Tanzania, like many other developing countries, is attempting to diversify its export base with a view to gaining new sources of income and foreign exchange and thus reducing its exposure to price volatility that typify international markets. A handful of non-traditional products such as oilseeds and oil, spices, fruits, vegetables and cocoa beans – which are almost invariably traded unprocessed – are beginning to contribute to total exports. Tanzania is strategically located between 1° and 12° south of the equator, thus commanding an enviable tropical climate to accommodate the production of a wide range of fruits, vegetables, spices, and flowers, both tropical and temperate. Some of the crops can be produced throughout the year and the majority are highly seasonal, consumed at farm level with a potential for local and export markets.

Land suitable for horticulture is spread throughout the country.  However, only 5 per cent is exploited (Mbwele and Nzalawahe, 1999). The horticultural industry has developed mainly in the highlands with a conducive climate and flourished in areas which have relatively easy access to the market. The highland areas include the southern highlands with regions of Mbeya and Iringa, while the northern highlands include the regions of Arusha, Kilimanjaro and Tanga. The central plateau and coastal zone also have a potential for the horticultural industry. The central plateau includes Dodoma and Singida, while the coastal zone includes the eastern part of Tanga, Dar es Salaam, the coast regions and the Uruguru Mountains in the Morogoro region. The Lake zone (Mwanza and Kagera) also has potential for horticultural crops. However, the country has not much to show in terms of actual horticultural products to be presented to the international market (Mutabuzi, 1999).

Flower-growing in Tanzania is a new activity practised in the northern zone, mainly in Arusha and Kilimanjaro regions where the climate is favourable and an export gateway available through Kilimanjaro International Airport (KIA). Being an agricultural activity, flower growing has the advantage of being a natural adjunct to more traditional exports, while the availability of ready markets in developed countries provides powerful financial incentives. Its impact in terms of employment, income and income distribution, and the type or existence of local-level initiatives has not yet been assessed, and this is partly the purpose of this study.

Export-diversification in the form of flower-growing has diverse impacts from the point of view of three important variables: (i) the macroeconomics, particularly the contribution to incomes and income distribution, employment, and foreign exchange; (ii) local-based initiatives; and (iii) conditions of work. These effects are analysed in this report.

The objectives of the research were to assess the costs and benefits of the flower industry from the point of view of the economy and the communities involved. The target was to evaluate the "success" of the cut-flower industry and to identify specific factors that have contributed to, or hindered, this success. Policy analysis was done on the role of the cut-flower industry and its impact on national economic development and local communities. There is a need to investigate how Tanzania has taken advantage of the opportunity afforded by export diversification in relation to the pros and cons of the industry, paying particular attention to local communities that have adopted this new undertaking. The sector appears to make intensive use of female labour. It is quite evident that it has created new jobs for women and provided additional income-earning opportunities for farm households. The report focuses on the issue of distribution of the gains from this new sector in terms of income, earning capacity, and conditions of work. Thus while documenting cut-flower exports as an example of successful globalization, the study report makes a social economic impact assessment of the industry. Parallel findings from a survey by the Ministry of Labour and Youth Development in 1998 are reported in the appendix.

Field research and case studies were carried out on cut-flower growers who have significantly altered their local production and employment base by entering the cut-flower export market. Materials for the case studies were collected from local actors – representatives or large and small landowners, hired agricultural workers and workers’ organizations, small local businesses, NGOs, and local government agencies. Mostly primary data have been used in this study, secondary data being limited, as the cut-flower industry is new to the country. There are hardly any books or published studies on Tanzania’s floriculture industry. The field survey covered 12 flower farms in northern Tanzania. A structured questionnaire was sent to the growers, covering issues such as production, employment, marketing, incomes, profit and institutional linkages. However, due to time limitations, the response was obtained from eight farms only. Data on the remaining farms was estimated on the basis of data obtained from the surveyed farms.

The flower industry has experienced tremendous growth since its inception in 1987 with the establishment of the Tanzania Flowers Limited (TFL). The company started with the cultivation of cut flower/foliage such as Carnations, Euphorbia and Ami Majus. All production activities were done in the open fields, rather than indoors under greenhouse conditions, a trade-off between capital investment and quality of the end product being involved. In 1992, however, TFL started intensive commercial production of roses indoors. Initially, 6,000 sq. m of greenhouses were constructed which has expanded to 36,000 sq. m at the present time. A further tripling of the areas is planned. The switch to greenhouses was rewarded by gains in productivity as well as profitability and the entry of real investors (both foreign and local) in the industry and by 1998, 12 farms were involved in the production of flowers. Of these, the survey covered eight farms – Horticulture Farms and Exports; Hortanzia; Tanzania Flowers; Kiliflora; Kombe Roses; La Fleur d’Afrique; Arusha Cutting and Multiflower. The four farms that did not respond to the survey questionnaire were Continental Flowers, Loliondo and Steeco systems in the Arusha region, and Florissa in the Kilimanjaro region.

Foreigners own most of the surveyed companies, with Horticulture Farms and Exports, Hortanzia, Tanzania Flowers, Multiflower, Arusha Cutting and Kiliflora being fully foreign-owned and La Fleur d’Afrique 40 per cent foreign owned. Two companies – the Kombe Roses and Continental Flowers – are Tanzanian owned.

The management structure of the companies surveyed is composed of boards of directors, managing directors, managers, supervisors and workers. The former three participate in the overall decision-making responsibilities, while the supervisors and workers are the implementers of the decisions. Most farms, by the very exigencies of the crop, have to be efficiently organized to ensure timely production of the type of flowers demanded in the international markets. Moreover, flowers are susceptible to pests and diseases and highly perishable, requiring management in planting, spraying, harvesting, grading and packaging.

The location of all the surveyed farms in Arusha region owes itself to the region’s favourable climatic conditions and to the proximity of the Kilimanjaro and Jomo Kenyatta international airports.

The production of cut-flowers is both capital- and knowledge-intensive, but due to high yields and high prices two hectares under greenhouse may be commercially viable. Due to the extreme sensitivity of the product professional management and constant vigilance is needed during all phases of growing, packaging and shipping. Because fresh cut-flowers do not undergo any processing between harvesting and sale, growers are essentially producing a finished product. Cut-flowers sold in international markets often retain the identity of the individual grower, and growers who can successfully differentiate their products can attain profit levels far in excess of other agricultural products.

Roses are the dominant export flowers produced and exported in Tanzania, contributing more than 75 per cent of the total cut-flower production. More than ten different varieties of roses are produced. The next most important flower produced is the Lisianthus (one farm). Carnations, Ami Majus, Euphorbia, Veronica and Chrysanthemums are also exported in significant quantities. Flowers other than roses can be grown at low altitude high temperature climates such as the coastal belt in Tanga, Dar es Salaam and Mtwara. TANEXA sees the need to develop pilot projects to demonstrate this (Mutabuzi, 1999).

Table 1 below shows the details on the types of flowers produced between 1994 and 1998.

The phenomenal expansion of the flower industry is evident from table 1. Roses accounted for 80 per cent of total production in 1998. The 1995-96 season saw a growth rate of 42 per cent, but only 1 per cent in 1997-98 due to the El Niño rains which flooded the greenhouses and caused the outbreak of fungal diseases such as downy mildew. Chrysanthemums are a new introduction in the last two years, Arusha Cutting and Multiflower being the two companies involved.

The net return obtained from rose production per hectare is estimated to be Tsh202 million per year compared to maize, which is produced in the same location and fetched only TSh283,500. Thus, comparative advantage in producing roses is indicated.

Quality control being the key to market success, all companies take stringent measures to ensure quality:

Table 2 shows the total area under flowers by the various companies.

Foreign investors purchased land from indigenous farmers. Five of the newly created flower farms were formerly used for coffee production, one for wheat and maize production, while the remaining two were used as garages for the State Travel Services. Reasons for entering the industry varied:

Analysis of the data in table 2 shows that there has been an increase in the area under production since 1994. The land under flower production increased by 43 per cent in the 1995-96 production year. It is during this period that most of the flower farms were established. During the 1996-97 and 1997-98 production years, the land under production grew. This is because flowers are perennial crops, therefore, an increase in the size of the land is associated with an increase in the size of farm or the establishment of new farms. During this period fewer greenhouses were constructed; producers were concentrating on crops which were already in the greenhouses.

As indicated earlier flowers have replaced traditional agricultural crops such as coffee, maize and wheat. Flower production is said to have many advantages over the abandoned crops:

Further expansion is being hindered because of the high initial investment required, susceptibility to disease and pests and high running costs due to the heavy utilization of chemicals.

Water is another key input. If roses go without water for 24 hours, replanting may be necessary and this is expensive. Farms are therefore located in areas where water supply is assured. Deliberate steps are taken (through reservoirs, boreholes, etc.) to ensure that water availability is at least twice as much as demand at any time. Sources of water include springs, rivers and boreholes.

Drip irrigation is the system most commonly used, being the most efficient available. Six farms used drip irrigation while the remaining two used overhead sprinklers. The sources of water are boreholes, springs and rivers such as Usa and Nduruma.

Seeds and cuttings are the planting materials most commonly used. All planting materials are imported.

The production of flowers involves the use of large amounts of chemicals, mostly during cultivation but also in post-harvest quality control. Four types are used in cultivation – fertilizers, fungicides, insecticides and fumigants – while post-harvest chemicals include nematocides and sterilants, foliar feeds, wetting agents and acaricides. Frequency of use depends on weather and flower variety. Complaints abound that most of the chemicals used in the flower industry have not been registered under the Tropical Pesticides Research Institute (TPRI) and their availability is a problem. Only three companies are registered importers of some chemicals – Balton Tanzania Limited, Bytrade (T) and Tri-Chem. An outbreak of diseases commonly finds the registered companies out of stock.

Workers need to use protective gear against chemicals. Uniforms/overcoats, masks, sunglasses, boots, gloves and respirators were found to be in common use. Sprayers, slide rules (for measuring stem height), trolleys, etc., are provided for particular tasks. At the Horticulture Farm and Exports’ cold-storage, workers are provided with special jackets.

The study has identified the following production problems in the cut-flower industry:

Cut-flower production employs 2,347 workers from surrounding villages, the majority (57 per cent) being women, their jobs being harvesting, grading and packing. Men spray, irrigate and do similar manual tasks. Employment is categorized into four groups – management, skilled labour, casual labour and others (especially the consultants engaged in the maintenance of cooling machinery, extension and quality control services, and marketing). Local communities have benefited from increasing incomes. Interregional migration has been encouraged from Singida, Dodoma, Tanga and Kilimanjaro. Coffee farmers in the Arumeru district of the Arusha region have sold/leased their farms to foreigners for cut-flower production.

A doubling of employment occurred between 1994 and 1998. The findings from the survey indicate that most workers have an average of five dependants which means that in 1998, 11,735 persons benefited from the cut-flower industry. Over 85 per cent of employees are in the "casual labour" category, whose main tasks are harvesting, planting and grading. "Others" (0.6 per cent) are consultants who are hired periodically. Skilled labour and management account for 14 per cent of total employees. As opposed to casual labour the job description of these groups are well defined.

Most employees come from the surrounding areas with Arusha, Kilimanjaro, Singida, Tanga and Dodoma being the major sources. Seven farms indicated that most of their labour force came from Arusha and Kilimanjaro. This implies that the labour market allows mobility of workers to the cut-flower industry. These workers are sufficiently adaptable and flexible to respond to changing requirements of the workplace and to enhance the competitiveness and growth of the industry.

All the surveyed companies had some workers originating in foreign countries, except for Kombe Roses Ltd. The majority of these come from the Netherlands. Foreign workers hold management posts and some are owners. All companies employ foreign consultants for short-term periods.

A majority of the employees are female while males occupy the small portion of skilled labour and managerial positions.

Three-quarters of the total employees are 18-35 years old, the rest being over 35, signifying the arduous nature of flower growing. Older workers perform management activities and undertake field supervision which are less demanding in terms of exertion but require much experience.

Female employees too are concentrated in the 18-35 age group (82 per cent). The preference for women workers is attributed to their efficiency in carrying out harvesting and grading.

The educational background of employees extends from primary-school leavers to degree level, with 68 per cent being the former and 0.3 per cent the latter. Primary-school leavers perform core activities such as spraying, irrigation, harvesting, grading, weeding and packing. University graduates are either owners of the companies or financial managers, marketing managers and consultants. In the survey the production manager’s post was in most cases occupied by diploma-holders. The resort to foreign experts indicates some weaknesses in the horticulture courses offered at Tengeru Horticultural Institute and Sokoine University of Agriculture. The low priority so far given to flowers may account for this.

The heavy use of chemicals constitutes the main hazard to workers, while the perishability of the product often means workers have to long hours to complete critical tasks such as harvesting and spraying. Five of the surveyed companies had ten working hours per day, one had 12, and the rest nine. Weekends and holidays are working days. Wages remain low.

Workers in the flower industry are ranked in the following categories on the basis of their performance.

Around one-half of the labour force were considered of good quality, the rest average. In terms of efficiency, 30 per cent were rated as average, 30 per cent good, 20 per cent very efficient and the rest very poor. A quarter of the workers were marked as being average honest and friendly, 40 per cent very honest and friendly, and the rest dishonest and unfriendly.

The average salary structure and income distribution by employment categories is summarized in table 7. Terms of payments are both on a monthly basis for permanent employees and piece-work for casual labourers. In addition to salaries, the management and farm managers of Horticulture Farms and Exports receive 12 per cent of their salaries for housing. At Tanzania Flowers, half of the employees reside in farmhouses, these being inherited from the previous coffee plantations. In Kiliflora only the management are provided with housing allowances. The remaining farms have no housing allowances.

The salary structure indicates a very big gap between casual labourers and management. Income distribution, if anything, has worsened. In 1997-98, for example, management salaries were raised by 48 per cent but of the casual labour category by only 11 per cent.

Almost all of the surveyed companies offer paid annual and maternity leave to the employees. At the Arusha Cutting and Multiflower Companies, workers get paid leave after every two years. All eight farms give a free lunch, one (Multiflower) also a free breakfast. Four out of eight surveyed companies provide buses to ferry workers to and from work. Medical allowances are provided at most companies – at La Fleur d’Afrique to only permanent employees, at Kombe Roses to all categories when injured at work. Allowances at Tanzania Flowers’ are kept to a minimum of TSh3,000 per treatment. At Kiliflora, workers are treated at the company’s dispensary for minor cases, and at hospitals that have entered into medical contract with the company for serious cases. At other farms, allowances are paid at the discretion of the management. Other benefits include bicycles and washing machines at the workplace for washing uniforms (Kiliflora). In all of the surveyed farms a bonus is given to graders when they exceed their target.

Employment problems may be classified into two groups: one from the employees’ point of view and the other from the employers’ point of view. All the causal labourers complained about their salaries, blaming the Government for fixing the minimum wage at TSh17,500 per month which most employers used as their norm. Some employees complained about the long working hours for which they were not paid overtime rates. Employees also felt they were not adequately represented in the management committees; workers on such committees are often nominated by the management and thus cannot represent the workers forcefully. Complaints were made about illnesses such as headaches, chest pains and allergic reactions that are associated with the frequent use of chemicals. Casualty of the work itself was a complaint.

Employers complained about the quality and efficiency of their workers. As mentioned in section 4.3 the majority of employees in the industry are primary-school leavers who lack the minimum education needed in flower production.

These include the cost of land, infrastructure, greenhouse construction, irrigation systems, packing/grading sheds, cold storage, equipment, machinery, housing, planting materials and trucks. A summary is given in table 8.

Operating costs include all the costs involved in the running of the farms, such as for chemicals, fertilizers, technical advice, electricity, fuel, wages, freight, marketing, depreciation, interest and rent. The costs were said to vary from time to time. It was explained during the survey that operating costs outweighed investment costs. Marketing, freight, wages, chemical and fertilizer costs were said to dominate. Table 9 provides a summary.

The industry has had a significant impact on the national income since the early 1990s in terms of wages paid out to employees. The income is used to pay school fees for children and to meet other day-to-day expenditure. The industry is also a very good source of foreign exchange. The survey revealed that almost all the companies are paid by telex transfer (TT), in most cases within weeks after delivery. The money is deposited in any foreign currency requested by the company. Retail outlets have increased in the areas where flower farms are located. Demand for houses close to the flower farms has also increased. Interregional movement of people seeking employment opportunities from neighbouring regions such as Kilimanjaro, Tanga, Singida and Dodoma has increased.

Cost-benefit analysis (CBA) indicates that the cut-flower industry has improved or had positive impact on the economic welfare of the Tanzanian community and society in general. The aggregate financial benefits outweigh the total financial costs associated with the cut-flower industry, especially with regard to the surveyed farms.

Export promotion policies have encouraged non-traditional exports. Such policies generally benefit commercial farmers and their labourers, but poor farmers are marginalized. As income is redistributed, the poor may be hit the hardest and may turn to the resource base to replace their losses. Export policies for cut-flowers should therefore also attempt to assist small and medium-sized farmers by providing improved infrastructure and financial system to facilitate farm-to-market movement of cut-flowers and increasing the funding for research and extension services. The forging of special relationships between trading partners should be promoted including firm-to-firm linkages to enable easy access to special markets.

The early producers succeeded by tapping into the industry’s international linkages and technology. Government has to remain vigilant to attract foreign firms that have requisite knowledge and technology.

International demand for floricultural products was estimated by the Flower Council of Holland at US$25 billion in 1990 and has been the reason behind the growth of this industry. The largest single market is Western Europe, with sales of US$12.5 billion, followed by Japan and the United States with US$6 billion each (Alan et. al., 1998). However, the West European market for cut-flowers and potted plants has been growing at a decreasing rate since the early 1970s. Table 12 presents the average annual growth rates in sales turnover at the Dutch flower and plant auctions from 1958 until 1993 (over five-year periods). Following the 25-year period from 1958 to 1983, in which turnover increased at 15.3 per cent (peaking at 19 per cent during 1968-73), sales growth has slowed considerably and was only 5.4 per cent during 1988-93 and in 1992. For the first time in four decades of uninterrupted growth sales turnover actually declined, much to the consternation of the European flower trade and its overseas suppliers who had based their investment plans on an assumption of indefinite growth. Declines also happened in 1995 (-1.4 per cent) and in January and February 1996 (-5.2 per cent).

Marketing of flowers involves a systematic chain from producers/exporters to auctioneers, wholesalers, retailers, and consumers. More than 90 per cent of flowers produced in Tanzania are transported by truck to Nairobi where they get air-freighted through Jomo Kenyatta Airport to Europe. Almost all farms use commission agents who sell the flowers on their behalf at fees of 15-20 per cent of the turnover. All the surveyed companies employ quality controllers who perform such tasks as phytosanitary inspection, sorting for damaged plants, grading cut-flowers, and making regular field inspections.

The Netherlands (Holland) take 90 per cent of Tanzania’s flowers, the remainder being supplied directly to individual wholesalers and/or retailers in Germany, Norway, England and Sweden. The major means of transport is cold vans to the airport and then air freight. A quality report is regularly sent to the farms explaining the quality of the flowers reaching the auction.

Local markets exist in Arusha, Moshi and Dar es Salaam. These markets are the outlets for overripe flowers which cannot be exported. Ten per cent of the total flowers of low quality are actually sold to customers the rest being used for making compost.

Marketing information originates from various sources. First, auctioneers contact the producers/exporters about the existing orders through faxes, telephones and e-mail. Second, some auctioneers make direct visits to the farms and place specific orders within a preset period of time. The third source is journals, newsletters, and international horticultural magazines.

One of the marketing techniques is bargaining, especially between producers and wholesalers. However, the bargaining capacity needs to be consolidated by the quality of the cut-flowers produced. Therefore, the strategy is to produce high-quality flowers that could fetch good prices at the Dutch auctions and other markets. Packaging, colour, stem length, freedom from disease and damage, and openness of the cut-flower contribute to the quality and hence their marketability. Between the wholesaler and the consumer, the auction approach is employed – i.e. there is a direct agreement between sellers/auctioneers and consumers (wholesalers, retailers and final consumers). As almost all flowers produced in Tanzania are sold at auctions, and since there is no bargaining at auctions, the main marketing technique used is to produce high-quality flowers. Some flower growers attend exhibitions where they get an opportunity to advertise their products.

There are existing links among flower growers and different institutions. Almost all flower growers are members of the Tanzania Flowers Association (TAFA). The growers link to the society and other institutions in various ways.

Growers are formally linked to the central and local government when it comes to policy issues. The majority of farms (six out of eight) meet with the Government occasionally according to need, but most express dissatisfaction about their relationship with the Government.

Growers are linked to the Bank of Tanzania. They formally meet to discuss business and are satisfied with this relationship. Before exportation, growers fill in CD 3 forms obtained from BOT which monitors the foreign exchange entering the country. The practice has lapsed recently.

Both informal and formal relationships exist between flower growers and people in the surrounding villages. They are socially linked as neighbours in their everyday life and also in their day-to-day businesses as most of the farm employees come from surrounding villages. The level of satisfaction is said to be good.

Flower growers are linked informal to the Tanganyika Farmers’ Association (TFA) in their business activities. They occasionally buy fertilizers from the TFA and the satisfaction level is average; only two farms categorized their satisfaction level as "good".

Growers are occasionally linked informally with the Board of External Trade (BET) on business issues. Some farms seek marketing information from the BET. The level of satisfaction is low.

Flower growers are linked with labour unions on policy issues. The relationship is formal often on a daily basis. Only two of the surveyed farms (Kombe Roses and Tanzania Flowers) have labour unions at the workplace. Management expressed average satisfaction with the unions, the employees low.

Growers are linked with the National Insurance Cooperation (NIC) on business issues. The farms contain a number of items that need to be insured. Some of the farms meet with the NIC on a monthly basis while others meet annually. The level of satisfaction is average as most of the farms complained about the difficulty of insuring plants in greenhouses.

None of the surveyed farms was aware of the Tanzania Exporters’ Association (TANEXA).

There are good links among flower growers on a regular basis. Trucks from one farm may collect flowers from another when space permits. All growers are members of the Tanzania Flowers’ Association. Most farms were highly satisfied by the existing links.

In summary some institutional linkages are shown to have a positive impact. Best linkages exist between the flower growers and the TFA (supplies of fertilizers), the BET (providers of market information) and the BOT (for discouraging controls on foreign exchange earned by exporters). There are also linkages with foreign actors facilitating the sharing of solutions to common marketing problems.

Maenda (1999) argues that there is weak institutional support to the CFI industry. This problem has been complicated by the existing negative attitude of the trade unions and the Labour Department. The legacy of socialism and monopolistic trade unions often adopted a confrontational stance against employers in many workplaces. The unions have low collective bargaining skills and little experience with labour relations in the new market economy. They often pressurise employers to adopt policies which where used by defunct parastatal corporations. As a result much time and energy is expended on dealing with difficulties created by this legacy, which time could be used more productively. The Labour Department likewise has the same legacy of control, vis-à-vis employers. Complaints and disputes reported to the Labour Department are taken as prima facie evidence of employers’ culpability.

The cut-flower industry is a short-cycle production process that requires the extensive use of agrochemicals, which have a negative effect on the soil water s