19 February 2013

Uganda: Rosebud Expands Amid Murky Outlook

High production costs, freight charges and stiff competition from neighbouring countries have continued to rip the flower sector off its blossom.

The lack of an independent cold storage system is also dealing a blow to the sector. The Fresh Handling Ltd facility at Entebbe airport being used by exporters is hired from Das Air Cargo. The number of flower companies have reduced to roughly seven from 14 eight years ago.

To survive, flower companies are now working together to save costs. For example, flower firms are now combining their flower exports in order to meet the plane's capacity. And yet throughout all these cost-saving initiatives, some firms are instead expanding.

In a bid to meet the demands of the international markets, Rosebud Ltd, the country's largest exporter of flowers, is expanding its production acreage from 40 to 50 hectares.

"Because of the challenges, we have to keep expanding to bring down the costs of production. We started with 13 hectares, now we are at 40 and by May this year we shall be at 50 hectares," said Dimple Mehta, the Rosebud administration manager.

Over the years, Rosebud officials say they have established strong relationships with customers, who include the Dutch auctions and other customers in Netherlands.

"It is not easy to expand as others are closing. It is all about total planning, patience and modernization of farms," Ravi Kumar, the Rosebud farm manager, said.

"The demand is there, and is growing globally. But you have to find out where the demand is. If you follow the trend, you will survive," Mehta advises.

Statistics from Entebbe airport show that flower exporters pay $2.20 per kilogramme of freight. Initially, flower shipment was done five or six times a week. However, with the dwindling fish and vegetable exports to the European market, charter flights like Avient and Euro cargo now fly four times a week.

In Kenya, the leading exporters of flowers in East Africa, there are about two flights a day flying flowers to the EU market. Some Kenyan farms have the capacity to fill a cargo plane alone.

For the last five years, the industry has registered a slowdown in the growth of sales following economic hiccups in the Eurozone - the major markets for Uganda's flowers.

Juliet Musoke, the executive director at the Uganda Flower Exporters Association, contends that incentives like subsidies from government and lowering air freight charges will give Uganda a competitive edge in the region.

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