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Nations square up for the battle of flowers
Addis Ababa may seem a long way from Amsterdam and Nairobi from Nijmegen, but developments in the cut-flower trade in Kenya and Ethiopia are shaking the earth in the Netherlands, its traditional home.
The flowers-for-export business is blooming particularly abundantly in Ethiopia – Africa’s second-largest flower exporter after Kenya. With export earnings growing by 500 per cent over the past year, some estimate that Ethiopia could earn around $300 million from the trade by 2010.
UK supermarket chain Morrison’s recently announced that it would stock roses and carnations from Ethiopia. Investors have also been attracted from the Netherlands, Germany, India, Israel, Japan and even Uganda and Kenya. White farmers from Zimbabwe are also moving in for a slice of the action.
Ethiopia has large amounts of cheap labour, areas of good soil and a favourable climate for the growth of cut flowers. In addition, the Ethiopian authorities are fertilizing the business with generous tax breaks, access to funding and low-cost leases on government-owned land.
Mengesha and Common (Public Administration and Development, Dec 2007) examine how public-administration reforms in Ethiopia – particularly in the Ministry of Trade and Industry – are helping to improve service delivery in the country. Meanwhile, Orton-Jones (Financial Management, Feb 2008) focuses on broader world trends in the flower industry.
For the moment, it seems, the place of the Netherlands as the world’s biggest cut-flower exporter remains secure. Around 60% of the global flower trade still passes through Dutch flower auctions – almost a third of which is made up of repackaged flowers from east Africa, the Middle East and South America. The Netherlands capitalizes on its hundreds of years of trading expertise, and its excellent transport links to major markets in Germany, France and Britain, to retain this trade.
But new competitors are coming up on the rails. China has been investing billions of yuan in cut-flower production, while Delhi and Bangalore have flourishing auction houses. Most surprising of all, however, is the threat that Orton-Jones outlines to the Dutch business from the new €50 million Dubai Flower Centre.
This state-subsidized venture is currently only a handling depot, but it is well placed to develop and could eventually spawn an auction house. Some in the Netherlands fear that Dubai is already tapping Dutch expertise to help this to happen. Dubai boasts a largely tax-free environment and excellent air links with many parts of the world. Massive expansion of the Emirates airline – is on the cards. Cut flowers from Africa and Asia can already be easily trans-shipped through Dubai to lucrative western European markets. This trade could be expanded to India, Latin America, Russia and Dubai’s Middle Eastern neighbours.
Whether flowers are grown in Africa or Europe, Asia or Latin America, distribution to the consumer market is the key factor. The Netherlands is currently developing a large site around its own Schiphol Airport for the processing of flowers and other perishable goods. The site will also benefit from access to Europe’s high-speed rail network.
The stakes are high. Only the rash would predict who will eventually emerge victorious in this ‘battle of the flowers’.