Thesis (MComm (Business Management))--University of Stellenbosch, 2005. / Tulips are the second largest floral commodity that is traded globally. Currently
Holland controls half of the 20 billion Dollar tulip bulb market, although immense
pressure from European institutions may serve to change this phenomenon in
the near future. Not only do increasing labour costs and stricter legislation on the
usage of pesticides impair this industry, but the Dutch government also places
huge pressure on its own producers to convert scarce agricultural land into
residential areas. These conditions could therefore provide a possible market
opportunity for farmers from other countries.
Due too the fact that the price of tulip bulbs is based on the size of the flower and
the length of the floral stem, floral farmers generally gain an extra 2-3 cm stem
length via physically cutting it out of the tulip bulb. Therefore, floral farmers
annually destroy their whole supply of tulip bulbs, resulting in a need to reacquire
bulbs from bulb growers. Due to the fact that the lifespan of cut tulip
flowers is generally not more than seven days, Dutch land rezoning ought to
result in tulip bulb production being the production component which could truly
be relocated in a global context. In this study, an economic analysis is therefore
conducted to ascertain South Africa’s potential to produce tulip bulbs in order to
supply the growing demand in the Netherlands.
Information was gathered by performing a literature study of existing literature
and by conducting structured interviews with numerous experts in their various
fields of operation. Due to the fact that expertise in South Africa was very limited,
a large number of interviews were scheduled with experts from Holland and
Germany. The presence of strict non-disclosure contracts resulted in a situation
where interviews had to be conducted with individuals who are two to three levels
removed from any relevant tulip organisation. The study was conducted through first analysing the global market from a
horticultural perspective and thereafter from an economic-logistical stance. It
was established that tulip bulbs are very temperature sensitive and therefore
have to be produced far from any tropical zones. Since Sutherland’s winter
temperature is similar to that of Dutch production areas, South African tulip bulbs
could be planted in Holland. The difference in seasons of production allows
farmers from the Southern Hemisphere to predict the extremely fashion sensitive
market in one year less. Via moving production activities between alternative
hemispheres, off seasons can be utilized for production, which could result in
fashions being predicted with a greater sense of accuracy.
If unfashionable bulbs are produced, a loss of up to R 34 129,87 per ha can be
incurred, while mid-priced bulbs and fashionable bulbs can earn respectively
R80 118,09 and R 122 626,57 per ha. Projections are however based on the
prices of a bear phase where the market currently pays up to 75% less for bulbs
than it did three years ago.
The production costs in Sutherland could be cut by R 15 750 if it is decided to
mechanise production but simultaneously this action will result in an increase of
R120 000 in new capital equipment required. The use of 40 feet High Cube
Reefers reduces transportation costs considerably and 1 042 437 bulbs with a
circumference of between 10 and 12 cm can be shipped in such an container via
utilizing South African produced SN 64190 crates and four way export pallets.
Market penetration remains an important consideration since a farmer’s
production history is very important in the international market environment.
Partnerships, production of larger bulbs, organic production and seasonal
production in alternating hemispheres, remain some of the most suitable
techniques for market penetration.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/3471 |
| Date | 12 1900 |
| Creators | Du Toit, Werner |
| Contributors | Van Zyl, J. H., University of Stellenbosch. Faculty of Economic and Management Sciences. Dept. of Business Management. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | Afrikaans |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Stellenbosch |
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