market is largely unaffected with inflation and is poised to cross the Rs 1,000-crore mark in two years, say industry observers. This is despite fertiliser costs spiralling by 100-300% but the industry is yet to increase the price of flowers.
The main sources of these fertilisers were imports from Europe and China. Earlier, the Chinese had provided 35% subsidy on export of fertilisers to their fertiliser companies. However, in order to control pollution levels for the Olympics, China has shut down most of these companies and imposed a 35% export duty on fertiliser exports. Moreover, the prices of phosphorous and sulphur have gone up in the international market and has further led to an increase in fertiliser prices by up to 200%.
Besides, the increase in petroleum prices has led to the increase in packaging material, such as polythene PP covers. Even the price of corrugated boxes has doubled. All this has affected exports of floriculture industry to markets like Europe, Japan, China and the US.
Shrivardhan Biotech's CEO Ramesh Patil says: "Flowers are considered to be a luxury item. The demand for flowers has gone down as buyers are not ready to spend much on them due to their perishable nature. It has badly affected our sales during Christmas, Valentine's Day and Ohigan (Japanese festival). Our flower sales have dipped from Rs 6.5 crore to Rs 5 crore in the current year."
Venkateshwar Rao, owner of Iris Biotech, says: "It is not possible to increase the current prices due to supply and demand dynamics and so we are absorbing inflation, but we will foresee a price increase of 10% in the coming months."
VSL Agro Tech's manager V Srinivas says: "Cost of production for a single stem of rose has increased from Rs 1.50 to Rs 1.70. We have stopped exporting to Japan and Europe which contributed to 60% of our export market till march 2008." The overall sales of the industry have also gone down by 25%. Of the total sales, exports contribute 80% in volume terms and 60% in terms of value.
N Manjunatha Reddy, CEO of Pushpam Florabase, says: "Our profit margins have been reduced to half owing to higher delivery and production cost."
However, the Rs 600-crore domestic market is largely unaffected with inflation and is poised to cross the Rs 1,000-crore mark in two years, say industry observers. This is despite fertiliser costs spiralling by 100-300% but the industry is yet to increase the price of flowers.
The main sources of these fertilisers were imports from Europe and China. Earlier, the Chinese had provided 35% subsidy on export of fertilisers to their fertiliser companies. However, in order to control pollution levels for the Olympics, China has shut down most of these companies and imposed a 35% export duty on fertiliser exports. Moreover, the prices of phosphorous and sulphur have gone up in the international market and has further led to an increase in fertiliser prices by up to 200%.
Besides, the increase in petroleum prices has led to the increase in packaging material, such as polythene PP covers. Even the price of corrugated boxes has doubled. All this has affected exports of floriculture industry to markets like Europe, Japan, China and the US.
Shrivardhan Biotech's CEO Ramesh Patil says: "Flowers are considered to be a luxury item. The demand for flowers has gone down as buyers are not ready to spend much on them due to their perishable nature. It has badly affected our sales during Christmas, Valentine's Day and Ohigan (Japanese festival). Our flower sales have dipped from Rs 6.5 crore to Rs 5 crore in the current year."
Venkateshwar Rao, owner of Iris Biotech, says: "It is not possible to increase the current prices due to supply and demand dynamics and so we are absorbing inflation, but we will foresee a price increase of 10% in the coming months."
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