Cutflowers-Economics of Production and Export

In an area of floriculture or flower production, Cutflowers have assumed prominent place in respect of (1) Selectivity or type of flowers, (2) Method of cultivation, (3) Marketing and (4)Final consumer use

  1. Selectivity or type of flowers
  2. From amongst the wide range of flowers, only certain type of flowers are grown as cutflowers because of their special features, particularly long stem or stalk. For example, rose, carnation, gerbera, gladiolus, tuberose, anthurium, etc. There is also varietial preference for them according to the choice of consumers.

  3. Method of cultivation
  4. Open field cultivation has been a traditional practice, which is a relatively cheaper method. In modern "Hi-tech" method the cutflowers are grown in polyhouses/greenhouses requiring high capital investment. But the quality of flowers produced is superior, because inside climate or micro-climate such as temperature, humidity, light, ventilation etc is controlled. Even water application is also controlled. Even water application is also controlled. Therefore, the quality of flowers is better. They are uniform in size, colour, freshness etc. Moreover flowers can be produced throughout the year to meet the market demand-domestic as well as foreign. Since flowers are of better quality, they fetch higher prices.

  5. Marketing
  6. Since cutflowers are of specific type and produced in polyhouses they are fresh and tender and since they are produced for specific purpose, great care is needed in their marketing viz. packing, handling, storage and transport. There should be minimum handling and transport should be quick with cooling and refrigeration facility. This is particularly necessary for cutflowers, which are produced for, export purpose.

  7. Final consumer use

Final consumer use of cutflowers is different from other flowers. Their use is of more sophisticated nature in educated and well-to-do segment of consumers. Cutflowers are mainly used for preparing bouquets, which are used in functions and ceremonies to welcome guests, VIPs and to felicitate great utility and hence fetch high prices.

Economics of Production

The polyhouses in which cutflowers are grown are of various sizes ranging from 500 sq.m.to 10,000 sq.m. (One hectare). They also differ in terms of cost as (a) low cost-Rs.125/m2 , (b) medium cost- Rs.500/ m2 and (c) high cost-Rs.2000/ m2, depending upon material used for construction and other facilities provided in them. An investment in a polyhouse of one hectare size with medium cost comes to almost Rs. 50 lakhs, which is quite high. Considering high initial investment, the Government of India has introduced scheme of subsidy from 10% to 50%.

Economics of cutflowers production (Roses) in a polyhouse of one hectare size is given below:

Sr.
No.

 

Particulars

Amount
Rs.
in lakh

I

 

Capital Investment

 

1

Polyhouse structure

45.00

2

Pre cooling and cold storage unit

15.00

3

Refrigerated van

13.00

4

Planting material

4.50

5

Land value

2.00

 

Total

79.50

II

 

Costs and Returns

 

1

Fixed costs

16.43

2

Variable costs

29.82

 

Total costs

46.25

3

Total no. of flowers produced
during 9 months (N0.)

6,76,170

4

Per flower

 
 

Average cost (Rs)

6.85

 

Average price received
with no important (Rs)

12.28

 

Average price received net
ofimport duty (15%) (Rs)

10.44

 

Net profit (Rs)

3.59

The items of fixed cost included interest on investment, depreciation on structure and transport and other equipment, and amortization of planting material. The items of variable cost included irrigation charges, fertigation, labour charges, managerial and supervision charges grading, packing, transport costs and air freight. This showed that inspite of high cost of cultivation of roses in polyhouses, their production is quite profitable due to export market.

Quality Grades

Cutflowers are graded according to the length of stem or stalk, which varies from 5 cm to 120 cm. Longer the stalk better the quality and hence higher the price. Most commonly followed grading is designated as-

  1. Short - stalk length – below 45 cm.
  2. Medium- stalk length – 45 to 60 cm.
  3. Long - stalk length – more than 60 cm.

Most of the cutflowers (50%) were of medium stalk. Average price received per rose flower according to stalk length was Rs.7 for short, Rs. 16 for medium and Rs. 20 for long stalk.

Period of High Demand

In western countries, Valentine Day and Christmas festival are the periods of high demand and consequently of high prices. Per flower prices of roses were Rs. 26 at Valentine Day, Rs.17 at Christmas festival and Rs.10 at other times. This trend in prices needs to be considered while planning cutflowers production.

Another study gives economics of cultivation of gerbera flowers (estimate for 2500 sq.m. area that is 17500 plants).

Sr.
No.

 

Particulars

Amount

I

1

Fixed costs

3,50,000

2

Variable costs

 
 

First year

7,63,150

 

Second year

7,13,150

 

Total

18,26,300

II

 

Returns

 

1

Total number of flowers per year
@ 50 flowers per plant for 2
years (No.)

17,50,000

2

Sale value @ Rs. 2.50 per flower

43,75,000

3

Total cost of two years

18,26,300

4

Net profit for two years

25,48,700

5

Per flower

 
 

a) cost of cultivation

1.04

 

b) sale price

2.50

 

c) net profit

1.46

Per flower cost of cultivation of roses is much higher (Rs. 6.85) than that of Gerbera (Rs. 1.04). Production of Gerbera is also quite profitable.

Subsidy Scheme

Looking to very high initial investment in polyhouses and to encourage more floriculturists to undertake cutflowers production for export purpose, the Govt. of India introduced an incentive scheme of subsidy for construction of polyhouses. The details of the scheme are as follows.

Sr.
No.

Type of
Greenhouse

Cost/
m2

Max.
area
m2

Total
Cost
Rs

Subsidy
%

Amount
of
Subsidy
available
Rs.

1

Low cost

125

500

62,500

50

31,250

2

Medium cost

500

500

2,50,000

40

1,00,000

3

High cost

2000

500

10,00,000

10

1,00,000

Thus the subsidy varies from 10% to 50% with a ceiling to the amount upto Rs. 1,00,000.


Agri-
Knowledge

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