APIP Agricultural Policy Implementation Project

profitable, assuming that high yields of quality flowers are obtained, losses in
transit are minimized and flowers arrive on the market ina timely manner. The
value of production and net revenue for low-medium-high production scenarios are
given for each flower, based on yield estimates minus 20% for shrinkage and
losses in transit.
Initial investment costs for cut flower export production are about 201,100
DT, or about 67,000 DT per hectare not including land for a model three-hectare
Tunisian farm. These are shown as the depreciation line item inthe enterprise
budget analysis and are assumed for purposes of this analysis to be the same for
all three flowers studied. Of the variable costs, the most significant cost item
was for cuttings, bulbs, and seeds. Carnations appear tobe the least profitable
enterprise probably due to the proportionate costs of cuttings which come to 75
percent of variable costs (including labor) and about 60 percent of total costs
per hectare.
Under the medium yield assumption, net revenues per hectare for roses are
26,602.9 DT, while gladiolas show 7,805.3 DT, and carnations actually show a loss
of 667.1 per hectare. Per stem, the gross margin for roses is59 millimes, while
carnations show a slight negative margin of 1 millime. This can be attributed
to the fact that while costs per stem sold under a medium yield assumption are
relatively close between the two flowers (141 millimes per rose and 121 millimes
per carnation), prices received for roses are greater than for carnations. The
gross margin for gladiola is 26 millimes per stem, under the medium yield
scenario. Under the high yield scenario, the gross margin per hectare ishighest
for roses at 52,852.9 DT, followed by 17,555.3 DT per hectare for gladiola and
12,232.9 for carnations.
Exhibit 4.2 displays the results of a sensitivity analysis which
illustrates how net revenues are affected by changes in price and yield. For
example, a 20% decrease in rose prices (from 200 to 160 millimes per stem)
results in almost 70% reduction in net revenue (from 26,602 to 8,602 DT) under
the medium yield senario. The profitability of various combinations of prices
and yields is emphasized by this type of analysis. Raising yields from low to
medium for roses has tremedous impact on net revenue (e.g., from 352 DT per
hectare for low yield to 26,602 DT for medium yield at 220 millimes per stem).
The sensitivity analysis shows that roses have a positive net revenue on
all but one price and yield combination - low yield at 160 millimes per stem.
Carnations, on the other hand, have positive net revenue under only three
combinations - high yield at 120 and 144 millimes per stem and medium yield at
144 millimes per stem. Inthe case of gladiola, net positive revenue isachieved
at all yield levels when the price is above 300 millimes.
Several conclusions can be drawn from this analysis. First, roses and
gladiola can be profitable enterprises under a variety of conditions. Secondly,
carnations are unlikely to be a profitable enterprise except under the best price
and yield conditions. Finally, growers must be extremely concerned with quality
(both in terms of the type of flower grown and postharvest handling) because a
20% discount in price for poor quality can have catastrophic consequences for
profitability.
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