Ethiopian flower export’s 97% value never reaches Ethiopia

By Duncan Green

OK, back to Ethiopia week. On leaving Addis, we head off to the Rift Valley on one of Ethiopia’s many excellent roads (shame about the driving…) to an enormous flower farm owned by a company called Sher, which rents them out to three large Dutch flower companies, including Herburg Roses Ethiopia plc, who we are meeting. And I mean enormous – rows of identical green plastic greenhouses, each one a kilometre in length, covering a total of 325 hectares so far, and aiming to reach 450. What follows is a classic flying NGO visit – a hurried conversation with the managers, a quick chat to some workers, and then we have to leave with a steadily accumulating series of unasked or unanswered questions, what the French call pensées d’escalier (‘thoughts on the stairs’).

ethiopia roses 3 So what is (more or less) certain? Roses have boomed in Ethiopia, overtaking Kenya this year. According to Alemayehu Geda, an economist from Addis Ababa University, about 100 firms are involved, 2/3 of them foreign-owned. Cut flower exports have risen tenfold over the last 3-4 years and now bring in an annual $170m in 2008 – that’s 11% of national exports. Peter van Heukelom and Jos Kliks, respectively Herburg’s Managing Director and Farm Manager, think Geda’s figure may even be too low. 90% of Ethiopia’s roses go to Holland.

Flowers create jobs: Herburg needs 26 people per hectare to grow its flowers, which is a lot more than can make a living from a hectare of any other crop I’ve come across. And Ethiopians want to work there, as the long lines outside the farm gates demonstrate.

Flowers bring in vital foreign exchange. The deal between the Ethiopian government and the foreign investors specifies a minimum of €0.08 must enter Ethiopia per flower. Herburg alone exports 80 million roses a year to Holland – that’s a guaranteed €6.4 million entering the country.

But only a tiny proportion of the sales price reaches Ethiopia: Peter says he would be happy to earn €0.13 a stem, (i.e. above the minimum set by the government), but a 12 rose bouquet on a UK supermarket website costs £40, or €3.91 per rose. That means 97% of the final value of the rose you buy in the shop never reaches Ethiopia!

3p for you; 97p for us.....

The companies spend a fair amount on social responsibility, including a gleaming hospital, free to all employees, and a nursery and primary school. Herburg is regularly audited and certified on both its environmental and social performance by MPS, a quality assurance company.

Herburg pays no corporation tax, because of a five year tax holiday that runs out next year. But even after that, as long as Ethiopia prevents companies from repatriating profits, they will probably make sure their pricing policy ensures that profits accrue in Holland, so little corporation tax will be paid in Ethiopia.

Beyond that, a one hour visit leaves a large cloud of uncertainty. Wages are low (about $28 a month for a packing worker, $50 for her supervisor), but that is reportedly a good deal more than the minimum wage and the few workers we speak to see it as a good, secure job.

On the environmental questions that always surround flower farms, Peter and Jos point to their MPS certification and say that the firm uses only organic chemicals, and takes great pains to clean up its effluents. A local environmentalist claims the fish are dying in the lake, but the lake looked luxuriant and was full of birdlife (including fish eaters), so who knows? Certainly not me. And I have no way of knowing the health impacts on the workers, if any, of chemical use, although Peter stresses that they are required to wear safety gear and fined if they fail to do so. And I have no information on the views of the small farmers evicted (with compensation) by the government to make way for the farms.

So on the basis of this sketchy information, do I think we should continue to buy Ethiopian roses? Yes. Does Ethiopia earn a fair proportion of the final price for its roses? No. Should we keep up pressure on the companies involved to improve wages, conditions and environmental management? Definitely. I suspect not all readers will agree, though. . .

(The author is Head of Research for Oxfam GB)

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