To Study Marketing Channels of Different Cut Flowers under Different Agro-Ecological Zones of Nowsehra and Peshwar
Jalal Amin1*, Anwar Shah1, Ghulam Nabi1, Wiqar Muhammad1, Muhammad Musa1, Farman Ghani1, Nawab Ali2, Muhammad Mehran Anjum2, Muhammad Riaz1 and Abid Ali1
1Department of Horticulture, The University of Agriculture, Pakistan
2Department of Agronomy, The University of Agriculture, Pakistan
Submission: January 02, 2018; Published: January 16, 2018
*Corresponding author: Jalal Amin, Department of Horticulture, The University of Agriculture, Pakistan, Email: email@example.com
How to cite this article: Jalal Amin, Anwar Shah, Ghulam Nabi, Wiqar Muhammad, Muhammad Musa, Farman Ghani, Nawab Ali, Muhammad Mehran Anjum, Muhammad Riaz, Abid Ali. To Study Marketing Channels of Different Cut Flowers under Different Agro-Ecological Zones of Nowsehra and
Peshwar. Int J Environ Sci Nat Res. 2018; 8(3): 555737. DOI: 10.19080/IJESNR.2018.08.555737
The marketing channels of different cut flowers were studied in Peshawar and Nowshera under the supervision of Mr. Jehanzeb Khan from September to December, 2015. Our country is rich in resources and has got favorable climatic conditions, which are very helpful for the cultivation of floriculture crops. Pakistan can earn its foreign exchange like India, Sri Lanka, Iran, Singapore and Thailand etc. However, effort should be made to encourage the farmers to grow floriculture crops. Many side businesses could be developed which include pots flower holding materials such as baskets, vases and chemicals etc, wrapping materials for cut flowers, fertilizers, gardens tools and implements. To encourage floriculture grower’s government must announce incentive to make this industry profitable by proving seeds, cutting or sapling etc which should be exempted from the customs duty. There is a need to establish flowers markets I the flowers growing area to reduce marketing cost of the growers.
Floriculture is an ancient creative skill with imagination and an advanced science that play a very important role in the course of human civilization and its social development. In today’s stressful life, plants are becoming more highly valued for their positive influence on human behavior. Plants provide a variety of color, form texture and pattern in the landscape. Beside these intangible aesthetic values, plants furnish a close contact with nature and enhance our surroundings. They contribute to the beauty of building by softening architectural lines and emphasizing structural details. Cut flower growth is not a new phenomenon in floricultural sector of Pakistan [1,2]; however it is an infant industry as far as its growth is concerned. The resource rich local soil provides ideal agronomic conditions for production of cut flowers. Despite lack of knowledge on modern floricultural production techniques, difficulty in obtaining the latest varieties and the lack of infrastructure. The industry is continuously attracting new entrants . The flower farming is an important and profitable enterprise in the agriculture sector of Pakistan. The area under floriculture is increasing day by day particularly in the area adjacent to the big cities. In fact flower farming is labor intensive as compared to horticulture crops particularly vegetables rather, it lies in between the two ends with the skilled labor force and modern farming techniques, it has been proved that the investment in this sector yields high returns for the growers . Production of cut flower is going to increase day by day in Pakistan. It is related with the rising living standard, education and electronic media that have promoted this business in recent years. The production and consumption of cut flower has increased over the past decade and this increase is expected to continue . Traditionally flowers are grown for aesthetic, social function and extraction of essential oils and manufacturing. But now, floriculture has been identified as a potential business due to divergence of farmers towards high-value floral crops and utilization of flower in social and industrial level. Hence commercial floriculture has emerged inside the country . The use of flowers at religious and social occasion is embedded in Pakistani culture. Sizable quantity roses and other flowers such as marigold, calendula, jasmine (Motia) and sadbarg etc are showered every day on the shrine (Holly place) such as on the graves of the near and the dear ones as a gesture of loving remembrance and on the tomb of heroes and spiritual masters as a token of respect.
Traditionally flowers were used in the form of garlands at the time of saying farewell to the intending Hajjis and then welcome back home, used at wedding, on Eid festivals and welcome special guests and other ceremonies. In addition to this people different social functions like birthday parties and even used for floral arrangement in the house, hotels and offices etc. In short, the unique aspect of lowers is that they are used in fresh and dried forms and on the occasions of sorrow and joy in form of bouquets, garlands and wreaths. In Pakistan, most of the flowers are produced in winter. When, Europe skinks in the snow and most of their traditional functions are held during that period. Our country is rich in resources and has got favorable climatic conditions which are very affable for raising cut flowers. However, farmers can be encouraged in Pakistan to grow floricultural crops. Many side businesses could also be developed. These may include pots, flower-holding materials (baskets, vases and chemicals etc), wrapping material for cut flowers, transportation, fertilizer, garden tools and implements etc. all this is expected to raise income of flowers by export and by fulfilling local demands. Unemployment in Pakistan cab is alleviated by increasing per unit income and by creating more on-farm jobs, by growing cut flowers. Our growers are in better position to do this job as compared to the other field crops because flowers give more on farm jobs. It can generate a lot of job opportunities . It can be a good source of foreign exchange by exporting it to different countries of the world. There is tremendous potential for the cultivation of cut flower on commercial scale due to availability of favorable soil, climatic and location in the country. This makes it possible to produce important cut flower almost round the year. In KPK, different cut flowers are grown on commercial basis. Both the supply and the demand for flowers in markets are highly seasonal. Flower prices fluctuate daily, price differentials exist between markets and within markets over the year. The variation in prices between markets can be explained by supply and the demand for flowers. The steady demand for traditional flowers comes from the use of flower for religious purposes, personal adornment, and decoration of homes. This demand is particularly strong in big cities like Lahore, Rawalpindi, Islamabad, etc as the use of flowers is part of the local culture . The seasonal demand comes from two sources: religion festivals and marriage. Due to the highly perishable nature of their product, fresh cut flower growers must develop an intensive marketing strategy. Whole scale markets require larger volumes of flower and growers receive lower prices. Lynn Byezynski states that growing half an acre of flowers can easily yield $15,000. She grosses about $10,000 with less than a quarter of an acre during six months of production, by selling to an upper-scale retail florist. Usually, retail florists will offer the best prices for cut flowers, but in a small town this may not be feasible because of a lack of buyers. Field-grown cut flower production, in general, is a low-overhead business. This is buy good news and bad-because competition can develop rapidly, sometime from marginal producers for whom profitability is a low priority. It is pretty easy to keep costs low. Although direct marketing can offer the benefit of higher prices, this strategy requires additional time and expense. The range of possibilities for direct marketing includes retail florists, farmers market, bucket shops and street corners and craft fairs. Lee Sturdivant, gave practical suggestions for many forms of direct marketing of cut flowers and flower for Scale, and suggested the local, niche markets are often the best choice for small growers. Selling to local retail florists is one of the marketing strategies .
The objective of the study was to present research finding to describe the basic information about respondents social characteristics, cultivated area, cut flower area and its production and marketing system.
a. To quantify the marketing margins of the growers and other marketing intermediaries and assess way to improve the producer's share.
b. To identify the present market channels adopted by the growers.
c. To suggest recommendations the basis of the findings of this research study.
A comprehensive questionnaire was designed on the basis of information obtained in the informal survey. An internship report on marketing channels of different cut flowers which was conducted from September to December, 2015. Interviews were conducted informally with individual growers, contractors and retailers without using questionnaires. An effort was made to create a relaxed atmosphere in which respondents would feel free to expresses themselves. For examining the validity and accuracy of the interview schedule, it was pre-tested in the field. After pre-testing changes and modification were incorporated and interviewing schedule was finalized for data collection. The aim of the study was to assess the basic information regarding production and existing marketing system of floral crops in KPK. In an empirical Investigation, it was impossible to collect information from the whole population. Therefore, researchers often forced to make inference based in information derived from representative sample of population. The sample size and variation in data usually affect the quantity and quality of information obtained from the survey. Given the limitations in term of grower availability, cost, efforts, data management, travelling and time it was decided to interview 100 growers, retailers, and contractors in flower growing area such as Kaka sahib (Walai) of district Now shera and Shop khel and Bazyedkhel areas of district Peshawar . Due to critical situation in Shop khel and Bazyedkhel area of district Peshawar the sample size was reduced to 50 respondents. The study was confined up to 23 flower's grower and 3 retailers and 5 contractors in district Nowshera and 12 flower’s growers and 2 retailers and 5 contractors in Peshawar district as shown in (Table 1). Face to face interviews were conducted on flower production in a specific field as well as general characteristics such as land owner-ship, respondent's age, education level and experience in growing floral crops . There are many paradigms to determine the marketing efficiency such as productivity measure, market margin analysis, welfare analysis and structure-conduct-performance (SCP) however, for the present study analysis was confined only based line information to market margin analysis.
Marketing margins are the differences between prices at two market level. Marketing margins estimated on the basis of data obtained on prices at different stages of the marketing chain. Besides this, marketing margins were calculated through computing the absolute margin or price spread, which was essentially the same as the difference between the prices paid and received by each specific marketing agency. The following formula was used to compute percentage-marketing margins as earned by each market intermediary involved in the marketing of farm products.
Mm= (Ps x 100)/Sp
Where " Mm" indicates the marketing margins earned by a specific agency, "Ps" stand for price spread availed by that agency and "Sp" represented sale price of the same agency for the same commodity.
The net margins of a specific agency are the net earnings, which it earns after paying all marketing costs. Net e4arning of various market agencies involved in the marketing of marigold were computed with the following formula.
Where, "Nm" stands for net margins, "Ps" indicates the price spread availed by the specific agency and "Mc" represents marketing costs incurred by the same agency. The replies of the respondents were codified and the data was entered in the computer, using SPSS package. Keeping in view the specific objectives of the study data was analyzed using relevant techniques of data analyses, in statistical package for social sciences (SPSS) software package.
In this section efforts have been made to describe and analyze the demographic characteristics of the flower's growers including age, education and farming experience of the respondents etc. Emphasis was also given to describe the farm characteristics such as farm size, operational land holding and tenancy status.
Different studies have been carried out which revealed that literacy status of farmers is an important variable, which influence the grower's receptiveness and responsiveness to innovation and resource allocation efficiency. Hence the literacy rate plays a significant role in society. Thus the level of human capital formation is generally measured through the mean number of schooling year. Data with respect to literacy status of the sampled respondents were collected on the basis of their schooling years, which were categorized in primary, middle, matric and above matric. In order to know the composition of the literate population of the respondents, it was found that about (41%) respondents were illiterate and the remaining (59%) respondents were literate having different level of education. Thirty percent off the respondents were educated at primary level education. Sixteen percent were educated above matric and the rest (12%) were at middle to matric as shown in (Table 2).
The age of the respondents is considered as significant factor to accept or reject the new idea or information. The respondents were categorized into three age groups viz; young (19-35 year), middle (36-50 years) and old (>50 years). It is remarkable le that majority of the respondent (70.6%) belonging to the age group of (19-35 years) and (>50 years) respectively. The result shows that the large numbers of middle age group (36-50 years) of respondents are involved in flower farming (Table 3).
In study area flower crops were the main source of income generation for the respondents. Two third of the respondents were well experienced in growing floral crops and also had experienced in flower marketing. It is remarkable that one third (33%) of the total respondents were recently entered in floral farming and gaining marketing experience by selling flower garlands. In the field contractors who visited field in the surrounding areas/shops. While during verbal discussion with the growers most of the farmers intend to grower floral crops in the future after gaining experience by attending field days/ training and exposure visits in the project. Cut Flower Research production & Technology Dissemination in Collaboration with SMEDA, Agriculture Research institute Tarnab, Peshawar .
Size of the farm household may have an important influence on the labor supply behavior of household members and the choice of occupation adopted by them . As a result the information on the size of arm household was collected during the survey. The average number of adult male was found 4 with the range of 3-5 members per household.
Data regarding source of income revealed that farming was the main source of income of the cut flower growers in both districts (89%), while the remaining (11%) were involved in Govt; service, labor work and business with farming to supplement their household cash income. The tenants were mostly relay on a higher number of livestock, which they consider as their source of cash income along with farming and part time local off farm work (daily wages).
Tenancy is an arrangement between landowners who lease out land and tenants, who lease in land on mutually agreed sum or share of the produce . Land tenancy has an important productivity impact. The length of the time horizon for owner and tenant is bound to differ, giving rise to different Altitude towards long term investment (specially, natural resources management's investment) and crop with long gestation lags. Growers can be classified into various categories, especially with regards to land tenure. An important distinction is between land-owner, tenant and owner cum tenant were found in flower farming. Land owner is functionary who cultivated his own land by himself and tenant is one who got the land from other on lease share basis for the specific period of time on the agreed rent or share. Results indicated that more than half of the cut flower growers (55%) were land owners while (36%) were tenant and the rest of the growers were owner cum tenant in the study area. Tenancy predominated in district Nowshera. While the remaining (9%) of the respondents got land on lease particularly for flower farming (high value crop). Results also showed that the lease rents ranged from Rs.16000 to Rs.20000 per acre with a mean of just over Rs.1800/acre (Table 4).
A. Farm size and flower area of the growers: The Farm size of land holding affects the efficient utilization of resources and types of cropping pattern a farmer will follow. However, the role of farm size has remained quite controversial [15-18] and many other researchers reported that small farms were more efficient than large ones. On the other hand, ; found a positive relationship between farm size and productivity. Data regarding the land holding in the research area showed that majority of the respondents (79%) had their land below substance level; 12.5 acre and (18%) possessed 12.5 to 25 acre, while the rest (3%) had more than 12 acres. This concludes that majority of the cut flower’s growers had below subsistence land holding followed by subsistence and above subsistence land holding followed by subsistence and above subsistence land holding. It is remarkable that about one fifth (17.66%) of the total operational land is devoted to cut flower crops while on the remaining operational landholding (82.34%) cereal crops as well as vegetables were grown. It was also noted that there was high significant variation within the districts regarding cut flower area (Table 5). According to respondents flower crops are more profitable and any other crop also fulfilled daily domestic needs by continue supply to market. Different types of cut flowers were commonly grown in the study area. Every type possesses different characteristics such as size, shape and color. Because of the very small size of land holding and small area of cut flower per farmer in KPK, farmers usually grow 1.19 acre of marigold and 1.21 acre of roses (Table 6). The growing of cut flower on small area by limited number of farmers has an important application for change in cropping pattern. Basically, small farmers will be less likely to change because the risk of changing area higher in the large farmers. Morai, Sadbar and Granda were the most common types of marigold which were grown in Peshawar and Nowshera district. Rose plants (Red color) are grown by few farmers in the research area of KPK as shown in (Table 7).
B. Existing Marketing System: Efficient marketing system is essential for sustained agricultural development. It affects both productions, income (through producer receive for their products) and consume welfare (via prices consumer pay for agriculture depend not only on farm production cost and yields, but also on what happens to the farm product from leaving the farm to reaching the consumers). There are several factors that influence the efficiency of cut flower marketing including, perishability, seasonality, quality, prices and location of the products . The marketing channels in which flowers production passes through various stages to reach the final consumers have been identified. Flower marketing margins analysis has been carried out to examine the efficiency of flower marketing system in KPK.
C. Marketing channels: Awareness of marketing as concept and as a vital and dynamic element in economic development has greatly increased in the developing countries. The improvement in the functioning of commodity markets as well as the improved performance of the marketing system is now generally recognized as an important strategic element in agricultural economic development. Changes of attitude to marketing have come about particularly during the last decade, when many developing countries have had to undergo stringent economic reforms . Defined marketing channels as: "A network of cooperating organization that together performs all activities required to link producers of goods and services to the end users". The existing flower's marketing channels are presented in (Figure 1). Private Organization and individuals, carryout the flowers marketing viz, wholesaler and retailers were the principal marker agencies in flower marketing system. The existing flowers marketing channels has been identified and their brief function is described here as under.
D. Producer: Flower producers were geographically dispersed in various locations of KPK. They in general, belong to farming community. In the research area, majority of the producer (50%) sold their produce in Peshawar wholesale market, situated in Ramdas bazaar and (22%) of the producers sold directly to retailers by visiting their shops/stalls and some of the retailers also visit to farmer’s fields for the purchase of flowers. It is remarkable that (19%) of the growers sold their produce in Lahore and Rawalpindi wholesale markets to fetch better price while the remaining (9%) sold flowers to contractors as depicted in (Figure 1). The reasons for sale to contractors were the lack of financial resources, no knowledge regarding marketing.
E. Contractor: Contractor can be described as merchant or middleman buying the flowers from the growers and selling in the wholesale markets. The contractors are the local men/ fellow farmers who posses enough knowledge about the market conditions. He estimated farm yield and hydration and dehydration cost etc. Result indicates that a few contractors (9%) purchased flowers from the growers and sold in Lahore and Rawalpindi whole sale markets. Some of the contractors obtained loans from shopkeepers to pay the initial installment to flower growers and to pays an advance for labor and packing materials, particularly on special occasion such as during Zil-hijj, wadding season, and Eid festivals.
F. Commission Agent: During survey, it was observed that commission agents were not involved in flowering business because of non-availability of proper market in KPK. No auctioned occurred in the market. A very small market of Marla (1361.25 sq. feet) located in Ramdas bazaar of Peshawar city in which the buyers and sellers met together and the prices were settled by bargaining with each other. The owner of the market place charged Rs.14/bundle consists of 600-800 garlands as a market fee.
G. Wholesaler: A few wholesaler purchased flowers form the growers early in the morning and sold in smaller quantities to the retailers and consumers or supply to shops/stalls to fetch better prices.
H. Retailer: Retailers do not require license, but experience is more important to enter in flower business. There were a large number of retailers in the market; as a result they faced strong competition in the buying and selling of produce. All market activities come to an end with the retailer, who buys flowers from the growers or whole-sellers by bargaining and sell it in small quantity to the consumers at their local area. The retailers did not require much capital to start the business.
I. Marketing Margins Analysis: Marketing Margin is commonly used to examine the difference between producer and consumers price, for the same quantity of a commodity. Marketing margins depend on the length of the marketing chain and the extent to which the produce is stored or processed . Marketing margin may be calculated in two ways: absolute cash margins and percentage margins. The absolute cash margins are a good indicator of the trend of marketing costs .
J. Flower prices: In order to measure market margins, flower prices were collected at various stages in the marketing chain. It was difficult to compare various flower varieties and grades to reach with the unique solution for the price to be used. There were many complications in formulating the standard price of flowers such as day to day variation in prices, Varietals differences, grade differences in consumption and production areas. Such types of problems have been solved by collecting prices, which might cover most of the above problems. The price of flower was collected on per 100 garlands basis. Simple analyses of mean flowers prices on per 100 garlands basis by stage of time are presented as shown in (Table 8). Majority of the flower's growers received better prices from roses as compare to marigold. The wholesaler also received higher prices from rose flower as compared to marigold as shown in (Table 8). More than half of flower’s growers (53%) were benefited from price variation, because they sold their produce direct in the wholesale markets (Figure 1). In addition to this some of the rose growers sold their producer to Hakeems at the rate of Rs.1000-1200/kg rose petals.
K. Absolute Cash Margin: Marketing margins are the difference between prices at two market levels and are commonly used to examine the differences between producer and consumer prices for a commodity. Marketing margins represent the price charged by market agencies for their service including buying, packing, transportation storage and processing. Under competitive market conditions the market margins are the result of demand for marketing services and equal to minimum cost of services provided plus normal profit . Absolute cash margin or price spread is essentially the same as the difference between the price paid and price received by each intermediary. The absolute cash margin to producers was calculated as the scale price of the flower/100 garlands marketed by producers. The absolute cash margin was calculated for each functionary as shown in (Table 9).
L. Share in consumer's rupee: The consumer's one rupee expenditure on a specific commodity is divided among the marketing agencies and producer. It shows that portion of consumer's rupee, which is earned by the producer or goes to various marketing agencies such as contractors, wholesalers and retailers. The share in consumer's rupee was calculated by expressing the net margin of a specific agency as a proportion of the retail price. Results indicated that rose producer received a highest portion (73%) of the consumer’s rupee followed by the retailers (13%) as shown in. Data also indicated that the contractor realized an average of (12-13%) the consumer’s rupee in case of marigold and roses, while the wholesaler received a minimum portion (6%) of the consumer’s rupee in case of roses as shown in (Table 10).
M. Marketing Cost: Marketing costs are composed of the total costs incurred on marketing of produce by each agency. One way of defining costs is as all the expenses incurred organizing and carrying out the marketing process. Another definition is the charges which are paid for any marketing activity such as, assembling, transportation, storage, grading processing, wholesaling and retailing. The most important factors, which influence marketing costs, are distance between production and consumption markets, conditions of the roads, seasonality, perish-ability, packaging, storage and processing . Marketing produce was estimated at per 100 garland basis for different market intermediaries. Results indicated that the producer and contractor costs were estimated Rs.75 and 40/100 garlands respectively, while the wholesaler and retailer had cost of Rs.10 and Rs.25/100 garlands. This was because of transportation of produce from market floor to selling point and rent of shop or barrow etc. while marigold producers spend Rs.80 and 40/100 garlands. Wholesaler and retailer had the minimum cost of Rs.10 and Rs.25/100 garlands respectively.
N. Market margins Analysis: Marketing margins calculated for different marketing intermediaries involved in flower marketing in KPK are as shown in (Table 11). The above estimates reveal that the producer and retailer got the highest margin in the one step promotion of marigold, rose and produce as compared to other market intermediaries such as contractor and wholesaler as shown in (Table 11).
O. Net margin: Net margins calculated for different marketing intermediaries involved in flower marketing in KPK are in (Table 12). Producers earned the highest share (62-64%) of the consumer rupee than the other market intermediaries mainly because producers contract out their produce at immature stage to the contractors, hence gained low market margins.
P. Marketing problem: Non-availability of proper flower’s market in the locality and lack of knowledge regarding management practices and marketing were the major problem, mentioned by the majority of the flower growers in the research areas. The lack of credit was also found to be the critical problem, which affects the decision of growers. This was one of the serious problems for flowers area during summer season to fulfill high market demand.
In light of the above conclusion, the following recommendations can be made:
a) The most obvious implication of the results of this study is that sound policies are needed to promote formal education among rural households as a means of enhancing rose cut flower production in the long run.
b) Policymakers should focus on enhancing farmer’s access to information via the provision of better extension services.
c) There is need to investment in land preparation technology; investments in improving agricultural labor productivity; need to promote the use of FYM. Cheap and effective pesticides would be introduced.
d) Farmers should use seed quantity recommended by the floricultures experts in order to maintain plant population at reasonable level.
e) Policy makers should also focus on the development of market and road infrastructure, and supply outlets should be located closer to the farm gate.