Economics of the Valentine's Day Rose

by: Mark J. Perry

Americans will buy almost 200 million roses for Valentine's Day, and almost all of them will come from South America, mostly from Colombia.

There is simply no better place to be a rose than in a valley near Bogota, Colombia. Near the equator, the valley gets constant sunlight year round. It is 8,500 feet above sea level, so the nights are cool and humid and the days are warm and dry. Flowers can be grown year-round because the area has constant 12-hour periods of daylight and temperatures averaging 57 degrees. In addition, Bogotá is just a three-hour flight to the United States.

To develop and strengthen legal industries and help these nations fight drug production and trafficking, Washington has allowed flowers and thousands of other products from Colombia, Ecuador, Peru and Bolivia to enter the U.S. duty-free since 1991. But for all the bustle and fuss of the peak season, growers in Colombia say they are being squeezed.

Prices for flowers remain flat. The falling value of the U.S. dollar has turned profits into losses. Several farms have closed, laying off thousands of employees. And a trade deal that would give Colombian flowers permanent duty-free entry into the United States may be rejected by the U.S. Congress.

Part of the problem is heavy reliance on the United States, where nearly six of every 10 flowers sold are imported from Colombia. Amid an economic slowdown, the U.S. dollar has lost more than one-third of its value against the Colombian peso (see chart above).

Read related stories here, here and here.

See a video of a Colombian rose farm.

See a video of a Minnesota rose farm.