This document provides information about Shahzad Flower Farms, a company in Pakistan that produces cut flowers through contract farming. It also discusses the international floriculture industry and opportunities for flower exports. Specifically, it finds that gladiolus production in Pakistan is profitable. Factors like fertilizer use, pesticide application, and irrigation impact yields, while a farmer's experience also increases output.

1. ShahzadFlower Farms
Case Analysis # 2

2. ShahzadFlower Farms
•A firm engaged in floriculture and cut flower production through contract growing with farmers
•Located in Mianwali, Punjab, Pakistan
•Contract farming is done and the firm supports farmers through supplying inputs, assisting with land preparation, providing production advice, and transporting produce to its premises

3. International Floriculture Industry
Export
•US$6.9Billion total value
•Top exporters
1.Netherlands (US$ 3.9B)
2.Colombia (US$1.1B)
3.Ecuador
4.Kenya
5.Italy
6.Belgium
Import
•US $7.0Billion total value
•Top importers
1.UK (US$1.1B)
2.Germany (US$1.1B)
3.USA (US$1.0B)
4.Netherlands
5.France
6.Russia
7.Japan
8.Italy
*Based on 2007 data

4. International Floriculture Industry
Opportunities for export
•25% of the total imports by the European Union (2007) was imported outside EU
•Netherlands is the leading importer of produce from developing countries (accounting 56%)
•Top suppliers outside EU
1.Kenya
2.Colombia
3.Ecuador
4.Zimbabwe
*Ethiopia

5. Floriculture Industry in Pakistan
•Pakistan has one of the most fertile lands and climatic conditions favorable to the production of flowers
•Most are sold locally and a small quantity is exported to the Middle East
•Flower cultivation is concentrated to only a few varieties
•Major flower uses locally are for marriage ceremony and decorations
•Fresh flowers are used as bouquets while the dried ones are sources of natural essence

6. Floriculture Industry in Pakistan
•Pakistan has been engaged in the production of cut flowers for a few decades; however it is an infant industry as far as its growth is concerned
Lack of resources and skilled persons limits the development of the industry
Similarly a large number of fresh cut flowers are wasted due lack of infrastructure, improper packing, mishandling and other related problems
Limited varieties of flower produced due to the lack of awareness and knowledge on production side

7. Rose
Mogra
Marigold
Chrysanthemum
Gladiolus
Carnation
Lilies
Tuberose
Freesia
Flower Varieties in Pakistan

8. Floriculture Industry in PakistanOpportunities for Expansion
•Demand for cut flowers is growing tremendously
•Value chain analysis showed a bigger scope for essential oil production and for use in traditional medicine such as
•Rose
•Tuberose
•Jasmine
•Gladiolus grandiflorushas shown profitable production potential in Pakistan

9. Gladiolus Farming
•An easy-to-grow bulbous cut flower plant
•Valued for use in floral arrangements
•Has high demand in both domestic and international markets
Importer
Supplier
Price/stem
Europe
$0.52
Japan
Japan
Netherlands
Taiwan
$0.45
$0.27
$0.27
Singapore
China
Malaysia
$0.44
$0.61

10. Gladiolus Farming in Pakistan-An advantage
•there is a shift in trend towards tropical and sub- tropical flowers
•suitable agro-climatic conditions of the country clearly indicate that wide range of ornamental crops can be grown
•As gladiolus is cultivated in rural areas, its potential for generating employment is an added advantage to improve the economic conditions of the weaker section of the society.

11. Estimation of Income and Costs
•Input variables
•Total harvest / acre
•Prevailing market price of Gladiolus
•Costs –labor, seed, fertilizer, irrigation, pesticide, weedicide
•Human resource –age of farmer, educational attainment, flower growing experience, farmer classification (owner, tenant, owner-cum- tenant)
푇표푡푎푙푅푒푣푒푛푢푒푇푅=푌푖푒푙푑∗푃푟푖푐푒
퐺푟표푠푠푃푟표푓푖푡푀푎푟푔푖푛퐺푀=푇표푡푎푙푅푒푣푒푛푢푒푇푅−푉푎푟푖푎푏푙푒퐶표푠푡(푉퐶)
푁푒푡푃푟표푓푖푡푀푎푟푔푖푛푁푀=푇표푡푎푙푅푒푣푒푛푢푒푇푅−푇표푡푎푙퐶표푠푡푇퐶
푇표푡푎푙퐶표푠푡푇퐶=푉푎푟푖푎푏푙푒퐶표푠푡푉퐶+퐹푖푥푒푑퐶표푠푡(퐹퐶)
퐵푒푛푒푓푖푡퐶표푠푡푅푎푡푖표퐵퐶푅= 푇표푡푎푙푅푒푣푒푛푢푒 푇표푡푎푙퐶표푠푡

12. Demographic characteristics and farm profile of gladiolus growers in Punjab
AGE
21-40
72%
41-60
24%
Over60
4%
EDUCATION
matric
36%
EXPERIENCE (YRS)
1-10
59%
11-15
22%
16-20
9%
21-25
5%
26-30
5%
LANDOWNERSHIP
owner
50%
tenant
32%
Owner-cum-tenant
18%
FARMSIZE
<2.5 acres
Small
2.5-5.0 acres
Medium
>5 acres
Large

13. Season
Farm Categories
Small
Medium
Large
Winter
16.09
17.33
16.71
Spring
12.97
13.57
15.71
Summer
15.35
15.63
18.43
Autumn
16.88
16.80
17.71
Table 1. Average seasonal prices of gladiolus (Rs./piece)

14. Variable
Farm Categories
Small
Medium
Large
Yield per hectare
67,725.80
68,506.82
64,784.00
Average Price
14.43
14.13
13.71
Total Revenue
977,335.40
968,229.70
888,466.29
Variable Cost
385,795.96
358,637.06
386,939.38
Total Cost
410,965.96
383,807.06
412,019.38
Gross Margin
591,539.44
609,592.64
501,526.91
Net Income
566,369.44
584,422.64
476,356.91
BCR
2.38
2.52
2.16
Table 2. Economic analysis of gladiolus production

15. Econometrics specification
lnY= lna+ b1lnX1+ b2lnX2+ b3lnX3+ b4lnX4+ b5lnX5+ b6lnX6+ b7lnX7+ b8lnX8+ b9lnX9+ b10lnX10+ lnUi
where: Y = revenue measured in Rs
X1= age of farmer measured in years
X2= education of farmer measured in years
X3= flower growing experience of farmer (years)
X4= land preparation cost (Rs.)
X5= total labor man days
X6= plantation No.
X7= FYM cost (Rs.)
X8= fertilization cost (Rs.)
X9= chemical (pesticide) cost (Rs.)
X10= irrigation frequency
Ui= error term which included unknown factors affecting the revenue
ln = natural logarithm
a = intercept/constant.
The Cobb-Douglas (C-D) production function is fitted to the data

16. Result
Variable
β
t-value
Sig. Level
Constant
7.93
2.94
0.00
ln-age (years)
0.11
1.24
0.22
ln-education (years)
0.05
0.52
0.61
ln-flower growing experience (years)
0.10
2.77
0.01
ln-land preparation cost
0.15
1.40
0.16
ln-total labor man-days
0.19
1.68
0.10
ln-plant population (No).
0.12
0.51
0.61
ln-FYM cost (Rs.)
0.01
0.86
0.39
ln-total fertilization cost (Rs.)
0.17
2.88
0.0
ln-chemical cost (Rs.)
0.15
2.89
0.00
ln-irrigation No.
-0.4
-2.46
0.02
R2
0.66
F-ratio
17.41
Significance F
0.047

17. Result
•The estimated results of Cobb-Douglass production function reveals that value of R2 was 0.66; the F-value is 17.41 and its associated error (αF) is 0.047 which indicated that the model is significant and has a good fit
•Significant effect on yield:
•Experience of farmers in flower growing –more years of engagement gives higher yield
R2
0.66
F-ratio
17.41
Significance F
0.047
Variable
β
t-value
Sig. Level
ln-flower growing experience (years)
0.10
2.77
0.01

18. Result
•Significant effect on yield:
•Adequate application of fertilizer and pesticide has positive effect on yield
•Gladiolus requires only minimal water requirement beyond which the effect on yield is no longer positive
•All other variables considered do not show significant impact on yield
Variable
β
t-value
Sig. Level
ln-total fertilization cost (Rs.)
0.17
2.88
0.0
ln-chemical cost (Rs.)
0.15
2.89
0.00
Variable
β
t-value
Sig. Level
ln-irrigation No.
-0.4
-2.46
0.02

19. Conclusion
•The study concludes that gladiolus production is a profitable business as shown by economic analysis using margins and ratios
•Estimates of productivity of inputs reveal that fertilizer, pesticides and irrigation are critical and must be the focus of farm management decisions involving appropriate amount and quality given existing farm technology for gladiolus
•Current challenges (to attain international standards) must be overcome in order to explore export opportunities

20. Philippine Setting
•The country is endowed with good soil and climate that allow growing of ornamental plants all year round
•Domestic production of cut flowers has been increasing annually since the 90’s, with a 20% growth rate from 1990- 2003
•Exports have increased steadily at 3% growth rate since 1991
•Varieties produced include roses, mums, orchids, anthurium, chrysanthemum, gladiolus, liliums, heliconia
•During peak season, domestic supply falls short of demand by 30%. The shortage is often filled by imported materials
•Export of cut flowers is on a limited scale, with gladiolus among the top varieties of cut flower exported
•46% of total export of gladiolus are exported to Korea
Source: Journal of Philippine Statistics. Vol.59 No. 2, Second Quarter 2008

21. Cut Flower
Luzon
Visayas
Mindanao
ORCHIDS
Laguna, Batangas
Cebu, Negros Occidental
Davao City, South Cotabato
ANTHURIUM
Laguna, Benguet, Cavite, Batangas
Negros Occidental
Davao City, Cagayan de Oro City, Bukidnon
ROSES
Benguet, Cavite, Batangas, Tagaytay
Cebu, Iloilo, Negros Occidental
Davao City
CHRYSANTHEMUM
Laguna, Benguet
Cebu
Davao City
GLADIOLUS
Benguet, Laguna
Cebu
HELICONIAS
Laguna
Negros Occidental
Zamboanga
GERBERA
Laguna, Batangas
Cebu
Davao City
CARNATION
Benguet
ASTER
Laguna
SHASTA DAISIES
Benguet
STATICE
Benguet
Flower Varieties Grown in the Philippines

22. International Market for the Philippines
Top countries of origin for imported cut flowers to PH (by volume)
1.Thailand (US$32,912)
2.Ecuador (US$15,323)
3.Netherlands
4.China
5.Colombia
6.Australia
7.Hong Kong
8.Malaysia
9.USA
10.UK
Top countries of destination for exported cut flowers from PH (by volume)
1.Japan (US$910,103)
2.Netherlands (US$1,105,989)
3.UK
4.Korea
5.USA
6.France
7.Italy
8.Greece
9.Germany
10.Palau
2000-2007 data (National Statistics Office, 2008)

23. King Louis FarmContract Farming in Benguet
•A firm engaged in floriculture and cut flower production through contract growing with farmers
•Located in Asin, Baguio, Benguet
•Contract farming is done and the firm supports farmers through construction of greenhouses and provide them counter funds by networking them to cooperatives and federations which engage in cut flower production
•has over 50 active contract farmer-growers scattered in various locations and operates on more than 6 locations in Baguio, La Trinidad

24. Floriculture in the PhilippinesSTRENGTHS
•Ideal climate for year-round production plus less investment in greenhouses and heating systems for most crops
•Capability to grow both tropical and sub-tropical plants
•Availability of land
•Availability of suitable production technologies
•Richness and variety of Philippine flora
•Existence of active horticultural associations
•DTI, DOST, and DA encouragement/ support particularly BETP, PCARRD and BPI

25. •Growing world demand for flowers and other ornamental plants
•Accessibility to major international markets, particularly US and proximity to Asian markets
•Long-term export potential in Japan, Hong Kong, Korea, Middle East, US, and Europe
Floriculture in the PhilippinesOPPORTUNITIES

26. •Limited availability of planting materials
•Limited R&D for continuing institutionalized national breeding program and selection of suitable breeds for local and export markets
•Limited technologies on: genetic engineering, production of planting materials, postharvest handling practices packaging
•Inadequate postharvest processing, storage, transport facilities, and infrastructure for export
•Limited access to and high cost of financing
•Lack of quality control among producers
•High import duties on production inputs
•Inconsistent supply of floriculture products/ inadequate volume of production for exports
Floriculture in the PhilippinesWEAKNESSES

27. •The high cost of structures like greenhouse, irrigation and postharvest facilities
•production technology is still insufficient
•limited R&D, particularly institutionalized national breeding program and selection of suitable breeds for local and export markets
•As a consequence, there is a shortage of cut flowers volume wise and quality wise
•small growers cannot compete with big growers
Floriculture in the PhilippinesChallenges in production development

28. Thank You!
GROUP 2:
Edgar MelchorLaigo
Aileen Legawen
Charisse Macalalag
AngelitaSabado

29. References
National Statistics Office. (2008). Cut Flower Industry: An Update. Journal of Philippine Statistics, 59(2), 1-26. Retrieved from http://web0.psa.gov.ph/sites/default/files/2ndQ2008.pdf
LeonidoR. Naranja, P. (2007, January-March). Floriculture: Sunshine industry in the Philippines. BAR Research and Development Digest, 9(1), 2. Retrieved from http://www.bar.gov.ph/digest-home/digest-archives/64-2007-1st-quarter/1499-janmar07- floriculture-2
Collector's Connection. (2009, October 4). King Louis Farm: King of Potted Plants & Cut Flower. Retrieved from Wordpress: http://renz15.wordpress.com/2009/10/04/king-louis-farm-king-of-potterd-plants-cut- flower/
Rosario, T. L. (1998). Cut Flower Production in the Philippines. Expert Consultation on Cut Flower Production Development in Asia. Bangkok: FAO . Retrieved from Food and Agriculture Organization of the United Nations: http://www.fao.org/docrep/005/ac452e/ac452e07.htm#TopOfPage
PCARRD-DOST. (n.d.). CordylineChallenges/Issues Ornamental Horticulture. Retrieved from PCAARRD: http://www.pcaarrd.dost.gov.ph/home/joomla/index.php?option=com_content&task=view&id=1058&Itemid=748

30. ShahzadFlower Farms
Case Analysis # 2