GREEN FINGERS

Colombia 2015 | AGRICULTURE | INTERVIEW

TBY talks to Carlos Manuel Uribe, CEO of Flores El Capiro, on new techniques for flower growers and issues with selling overseas.

Could you describe Colombia's flower industry, and Flores El Capiro's role in it?

Colombia is the largest exporter of cut flowers in the world. Technically the Netherlands is considered the greatest exporter, but that is because the Netherlands re-exports flowers imported from Colombia and Ecuador. In terms of volume exported from a single country of origin, Colombia leads, with the Colombian flower industry growing by about 4-6% a year, with growth for 2015 expected at around 5%. Cut-flower exports last year reached $1.3 billion. About 75% of the flowers from Colombia are from Bogotá, with 20% stem from the Rio Negro area. In Bogota we mainly plant roses and carnations, mini carnations, spray carnations, along with Alstroemeria and other floral varieties. In Antioquia we mostly grow chrysanthemums and hydrangeas, which have become an important crop for the region. I am the chairman of the board of Asocolflores, the Colombian Association of Flower Exporters, in Bogotá and Medellín. Flores El Capiro mainly grows chrysanthemums. The processes for roses and chrysanthemums are markedly different, with the latter being more labor-intensive. We have 75ha reserved for chrysanthemums, making us one of the largest growers of Chrysanthemum in the world. Flores El Capiro employs 1,500 people, and we operate five production centers. We export to many different markets with North America being our chief destination, accounting for 45% of our exports, followed by the UK with 35%. Chile, Australia, Japan, and Spain are also important markets. Unlike other chrysanthemum growers, we export 60% of our flowers by sea freight, which makes us the largest exporter of flowers by this route in the world. We have exported more than 1,800 containers to date, and eight years ago we commenced a major project with the Dutch Flower Group and Tesco, which pioneered selling flowers in supermarkets, remaining one of our biggest buyers. We also export to Chile and Australia by sea freight. It takes 28 days for our flowers to reach Australia, and we guarantee a seven-day life span once the flowers are on sale there, mainly in supermarkets like Coles and Woolworths.

What effect has the devaluation of the peso had on flower producers in Colombia?

The devaluation is a positive development for exporters. Most exporters of flowers, including us, use futures to put a flat rate on the currency. I think the devaluation has led to a consolidation of the industry among major producers, and the business is radically different from what it was eight years ago when the peso started to devalue. In the past, the devaluation would help businesses that were inefficient, but now the margins are too tight for that. Companies have adapted by diversifying their crops and adopting new technologies. They are investing more per hectare, and labor is becoming more expensive. Flowers are a riskier business today, in large part due to fluctuations in the exchange rate. To hedge against fluctuation, we use futures. This strategy guarantees margins, and we are not at the mercy of exchange rate fluctuations. Whatever exchange rate we anticipate, we peg it into the future, which ensures our survival.

What changes are occurring in the international market in terms of the markets that you wish to trade with? How are the free trade agreements (FTAs) impacting your industry?

We once had an ATP agreement (agreement on the International Carriage of Perishable Foodstuffs and on the Special Equipment to be used for such Carriage with the US exempting us from duties on exports, so nothing has changed with the new ATP. Ecuador, on the other hand, did not sign an ATP with the US, so Colombian flowers are more competitive than Ecuadorian produce on the US market. Our export duties levied by the UK are negligible. We want to sign a free trade agreement for hydrangeas with South Korea. In regard to other factors, the exchange rate between the dollar and Euro is of concern to us. The Euro has lost 20% of its value to the dollar, and the two currencies are approaching parity, which means our exports to Europe will be more expensive, since we sell in dollars. In the UK, the pound still yields us a slight advantage.