Closing Case: the Ecuadorean Rose Industry
CLOSING CASE: The Ecuadorian Rose Industry Case Study Summary The opening case describes Ecuador’s rose industry. In the last 20 years, Ecuador has built its rose industry from virtually nothing to a thriving industry generating $240 million in sales. Today, the industry employs tens of thousands of people at higher wages than the average Ecuadorian receives. Yet, there are concerns that in the quest for perfect flowers, the use of toxic chemicals such as pesticides may be hurting not only the environment, but also the health of the workers.
Question 1: What is the basis of Ecuador’s comparative advantage in the production of roses? Answers 1: Most of Ecuador’s rose farms are located in Cayambe and Cotopaxi regions and are within an hours drive from Quito, the capital of Ecuador. The altitude is around 10,000 and the rose farms are at the foot of volcanoes that rise more than 20,000 feet. The rose fields benefit from fertile soil, high altitude, and the intense sunlight that lasts up to 12 hours each day. The location close to the equator makes an ideal growing condition and the roses thrive.
They have vibrant color and large heads. They are prime roses and fetch a premium price. Because of the location and conditions, the roses flower year round. Because of these advantages, Columbia and Ecuador roses account for 90% of the roses sold in the United States last year. The revenues gained by taxes paid by rose growers have allowed the country to improve its infrastructure. Huge plastic covered structures have been built to protect the roses. Roads have been paved, schools built, and huge sophisticated irrigation systems have been developed and constructed.
Airports and transportation has been developed so that a rose that is picked today in Ecuador can be in the United States tomorrow ready for delivery. As more focus is and scrutiny is being made on the worker’s safety and exposure to harmful pesticides, the rose worker’s conditions are improving. The advantage of low labour costs still exists even with employees earning more than the average national wage. Many employees have some access to healthcare. Insecticides, herbicides, fungicides, and soil fumigants used n the greenhouses are causing serious health problems for Ecuador’s rose workers, most of whom are women. These chemicals are toxic. As the movement grows for free trade certification with talks of boycott, hopefully conditions for the employees will improve as more farms implement these practices. Question 2: Most Ecuadorian roses are sold in the United States or Europe. Who in these countries benefits from the importation of Ecuadorean roses, and how do they benefit? Who loses? Do you think the benefits outweigh the costs?
Answers 2: United States is the most benefit country from the importation of Ecuadorean roses because all the roses imported will be sold at the premium prices in the shop around the country. Besides, the Ecuadorean roses have been quickly become the Rolls-Royce of roses. Europe country will lose from this importation. Many students will probably argue that indeed the industry has been beneficial to the country. Some students however, may note that in rose-growing cities like Cayambe, populations have swelled significantly putting pressure on the resources within the region.
In addition, environmentalists worry that the industry is now following proper safety precautions with the chemicals it uses. Question 3: How does the rose export industry benefit Ecuador? Do these benefits have any implications for the United States and Europe? Answer 3: Ecuador is now the world’s fourth largest producer of roses. Rose farms in the country support tens of thousands of jobs. Revenues and taxes from the industry have been used to help pave roads, build schools, and construct irrigation systems. Many workers earn more in the industry than they could elsewhere.
Yes, it have environment implications from both of this countries. Question 4: How should developed nations respond to reports of poor working conditions in this industry? Should importers in some way certify Ecuadorean producers, only importing from those who adhere to strict labor and environmental standards? Answer 4: Consumer groups in Europe have pushed for reforms to Ecuador’s environmental regulations for its rose industry. Other groups have encouraged trade sanctions to force Ecuadorian rose growers to be more environmentally responsible.
In response to the suggestions of consumer groups in Europe, some Ecuadorian rose growers have voluntarily joined a program certifying they are responsible growers. Importers in some way certify Ecuadorean producers . As part of the program , the growers must supply workers with appropriate protective gear, train them in the proper use of chemicals, and hire doctors to visit workers on a weekly basis. Most students will recognize that the cost of this type of program will affect the profits of growers, and could lead to layoffs within the industry, higher prices for consumers, or both.