Why Rose Prices Swing Wildly: Growers Give Up Harvesting in Despair

“Someone got so furious that they drove an excavator into the rose field.” Li Zhenhai, a villager from Xiaodoushan Village, Bajie Street, Anning City, Yunnan Province, told astonished reporters.

During the recent edible rose harvest season, flower growers had a bumper crop but no bumper income. The price of edible roses fell from more than 30 yuan per kilogram to below 3 yuan, dealing a huge blow to farmers in Bajie, Anning City, Yunnan Province.

Li Zhenhai also felt the price plunge personally: “My family's two-plus mu of roses sold for only 2,500 yuan.” He told reporters that he had originally expected an income of nearly 10,000 yuan, but the price crash meant he did not even recover his costs.

Rose Prices Soared, Tobacco Growers Switched Crops, Flower Growers Sold Cuttings

“Two or three years ago, growing roses really had its good days.”

Li Zhenhai told reporters that around 2012, edible rose prices in Bajie, Anning reached a peak, once selling for more than 30 yuan per kilogram. “Manufacturers competed to help farmers with the harvest.”

Because it was profitable, many local farmers who had originally grown flue-cured tobacco looked on enviously and switched crops as well.

“Flue-cured tobacco requires large investment and labor, with a fairly stable gross income of five to six thousand yuan per mu. Edible roses conservatively yield 600 kilograms per mu, and at less than 10 yuan per kilogram they can match tobacco, while in previous years the actual purchase price was basically above 15 yuan.” Li Zhenhai told reporters that at 2013 prices, the output value of edible roses reached more than 12,000 yuan per mu.

“Back then, not only did the roses sell well, even the seedlings fetched a good price.” Li Zhenhai recalled that edible rose seedlings were actually the branches cut off during annual pruning. What was once waste that was thrown away or burned for firewood was bought by out-of-town traders for about 50 cents per branch. “Some farmers could earn twenty or thirty thousand just from selling cuttings.”

“If the seedlings go out, what if no one comes to Bajie to buy roses in the future?” The local government and some village officials were the first to recognize the potential crisis, but found themselves powerless.

“When income is at stake, persuasion is simply useless.” Li Zhenhai said that for many farmers: why not make money when you can? If I don't sell, will others not sell?

Agreements Hard to Enforce, Companies Can Only Buy at Market Prices

Li Zhenhai has another identity as the head of the edible rose cooperative in Xiaodoushan Village, Bajie Street, Anning City, Yunnan Province. For him, besides selling his own family's roses, he also has to buy flowers grown by others.

“We give priority to buying members' roses.” Li Zhenhai said that because roses come onto the market in a very concentrated period, especially the first-flush flowers which have a very large yield, and because roses take up a lot of space, basically after simple processing they must be transported away as soon as possible. “At our cooperative's busiest times we have to ship out two truckloads a day.”

But what gave Li Zhenhai a headache was that farmers did not honor the signed price agreements.

“As long as another buyer offers a higher price than the agreed price, many farmers will break the contract.” Li Zhenhai told reporters that his cooperative signed price agreements with farmers in 2011, “and if someone elsewhere offered 50 cents more, farmers would break the contract and sell to them.” After being burned, Li Zhenhai's cooperative could only buy at market prices.

“Some large flower cake manufacturers also signed purchase agreements with farmers in advance to control costs, but farmers still broke the contracts.” Faced with scattered farmers breaking contracts, most purchasing companies were helpless and could only turn to land transfers in other areas to build their own or partner raw material production bases.

Also starting in 2012, the planting area of edible roses in Bajie, Anning expanded rapidly, reaching a record nearly 9,000 mu this year. In fact, this is not the entire edible rose planting area; in Qujing, Chuxiong, Honghe and other prefectures and cities, “rose gardens” and “rose valleys” of a thousand mu or more have also taken shape.

And with the cliff-like drop in edible rose prices this year, for the vast majority of farmers, without the protection of price agreements, the flowers in their fields had nowhere to go.

Smallholder Economy Makes It Hard for Flower Growers to Reach the Market

In Li Zhenhai's view, this year's rose price crash was related not only to some large companies no longer buying in Bajie, but also to a very small number of companies deliberately driving prices down. “When the first-flush flowers came in this year, many purchasing points had their doors shut, and since roses can't be stored, they had to be thrown away. By the time most purchasing points opened two or three days later, the flower price had been cut in half.”

The inability to store roses for long has become the Achilles' heel of edible roses. “Flower growers have little bargaining power; once picked, the flowers either get sold or rot.” Li Zhenhai told reporters that some flower growers felt it wasn't even worth the labor cost and simply stopped picking.

“At the beginning, the government also advised farmers not to sell seedlings, but that was limited to advice.” Li Zhenhai felt that the government's intervention in farmers' decisions had always been fairly restrained. “If the intervention is right, fine; if it's wrong, the public will be even more dissatisfied with the government.”

In fact, while the market was heating up, the government was not doing nothing. Increasing publicity for Bajie roses, contacting cold storage facilities, and coordinating interest-subsidized loans for cooperatives to expand purchasing scale -- the local government took a series of measures to stabilize rose prices. “Publicity for Bajie roses began years ago, and in the past two years when the roses bloomed, vehicles coming to Bajie for tourism often lined up in long queues.”

In contrast to the flower growers' helplessness, long lines formed in front of shops on Bajie Street selling rose wine, rose juice and rose jam; at Kunming Changshui Airport, flower cakes are also one of the must-buy souvenirs for most tourists visiting Yunnan. In terms of price, a flower cake costing three or four yuan uses edible roses purchased for just a few mao, and while edible rose prices crashed, flower cake prices remained very firm.

Now, Li Zhenhai's cooperative is also going to Shanghai and other places under government guidance to discuss cooperation and expand sales channels. “The closer to consumers, the higher the profit, but the smallholder economy formed over the long term makes it very hard for flower growers to reach the market.” Li Zhenhai was still somewhat worried.

“Though Lagging, the Market Is Still Playing a Role”

“We still have to go the route of contract farming; without it, there is no way out.” Li Zhenhai told reporters that the edible rose market in Bajie is still in a disordered state, and contract farming helps stabilize agricultural product market prices and prevents edible rose prices from riding a “roller coaster.”

In Li Zhenhai's view, the current cooperative is not a cooperative in the true sense. “The land is in the farmers' hands. When edible rose prices are high, what if they don't sell to the cooperative?” Li Zhenhai analyzed that Bajie's edible rose planting scale is large, but it is scattered among individual households, and land transfers and appropriately scaled operations are necessary. “For example, transfer the land to the village group or cooperative, farmers receive income according to their share in the cooperative, and at the same time they can work for the cooperative to earn labor pay; the cooperative as a whole signs sales agreements with manufacturers and ensures the agreements are fulfilled.”

Besides stabilizing the source of roses, the development of the edible rose industry cannot do without extending the industrial chain and enriching product categories. “This requires strong scientific research capabilities, huge capital investment and mature marketing, and at present Bajie lacks such local enterprises.” Li Zhenhai suggested that appropriately attracting relevant enterprises from elsewhere to invest locally is a shortcut, while local enterprises can also try developing new products.

In addition, in response to the insufficient storage capacity exposed by this edible rose price crash, some local enterprises are already eager to try, planning to build new cold storage facilities. At this point, Li Zhenhai seemed to have regained a bit of confidence: “Though lagging, the market is still playing a role.”