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Ecuador Flower Exports Require U.S. Trade Deal to Keep Growing

By Mercedes Alvaro

QUITO (Dow Jones)--Exports of Ecuadorian flowers are expected to continue growing strongly in 2006, as the industry gains acceptance on international markets and branches into new businesses such as organic flowers.

But their prospects beyond this year depend largely on a free trade deal that the Andean nation is now negotiating with the U.S. Much is at stake for what has become a significant component of Ecuador's export platter.

Revenues from flower exports should rise to $398 million in 2006, up 8% from 2005, the Ecuadorian Flower Producers and Exporters Association, or Expoflores, said Friday. The industry exported $365 million of flowers in 2005, about two-and-a-half times the $105 million shipped abroad a decade ago.

Ecuador is the world's fourth-largest exporter of flowers. In terms of volume, this Andean nation will export some 114 million tons of flowers during 2006, 75% of which will be roses, Expoflores said Friday.

"Flower growing in Ecuador has become much more technical over the last decade, and that has also contributed to the recognition of the quality of Ecuadorian flowers around the world," said Santiago Saenz, owner of flower producing firm, Agropromotora del Cotopaxi, or Agrocoex.

Flowers are the fourth-largest component of Ecuador's export industry after oil, bananas and shrimp. The U.S. is the largest market for Ecuadorean roses, accounting for 61% of total sales, while Ecuadorean flowers represent 31% of U.S. flower imports, according to Expoflores.

It's no exaggeration to say the future of the Ecuadorean flower industry rests on free trade talks currently underway between Ecuador and the U.S. At the moment, Ecuadorean flowers pay no duties under U.S. trade preferences established to help Andean nations diversify away from the production of coca - the main raw ingredient for cocaine. That preferential treatment expires this year and, without a free trade agreement that maintains the same zero tariff conditions, Ecuador's flower industry could be wiped out, said Hernan Chiriboga, a former president of Expoflores.

The trade talks are stalled at the moment, and one of the sticking points is agriculture. Manuel Chiriboga, Ecuador's main negotiator in trade talks and no relation to Hernan, said the U.S. is holding flowers in reserve until an agreement is reached, but that "Ecuador cannot accept anything other than a zero tariff for flowers."

Other key markets include Europe, which account for 20% of exports, followed by Russia at 14% and other countries as diverse as Japan, the Middle East, South America and Central America accounting for the remaining 5%. Indeed, 80% of Russian flower imports come from Ecuador; Ecuadorean flowers decorate Middle Eastern palaces; and they were used for decoration at last year's marriage of Spain's Prince Felipe and Leticia.

Around 400 firms, both locally owned and international, participate in the Ecuadorian flower business, in which the government plays a very limited role, with just some support provided by export promotion agency Corpei.

One of the largest exporters is Nevado Roses, a joint Spanish-Swedish venture, which sold over 17 million Ecuadorean rose stems abroad in 2005, half of which went to Russia and the rest to Spain, Switzerland, Sweden, other European countries, the U.S. and Japan.

The firm's president, John Nevado, emphasizes the industry's efforts to gain international acceptance as the key to its growth. At the Flowers 2005 fair in Moscow, Russia, Ecuadorean flowers won a gold medal for quality among 150 rivals from Colombia, Holland, Kenya, the U.S. and Germany, among others.

For 2006, Nevado will begin exporting organic roses to the U.S. through California-based Organic Bouquet, and aims to export some three million stems per year, Nevado said.

Ecuador's flowers are among the most expensive in the world. Growing conditions are considered close to ideal, as the country is located on the equator, providing around 13 hours of sunlight per day, which helps growth, development of the bud and color. Nevado's rose stems can be up to 1.90 meters tall, to meet demands from countries such as Russia and Kuwait, who prefer very long stems, Nevado said.

Furthermore, the mountainous regions where most of the fields are located are considered very fertile. Ecuador has some 3,500 hectares of flowers planted, primarily in Andean provinces of Pichincha, Cotopaxi, Imbabura and Riobamba, at altitudes of between 2,500 and 3,200 meters above sea level.

While roses are most popular, the country also produces gypsophila, carnations, chrysanthemums, as well as other summer and tropical flowers.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653;
(Matthew Cowley in New York contributed to this report.).

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