Publications

Master’s Thesis
Submitted for the master’s degree in Entrepreneurship and Innovation Management (MSc)
from Aalto University

Summary:

The global floriculture industry, like many other multi-billion dollar industries, is evolving rapidly. One critical change is the shift of production from long-time dominator, the Netherlands, to equatorial countries such as Colombia, Kenya, Ecuador and Ethiopia. Consumption, while still centered in North America and Europe, is also taking off in places like Russia and in Asian and Middle Eastern countries. Buying behavior is also shifting, with online sales expected to gain market share (from <10% to 30% in Europe in the next decade).

Players in floriculture are making advancements in breeding and production technology and cold chain logistics, but some pieces of the supply chain remain rather old-fashioned. For example, both producers and buyers describe frustrations with lags in information-sharing and transparency. Transparency is also important to end consumers, who are pressuring the industry to be more socio-ecologically sustainable.

This thesis marks the beginning of my own journey to understand the floriculture global value chain, starting from the perspective of smallholder rose producers in Ecuador. Small-scale producers (<2 hectares) represent an interesting subject for the study because small-scale farming is often lauded as an important solution for community development – presuming that small farms are generally locally-owned, which keeps the gains from trade in local communities, rather than sending them to foreign corporations; and for sustainable agriculture – presuming that small, family producers use more socially and environmentally sound production methods.

Still, smallholder flower producers are virtually absent from the literature on the global floriculture industry, and scholars writing on Global Value Chains (aka GVCs, the en-vogue terminology used to describe today’s global production and distribution systems) take the baseline assumption that the level of sophistication required to compete on global markets is beyond the capacity of most smallholder producers. In Ecuador, however, the number of smallholders producing the high-value, export-oriented Ecuadorian rose is expanding; and some of these producers stretch past a limited production role and into higher value-added activities like processing, post-harvest and export sales. This thesis seeks to understand what it is like to be a smallholder rose producer, and how they compete in the global industry.

This thesis begins with Global Value Chain analysis to understand the context in which these producers operate, along with a qualitative empirical study to gain insight into the value chain from the perspective of the producers themselves. Based on data collected through field interviews over a two-month period in Ecuador’s Pichincha province (where 60% of Ecuador’s roses are produced), I use Grounded Theory methodology to analyze the producers’ stories and to identify the themes and issues important to them.

As it turns out, while sustainability questions were a primary motivator for this study, such issues play only a minor role in the decision-making of these producers and as such occupy a small part of the findings of this thesis. The key themes which did emerge include the ambitions and motivations of the producers for launching their rose businesses; their strategies for approaching and maneuvering through the Global Value Chain; the surprising differences between the way they experience the value chain and how it is portrayed in the dominant GVC literature; and the importance of family and community alliances for surviving in the floriculture industry.

Full (PDF document): An Empirical Study of Ecuadorian Smallholder Rose Producers in the Global Value Chain