News » Cover Story

War of the Roses

This is the story of Tim Haleys fight for survival



It might be a clich to say that the flower business is in Tim Haley's blood. But what the heck. The floral trade is rooted in cultural clichs -- a rose by any other name; she loves me, she love's me not; etc.

In the case of Haley, the clich fits. His earliest memories are of hothouse flowers: housed in two sprawling greenhouse complexes his father bought in the 1940's and in which Haley now grows a wide range of flowers, from poinsettias to roses.

"I remember following Carl the Carpenter around the greenhouses; I was like 5 or 6, and I'd fetch him his nails and get him tools that he'd need," Haley recalled, remembering how the craftsman (Anderson was his last name) would amuse his young apprentice by giving him small wood-working projects.

By grade six, Haley would be drawing wages from his father, Charles Tiffany Haley, clipping the spare buds off of carnations or fixing small sticks that helped the carnations produce straight stems.

At the University of Colorado at Boulder, he studied experimental psychology, but before long, he was back in Colorado Springs, helping his father grow carnations, chrysanthemums and roses in two separate greenhouse operations owned by Pikes Peak Greenhouses, Colorado Springs' only major cut-flower grower.

"I've always said that if I was pricked, it would be a carnation grower that bleeds," Haley said, adding that over time, he fell in love with the vibrant fullness of the Colorado carnation. "My first and greatest love is growing carnations."

But whatever runs through Haley's veins, the sad fact is that Haley hasn't grown a carnation in years. Nor has he grown a chrysanthemum, his second love.

And next year, like many other American greenhouse growers in recent years, Haley expects to once and for all leave the rose-growing business, focusing instead on potted plants.

The reason for leaving behind his once-beloved flowers is not the normal list of business pests: environmental restrictions, tightening markets, rising labor costs, corporate takeovers and consolidation in the industry.

Rather, Haley and hundreds of other greenhouse growers across the country essentially became the unintended collateral damage of two of the 1980s most sacred political cows: free trade and the United States government's ill-fated war on drugs.

"Basically, we refer to ourselves as victims of the war on drugs," said Haley. "Almost all of my peers -- people who are fresh-flower growers -- are out of business in part because of it."

What does the war on drugs have to do with Tim Haley and the American flower business? Haley is still trying to grasp the twisted logic. But basically, it goes like this:

In an effort to wean Colombia and other Andean countries from the drug-export economy, the Bush administration tried to promote alternative agricultural exports.

The result was the 1988 Andean Trade Preferences Act, which, among other things, eliminated any tariffs on Colombian and Ecuadoran flowers coming into the United States.

The rationale was simple: Give legitimate industries in Colombia, Peru and Ecuador a break on import tariffs and red tape at the border, and farmers will convert their fields from cocaine, poppies and marijuana to less troublesome flowers and coffee.

The plan was hugely popular in Washington at the time, because no one wanted to oppose a trade plan aimed at stemming drug importation. "Even those who would oppose NAFTA in 1991 were willing to support this bill because of the widespread desire to solve the drug problem," the journal International Business observed in a Dec. 2, 1997, article.

Years later, the flowers-for-coke policy is considered a complete flop even by those who once supported the idea. Though some arable land has been converted from drug to flower production, there is now more cocaine and opium flowing through Colombia to the United States than ever before.

"If the drug problem could have been alleviated, the price paid by our domestic flower industry would have been worth it," California representative Tom Campbell wrote at the time. "Flower-for-cocoa-leaf production has not happened. In fact, the opposite has occurred, and more hectares are being cultivated for cocaine than before the ATPA."

One of those who voted for ATPA, but then had second thoughts, Campbell is now one of several lawmakers leading a drive to lift some of the region's trade preferences. To date, those efforts have all failed.

In the meantime, the sweetheart trade deal was a huge shot in the arm for Andean flower growers, whose imports blossomed after the deal went through -- from 2 percent of the domestic market in 1970 to roughly 70 percent in 1998.

In 1996, total exports of fresh-cut flowers surpassed $500 million. Of Colombia's half billion dollars in flower exports, 85 percent goes through Miami for distribution to United States supermarkets and flower shops. Two out of every three flowers sold in the United States are now from Colombia, according to industry sources.

Meanwhile, the trade policy was the nail in the coffin for the homegrown American cut-flower trade. At the time of its implementation, the industry's carnation growers were already dropping like flies from the effects of new and growing overseas competition. ATPA just accelerated the trend.

According to the Floral Trade Commission, the industry has lost 10 percent of its growers each year for the last five years.

This year, the number of U.S. flower growers fell to 694, some 135 fewer than the previous year as the wholesale value of domestic flowers fell 11 percent, according to the FTC. Twenty years ago, there were no less than 2,000 flower growers -- mostly concentrated in Colorado and California.

While many American flower wholesalers and importers say domestic growers blame too many of their woes on Colombian imports, there's no doubt that for the growers, the trade pact was salt on a very fresh wound.

For more than a decade, American flower growers had been fighting a series of cases before the U.S. International Trade Council and the International Trade Association, in which the domestic growers were generally successful in proving that their South American peers were illegally dumping flowers at below-cost in U.S. markets.

"Rose growers throughout the United States are in a state of crisis," Haley told the U.S. International Trade Commission in January of 1995. "Unable to sell roses at prices which recover costs, let alone provide a markup for investment and profit, [the situation] has weakened us all to the point that we must be concerned about our very survival."

"We are being forced out of roses," he continued. "Pikes Peak [Greenhouses] now has about 160,000 square feet of rose greenhouse with 84,000 plants. Compare this to 1992, when we had 300,000 square feet with 170,000 plants. Our production has dropped from 4.7 million stems to 1.7 million stems."

That was five years ago. Now, the greenhouses where Haley grows roses, on the corners of Columbia Avenue and North Corona Street, are being sold, under contract to a local group that hopes to create co-housing community (See Independent, September 1999).

But while the ITC agreed with Haley and his peers in many of its rulings, the ITC also found that while Colombia and Ecuador were, in fact, dumping roses in American markets, domestic rose growers were not harmed by the unfair competition.

That's because, while Colombians continued to dramatically expand their market share, those gains were made largely via new retail markets -- mainly in mega-retail outlets like K-Mart and Wal-Mart, the ITC judges reasoned.

In the end, the American growers were only able to convince trade judges to impose a 4 percent punitive duty on Colombian and Ecuadoran flower importers. (Since the duties are company-specific, the 4 percent figure is an average.)

Then president of the Floral Trade Council, a national group established solely to fight the dumping issue, it was Haley who led the case against the Colombian and Ecuadorian importers with considerable help of a Washington trade lawyer named Eugene Stewart.

"Tim was definitely at the forefront," said Will Carlson, director of the Michigan-based FTC. "He has been the leading voice."

Though it was a victory, the 4 percent tariff was not seen as substantial by U.S. growers. American flower growers had wanted a far greater punitive tariff, since the ITA had found that Colombian growers were dumping flowers at anywhere from 25 to 75 percent below the cost of production.

Even importers of Colombian flowers now say the 4 percent tariff did little to diminish overseas price competition. "The duty itself would have never slowed the flowers coming in," said Robert Wilkins, president of Delaware Wholesale Florists, one of the firms accused of importing the Colombian flowers at below the cost of production. "A 2.5 to 6 percent duty was not enough to cause an economic difference; it would have had to be 20 to 30 percent to equalize the pricing."

Prior to the Andean Trade Preferences Act, Colombian importers were already subject to an 8 percent general tariff on all flowers imported to the United States. The tax applied to all countries not given a special trade preference.

But with the trade pact, a single unanimous Senate vote reduced the 8 percent tariff to zero, pulling the carpet out from under 10 years of legal wrangling by lawyers and rulings by trade judges.

"Basically, we had one government agency trying to protect the U.S. growers with punitive duties, and the other side of the government was saying we need to promote the growing of flowers or crops of that type in Colombia," noted Wilkins.

"It's ironic, isn't it?"

American Duty

To growers, it was simply unfair. The treaty left growers exactly where they started: with high trade barriers on their products in key export markets such as Europe and Japan, and no protection at all from products coming into the U.S. market.

To the FTC's Carlson, American growers are at a disadvantage, because many countries that import flowers to the United States don't have the same costs as U.S. growers.

"Congress has passed stringent environmental and worker-safety laws on domestic growers, and that's fine and wonderful," Carlson said. "But what that's been doing is driving production overseas, where you don't have the same kind of worker protections and so forth. There might be laws there on the books, but they may not be enforced.

"So U.S. growers are being pinched. And I'm sorry, but drugs have gone up, and flower imports have gone up, and we're the ones left paying the bill."

Now, because of a technicality in global trade law that "sunsets" trade and tariff rulings after a certain period of time, even the 4 percent punitive tariff will be phased out next year.

Rather than once again spending thousands to file new lawsuits in trade courts, and with no guarantee of a return on that investment, Haley and other industry leaders decided to take a different tack.

They forged a compromise with South American importers.

Though details of the settlement are confidential, industry magazines have reported that South American importers will spend roughly $4 million over the next three years to promote flower sales in the U.S. consumer market.

Some are skeptical that it will do much good for U.S. growers, since it's still possible that Colombian and Ecuadorian growers will capture the lion's share of any growth in the market.

But it's better than fighting a new, exhausting and expensive round of legal battles, said the Floral Trade Council's Carlson. "With trade cases, even if commerce does find that harm was done, they can put price pressure from that point on," he said. "But it's not like tort law, where if you're harmed, you get compensation for your injury. Even if we win the suit, Treasury gets the duties. The mom-and-pop growers don't really get much out of it."

It was those mom-and-pop operations, which still make up much of the industry, that were hardest hit by the competition. Like Haley, carnations and chrysanthemums were more than just a business for those growers, says the FTC's Carlson. "Growing flowers is a way of life for these folks," said Carlson.

Those small, family operations didn't have the resources to continue fighting legal cases, so they're hoping the settlement might at least lead to better business for all flower suppliers, Carlson said.

"At least they'll be contributing to growing the market," said Haley. "In the past, we built up the U.S. market. They just used it."

Meanwhile, there are still some rose growers hanging on even in Colorado. However, most flower growers are surviving largely by diversifying into other products that overseas firms can't easily compete against.

It was a hard call to make, but Haley said there wasn't much choice. "Me and a bunch of other flower growers have gotten ourselves out of the flower business to be in the plant-growing business, poinsettias and bedding plants and things like that," Haley said.

The weight and bulk associated with bedded plants makes them too costly for overseas growers to ship to, and distribute in the United States. Meanwhile, Haley's family business has met the rising competition by diversifying into wholesale and retail businesses.

Haley's brother, Charles, now runs Flower Stop Marketing, a flower retailer and distributor on Union Boulevard and Templeton Gap Road. While Pikes Peak Greenhouses has no walk-up retail business of its own, it did begin offering direct, overnight sales of roses via a toll-free number (800 LD-ROSES).

But even as growers became "vertically integrated" with their own retail and wholesale operations, it has become increasingly difficult to compete. "This is basically a bunch of guys who never asked for a cent from the U.S. government in terms of agricultural price supports or anything, and they've been rewarded for that by being legislated out of business," said the FTC's Carlson.

The Andean Connection

Ironically, it was boxes of fresh-cut flowers that once served as one of the Colombian drug industry's key means of cocaine importation to the United States.

Improved X-ray detection equipment has largely put an end to that, according to numerous published reports, and today, the flower business in South America is seen as a key way of elevating depressed economies and workers from Third World conditions.

"Today, the livelihood of 50,000 Ecuadorians, a majority of whom are indigenous women, depends solely on the rose industry," Edgar Teran, the Ecuadorian ambassador, told ITC judges in 1995.

But flower production was not new to the Andes when President George Bush pushed ATPA through Congress in 1988. The industry had already made significant inroads into U.S. markets, importing roughly $30 million in roses a year by 1980.

Because Colombia had already been developing a range of good-quality, affordable flowers since the 1970s, many in the flower industry are skeptical of the growers' complaints of unfair trade practices.

To flower importers such as New Jersey's Robert Wilkins, the Colombian farmers that he buys from made it big not through unfair pricing, but by being smart enough to recognize the inherent suitability of their climate for growing high-quality flowers.

"In the case of Colombian and Ecuadorian farmers, they were very good businesses people," Wilkins said. "They have some of the best management minds in the world. Many were educated in the U.S. or England and had different businesses already in Colombia."

One of the farms from which Wilkins first purchased flowers, for example, was already importing everything from aircraft to navigation systems and road-grading machinery before starting one of the country's first flower farms.

"They had the business sense to recognize that Colombia had one of the best growing climates in the world," Wilkins said. "They have a topsoil layer that goes down farther than 20 feet in some places. And the light and temperature are perfect. Flowers prefer equal days and equal nights, and in Colombia, near the equator, the greatest difference between night and day is eight minutes."

The fact that international airports were nearby meant those flowers were readily available to U.S. florists. At the same time, those growers were innovative in terms of what they grew and how they grew it, Ambassador Teran asserted.

"Ecuadoran producers specialize in varieties of roses, such as the renowned Madame Del Bard, and in unusual and distinct colors, including orange, black, brown and zebras," he stated.

"Ecuadoran roses typically have longer, thicker stems; deeper, more intense color; and larger blooms than do roses grown in the United States."

Many U.S. growers take strong issue with statements like that, arguing that it's American growers who built up the image of flowers such as roses and carnations through innovative breeding and growing.

But they would likely agree with the ambassador's assertion that South America's flowers are cheaper, because labor is cheaper in the Andes than in Colorado or California.

And they concede that operating costs are lower, because Colombia and Ecuador's yearround mild weather means that growers there don't have to spend money heating large greenhouses.

But none of that, argued Wilkins, makes a case for illegal dumping.

"Is it dumping just because they're selling at less than the production cost for a U.S. grower?" asked Wilkins. "It's a commodities business, like the vegetable business. Many times when you go to the grocery store, you'll see vegetables and fruit selling below the cost of production."

Because flowers are perishable, Colombians often do as farmers anywhere would if crops are ready, but the markets are poor; they cut their losses. "No farmer wants to get below-cost pricing, but if the product is there for picking, they're going to pick it, bring to market and hope to see what they get," Wilkins said.

The ITC erred in imposing punitive duties, he added, because they looked at random cases of individual shipments that were sold below cost. "If they had taken a yearly average of prices and a yearly average of costs, they wouldn't have found dumping," he said.

Wilkins said he sympathizes with U.S. growers. But he suggested they are not the victims of unfair trade but, rather, the inevitable collateral damage of the new global economy.

"Is it fair that big grocery stores are taking over the corner pharmacy? Just because China can ship computer cords into the U.S. and sell them cheaper than U.S. manufacturers can make them here, is that dumping?"

A thorny problem

But growers such as Haley say they're not upset just because Colombia and Ecuador can grow flowers more cheaply than they can. What has really hurt the industry, they said, is that flower importers based in Miami have routinely sold flowers for next to nothing simply to get their investment out of Colombian pesos and into U.S. dollars.

"It didn't matter if they made any money on the flowers, they just wanted to get their money out of the country," Haley charged

This assertion is hotly disputed by advocates for Colombian growers. They say their equatorial suppliers got into the business because of their unique climate, not because they're unethical business people.

But whatever the motives of South American growers, the U.S. greenhouse farmers were able to win several dumping cases before the Department of Commerce's International Trade Administration in the 1980s and 1990s. And they were even able to convince the free-trade-oriented International Trade Commission that dumping of carnations and chrysanthemums had occurred.

But in many rulings on the impact of dumping of roses, the ITC also found that the dumping had little effect on American growers. "In these kind of trade cases, you have to prove there was harm, and for political purposes, they tended to minimize the damage," Haley said.

For example, Haley said, the ITC tended to lump all flower growers together, and because particular segments were doing well, the court ruled that the industry was still healthy.

But Haley said the ITC's decisions were also flawed for other reasons. For one thing, the commission didn't consider the fact that South American flowers are almost entirely focused on the U.S. market, both because of the non-existent tariffs and their relative proximity to Miami, a key distribution hub for South American flowers.

"It's probably normal that Colombia and Ecuador should be in this business because of their climate, but we were hurt, because everything they produced came to the U.S., because it was precluded from going to Europe and Japan [because of trade barriers]," Haley said.

And while the ITC sided with importers, agreeing that Americans were buying roses based on their quality not price, American growers note that it's wholesalers and buyers for major retail chains who decide what consumers see. Those wholesalers are incredibly sensitive to price, because they're buying in bulk.

In many ways, the experience of American flower growers could be a textbook case for what some see as the pitfalls of global trade -- the reason thousands of people marched on Seattle's meeting of the World Trade Organization last week.

In the name of cheap consumer prices and free trade, member countries such as the United States pay little attention to the potential downsides of liberal trade policies.

For Haley, it came as a shock to learn that not only did legislators pooh-pooh his concerns, but that U.S. trade representatives had virtually no interest in the health of the U.S. flower market.

"Boy, were we nave," Haley said. "Our federal government has zero interest in protecting [the] local grower, which maybe isn't a bad thing in a perfect world. But when every other country in the world is promoting their domestic industry and protecting them, it is a horribly bad position to be in."

A rose is not a rose

Ultimately, Haley argued, consumers will lose out if the American cut-flower producers continue to opt out. While free-trade advocates argue that cheap imports are helping consumers by offering them the lowest possible prices on decent-quality flowers, Haley said they're losing quality and freshness.

"They don't last as long in the vase because they've spent longer on the plane getting here," Haley contended. "When you go buy flowers today, the odds are that, unless you happen to know that they are locally grown in Colorado or California, they are probably 5 days old, because they came from Bogota."

So while wholesalers and retailers may do OK because they can sell more imported flowers at better prices, the consumer doesn't get the kind of quality that used to be standard in the industry, according to Haley.

Many florists and wholesalers dispute this claim, noting that the difference in shipping time is often not that great, given that many domestic flowers grown in California also come a long way to reach consumers on the East Coast.

The danger to Haley is that imports might diminish what shoppers expect from a fresh bouquet: that they, in fact, are fresh, that they will continue to bloom, and that they will be worth the money spent.

It was an issue that Haley's father, Charles, put before the ITC in one of the first rose-dumping cases in 1988. "Long continued price promotions of the sale of imported roses has produced a marketing focus by wholesalers and retailers on price before quality," he said.

And if rose growers continue to go out of business, then there's a danger that they'll also lose the kind of industry infrastructure and consumer support needed to produce the best varieties of U.S. roses, stems like the once-popular Cara Mia rose, which has gone virtually extinct since the Carlton Rose Company succumbed to foreign competition.

That was exactly what was lost in the U.S. carnation industry when growers began going under, Haley said. "We lost our infrastructure. The American Carnation Society was no longer doing the research, it was no longer a healthy organization where we could meet and cross-pollinate ideas -- things that all benefited the consumer."

Similarly, the breeding and selection programs that kept the carnation industry healthy fell apart. "It got to the point where I could not buy carnation stock to grow in Colorado, because the only selection work left was being done in low-lying coastal areas of California," Haley said.

The good news, Haley said, is that some U.S. rose growers are hanging on by finding innovative ways to grow, market and ship roses. The real task at hand may be even more challenging -- educating American consumers that there's a difference between fresh, locally grown flowers and imports; to teach them, in other words and to twist another timeworn clich, that a rose is not a rose is not a rose.

Add a comment

Clicky Quantcast