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Colombian flower exporters welcome anti-drug efforts
Floraculture International / April 2001

By Larry Luxner

RIONEGRO, Colombia -- When it comes to convenience, Colombian flower exporter Juan Cock–Londoño couldn't have asked for a better location. His 10-hectare operation -- filled with 50 varieties of chrysanthemums and pompoms -- abuts the border fence of Rionegro's José María Cordova International Airport, from which cargo planes carry Londoño's colorful blooms to Miami for distribution throughout the United States.

"The main runway is only 500 meters from our greenhouses," says Londoño. "Three times a day, we send flowers directly from Rionegro to Miami. From there, refrigerated trucks take the flowers to 78 U.S. cities. During holidays, such as Mother's Day and Valentine's Day, we have up to seven flights a day to Miami."

Yet all is not coming up roses lately for Colombia's flower export sector.

Preliminary numbers from Asocoflores, the Bogotá-based trade association that represents Colombia's 215 flower exporters, show that shipments in 2000 generated around $535 million, a significant drop from the $550.4 million reported in 1999. Competition from neighboring Ecuador and the fall of the euro have hurt flower sales in the all-important European market.

Even worse, death threats and Colombia's continuing political violence have forced business owners of all types to flee the country, while drug-traffickers have attempted to smuggle cocaine in flower shipments to the United States -- leading Washington to periodically threaten Colombia with severe trade sanctions if its anti-drug efforts aren't improved.

"Our business very much affected by the political situation in Colombia," said Fred Jacobsen, president of Transportes Aereos Mercantiles Pan Americanos (Tampa) S.A., a Medellín-based air cargo company that has an estimated 40% share of Colombia's flower export market.

"One of the effects has been a marked reduction in inbound freight into Colombia. Starting in 1999, the aggregate import market fell 40-45%, and in 2000 it stayed pretty much the same. This means that in 2000, we moved half the import tonnage of 1998. You have to bring your planes down almost empty," he said.

"As a result, the only way for the airlines to be able to profitably carry the export volumes out of Colombia, which have been growing, is to increase the rates northbound. Obviously, that makes the logistics of carrying flowers into the States more expensive," he said. "However, at the same time, their competiton in Ecuador also has very high transportation rates, so it hasn't been as dramatic as it would have otherwise been."

In 1997 and again in 1998, the Clinton administration "decertified" Colombia, putting it in the same league as Iran and Afghanistan. But the move was really an attempt to isolate then-President Ernesto Samper, who had accepted up to $6 million in campaign funds from the Cali drug cartel.

Flower exporters were trembling because decertification opened the door to possible removal of Colombia from the 1988 Andean Trade Preference Act, which gives preferential treatment to over 4,000 products from five South American nations. In Colombia's case, flowers make up 60% of ATPA exports by value. Removal of those benefits would have subjected Colombian flowers to an 8% export duty, while Ecuador -- Colombia's biggest competitor -- would have kept the exemption, giving it a distinct price advantage.

"We believe we were instrumental in avoiding, if not decertification, at least trade sanctions against Colombia," said Miguel Camacho, economics director at Asocoflores, in a recent interview in Bogotá. "I think we did a very good job. We managed to prove that if sanctions were imposed, the situation in Colombia would have deteriorated."

Adds Londoño: "The certification process was a problem with the Samper government, but with [President Andrés] Pastrana, relations with the U.S. have improved dramatically. We don't have any more threats from Washington, and we're not worried about the Bush administration. They have very good intentions with respect to Colombia."

According to Asocoflores statistics, the United States buys 81% of Colombian flower exports. Other important markets are Great Britain (5.6%); Canada (2.3%) and Germany (1.1%).

"Two factors are affecting the industry," Camacho explained. "Since the Russian financial crisis in 1998, demand there for large, long-stemmed roses -- which they bought from Ecuador -- has basically disappeared. So flowers that used to get sent from Ecuador to Russia now go to Miami, which is also the port of entry for 98% of U.S. imports of Colombian flowers."

As a consequence, the average Miami wholesale price of a long-stemmed rose is now 27 cents, compared to 35 cents just a few years ago.

"The other factor," says Camacho, "is the drop of the euro, which has cost us about 40% of our competitiveness. The European Union is the most contested flower market in the world, since almost every country in the EU produces flowers."

Holland, he said, is an important market because "the Dutch buy Colombian flowers, repack them as bouquets and sell them to other countries."

Londoño, who besides running Uniflor is also chairman of the board of the Medellín chapter of the Colombian-American Chamber of Commerce, says he eagerly welcomes Plan Colombia -- a controversial, $1.3 billion U.S. aid package aimed at eradicating cultivation of coca, the main ingredient in cocaine.

"Plan Colombia will help the whole country by removing the main source of financing for the guerrillas," says Londoño. "Simultaneously, they have a program to invest money in alternative production, in order to create jobs for people now working in coca cultivation. It will also help eliminate opportunities for drug traffickers to use flower exporters to ship illegal drugs to the U.S.

"We already have things well-controlled by Customs, but this will be an improvement," he explained. "Secondly, it'll reduce violence by the guerrillas, who are financed by drugs and other criminal activity. Many exporters had to leave for the U.S. because of death threats and insecurity."

Currently, the Colombian flower export industry has 4,200 hectares under cultivation. Roughly 92% of that land is in the Bogotá metro area; the remaining 8% is divided between Valle del Cauca and the Medellín-Rionegro area. Every day, around 20 cargo planes take off for the United States. Roses, carnations, mini-carnations and chrysanthemums accounted for 65% of the total, with 75 other types of flowers accounting for the remaining 35%.

"In certain products like long roses, we're more competitive than Holland, even in the European market," said Londoño, estimating that Colombian flowers account for 66% of the U.S. market, compared to 60% five years ago. "We've lost business to Ecuador in roses -- we've dropped from 75% to 45% in that category -- but we've gained market share in carnations and mums."

At Uniflor, the average worker earns 512,000 pesos a month. That translates into $1 an hour -- more expensive than neighboring Ecuador, where flower workers earn 80 cents an hour, but far cheaper than California, where wages average $6 an hour.

In Colombia, the flower industry employs 70,000 people. Asocoflores claims it that another 110,000 jobs in the United States, including 15,000 in South Florida -- from airport workers to truck drivers -- depend on a steady supply of Colombian flower imports.

Uniflor exports exclusively with Tampa Airlines, which uses three DC-8s and one DC-10; the DC-8s can carry 38 tons of flowers each, and the DC-10 carries 65 tons.

The industry's peak season is, of course, Valentine's Day. This year, Tampa moved 3,384 tons of flowers -- a 5% growth over the year 2000 -- between Jan. 24 and Feb. 7. This season, the airline added a second DC-10, allowing the airline to operate eight to nine flights a day at its peak.

Tampa's Jacobsen said it now costs 72 to 80 cents per kilogram to transport flowers from Colombia to Miami, up from 65 cents just a few years ago.

In 2000, Tampa -- which has 540 employees -- generated $108 million in revenues and moved 135,000 tons of cargo. In Bogotá, at least three other carriers fly cut flowers to Miami: Challenge Air Cargo and Fine Air. Atlas Cargo and South Florida, a subsidiary of LanChile, use Boeing 747-200s, which can carry 6,000 boxes of flowers each. The planes generally fly at night because it's cooler in Miami upon arrival, which prolongs the shelf life of the product.

In addition to all-cargo carriers, Air France, American Airlines and Lufthansa transport flowers from Colombia to U.S. and European markets in the bellies of their passenger jets.

As for Plan Colombia, said Jacobsen, "certainly anything or any plan that attempts to address the resolution of the conflict in Colombia is positive. I think the problem is how effective it's going to be."

Adds Phil Nowers, managing director of the Colombia Flower Council in Miami: "The civil situation hurts all businesses in Colombia, but the floral industry is fairly well-insulated from most of the problems associated with that. First, it's located in areas that are relatively free of violence and difficulties. It's not like you're growing this stuff in the jungle. Secondly, it is an export industry where production goes very short distances from farm to airport. But still, everything and everybody in Colombia is affected by the violence."

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