Cutflowers-Economics of Production and Export

In an area of floriculture or flower production, Cutflowers have assumed prominent place in

respect of (1) Selectivity or type of flowers, (2) Method of cultivation, (3) Marketing
and (4)Final consumer use

1.

Selectivity or type of flowers

From amongst the wide range of flowers, only certain type of flowers are grown as
cutflowers because of their special features, particularly long stem or stalk. For
example, rose, carnation, gerbera, gladiolus, tuberose, anthurium, etc. There is also
varietial preference for them according to the choice of consumers.

2.

Method of cultivation
Open field cultivation has been a traditional practice, which is a relatively cheaper
method. In modern "Hi-tech" method the cutflowers are grown in
polyhouses/greenhouses requiring high capital investment. But the quality of flowers
produced is superior, because inside climate or micro-climate such as temperature,
humidity, light, ventilation etc is controlled. Even water application is also controlled.
Even water application is also controlled. Therefore, the quality of flowers is better.
They are uniform in size, colour, freshness etc. Moreover flowers can be produced
throughout the year to meet the market demand-domestic as well as foreign. Since
flowers are of better quality, they fetch higher prices.

3.

Marketing
Since cutflowers are of specific type and produced in polyhouses they are fresh and
tender and since they are produced for specific purpose, great care is needed in their
marketing viz. packing, handling, storage and transport. There should be minimum
handling and transport should be quick with cooling and refrigeration facility. This is
particularly necessary for cutflowers, which are produced for, export purpose.

4.

Final consumer use

Final consumer use of cutflowers is different from other flowers. Their use is of more
sophisticated nature in educated and well-to-do segment of consumers. Cutflowers are
mainly used for preparing bouquets, which are used in functions and ceremonies to
welcome guests, VIPs and to felicitate great utility and hence fetch high prices.
Economics of Production
The polyhouses in which cutflowers are grown are of various sizes ranging from 500 sq.m.to
10,000 sq.m. (One hectare). They also differ in terms of cost as (a) low cost-Rs.125/m2 ,
(b) medium cost- Rs.500/ m2 and (c) high cost-Rs.2000/ m2, depending upon material used
for construction and other facilities provided in them. An investment in a polyhouse of one
hectare size with medium cost comes to almost Rs. 50 lakhs, which is quite high.
Considering high initial investment, the Government of India has introduced scheme of
subsidy from 10% to 50%.

Economics of cutflowers production (Roses) in a polyhouse of one hectare size is given

below:
Sr.
No.
I

Particulars

Amount
Rs.
in lakh

Capital Investment
1 Polyhouse structure
45.00
2 Pre cooling and cold storage unit 15.00
3 Refrigerated van
13.00
4 Planting material
4.50
5 Land value
2.00
Total
79.50

II

Costs and Returns

1 Fixed costs
2 Variable costs
Total costs
3 Total no. of flowers produced
during 9 months (N0.)
4 Per flower
Average cost (Rs)
Average price received
with no important (Rs)
Average price received net
ofimport duty (15%) (Rs)
Net profit (Rs)

16.43
29.82
46.25
6,76,170

6.85
12.28
10.44
3.59

The items of fixed cost included interest on investment, depreciation on structure and
transport and other equipment, and amortization of planting material. The items of variable
cost included irrigation charges, fertigation, labour charges, managerial and supervision
charges grading, packing, transport costs and air freight. This showed that inspite of high
cost of cultivation of roses in polyhouses, their production is quite profitable due to export
market.
Quality Grades
Cutflowers are graded according to the length of stem or stalk, which varies from 5 cm to
120 cm. Longer the stalk better the quality and hence higher the price. Most commonly
followed grading is designated as-

a.
b.
c.

Short - stalk length below 45 cm.

Medium- stalk length 45 to 60 cm.
Long - stalk length more than 60 cm.

Most of the cutflowers (50%) were of medium stalk. Average price received per rose flower
according to stalk length was Rs.7 for short, Rs. 16 for medium and Rs. 20 for long stalk.

Period of High Demand

In western countries, Valentine Day and Christmas festival are the periods of high demand
and consequently of high prices. Per flower prices of roses were Rs. 26 at Valentine Day,
Rs.17 at Christmas festival and Rs.10 at other times. This trend in prices needs to be
considered while planning cutflowers production.
Another study gives economics of cultivation of gerbera flowers (estimate for 2500 sq.m.
area that is 17500 plants).
Sr.
Particulars
No.
I 1 Fixed costs
2 Variable costs

II

Amount
3,50,000

First year

7,63,150

Second year

7,13,150

Total

18,26,300

Returns
1 Total number of flowers per year 17,50,000
@ 50 flowers per plant for 2
years (No.)
2 Sale value @ Rs. 2.50 per flower 43,75,000
3 Total cost of two years
18,26,300
4 Net profit for two years
25,48,700
5 Per flower
a) cost of cultivation

1.04

b) sale price

2.50

c) net profit

1.46

Per flower cost of cultivation of roses is much higher (Rs. 6.85) than that of Gerbera (Rs.
1.04). Production of Gerbera is also quite profitable.
Subsidy Scheme
Looking to very high initial investment in polyhouses and to encourage more floriculturists
to undertake cutflowers production for export purpose, the Govt. of India introduced an
incentive scheme of subsidy for construction of polyhouses. The details of the scheme are as
follows.
Sr.
Type of
Cost/ Max.
No. Greenhouse m2 area
m2

Total
Cost
Rs

Subsidy Amount
%
of
Subsidy
available
Rs.
1 Low cost
125 500 62,500
50
31,250
2 Medium cost 500 500 2,50,000
40
1,00,000
3 High cost
2000 500 10,00,000
10
1,00,000

Thus the subsidy varies from 10% to 50% with a ceiling to the amount upto Rs. 1,00,000.

Source:
http://www.indiaagronet.com/indiaagronet/farm_management/CONTENTS/Cutflowers.htm