Transcripts

China's Blooming New Flower Industry Takes Root

LINDA O`BRYON: A new industry is booming or we should say blooming in China and it promises to supply western markets in the coming years. In the southwest province of Yunan, the area of land being cultivated for flowers has increased a thousand fold since the 1990`s. Nick Mackie reports.

NICK MACKIE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Lu Ronghua was one of only half a dozen farmers in rural Dounan that grew flowers instead of vegetables 18 years ago. His 800 square yard plot produced 30,000 stems annually. And every day, he`d gather up a bundle and cycle the 10 mile long dirt track into the big city.

LU RONGHUA, FLOWER GROWER (THROUGH TRANSLATOR): When I started growing flowers, there was no market here so I had to take all our flowers into (INAUDIBLE) to sell.

MACKIE: Now with 80,000 square yards under cultivation and a workforce of 50, he supplies wholesalers with up to eight million flowers every year. Dounan now has a thriving market, where 10,000 growers and traders gather early each morning. Since the mid 1990s, 1,200 households in this town alone have seen their incomes rise more than tenfold after switching from growing food, which used to generate less than $50 annually. Yunan province has 62 square miles of cut flowers under cultivation, a thousand fold increase in 10 years.

In 2005, it produced 3.6 billion stems. Ninety percent was sold to other regions in China as well as 28 markets abroad and this generated $500 million to the local economy. It was once a cottage industry that served wealthy city folk nearby. Now more than half of China`s flower vases are filled with stems from Yunan. In just over a decade, growing flowers has helped lift 20,000 families out of rural poverty. Now the province has a real industry that is competing globally. Yunan established this industry on seeds imported from Europe - for these roses and carnations aren`t native to China.

But for years, many local growers have used seeds germinated by local producers. These can be 20 times cheaper if they flout intellectual property rights. But only those who respect IP get access to foreign markets, like through this auction house. The government wants growers to go for quality, even if it means buying the latest foreign seeds as they deliver better yields and the varieties that lucrative consumers demand.

DENG CONGJUN (THROUGH TRANSLATOR): We need to increase our cultivated area. Meanwhile, most important, we have to raise the overall share that meets best quality so that more flowers reach the export standard and so increase the profitability of our industry.

MACKIE: Another export issue is transport. Direct flights abroad from Kunming (ph) are limited and as yet, there is no carrier with refrigerated holds. Yunan is confident that both logistics and piracy are solvable issues. It`s pressing ahead with plans to double last year`s cut flower production by 2010, to provide another Chinese product for the western markets. Nick Mackie, NIGHTLY BUSINESS REPORT, Yunan province, China.