White Paper: Ecuador's Cut Flower Industry

7/30/2019 White Paper: Ecuador's Cut Flower Industry

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White Paper: Ecuadors Cut Flower Industry

Jeremiah Granden: Georgia Tech

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Introduction

Since the mid-eighties Ecuador has experienced a boom in cut flower production and is

now second only to Colombia in floral exports to the United States. This paper analyzes the

Ecuadorian cut flower industry; focusing on geographic scope, prior land use, social

implications, industry structure, environmental impact, and overall sustainability.

Geography and Industry Basics

The Andean mountain range, which runs through the center of the country, gives Ecuador

an optimal environment for flower production. High elevation, year round temperatures that

average between 70 and 45 degrees Fahrenheit, and ample sunlight are the core geographic

advantages that the Andes provide, and these conditions make the landscape especially suited for

the growing of long, straight roses.12

The majority of planting occurs in the Pichincha province,

whose largest city is Ecuadors capitol, Quito. The Cotopaxi province, immediately to the south,

is second in production, and these two provinces contain approximately 88 percent of the

countrys flower farms, orpredicos floricolas, with substantially lower producing regions

dispersed throughout the central and western parts of Ecuador.3

Roses dominate the Ecuadorian floral industry, accounting for 60 to 70 percent of the

nations flower exports. Rose production is carried out on farms situated in cool, sunny valleys,

where the flowers are grown in greenhouses, cut, and boxed. They are typically transported via

1Hamilton, Courtney and Deb Tullman. Ecuador: Flower Power. Fair Trade Roses for Valentines Day. Frontline:

Rough Cut, Feb 14, 2008. http://www.pbs.org/frontlineworld/rough/2008/02/ecuador_a_rosie.html2

Weather.com. Monthly Averages for Quito, Ecuador. Accessed on September 3, 2011.

http://www.weather.com/weather/wxclimatology/monthly/graph/ECXX00083

USDA Foreign Agricultural Service. 2009 Ecuador Fresh Flower Industry Situation. Accessed on September 3,

2011.http://gain.fas.usda.gov/Recent%20GAIN%20Publications/2009%20Ecuador%20Fresh%20Flower%20Industry

%20Situation_Quito_Ecuador_6-9-2009.pdf


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refrigerated trucks from the growing site to Quitos Mariscal Sucre International Airport, where

the majority of them are flown to Miami International Airport (MIA) for consumption in the

U.S., with a lesser volume of roses destined for European markets.45

Historical Land Use

The mountainous terrain of the Ecuadors primary flower growing province, Pichincha,

makes much of it unsuitable for agriculture beyond livestock grazing. Whatever growing does

occur in Pichincha takes place in the more fertile Interandean valley, but much of the land here

has historically been devoted to cities and towns and their attendant needs (e.g. reservoirs,

cemeteries, and roads) or large eucalyptus plantations outside of Quito.6

In short, the province is

underdeveloped from an agricultural standpoint and the cut flower industry has not crowded

out another sector in a meaningful way. In the Cotopaxi province to the south, land use has

traditionally been devoted to the growth of cereals and tubers with significant dairy and livestock

production. Historical land distribution here has followed patterns common to Latin America,

with a minority of landowners possessing vast tracts of land while the majority operating at a

sustenance farming level, owning less than five hectares.7

4 USDA Foreign Agricultural Service.5Vega, Henry. The Transportation Costs of Fresh Flowers: A Comparison Between Ecuador and Major Exporting

Countries. (Background paper for the Inter-American Developing Bank report Unclogging the Arteries: The

Impact of Transportation Costs on Latin American and Caribbean Trade. 2008), accessed September 3, 2011.

http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=18018636Smith, Vernon. Marketing Agricultural Commodities in Pichincha Province, Ecuador. Geographical Review.

Volume 65. (1975). 353-363.7Weiss, Wendy. The Social Organization of Property and Work: A Study of Migrants in the Rural Ecuadorian

Sierra.American Ethnologist. Volume 12. (1985): 468-488.


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Geographic Distribution of Flower Farms in Ecuador

Source: Ecuadors Ministry of Agriculture (2008)8

Social Implications

Ecuador suffers from pervasive poverty and the economy has been in poor shape since

the end of the countrys petroleum boom in 1982. The explosion of the flower industry can be

interpreted as good news in the sense that it injects cash into the region, provides local jobs

(especially for women), and is contributing to improved infrastructure in areas such as

8USDA Foreign Agricultural Service.


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transportation.910

11

However, problematic working conditions and health risks related to

pesticide use complicate this interpretation.12

Members of rural communities with little or no land holdings have had reason to

welcome the flower boom. The wages are typically higher than those found in other types of off-

farm employment available to peasants, such as unskilled construction and domestic service. It

is also advantageous that flower production is a year-round activity that requires a permanent

workforce. Owing to the quality demands of the international flower market, greenhouse and

cutting house work requires a considerable amount of care and skill, and growers seek to attract

and retain good employees. Furthermore, there isnt a meaningful presence of migrant workers

to compete with the residents of flower producing regions for positions. However, the higher

wages of the flower industry can barely cover sustenance needs and the flower boom has

increased the price of land, making the purchase of family plots, often a core goal of Ecuadorian

peasants, more difficult. Many workers are subjected to a punishing productivity system, orel

sistema de rendemiento, that leads to actual hours worked by employees far exceeding the

guidelines set forth in the Ecuadorian labor code. Much of this extra work is unpaid.

Furthermore, there is chronic exposure to pesticides; one long-term industry employee reported

greenhouses being fumigated with workers inside them with the opportunity to seek healthcare

being denied to those who got sick as a result. While reckless and cruel practices like this may

9Sawers, Larry. Nontraditional or New Traditional Exports: Ecuadors Flower Boom. Latin American Research

Review. Volume 40, (2005). 40-67.10

USDA Foreign Agricultural Service.11

Vega, Henry.12

The Economist. The Search for Roses Without Thorns. February 16, 2006, Accessed on September 3, 2011.

http://www.economist.com/node/5526580


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not be the norm fertility problems, birth defects, respiratory disease, and other health issues have

been linked to pesticide exposure among flower workers.13

14

15

Women are often treated as a beneficiary of Ecuadors flower industry. In 2008, 60

percent of workers were women. Income and decisional autonomy for female workers have

been improved, albeit marginally, by their position in the flower industry but once again there is

a darker side to this. Long working hours and commute times have led to persistent physical

exhaustion with an adverse effect on child care. Often the burden of child care shifts to extended

family members, who also have their own domestic responsibilities to attend to, resulting in a

dynamic of near-child neglect previously unheard of in indigenous society.16Also, a study by the

International Labor Rights Forum and its Ecuadorian NGO partners determined that 55 percent

of flower workers have been the victims of sexual harassment with 19 percent having been

coerced into sex with a coworker or supervisor and 10 percent having been the victims of sexual

assault.17

Beneficiaries of the Industry

One way that the Ecuador as a whole may continue to benefit from flower exporting is

via improvements in infrastructure, particularly in the area of transportation. Cut flowers are a

highly perishable good that necessitates a quick transfer from farm to market, hence a need for

13Korovkin, Tanya. Cut Flower Plots, Female Labor, and Community Participation in Highland Ecuador. Latin

American Perspectives, Volume 30 (2003) 18-42.14

Hamilton, Courtney and Deb Tullman.15

International Labor Rights Forum. Flowers. Accessed on September 3, 2011.

http://www.laborrights.org/creating-a-sweatfree-world/fairness-in-flowers16

Korovkin, Tanya. Cut Flower Plots, Female Labor, and Community Participation in Highland Ecuador.17

International Labor Rights Forum.


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quality roads and air travel facilities. The New Quito International Airport, necessitated in part

by a need for more efficient outbound shipping, is slated to open in April 2012.18

The global flower market is a big winner in the flower boom since Ecuadorian roses are

of unquestionably high quality and are immensely popular in the United States, Europe, and

beyond.

Another player that warrants mention, although it remains unclear whether it can be

considered a winner or not, is U.S. law enforcement. Until recently, Ecuador was a beneficiary

of the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which will be discussed

in greater detail later. This act was designed to promote economic alternatives to cocaine

trafficking in the Andes. It is unclear whether the economic push that preferential trade practices

offer in general, or the cut flower industry in particular, have diminished Ecuadors role in South

Americas illicit drug economy. Ecuador has historically been a place to process Colombian and

Peruvian cocaine and a maritime transport hub with negligible amounts of cocoa and poppy

cultivation scattered throughout the country, and there is little to suggest that the flower boom

has had a tangible impact on this, although the Andean cocaine trade has declined over the last

decade.19

20

Structure of Ecuadors Cut Flower Industry

There is little in the way of direct foreign ownership in the global flower industry. The

Dole Corporation once had holdings in both Ecuador and Colombia, but the Ecuadorian

18Latin Business Chronicle. Quito Airport: Too Little, Too Late? March 21, 2011. Accessed on September 3, 2011.

http://www.latinbusinesschronicle.com/app/article.aspx?id=482519

Department of State (US). 2010 International Narcotics Control Strategy Report. March 1, 2010. Accessed on

September 3, 2011. http://www.state.gov/p/inl/rls/nrcrpt/2010/vol1/137196.htm20

BBC News. Big Decline in Colombian Cocaine. August 11, 2004. Accessed on September 3, 2011.

http://news.bbc.co.uk/2/hi/americas/3556464.stm


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properties were sold off in 2006 and the majority of flower farms in country are now independent

or collectively owned enterprises. In terms of U.S. distribution, 70 percent of Ecuadors flowers

traverse traditional importer to wholesaler to retailer channels rather than utilizing a vertically

integrated alliance between several wholesalers and a major retailer such as Wal-Mart. There are

over 130 separate flower importers in Miami alone, with no single organization monopolizing

the supply chain.21

22

23

From 1991 to 2011, Ecuadors status as a beneficiary of ATPDEA meant flower exports

faced virtually no tariff barriers to entry in the United States. In February of 2011 the act was

allowed to expire by the 112th U.S. Congress. A central reason for the failure to renew is that

Republicans, who won the House majority in the 2010 election, object to funding the Trade

Adjustment Assistance (TAA) program included in the ATPDEA framework. This program is

designed to retrain American workers who have lost their jobs because of foreign imports.

Duties now stand between 3.2 to 6.8 percent and this, combined with an increase in carriage

costs, diminished Mothers Day 2011 exports to the U.S. by 5 percent.24

25

Environmental Issues

The problem of pesticide use is the core environmental challenge that Ecuadors cut

flower industry faces. As an agricultural crop, flowers must be pest-free in order to be received

by the importing country, but are not subject to pesticide residue regulations in place for food

21US International Trade Commission.22

Los Angeles Times.Dole to Trim Its Flower Unit. October 13, 2006. Accessed on September 3, 2011.

http://articles.latimes.com/2006/oct/13/business/fi-dole1323

Vega, Henry.24

Ecuador Times. Selling Flowers Dropped Due To Carriage and ATPDEA. May 12, 2011. Accessed on September

4, 2011. http://www.ecuadortimes.net/2011/05/12/selling-flowers-dropped-due-to-carriage-and-atpdea/25

Greenhouse Management. Colombian, Ecuadorian Flowers Lose Duty-Free Status. February 21, 2011. Accessed

on September 4, 2011. http://www.greenhousemanagementonline.com/colombian-ecuadorian-flowers-lose-duty-

free-status.aspx


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products. This incentivizes heavy pesticide use among growers. Most of the risks incurred by

pesticides exposure are assumed by flower farm workers, as outlined in the Social Implications

section of this report. The hazard extends to livestock and other community members as well;

dairy cows are known to eat contaminated flowers and the high concentration of young female

employees on the farms creates a health risks for nursing infants. The demands of the global

market may serve to mitigate some of the pesticide problem; there is a regimen of environmental

certifications that growers can obtain (which will presumably make their product more attractive

to ecologically conscious buyers).26

Sustainability

The cut flower trade is one of the few economic advantages that Ecuador enjoys at this

time, and it should be fostered and promoted. It has the potential to be ecologically sound; the

greenhouses dont extract an unbearable toll on the land itself, heavy pesticide use can be

addressed on a structural level, and irrigation issues have yet to surface as a major concern. The

strain on Ecuadors social fabric has not been unbearable either, despite the health, worker rights,

and quality of life problems that the industry has wrought on its employees. The issues here

should be resolvable at the farm level, although meaningful and effective legislation (which

Ecuadors government may be less than capable of implementing) will likely be required to

accomplish this.27

There are two critical problems that the industry now faces, both of which are related to

costs. The first is the expiration of ATPDEA protection. There are few indicators that Ecuador

will return to the duty free status it has enjoyed since 1991; the inclusion of the TAA program in

26Tenenbaum, David. Would a Rose Not Smell As Sweet?: Problems Stem from the Cut FlowerIndustry.

Environmental Health Perspectives. Volume 110. (2002) A240-A247.27

US International Trade Commission.


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the ATPDEA framework has made cut flower protection into a casualty of an American political

conflict over government spending, and the hysteria over illegal drugs in public discourse is

hardly at the fever pitch it was twenty years ago. There is little incentive to take up the issue; in

fact, one can hardly find a mention of ATPDEA in the English-language press over the last six

months.28

Furthermore, diplomatic relations between the two countries have been strained by the

expulsion of the U.S. ambassador to Ecuador in the aftermath of the WikiLeaks scandal.29

The

second issue involves the supply chain. The floral industry near Quito relies on a single runway

airport that charges the highest landing fees in Latin America, has insufficient refrigeration

facilities (a complication that has been vaulted by the presence of multiple cargo companies),

and is only able to support small to mid-sized aircrafts due to altitude constraints. Completion of

the new airport has been delayed multiple times over the last few years. Since Ecuadors flower

industry is not vertically integrated, product must pass through multiple links in a supply chain

with some steps having a high potential to affect quality (e.g. flowers being flown in from Quito

in a non-air conditioned cargo hold may be damaged if MIA is backed up and the plane is forced

to taxi on the runway for an excessive amount of time). Despite the efforts of Exoflores,

Ecuadors flower producer association, the industry has had less success in persuading the

government to take business friendly measures then its Colombian counterpart has. Air

infrastructure is handled in a parochial, revenue oriented fashion, highways are not built because

of regional disputes, and high tariffs remain in place.30

28LexisNexis Academic search for terms Andean trade promotion on September 5, 2011 produced four hits later

than Feb 2011.29

Hoy. Gobierno pone en vigencia ayuda para afectados por suspensin de ATPDEA July 11, 2011. Accessed on

September 5, 2011. http://www.hoy.com.ec/noticias-ecuador/gobierno-pone-en-vigencia-ayuda-para-afectados-

por-suspension-de-atpdea-488832.html30

Vega, Henry.


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Both the suspension of ATPDEA and structural supply chain give Ecuadors flower industry a

precarious long-term outlook.

Update:As of May 2012 ATPDEA protection was re-extended to Ecuador with expiration slated

for 2013. It is the only beneficiary of the act as Colombia and Peru currently hold free trade

agreements with the U.S.31Furthermore, the completion date for the New Quito airport has been

pushed back to February 2013.32

31Department of Commerce, Office of Textiles and Apparel (2012). Website. Accessed on September 21, 2012.

http://web.ita.doc.gov/tacgi/eamain.nsf/6e1600e39721316c852570ab0056f719/53018ab5e2d8426a85257394004

9684c?OpenDocument32

El Tiempo. Aeropuerto de Tababela operar en febrero de 2013. August 15, 2012. Accessed on September 21,

2012. http://www.eltiempo.com.ec/noticias-cuenca/103267-aeropuerto-de-tababela-operara-en-febrero-de-

2013/


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References

BBC News. Big Decline in Colombian Cocaine. August 11, 2004. Accessed on September 3,

2011. http://news.bbc.co.uk/2/hi/americas/3556464.stm

Department of Commerce, Office of Textiles and Apparel (2012). Website. Accessed on

September 21, 2012. http://web.ita.doc.gov/tacgi/eamain.nsf/6e1600e39721316c852570a

b0056f719 /53018ab5e2d8426a852573940049684c?OpenDocument

Department of State. 2010 International Narcotics Control Strategy Report. March 1, 2010.

Accessed on September 3, 2011. http://www.state.gov/p/inl/rls/nrcrpt/2010

/vol1/137196.htm

Economist. The Search for Roses Without Thorns. February 16, 2006, Accessed on September

3, 2011. http://www.economist.com/node/5526580

El Tiempo. Aeropuerto de Tababela operar en febrero de 2013. August 15, 2012. Accessed on

September 21, 2012. http://www.eltiempo.com.ec/noticias-cuenca/103267-aeropuerto-de-

tababela-operara-en-febrero-de-2013/

Ecuador Times. Selling Flowers Dropped Due To Carriage and ATPDEA. May 12, 2011.

Accessed on September 4, 2011. http://www.ecuadortimes.net/2011/05/12/selling-

flowers-dropped-due-to-carriage-and-atpdea/

Greenhouse Management. Colombian, Ecuadorian Flowers Lose Duty-Free Status. February

21, 2011. Accessed on September 4, 2011. http://www.greenhousemanagement

online.com/colombian-ecuadorian-flowers-lose-duty-free-status.aspx


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Hamilton, Courtney and Deb Tullman. Ecuador: Flower Power. Fair Trade Roses for

Valentines Day.Frontline: Rough Cut, Feb 14, 2008. http://www.pbs.org/

frontlineworld/rough/2008/02/ecuador_a_rosie.html

Hoy.Gobierno pone en vigencia ayuda para afectados por suspensin de ATPDEA July 11,

2011. Accessed on September 5, 2011. http://www.hoy.com.ec/noticias-ecuador

/gobierno-pone-en- vigencia-ayuda-para-afectados-por-suspension-de-atpdea-

488832.html

International Labor Rights Forum. Flowers. Accessed on September 3, 2011.

http://www. laborrights.org/creating-a-sweatfree-world/fairness-in-flowers

Korovkin, Tanya. Cut Flower Plots, Female Labor, and Community Participation in Highland

Ecuador. Latin American Perspectives, Volume 30 (2003) 18-42.

Latin Business Chronicle. Quito Airport: Too Little, Too Late? March 21, 2011. Accessed on

September 3, 2011. http://www.latinbusinesschronicle.com/app/article.aspx?id=4825

Los Angeles Times. Dole to Trim Its Flower Unit. October 13, 2006. Accessed on September

3, 2011. http://articles.latimes.com/2006/oct/13/business/fi-dole13

Sawers, Larry. Nontraditional or New Traditional Exports: Ecuadors Flower Boom. Latin

American Research Review. Volume 40, (2005). 40-67.

Smith, Vernon. Marketing Agricultural Commodities in Pichincha Province, Ecuador.

Geographical Review. Volume 65. (1975). 353-363.

Tenenbaum, David. Would a Rose Not Smell As Sweet?: Problems Stem from the Cut Flower

Industry.Environmental Health Perspectives. Volume 110. (2002) A240-A247.


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USDA Foreign Agricultural Service. 2009 Ecuador Cut Flower Industry Situation. Accessed

on September 3, 2009. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/2009%

20Ecuador%20Fresh%20Flower%20Industry%20Situation_Quito_Ecuador_6-9-

2009.pdf

Vega, Henry. The Transportation Costs of Fresh Flowers: A Comparison Between Ecuador and

Major Exporting Countries. (Background paper for the Inter-American Developing

Bank report Unclogging the Arteries: The Impact of Transportation Costs on Latin

American and Caribbean Trade.2008). Accessed on September 3, 2011. http://idbdocs

.iadb.org/wsdocs/getdocument.aspx ?docnum=1801863

Weather.com. Monthly Averages for Quito, Ecuador. Accessed on September 3, 2011.

http://www.weather.com/weather/wxclimatology/monthly/graph/ECXX0008

Weiss, Wendy. The Social Organization of Property and Work: A Study of Migrants in the

Rural Ecuadorian Sierra.American Ethnologist. Volume 12. (1985): 468-488.

White Paper: Ecuador's Cut Flower Industry

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