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PRODUCTION, MARKETNG OF CUT FLOWERS AND POLICIES PERSUDE IN TURKEY C. Sayin1 B. Ozkan1 O.Karaguzel 2 Y.

Tascioglu1

1. University of Akdeniz, Faculty of Agriculture, Department of Agricultural Economics, 07059 Antalya, Turkey 2. University of Akdeniz, Faculty of Agriculture, Department of Landscape of Architecture 07059 Antalya, Turkey Abstract The objectives of this paper are to examine the current status and marketing structure and policies pursued in the Turkish cut flower industry. Turkish cut flower industry was heavily focused on the carnation production. Carnation, mainly spray, accounts for more than 80 % in the total export-oriented cut flower production. Turkish cut flower industry has made remarkable process. However, the industry has faced some important problems. In recent years contract growing seems to be partly solution way to some of these problems due to its advantages of reducing risks both for growers and for export companies. 1. Introduction Cut flower production in the world has started to gain importance in the early of 20th century and especially after the second World War it has began an important commercial activity. As a result of this, rapid developments and changes have been occurred in the cut flower production, storage, classification and marketing. By the means of this change, new techniques and technologies are used in the cut flower industry from production to consumption. In addition to these developments, seeking of new support policies has come to on agenda. Same developments are observed in Turkey as well. Commercial cut flower production has begun in Turkey in 1940s. Before 1980, the production centre was primarily Istanbul and its surrounding areas and production was oriented to mainly meet for domestic needs. At the beginning of the 1980s cut flower production shifted to the Mediterranean (Antalya) and Agean (Izmir) region. Particularly Antalya province located on the south cost in Turkey is the main centre of export oriented cut flower production. Since a favourable climate and rapid air transportation to Europe gave Antalya a comparative advantage. Hence Antalya province became a major centre for export-oriented cut flower production in Turkey. Turkish export-oriented cut flower industry heavily focused on the carnation production (mainly spray) and cut flower production in Antalya mainly took place under plastic without heating (Ozkan et al., 1997; Ozkan and Karaguzel, 1997; Brumfield et al, 1997; Brumfield et al, 1998).

2. Results and Discussion 2.1. Cut flower Production in Turkey As noted previously, cut flower production has started in the year of 1940s in Istanbul and its surrounding and then has spread to other provinces. After 1985, by the means of cut flower export from Antalya has increased rapidly the production areas of cut flowers in this province. Particularly, within the context of the 6th and 7th 5 Year Development Plans, export oriented cut flower production was supported by indirectly and introducing new easiness measures to imports for plant materials has provided important increases on production area and quantity of cut flowers. The cut flower industry makes an important contribution to economy. These are briefly summarised here. Cut flower industry provides important contributions to fertiliser and agricultural chemical industry since it is an intensive agricultural production activity by having short-term production, requiring intensive fertiliser and plant protection techniques. Packaging is one of the most important elements in post harvest processes for cut flower products. During supplying of products to market and for transport, lots of packaging material originated from cellulose and plastic is used, by this way cut flower industry also provides an important contribution to this industry. In addition, existence of cold chain in the cut flower export firms requires different techniques and application that creates employment opportunities. On the other hand, chemical usage in the post harvest processes constitutes a market for chemical substance producers and distributors. Transportation of cut flowers products needs special techniques and applications. Transportation of flowers to importer countries creates an important source of income for transportation industry also (Anonymous, 2001).
Table1. Cut flower production in Turkey by production system, region and variety (1999)
Production system Glasshouse Plastic house Open area Total Area (ha) 38,28 946,78 542,97 1528,03 (%) 2,5 62,0 35,5 100,0 Total 100,0 Region Mediterranean Aegean Marmara Others (%) 32,3 39,1 27,5 1,1 The share of flowers in total Carnation Gladiolus Roses Chrysanthemum Others Total (%) 51,7 17,0 9,9 3,7 17,8 100,0

Source: Anonymous, 2001.

As of 1999, approximately 65 % of cut flowers are produced in greenhouse areas and the rest of 35 % is produced in open areas. The majority of greenhouse cut flowers are produced under plastic houses. In 1999, total production area of cut flowers was 1528,03 hectares of which 98,9 % was concentrated mainly in the three region namely Aegean, Mediterranean and Marmara. The Aegean Region comes the first among these

regions with a share 39,1 % in this total area. Carnation (51,7 %) dominates in the cut flower production followed by gladiola, rose and chrysanthemum respectively (Table 1). 2.2. Foreign Trade of Cutflowers 2.2.1. Cut Flower Export In the world, more than 50 countries produce cut flowers and the Netherlands takes the first place with 8.526 ha (Turkay, 2000). The Netherlands also takes the first place in world-wide cut flower export with share a more than 50 %. The Netherlands is followed by Colombia and Ecuador. Turkeys share in cut flower export is generally below than 0,5 %. Turkish cut flower exports have reached level of nearly 13 million in 2000. The share of Turkey in the world cut flower trade is only 0.3%. The United Kingdom is the major market for Turkish cut flower exports (Table 2).
Table2. The share of selected countries in the world cut flower export ($ 000 and %)
Countries Netherlands Columbia Ecuador Israel Kenya Spain Thailand Zimbabwe South Africa Australia Turkey Others Total 1998 2.296.041 600.014 201.883 175.196 131.550 95.977 51.856 61.925 14.656 15.720 16.853 422.692 4.084.363 (%) 56,22 14,69 4,94 4,29 3,22 2,35 1,27 1,52 0,36 0,38 0,41 10,35 100,00 1999 2.095.183 546.210 210.409 115.884 141.326 85.450 50.175 58.810 13.468 17.334 13.401 421.793 3.769.443 (%) 55,58 14,49 5,58 3,07 3,75 2,27 1,33 1,56 0,36 0,46 0,36 11,19 100,00

Source: http://www. pathfastpublishing.com

As of 2001, total export value of Turkey is 31 billion $ and the share of agricultural export is 15,5 % in the total export. The cut flower accounts for 0,3 % and 0,4% in the total agricultural and crop export, respectively (Table 3). However unregistered trade is not included in the official export values. The unregistered trade (trade in which 10 to 20 boxes of flowers are purchased at a time and are taken to Russia, Romania or Bulgaria on buses as luggage) has become very important for the Turkish cut flower industry in recent years and it is equal to almost half of the official exports (Brumfield et al, 2000).

Table 3. The share of cut flowers in the total agricultural export (%)
Total export value Share of cut Agricultural export Share of cut of Turkey flowers value flowers ($ 000) (%) ($ 000) (%) 31.063.595 0,5 4.820.221 0,32
Source: http//www.aib.org.tr

Export value of crops ($ 000) 4.024.252

Share of cut flowers (%) 0,38

The overall average value of cut flowers export did not change much between 1992 and 1999. During this period, the export value changed between 11 and 12 million $. However in the same period there was 60 % increase in the export quantity. It implies that export prices were declined in those years. In 2001 year, the total value of cut flower export is 15 million $ (Anonymous, 2002/b). Looking at the years of 1999-2001, England, the Netherlands and Japan are general the leading destination countries for Turkish cut flower export. These countries are followed by Germany and Russia (Table 4).
Table4. The share of selected countries in the Turkish cut flower export value (%)
Countries Netherlands England Japan German Russia Others Total 1999 33,54 40,08 9,09 6,41 2,69 8,19 100,00 2000 30,03 32,08 15,86 5,67 4,53 11,83 100,00 2001 33,81 33,10 10,09 6,39 3,97 12,64 100,00

Source http//:www.aib.org.tr

When it is looked at composition of exported cut flowers, carnation export dominate (92,4 %) in the Turkish cut flower export and in recent years. There was a increasing trend of the share of carnation export in the total cut flower export value while downward tendency was recognised for the other cut flower export (Anonymous, 2002/b). Antalya Cut Flower Exporters Union Board of Directors affiliated with the Export Unions of Antalya is the only organisation for the export-oriented cut flowers in Turkey. The number of the members in the cut flower export union is 123. As of 2001, about 97,4 % of the Turkish cut flower was exported from Antalya province and carnation export dominate in this export (Anonymous 2002/b). As a result over a period of 20 years a significant advance has been made in Turkish cut flower export. However there is a stagnation in the development of cut flower industry in recent years due mainly to the problems of production and marketing Strong dependency to imported propagation material, heavily focus on one variety, lack of qualified personnel and relatively low technology can be mentioned as production

problems. Besides these, exporting to one market, high air freight costs, lack of an effective organisation for exports, lack of enough professionalism in the sector, heavy competition and price cutting among exporters, low economics of scale for per exporters, lack of strong attention to flower quality can be highlighted as marketing and organisation problems. For this reason, Turkey is not be able to use its advantages and take very little market share from the world cut flower trade (Ozkan et al., 1998) 2.2.2. Main Cut Flower Markets and Cut Flower Import The main importer countries for cut flowers are illustrated in Table 5. As can be seen, Germany is the largest market in the world with a share of 21,07 %. It is followed by USA (19,49 %) and UK (13,97 %). It is seen that UK is not only one of the leading country for the cut flower import but also at the same time it is major destination place for Turkish cut flower export. In addition, the Netherlands, Germany and Japan as leading importers are also major destination places for Turkish cut flower exports. This indicates that Turkish cut flower export mainly is directed to major target markets.
Table5. Cut flower export in the world and the share of selected countries (1999)
Countries Germany USA England France Netherlands Japan Others World 1999 794 251 734 804 526 637 414 869 366 418 153 680 778 784 3 769 443 (%) 21,07 19,49 13,97 11,01 9,72 4,08 20,66 100,00

Source: http//:www.pathfastpublishing.com

2.3. Main Policies Pursued for Cut Flowers in Turkey In Turkey, there are no any government support programs oriented directly to improve cut flower production. However, the cut flower industry has benefited from the government subsidies and supports supplied to small and medium scale enterprises (KOBI) and from the agricultural input subsidies such as fertilizers, pesticides, credits etc. After 1995, export supports have been rearranged in the framework of Agriculture Agreement of the World Trade Organization (WTO) related to agricultural trade within the context of the GATT. In accordance with Part 5 and 8th paragraph that subjects export subsidies and takes place in the Agriculture Pact, countries have will provide the subsidies in line with the Agreement. Hence, the export incentives given for some types of cut flower, has been converted to government aid for export of cut flowers. According to the GATT, monetary export subsidy is not allowed and these subsidy policies must be converted to government aid. Otherwise, there is no monetary support for the export (Tufan and Sayin, 1996).

In Turkey, the majority of the export-oriented cut flower production is realized by contract production. Therefore, export oriented cut flower production is provided mainly based on the contracts between producer and exporter. While government aids was given only to exporters in the previous years, currently a new application has been put in the practice and within the context of the new policy government aids it is given to growers and exporters. Also, monitoring of the producers and exporters of cut flowers and exporters taking into database is aimed in the scope of the new policy. In addition, determination of production quantity correctly and direction of supports to real producer-exporters is also considered as the other aims of this new arrangement. 2.4. Cut Flower Price Formation The cut flower demand depends on population size of the country and depends also on the per capita expenditure on cut flowers. When the price changes of the some cut flowers are examined over the past four years, it is seen that there is not an important increase in the real prices of the many cut flowers but there is a decreasing tendency in the prices of the some cut flower species (Table 6).
Table 6. Wholesale prices of the some cut flowers in Turkey
Cut flowers (number) Carnations Roses Gladioli
Chrysanthemum

Y ears 1995 (TL) (US $) 3 234 0,070 4 716 0,103 4 023 0,088 4 193 0,091 7 221 0,157 1996 (TL) (US $) 4 284 0,053 9 097 0,112 7 058 0,087 6 238 0,076 15 502 0,190 1997 (TL) (US $) 7 228 0,048 17 475 0,115 13 537 0,089 10 538 0,069 29 673 0,195 1998 (TL) (US $) 14 276 0,055 30 205 0,116 24 168 0,092 18 673 0,071 50 057 0,192

Gerbera

Sources: Anonymous, 2000/a

When the price changes for the exported cut flowers is examined, it is observed that the real prices of carnation declined continually compared to 1995 same decreasing tendency in the prices is also valid other cut flowers (Table 7).
Table7. Export prices for the some cut flowers in Turkey ($/number) Cut flowers Carnations Roses Chrysanthemum Gladiolus
Source: Anonymous, 2000/b

Y ears 1995 0,091 0,121 0,208 0,190 1996 0,077 0,288 0,202 0,142 1997 0,079 0,158 0,161 0,161 1998 0,075 0,151 0,174 0,169

Quality, timing and low cost takes place among the important competitive factors for both domestic and foreign market. Because sale prices is directly influenced by the changes in the cost. The most important costs items in Turkish cut flower production are labour, seedling, packaging and transportation (Table 8).

Table 8. The share of important items in the cut flower production (%) Labour Seedling Packing Transportation Total
Source: Anonymous, 2002/d

Carnations 33,6 13,4 11,0 29,9 100,0

Chrysanthemum 11,9 43,4 12,7 14,6 100,0

Gerbera 15,2 17,6 16,8 10,1 100,0

Gypsopphilla 40,5 8,9 14,8 17,1 100,0

2.5. Marketing Activities In Turkey, cut flower production systems can be divided into two groups according to their market orientation. These are domestic market and export market oriented production systems. There are differences in the two production systems in terms of enterprise size, sources of labour worked on the farm and obtaining of production material (Anonymous 2001). 2.5.1. Domestic Marketing Activities Two cooperatives are dealing with in the domestic cut flower marketing in Turkey. These are the Flora Flowering Production and Marketing Cooperative and the Flower Production and Marketing Cooperative. The majority of cut flower farms that produces for domestic market are members of these cooperatives. Growers sell their flowers through auctions owned by these cooperatives. This situation puts cooperative auctions in a very important place among the domestic marketing channels. In addition to the cooperative auctions, some private auctions take place in the cut flower marketing. Growers who are not member of the cooperatives can sell their flowers directly to retailers. Furthermore, there is a short marketing channel in the domestic marketing of cut flowers. In this channel flowers are sold by producers to retail florists. Particularly small scale producers who are not a member of a cooperative use this marketing channel and hence small producers can sell their small amount of flowers. The members of the cooperatives can only sell their flowers to cooperatives auctions according to the cooperative contract. If any ember of the cooperative sells her flowers to other firms instead of cooperative auctions, he can not be member of the cooperative any longer. 2.5.2. Foreign Marketing Activity There are differences in the marketing channels and systems used by export oriented cut flower producers of Turkey. The most important channel is exporter firmimporters. Exporter firm purchase flowers from producers and they ship to flowers to importers operating in the foreign markets. One research study conducted in Antalya showed that the majority of export companies (84%) export their product via wholesalers supermarket chains, agencies and auctions play only minor role in the marketing of cut flowers (Ozkan et al., 1997). About 90 % of transportation is carried out by air freight and consignment selling is preferred in the selling process. The consignment selling system is against of the

exporters but importers. The main reasons for using consignment selling are heavy competitions at the export markets and price discount competitions among the export firms. As a result, bargaining power of exporter is declined in the consignment system. Other important issues related to the export is inadequate entrance to the big auctions located in the Netherlands that realizes an important part of the cut flower distribution to the EU countries where there is the worlds largest consumption centres, cut flower exports based on the one flower (carnation) and one country (England), and having only little benefit from the supermarket chains that their importance is increased gradually in the cut flower marketing. The quality of cut flowers demanded by European traders is very high. Therefore, consumer behaviours and attitudes should be monitored continuously since they are changing very rapidly. By understanding the ultimate consumer and his purchasing decisions is very important to meet the consumers needs and expectations. Today consumers are willing to spend money but only on good quality products. It should be kept in mind that basic flower is not really the product the consumer needs; it is only raw material for the end product. 3. Conclusion At the beginning years 20th century, production quantity and area of the commercial cut flower has begun to increase in the world. The cut flower production has started to begun in 1940s years in Turkey and its export income contribution has increased steadily. Once cut flower was in the scope of the export incentive supports, after the GATT Agriculture Treaty it has started to support as a government aid. With this new support policy in recent years both producer and exporter is supported. It is suggested that problems faced exporters should be solved by the following the healthy and systematic policies. The current export structure which is based on the one flowers and one country should be diversified. Also the support policies pursued in the cut flower production and export should be expanded. The other important point is should be kept in mind the environmentally friendlier production methods are becoming increasing important. It was concluded that a new approach should be established in the cut flower industry from production to marketing and export firms should be formed as foreign trade firms to co-ordinate export efforts and lobby for favourable government policy. It means that the entire of Turkish cut flower industry from production to distribution and exports needs a new approach. 4. Literature Cited Anonymous, 2000/a. Devlet Istatistik Enstitusu. http://www.die.gov.tr Anonymous, 2000/b. Ihracati Gelistirme Etud Merkezi http://www.igeme.gov.tr Anonymous, 2001. Sus Bitkileri Alt Komisyonu Kesme Cicek Raporu. DPT VIII. Bes Yillik Kalkinma Plani OIK 653. Ankara Anonymous 2002/a. www. pathfastpublishing.com Anonymous. 2002/b. Antalya Ihracatcilar Birligi. www.aib.org.tr Anonymous, 2002/c. Dis ticaret Mustesarligi. http://www.dtm.gov.tr Anonymous, 2002/d. Antalya Tarim Il Mudurlugu Kayitlari

Brumfield, R.G., Karagzel, O., Ozkan, B. 1997.Cut Flowers in the Antalya ProvinceThe face of cut flower production is changing in the primary horticulture region of Turkey, FloraCulture International, December 21-25. Brumfield, R., Ozkan, B., Karaguzel, O., 1998. Contract Growing For The Export Oriented Cut Flower Industry In Turkey. HortScience Vol.33 (3):530. Brumfeld, R.G., Ozkan, B. Karaguzel, O. 1999. A profile of Turkish Export Cut Flower Growers. HortTechnology ( in review). Ozkan. B., Celikyurt, M.A., Karaguzel, O., Akkaya, F. 1997. Production Structure and Main Marketing Problems of Export Oriented Cut Flower Industry in Turkey. Acta Horticulturea Number 491:481-487. Ozkan, B., Karaguzel, O. 1997. Antalya'da Kesme iek retiminin Mevcut Durumu. Derim Dergisi Cilt 14 (2): 50-61. Antalya. Ozkan, B., Karagzel O., Ortaeme,V. 1998. Trkiye Kesme iek Dsatmnda retim ve Pazarlamadan Kaynaklanan Sorunlar ve zm nerileri. Ss Bitkileri Kongresi 6-10 Ekim. 19-25. Yalova. Turkay, C., 2000. Kesme Cicek Dis Pazar Arastirmasi T. C. Basbakanlik Dis Ticaret Mustesarligi Ihracati Gelistirme Etud Merkezi. Arastirma ve Gelisme Baskanligi Tarim Dairesi. Ankara. Tufan, A., Sayin, C. 1996. Trkiyede Tarm rnlerine Ynelik D Satm Tevikleri, Geliim Yn ve Etkileyen Faktrler. Trkiye 2. Tarm Ekonomisi Kongresi, 4-6 Eyll 1996, Adana.

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