The Economic Impact of Underperformance Operation of Flower Investment Projects: The Case of Suryablossom Flower Industry

Abstract

flower investment in Kenya as well as in Ethiopia. The company ranks as one of the largest investors in the agricultural sectors especially on the floricultural investments. Karuturi has leased more than 300,000 hectare of land in Ethiopia, about one-tenth of the total amount of land that the government has made available to domestic and foreign investors. The Surya blossom flower industry was established by Karuturi global, it started its operation by leasing 376 hectare of the land and registered 531,150,000ETB capitals. This study aimed to analyze the economic impact of under performance operation in Suryablossoms (Karuturi) flower industry on the surrounding community. In the study, the researcher used descriptive analysis and simple random sampling technique. The primary data are taken from the residents of that area with direct interview of 90 farmers who leave their land due to this investment project.On the basis of the findings, when the agricultural products forgone are valued in monetary unit the study used 700 ETB and 950 ETB average prices of Teff and peanut per Quintal respectively for the past six years. Depending on this average prices, if we consider both scenarios of agricultural product (Teff and Peanut), 811,043,512ETB are forgone for the past six years due to the establishment of Suryablossom flower industry. During 2007, 2008, 2009, 2010 the export forgone per weak due to under performance operation of this flower industry is 20,439,685.71ETB,19,715,376.12ETB,19,074,445.29ETB and 18,687,455.49ETB respectively. But after 2012 the Suryablossom flower industry stopped the export of cut flower. As a result the country has forgone 21,311,699.7 ETB per week for the past two years, which can be summed up to 2,067,234,871 ETB. It is therefore recommended that there should be close follow up and monitoring performance of the operator and guarantee for the government that cut flower industry operates as expected. In addition, it should transfer the land back to the previous farmers of the land and provide appropriate economic compensation during the transfer.