Ethiopia's central bank has set a threshold price for the exports of fresh-cut flowers to the dismay of the companies and their managers, who warn that higher floor prices could imperil competitiveness in the global market. These companies have already been up in arms about the central bank's revision of forex retention rules earlier this year.

The National Bank of Ethiopia (NBE) issued a new directive effective on April 1, 2022, which imposes a price regime for highland roses to bring no less than 4.2 dollars a kilogramme, around 0.6 dollars higher than the previous prices set two years ago. Lowland roses saw similar increases, while floor prices for a kilo of summer flowers have jumped by almost a dollar. Despite the varieties, average prices for roses in the first two months of this fiscal year registered at 3.74 dollars a kilo, data the Ethiopian Customs Commission showed. However, the last quarter of 2021 brought 2.4 dollars more.

Mekonnen Solomon, director of horticulture export support at the Ministry of Agriculture, contends that growing global demand for fresh-cut flowers has outstripped supply, pushing prices up.

"There's good reason to revise as the previous floor price set by the National Bank does not reflect the current prices in different market arrangements," he told Fortune.

The market arrangements he refers to are auctions and direct sales.

A group of experts from the central bank, the Customs Commission and the Revenues Ministry carried out a study to determine the new rates in October last year. Conducted after seven years, the study uncovered that average prices offered by flower growers had exceeded the floor prices set by the authorities. The 72 flower farms in operation (64 foreign-owned) participate in these arrangements, bringing forex accounting for 11.4pc of the country's export earnings, making them the second-largest flower producers and exporters in Africa after neighbouring Kenya. Export revenues registered at 264.4 million dollars over the first half of the year.

The growers were displeased with the findings when briefed a few weeks ago. But the industry was surprised when the directive landed with no heads up to the industry leaders.

Tewodros Zewdie heads the Ethiopian Horticulture Producer Exporters Association (EHPEA), an industry lobby group advocating the interests of growers. He was dispirited, for there were no consultations before the directive was issued. Industry leaders have been in touch with the authorities and requested "extensive discussions be held," according to Tewodros.

"We expect it to happen in the coming week," he told Fortune.

Growers want to appeal to the authorities that the revised prices will make it more difficult for them to find markets. It is particularly difficult for auction-based transactions, says a manager of a flower farm who requested anonymity.

The primary destination for auction-based sales is the Netherlands, which bought 294 million dollars worth of flowers last year. A little over 60pc of the flowers Ethiopia sells to the world go to the auctions in the Netherlands. Companies taking part in the auctions ship off flowers for grading. The process may push prices down below the threshold. However, as the flowers have already been shipped, growers would be forced to deposit the balance to the central bank based on the floor price.

The seasonality of the flower market is also an issue. Prices fall during off-seasons, such as periods after Christmas, Valentine's Day, and Mother's Day, the three moments of peak time.