Flower exports from India
are likely to be hit because of rising air freight costs
and withdrawal of freight subsidy, even as exporters combat
a rupee appreciating against the dollar.
Oil companies had hiked jet fuel prices by 4.2% on 1 October
and most airlines have passed on the cost to passengers
and freight. Largely as a result, floriculture exports from
India will see a growth of only around 15-20% this year,
according to the South India Floriculture Association, compared
with a 26% growth in the previous year.
Starting from Christmas through Valentine’s Day on
14 February, is the busiest two-month period for Indian
flower exporters, when 70% of the year’s exports are
airlifted. Air freight works out to nearly half the wholesale
price that Indian roses, for example, are sold at overseas.
A November Agricultural and Processed Food Products Export
Development Authority report notes that air freight from
African destinations, such as Ethiopia and Kenya, the main
competitors to Indian floricultural exporters, to European
markets is at $1.60 (Rs63) a kg, while it costs $3 a kg
from India.
Indian exports for the year ending March were valued at
Rs380 crore, according to the authority. Indian flower exports,
however, constitute only 0.18% of the international trade
in flowers.
Meanwhile, the Indian government had also stopped subsidizing
air freight for floricultural exports since March. Until
then, exporters could avail a subsidy of Rs25 per kg on
fresh-cut flowers exported to Europe, Japan and West Asia.
“The margins of cut flowers this year would be a little
less than the previous year,’’ concedes R.D.
Reddy, a member of the association’s working committee,
who is also managing director of Meghna Floritech Ltd.
A majority of the Indian cut- flower exports come from Karnataka,
Tamil Nadu and Maharashtra.
“Growth may be around 10-20% this year, but the prices
that our flowers command will be the same as previous years,”
says K.V.L.N. Raju, another Bangalore-based exporter, who
runs Nagarjuna Agritech Ltd.
“We are having stiff competition from African countries,
which have now started exporting to the Middle East as well,”
said the authority’s assistant general manager in
Bangalore R. Ravindra. However, a few exporters from India
also own units in Ethiopia and Kenya.
To combat the double impact of the depreciating dollar and
increasing air freight charges, Indian players are increasingly
targeting West Asia and Australia.
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