Weak rupee means roses will yield better profit, exporters say

Weak rupee means roses will yield better profit, exporters say

Bangalore: Indian rose exporters expect to reap the benefits of a depreciating rupee as they look forward to a peak season that runs through Christmas to Valentine’s Day.

“The order book is excellent this year as we have the leverage to reduce the price in dollar terms..," said Manjunath Reddy, who runs Pushpam Flora Base Pvt. Ltd in Bangalore. “We have started our exports from October itself this year as against late November in the previous years."

The rupee has depreciated 22% against the dollar, by 9% against the euro and 33% against the yen since the start of this year, according to Bloomberg data. That translates into more rupees for every dollar, euro or yen that is earned by exporters, who had been hit last year by the steep appreciation of the local unit.

For the rose trade, the festive season running up to Valentine’s Day on 14 February, is a boom time for sales.

“We expect this Valentine’s to be quite normal and the prices that we are talking about are pretty much the same prices that we did last year, but in rupee context, it is better though our sales currency is euro," said K.S. Ramakrishna, managing director of Bangalore-based Karuturi Global Ltd, the world’s largest exporter of roses.

Most of Karuturi’s exports are from its farms in Ethiopia and Kenya. Its 10-hectare farm in Bangalore caters mainly to its 33 retail outlets across Bangalore and Hyderabad. “This year, because the Japanese yen has appreciated so much, we are in for a bonanza from the Japanese market because we are getting nearly 50 paise to a yen now. Last year this time we were getting only 40 paise to a yen," Ramakrishna said.

Indian rose exporters, hit by a dip in local production, have been bracing for lower margins. Domestic production has been low because rains were spread over more days, depriving rose farms of the sunlight they require for growth.

Coupled with higher labour and input costs, weather patterns are “definitely impacting production and bottom lines massively", said Manjunath Reddy.

R.D. Reddy, managing director of Bangalore-based Meghna Floritech Ltd and a committee member of the South India Floriculture Association, an industry body, estimates a reduction of 20-25% in rose production this year.

“The situation would have been much worse if it (the rupee) wasn’t this way," said Mammen Mappillai, managing director of Indo Bloom Ltd, a Bangalore-based firm that exports over 90% of its roses to Japan.

India’s floriculture exports for the year ended March were valued at Rs338 crore, according to the Agricultural and Processed Food Products Export Development Authority, or Apeda, a Union government agency. Cut flowers such as rose stems constitute around 25% of India’s floriculture exports, which are less than 1% of the international trade in flowers.

Indian rose farms are located in two clusters at Bangalore and Pune, and flower growers typically export over 60% of produce between September and March.

Karuturi’s Ramakrishna said that globally the industry is expected to grow at a slower rate this year compared to 11% last year because of factors including decreased production in South American countries, lesser demand from Russia and rising cost of inputs such as fertlizer.

“This year the growth is going to be lesser definitely, maybe close to 8% or 9% is what the industry pundits believe," Ramakrishna said.