Bangalore, Jan. 3
THE Dark Continent is beckoning Indian hi-tech floriculturists who are making a beeline to set up shop there.
The focus is initially on Ethiopia in North Africa. The reason? Proximity to main consuming markets such as Europe and West Asia, ideal climatic conditions round the year, improved investment code in the country, easy accessibility to bank loans and land availability.
Karuturi Networks, which has a floriculture division, has set up a 50-hectare unit at Holeta near Addis Ababa and is in the process of adding 50 hectares. A few more companies including Pushpam Florabase Pvt Ltd are in the process of setting up their operations in Ethiopia.
"Karuturi is relocating some of its green house assets from India to Ethiopia," said Mr K.S. Ramakrishna, Managing Director, Karuturi Networks. Karuturi, which recently bagged a major order from the UK-supermarket chain Morrisons, is relying on its Ethiopian operations to service it.
The Ethiopian Government offers large tracts of land for floriculture companies on a perpetual long-lease at very attractive rentals. Located in the equatorial belt, Ethiopia has an ideal climatic condition that helps in producing premium grade roses, according to Mr Ramakrishna. Roses produced in Ethiopia are of top quality and command a significant premium compared to the Indian roses, he said.
"Indian growers expect to reap the low freight cost advantage by operating from Ethiopia," said Mr Manjunath Reddy, CEO of Pushpam Florabase. "Freight costs, which account for over 50 per cent of the floriculture earnings, from Ethiopia to Europe are lesser by 50-60 per cent compared to the costs from India," he added.
Indian growers are battling a steep hike in freight costs, which have increased 300 per cent in three years.
Pushpam is setting up a 50-hectare unit in Ethiopia for which the company hadroped in a London-based investor, with whom it had a marketing tie-up, said Mr Reddy.
The company has 11 hectares under cut-flower cultivation near Bangalore.
"Though Ethiopia offers no fiscal incentives, growers can avail themselves of funds at a low rate of interest from the World Bank-assisted fund, which has earmarked close to $350 million for the development of floriculture in Ethiopia," Mr Ramakrishna said.
Karuturi, which had invested $8 million for its first phase of operations, is investing about $6 million for the second phase and is taking assistance from the World Bank fund, he said.
News reports from Addis Ababa indicate that annual flower exports from Ethiopia from the existing units are expected to reach $100 million by 2007, from a little over $20 million at present. Projects by another 100 investors from the Netherlands, Germany, India and Israel which have acquired 450 hectares of land to set up farms should generate another $300 million a year by 2007, they said.
Considering the pace at which the Ethiopian flower industry is generating investments, the sector could change the image of the country often associated with famine and acute poverty, the reports said.