Many Colombian flower growers are under intense financial pressure -- and others are facing bankruptcy -- as the exchange rate grows increasingly unfavorable to the South American country while inflation, labor and associated costs skyrocket.

"The theory of purchasing power parity says that the exchange rate must depreciate according to the difference in inflation between two countries," explains Augusto Solano, president of Asocolflores, the Colombian Association of Flower Exporters. "In the case of Colombia, the exchange rate, instead of increasing by the difference between the inflation of both countries, has decreased by 30 percent. In the meantime, we had an accumulated inflation of 23 percent."

According to a white paper that Asocolflores created to examine the economic situation, in the past four years: 

 • The value of the dollar has gone from $2,827 pesos to $1,900 pesos (at press time), a 30 percent change. 

 • Labor costs (as set by the government) have increased by 33 percent.
 
 • The cost of flower production, excluding labor, has increased by 21 percent. 

"The above implies that, assuming a constant dollar price for flowers, the margin for the flower grower has decreased by 57 percent in the last four years," Solano says.

The situation, according to U.S. wholesalers and importers, is serious. When Colleen Taber of Gardens America in Miami visited Colombia earlier this month she saw growers' "desperation" firsthand, she says.

"Some of them will absolutely close," Taber says. "If you buy from a farm and you pay them $100 a week for flowers, it means they are getting $60, but their costs are going up. How would you feel if your sales dropped by 40 percent in four years but your costs increased?"

Read more about the situation -- and how it could affect retailers -- in the July issue of Floral Management magazine.

--Mary Westbrook
mwestbrook@safnow.org

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