2015 has been a particularly good year for the local orchid industry, with several milestones achieved.
Taiwan’s orchid kingdom bolstered its world-leading position by adding Australia and Brazil as export markets. The nation’s orchids are exported to 36 countries in North America, Northern Europe and South Africa. Local orchid growers hope to bring their beautiful creations to France’s Reunion Island, India, Iran and United Arab Emirates.
In the show’s 11th year, Taiwan orchid exports continued to post record sales. What began with modest exports in the vicinity of US$23 million per year in 2004 has since grown to an annual export value of more than US$130 million.
Taiwan also won its bid to host the 23rd World Orchid Conference in 2020. The triennial event is the equivalent of the Olympic Games of the orchid industry. Taiwan’s awarding of the prestigious event underscores the fact that local orchid growers have earned recognition abroad.
The success of breeding the indigenous phalaenopsis, or moth orchid, species shows that Taiwan agricultural products are marketable and competitive on a global scale. However, the industry’s rise did not come overnight and without a few hiccups.
Eight years ago, phalaenopsis orchids from the Netherlands enjoyed a market boom, and many industry insiders feared at the time that a certain Dutch company could defeat Taiwan as the world’s leading orchid exporter. This year brought another challenge when the U.S. approved imports of phalaenopsis orchids from mainland China in growing media under the same conditions as ones from Taiwan.
Continued challenges have kept Taiwan’s orchid breeders on their toes. Yet the local industry remains in good shape, unfazed by growing global competition. What can Taiwan’s agricultural industry learn from the success of its orchid breeders?
Advanced breeding technologies
In March, buyers and growers from 36 countries and territories toured TIOS in southern Taiwan. Defying the tropical temperatures and high humidity of the greenhouses, the visitors were eager to see the splendor of the latest orchid novelties with their own eyes. This year, the vast outdoor park area featured orchids in red, blue and gold. Paths lined with vibrant orchid displays led to the theme pavilions.
The show’s main theme was the conservation of nature. Indigenous orchid species were presented against the backdrop of different landscapes with water features, mountains and valleys.
Artistic orchid sculptures, displays and special species vied for the attention of the visitors in another exhibition hall. Johan Hermans, chairman of Britain’s Royal Horticultural Society Orchid Committee, was impressed with what he saw. “This event is very important because it is one of the top three orchid expositions in the world.
“I’ve been here five times, and every time I come back, there’s something new. It’s fascinating to see all the different species. It all starts here.”
One buyer from Europe, who was busy searching for the best angle to take pictures of the orchid extravaganza, said, “I’ve got only three hours, but it’s so beautiful that I want to see all the expositions.”
How does Taiwan compare with the Netherlands in the eyes of international buyers and breeders? Andy Doherty, CEO at Pacific Wide (NZ) Ltd., which makes organic growing media under the brand Besgrow, believes that Taiwan and the Netherlands are the two key competitors in the European orchid market. He identifies Taiwan’s strengths as breeding, diversity, new orchid varieties and novelty, all areas in which the Netherlands wants to learn from Taiwan.
On the other hand, Taiwan could pick up a lot from Dutch production technologies, he said, adding that if the growers combined both, the nation’s industry would become even more dynamic.
Ensuring continued innovation
The first stop in the quest for industry innovators is Linluo Township in Pingtung County. John Feng, CEO of local orchid breeder Sogo Team Co. Ltd., said he is of the opinion that overseas buyers generally hail Taiwan’s skills in developing new varieties. However, the country’s growers have travelled a long and arduous road before their business blossomed into the robust and healthy ones of today.
While electronics makers churn out a new generation of products every year, it takes up to a decade to breed a new orchid variety and bring it to market. According to Feng, after a new hybrid has been bred from two different orchid varieties, 300 plants are propagated through tissue culture in a nutrient medium in flasks or test tubes under sterile conditions. It will take one year to 18 months before these young orchids produce flowers.
Following a six-month testing period, during which the plants are evaluated for stable growth and flowering, another pilot batch of 3,000 is propagated over three or four years. Each customer receives 300 samples to test the market for one to two years. Only if the new orchid variety is received well in the target market and the customer is satisfied with the plant’s properties can production in large quantities begin, which takes another two years. Overall, the entire cycle from breeding to mass production takes nearly a decade.
But there is no guarantee the market will accept new orchid varieties. Gesturing toward the myriads of phalaenopsis in his greenhouse, Feng said, “We develop continuously to make international customers notice the diversity and R&D capabilities of new varieties that Taiwan’s orchid breeders offer. But less than 5 percent of varieties make it from testing to real commercialization.”
The goal of these breeding efforts is to release different products to win new markets. Describing customer preferences in Europe, Feng said, “Taiwan’s got it tough. Even if orchids from Taiwan and the Netherlands are the same, European customers will still not pick the Taiwan ones. The country must develop orchids that are clearly better than Dutch offerings just to compete.
“Taiwan must also vie with the Netherlands in the area of orchid varieties, as well as service and global reach.”
The second leg of the trip is the township of Minxiong in Chiayi County in a bid to better understand the division of labor in Taiwan’s agricultural sector and its ability to go global.
Chang Neng-i, chairman of Yu Pin Biological Technology Co. Ltd., heads one of the local outfits leading the charge in this regard. The company was the first to set up greenhouses in the U.S., controlling both ends of the smiling curve—R&D and the market.
In the past, Taiwan exported orchid seedlings to the U.S. where growers cultivated the plants in greenhouse nurseries, forcing them to bloom at the desired time. Only then were they sold in the domestic market. Chang, however, exports potted mature orchid plants that he brings to bloom at his own greenhouses in the U.S. before selling them to customers.
“We make great efforts to sell Taiwan orchids to every corner of the world,” he said. “Reunion Island in the Indian Ocean has a population of just over 800,000 people, but Taiwan is able to ship 10 containers with about 200,000 orchids there per year. Where there are trade opportunities there are people from Taiwan. Phalaenopsis orchids are a highly globalized business.”
To ward off competition, Chang is always coming up with new ideas. His latest brainchild is a 6-centimeter-high flowerpot containing a small orchid just 13.5 centimeters in length. When packaged in a box, the potted orchid meets U.S. courier service companies’ size restrictions for the lowest domestic delivery fee.
This means that these miniature orchids can be delivered directly to the domestic market upon arrival in the U.S. via express courier services. Chang said that phalaenopsis orchids are not yet available in several American cities. He hopes to use pharmacies across the U.S. as a sales channel, selling potted mini orchids for the price of a hamburger.
The continued growth of Taiwan’s orchid industry hinges on exploring foreign markets. Chang currently plans to build greenhouses in the emirate of Dubai in the UAE, and is also getting ready to enter the Indian market.
Why does he want to sell orchids in a desert country? “In Dubai, the wholesale price for an orchid stands at US$1,000,” Chang said. With such lucrative prices, Dubai could become a new business paradise for Taiwan orchids, should it be possible to invest in greenhouses.
Taiwan orchids will probably not just flourish in the desert but also enchant consumers in long-isolated Iran with their beautiful blooms and vibrant colors once trade sanctions are lifted in exchange for a freeze of Iran’s nuclear program. While the world still debates how the resumption of Iranian crude exports will affect oil prices, Sogo has already zeroed in on the country as a new consumer market. At the same time, Chang sees great market potential in Brazil, Columbia and Mexico.
Competition from the Netherlands is not on Chang’s radar at all. “The world is so big, there are so many people … there are opportunities everywhere, and there is no such thing as who destroys whom,” he said.
From competitors to business partners
The third stop on the tour takes in Dalin Township in Chiayi County and I-Hsin Biotechnology Corp. In recent years, I-Hsin has largely exported Taiwan orchid seedlings, young plantlets and seedlings in flasks to European countries such as Denmark, Germany, Italy and the Netherlands.
Surprisingly, the Netherlands counts among I-Hsin’s three major export markets. The Dutch failed to completely eliminate competition from Taiwan orchid growers and even become one of the major markets for some local orchid breeders.
Jian Wei-tso, president of I-Hsin Biotechnology said that Taiwan boasts many orchid varieties, while the Netherlands has market access. Europe is the world’s largest market for orchids, with annual demand reaching 150 million plants.
Dutch orchid marketers are able to offload orchid varieties that do not sell well in Taiwan in great quantities in Europe. I-Hsin capitalized on this strength through an ingenious strategy. “We discussed whether it would be possible to sell the orchid varieties that were not picked by our customers to the Dutch orchid growers. Then Taiwan would take the royalty fees,” Jian said.
Inside I-Hsin’s tissue culture lab, every cultivar has a product number. Over the years, more than 12,000 breeding experiments yielded more than 2,300 phalaenopsis varieties with product numbers, which means they were successfully bred and commercialized for mass production.
Given that it can take a decade to breed a novelty orchid and bring it to market, I-Hsin’s more than 2,000 successful varieties represent many years of painstaking, hard work.
Four crises
Although Taiwan’s orchid exports keep growing, challenges and crises loom on all fronts. After Japan’s multinational imaging and optical company Canon Inc. opened a production plant in the Chiayi Dapumei Intelligent Industrial Park three years ago, a growing number of manufacturing jobs became available in this traditional orchid growing region. As a result, orchid growers in Minxiong and Dalin find it increasingly difficult to find farm workers. Labor shortages have become the major obstacle that stands in the way of further orchid industry growth.
Second, while the cultivated area of the Taiwan Orchid Plantation in Houbi continues to expand, the water supply cannot keep up with demand. For the past three years, the 175-hectare biotech park has faced severe shortages, throwing into doubt the long-term development of Taiwan’s largest orchid production base.
Third, Chen Chia-chung, professor at the Department of Agricultural Machinery Engineering of National Chung Hsing University in Taichung City, found during a recent fact-finding mission to Europe that Taiwan’s orchid growers lag behind in their R&D of European mainstream varieties by three to five years. He warns that by the time local breeders are eventually able to launch mass production of these orchids, market trends might already have taken a different direction.
Chen views this as a serious problem. The Netherlands controls the world’s largest market for potted plants and phalaenopsis orchids. Taiwan can only rely on its large variety of orchids but is not able to control or initiate market trends.
Fourth, Taiwan is playing catch up with the Netherlands, while other competitors are hot on its heels. Mainland China has already obtained permission from the U.S. to export phalaenopsis in growing media such as sphagnum moss. This means that mainland Chinese orchids are competing with Taiwan orchids under the same export conditions.
Although Chang and Jian state that mainland Chinese orchid growers have higher costs than their Taiwan counterparts, and cannot compete with Taiwan when it comes to breeding new varieties, they fear mainland China will unleash cutthroat price competition in the U.S.
“In the past, the Dutch posed the only threat,” Feng said. In order to cope with recurring challenges and relentless competition, Taiwan’s orchid breeders will need a good dose of unshakable optimism.
[by Lu Kuo-chen and Jenny Cheng / tr. by Susanne Ganz]