Page last updated at 08:26 GMT, Monday, 9 March 2009

Wilting flower exports hit Zambia

By Steve Schifferes
Economics reporter, BBC News, Lusaka, Zambia

Watze and Angelique Elsinga grow roses for export
Watze and Angelique Elsinga grow roses for export

On the outskirts of Lusaka, Angelique and Watze Elsinga have been growing roses for export for the last 14 years.

But now the speed of the global downturn is forcing them to give up the business, threatening the livelihoods of hundreds of workers and their dependents.

The sudden collapse of the prices paid for roses in Europe, due to diminishing demand and oversupply, has made their business uneconomic.

And they are being forced to sell their farm as they can no longer keep up their loan payments to Barclays Bank, which is demanding immediate repayment.

Happy Valentine's Day

ENVIRO-FLOR ROSE EXPORTERS
Roses for export from Zambia
40m roses exported per year
7 hectares of greenhouses
189 workers employed
Total Zambia rose exports: 4,200 tonnes worth $40m in 2008
Total employment: 12,000

" It's a sad day," says Angelique Elsinga as she walks round her farm with its eight giant greenhouses - which produced 40 million roses for export last year.

"It's cheaper for us to destroy the roses now than send them to Europe."

They are shutting off the irrigation pipes in seven of those greenhouses, growing only for the local market and switching some of their production to vegetables.

The demand for roses - and the price - normally peaks at Christmas and Valentine's Day.

But this year was very different.

"We had to shut down production during the two weeks before Christmas, something we had never done before," said Watze Elsinga.

"And just before Valentine's Day, our suppliers told us not to send any more roses - their warehouses were full."

"We have never seen such low prices."

Sudden collapse

Abandoned greenhouses mark the collapse of the flower export market
Abandoned greenhouses mark the collapse of the flower export market

Yet just six months before, their business had seemed secure when they signed a long-term supply deal with a leading Dutch wholesaler, Blooms.

But in October, the company suddenly told them it was terminating the contract because of falling demand.

It was the first sign of the sharp slowdown that has gathered pace ever since.

"We have been surprised that this crisis has happened so fast," said Mr Elsinga.

"As growers, we cannot control either the prices we are paid, the exchange rate, or many of our external costs, even though we have managed to keep our own costs under control."

Social gains

CRUNCH TIME FOR AFRICA
School
World leaders will meet next month in London to discuss measures to tackle the downturn. See our in-depth guide to the G20 summit.
Only one African country will be represented at summit.
This week BBC World News and World Service Radio will be examining how Africa is coping with the crisis, with our blog and reports from the continent

For the Elsingas, who came to Zambia from the Netherlands 14 years ago, the farm was a social enterprise as well as a business.

They have constructed housing for their workers, and built a community centre and a school for 600 children on the premises.

And they have provided year-round employment for nearly 200 workers.

Now they will have to lay off all the workers at the rose farm, with only a few finding employment in the vegetable business which they hope to continue at another location.

Difficult conditions

According to Luke Mbewe, chief executive of the Zambia Export Growers Association (Zega), flower exporters in Zambia face more difficult conditions than their rivals in other African countries such as Kenya, Tanzania, and Uganda.

Flower exporters are dependent on a secure supply chain, with the fresh flowers kept refrigerated and disease-free as they are moved quickly from the farm to markets in Europe within 48 hours.

But in Zambia, transport costs are higher, because of the higher cost of petrol and jet fuel that has to be imported into this land-locked country.

And the lack of a substantial scheduled air freight service has meant that they have had to charter flights to take their flowers to market.

They have also faced problems with electricity supply, with Zambia's government-owned electricity company Zesco introducing rolling power cuts throughout the country over the past year.

The sharp drop in the value of the Zambian currency has raised the cost of fertilisers, fuel and other farm inputs.

Mr Mbewe says he knows of a number of other farms that have gone out of production, and he now fears for the future of the industry.

Economic hopes

Rupiah Banda
President Rupiah Banda wants to encourage economic diversification

Zambia remains one of the world's poorest countries, with more than 60% of the population living on less than $2 a day.

Now its prospects for economic growth have been dented by the decline in the world price of copper, which makes up 90% of the country's exports and provides thousands of jobs.

Zambia's President, Rupiah Banda, says that the way for Zambia to cope with the global recession is by diversification, moving away from dependence on copper.

But the problems of the flower industry show how difficult this could be.

To become competitive, Zambia's flower growers will need more, not less aid to improve infrastructure - either from the government or outside sources.

But it is still unclear whether any global measures to cope with the downturn, to be discussed at the G20 summit of world leaders in London in April, will reach the flower growers of Zambia in time.



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SEE ALSO
Country profile: Zambia
03 Nov 08 |  Country profiles

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