Development of Floriculture Industry in Ethiopia: Challenges and Opportunities of the Industry in The Global Floriculture Chain

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Date

2007-03

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Addis Ababa University

Abstract

The purpose of this study was to explore challenges and opportunities of the Ethiopian fl oriculture industry in the global commodity chain by describing the structure of the chain, examining governance structure and upgrading response of producers in light of global buyers. A cross-sectional survey with Questiotmaire method was used to collect data form seventeen floriculture firm s, who statted exporting before 2006. Global commodity/value chain approach was used to see chall enges and opportunities of the industry in entering into global market and chain elements that are dealt in this study are input-output structure, governance structure, upgrading activities, and institutional framework. As the findin gs of this study h ave revealed, input supply system of the Ethiopian floriculture chain is not well developed. As an output, flori.culture industry produces di ffe rent varieti es of Rose flower and no indigenous varieties of flowers are found on the production and ex po rt. This product is targeted to auctions and who lesal ers in the European markct. This market is high ly developed and so phi sticated in terms of thei r requirement regarding quality, consistent supply and timely delivery. To meet these requirements, produce rs in Eth iopia should make high investment on the production , post harvest faci lities and logistics. This has shaped the structure of the fl ori culture industry in the country that only those producers who are capable to make such investment can participate in the chain while small producers are structurally excluded form the chain. On the other hand, governance structure of the chain is more of implicit type, the market bei ng main governing body. Majority of producers have not entered yet into the most pro fitab le as well as demanding chain, a retail chain, which is characterized by standing order and ex plicit coordination of the supply chain. In general buyers set product, process and logi stic parameters and use di fferent mechanisms to transmit their requirements. In the case of auctions and wholesalers, agents seem to playa lead role while su permarkets ap pear to coo rd inatc more explicitl y. In all cases the power of buyers emanates from their understanding of market demand and holding marketing infrastructure than Ethiopian producers. Upgrad ing by producers is limited due to lack of financial, organi zational and information capabi lity especiall y among domestic producers. Moreover, lack of research and innovation and low insti tutional backup in the country has limited the upgrading capabi lity of Iloricul ture industry. As a consequence, competit'ive advantage of Ethi opian floricu lture industry lies only on the natural and basic production factor s.

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Keywords

Floriculture

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