Floriculture Industry

1. Background

Export  oriented Floriculture Industry was established during year 1980/81 period. Since then it has shown a remarkable growth. Today the industry is comprised of about 40 major export companies, including a few foreign investors. Floriculture sector employees over 5000 people and more than 10,000 families in the semi urban and rural areas are indirectly involved in exports as out growers to the existing companies. This is one of the few agriculture based industries that employees people through out the year at the rate of 5-7 workers per acre. The net foreign exchange earning capacity of the sector is around 85%-90%.In year 2008 Sri Lanka has earned Rs 1562 Mn (US $ 14.52) worth of  foreign exchange by exporting floriculture products and in year 2010 there was a drop in exports to US$ 11.5 due to the global recession. The exports have  slightly  recovered during year 2010.

Strength & Opportunities

Strengths

• Climatic variations and diverse topography enabling to cultivate a range of products from tropical to temperate.  
• Availability of cultivation technology to finish products according to international standards.
• Skilled labor.
• Availability of coco peat as a growing media.
• Reputation  built up as a supplier of quality products.
• Encouragement received from the Government.
• Application of Good Agricultural Practices to protect the environment, safeguard  workers and sustainable use of natural resourses.

Opportunities

• Expanding new markets
• Opportunities to export value added products
• New developments in sea transportation

Product Assortment

Sri Lankan product assortment consists of the following product lines.

• Ornamental Foliage Plants
• Cut decorative leaves
• Cut Flowers
• Aquarium plants
• Landscaping plants
• Tissue cultured plants

Comparison of cut leaves, Pot plants and Flowers

Supply Base

• All  major exporters are producer exporters operating their own nurseries
• Some have arranged out grower systems on their own, under the supply development assistance schemes & other provincial development programmes organized by the EDB, programmes done by other government institutions and NGOs .( Mainly for  decorative Foliage and Anthuriums)
• Collector /Supplier is playing a major role in the Decorative Foliage export sector.

Major Production Regions

Western province-Gampaha, Kaluthara and Colombo Districts
North Western Province- Kurunegala , Puttalam  Districts
Central Province – Kandy, Kegalle, Matale, N’ Eliya, Bandarawela

Possible Areas for Expansion

Southern Province
Sabaragamuwa Province

The world market

Total World imports (2010) – US$ 17.1 Bn

Sri Lankan Exports 2010– US$ Mn. 11.7

Growth in Sri Lankan exports (2006-2010 )- 3 %

Sri Lankan Share in the World Market (2010)- 0.1%

World Ranking (2010) – 52

Sri Lankan Floriculture Exports

Source: Sri Lanka Customs Statistics

The export  market for Floriculture Products

Europe is the major market for Sri Lankan floricultural products and accounted for 62% (Rs. 820 Mn)  of our total floriculture exports in year 2009. The Netherlands  is    the leading importer in Europe and continues to be the number one market for Sri Lankan floriculture products absorbing  36% of our total exports  (Rs. 477 Mn) in year 2009. Japan ,South Korea and the Middle East are the other major import markets.

Source: Sri Lanka Customs Statistics (Trade information Service –SLEDB)

Major Markets (US $ Thousands)

Export market	2006	2007	2008	2009	2010
World	11267	12037	14177	11461	11749
Netherlands	3805	4317	5059	4155	4039
Japan	1994	1706	2040	1972	2315
Germany	830	950	1170	1047	1244
United Kingdom	930	1144	941	687	725
Qatar	170	290	332	256	444
Denmark	324	294	409	459	435
Saudi Arabia	367	380	431	405	433
United Arab Emirates	352	407	675	486	333
France	141	171	188	198	257
United States of America	241	325	630	207	234

Major Competitors

    
Quality Standards  required  by the Importers

• EU product Quality Standards
• Sanitory and Phytosanitory  regulations under WTO
• Quarantine Standards stipulated by the importing countries
• Private quality labeling systems (GLOBALGAP, MPS, FFP)

Prices – structure and trends

• Seasonal Price fluctuations
• Slight price fluctuations at auctions
• Price will vary according to several factors (eg: Seasonality, variety. quality, appearance, vase life regularity in supply etc)
• Profit margins vary at various levels of the supply chain.
• Auctions : large volume/high value products-10 to 12%, Small volume /low value – up to 20%, Import Agents/wholesalers- 5-25%, Wholesalers -25-30%,    Retailers- 85-95%
• Market access requirements (e.g. tariffs, legislative, non-legislative requirements)
• Quarantine Certificate : To prevent entering of Organisms harmful to  animals, plants and plant products.
• (Requirements are country specific. Need to fulfill the requirements set by  individual import  countries)
• European Buyer requirements (Additional Requirements set by companies)-   Environmental requirements
• Social requirements
• Eg :  International sustainable label-MPS
               International consumer label- FFP
               International social label- Fair Trade
                                       Good Agricultural Practices –GLOBALGAP 
•  CITES (Regulation 338/97)- To prevent trading of  endangered species
• Tariff and Quota
• VAT –Country Specific

Exporter Associations

Floriculture Produce Exporters Association
C/o Ramya Horticulture (Pvt) ltd
459/1, Kandy Road
Ranmuthugala
Kadawatha

Related Institutions

• Department of  Agriculture
• Department of National Botanical Gardens
• Department of Forest
• Department of Wild Life Conservation
• Department of Commerce
• Sri Lanka Customs

MB/31/01/2011