Cut-throat times for the flower industry

Local flower producers have seen lower prices, albeit recovering volumes, for their exported produce since the global financial crisis in 2008.

Local flower producers have seen lower prices, albeit recovering volumes, for their exported produce since the global financial crisis in 2008.

René Schoenmaker, chairperson of the SA Flower Growers’ Association, said that since the financial crisis, world prices had dropped 20-25%. “With higher oil and freight prices, and high electricity and minimum labour costs, margins are under pressure.

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“Some farmers are pulling out because they just can’t make ends meet. We’re reaching a point of no return, in that the guys are optimising the number of stems they can produce per square metre – but if they can’t maintain their return, they’re fighting a losing battle.”

David Gates, who grows chrysanthemums in tunnels in Baynesfield, agreed that electricity prices and wages are putting huge pressure on growers. “We ran our greenhouses colder than we should have in winter and ended up shooting ourselves in the foot because it affected production,” he said.

“If we’d kept it up, we’d have seen about a 33% hike in our electricity bill. Electricity still went up by about 20%. With a 5c margin per stem, we have to grow a hell of a lot of flowers to pay for an extra R30 000 of electricity. Wages are also putting a huge strain on business.”

Schoenmaker said while he isn’t concerned about exports, he is concerned about the local market. “Government is very supportive of promoting the flower industry worldwide. We’d also like to see a bit of a change in focus and see what the potential is here with South Africa’s growing middle class. At the moment the guys are promoting their businesses individually, which takes a lot of time, effort and money. If we do it as an industry, with government support, it would be favourable for everyone.”

From 2000 to 2010, South Africa’s trade balance has been positive for flower bulbs, tubers and cut flowers, and the value of exports exceeded the value of imports. That’s according to the latest Trade Probe, a joint publication by the National Agricultural Marketing Council and the Directorate: International Trade of the Department of Agriculture, Forestry and Fisheries.

Schoenmaker estimates the flower industry employs 80 000 to 120 000 workers. – Robyn Joubert

Caption:
The cut flower industry is keen to tap into the market offered by South Africa’s growing middle class.
ROBYN JOUBERT