Leading Danish kalanchoe nursery Knud Jepsen was looking for a good way to outsource the cutting production. After exploring possibilities in Turkey the idea changed from outsourcing to investment in a joint venture in order to take advantage of the developing local pot plant market. For the Turkish partner Agrico the cooperation opens up a rapidly developing market and export possibilities.
High labour costs in Denmark decrease competitiveness in an international pot plant market. Especially the production of cuttings is very labour intensive. Knud Jepsen A/S, world’s largest producer of kalanchoe, therefore moves parts of the production to low wage countries.
“Initially we just looked for a supplier of cuttings. In our quest we found that Western Turkey has advantageous labour conditions, although not the lowest costs, combined with good weather conditions and moreover a developing pot plant market. There are also logistic advantages: because of the good infrastructure we can supply nearly every destination in Europe with young plants on cc containers in five days”, says Lars Korup, chief operational officer of Queen Tarim. “This combination changed the perspective from outsourcing to cooperation with a local partner, producing both cuttings and pot plants. Such cooperation may look like sharing your profit with a stranger but in return it is easier to develop the company in an unknown environment and steer in an unfamiliar market.”
Fast growing economy
The partner in the joint venture is Agrico, originally a trading company with activities like import of machinery and equipment for the agricultural market, especially young plant nurseries. In 2009 they started producing young vegetables plants in greenhouses themselves. After the establishment of the joint venture with Knud Jepsen all the former activities were ended. “For us the joint venture is an interesting way to enter a rapidly developing market and gain export possibilities, like supplying other breeders”, says Sinan Pulat, general director.
Turkey’s economy has grown fast over the last 14 years: GDP increased on average 5.7% per year, slowing down to 3% nowadays. As a result of the growing wealth people buy more and more ornamentals.
Many different varieties
At the time the joint venture has 6 ha greenhouses (glass and plastic) in Dikili (Izmir region) with expansion opportunities to 25 ha. The company produces both young plants and finished pot plants; the turnover is divided equally between the two branches. The cuttings and young plants are shipped to growers worldwide. The pot plants are sold merely in Turkey.
Pulat: “For the time being our pot plant market is Turkey, because the ever-growing market consumes our capacity, but of course we want to diversify our market as much as possible, and become a pot plant exporting company as well. Our main customers are wholesalers, but we also supply garden centres and small flower shops.”
In order to meet market demands production is diverse: except kalanchoe in many different varieties the company produces pot roses, pot chrysanthemum, campanula, hibiscus, schlumbergera and echeveria.
A striking innovative product is the cut flower kalanchoe. “They set a stunning new standard for longevity in the cut flower category as they keep their fresh bright appearance just as long as our potted varieties. Queen CutFlowers (as the brand is named) have a guaranteed vase life of at least three weeks, and often they live longer. The customer doesn’t have to change the water in the vase because it remains clear and odourless”, says Ebru Akgün Özdemir, responsible for marketing and branding. Other innovations include new potted roses and chrysanthemums in a range of bright colours.
The focal point is always longevity: “In our breeding all our rose varieties are focused on drought resistance. Therefore they can handle with less water than the traditional roses. Also they have a high ethylene resistance. During transportation, in shops and living rooms ornamentals are always exposed to ethylene, which causes aging of the product”, says Korup.
Another innovation concerns the constant search for new echeveria cultivars. They are sold as cuttings and exported without roots in cardboard boxes to distant markets like Australia and the USA.
All pot plants for the Turkish market are sold under the brand Queen. Even the name of the joint venture is Queen Tarim.
“The Queen brand implies beautiful long lasting flowers in a broad range of colours,” says Özdemir. The history of the company goes back to 1939 and already in the sixties Jepsen started growing kalanchoe, constantly developing ever since. In Denmark Jepsen uses the brand for het wide assortment of kalanchoe, from the classic four-petalled originals to the romantic rose flowers and the latest line Queen Green, each with their own characteristics.
“The joint venture has expanded the use of the brand to the whole range of pot plants. Our goal is to make the brand famous among the Turkish consumers as a guarantee for high quality pot and balcony plants,” she says. “All our products are distinctive because of their long life, due to genetic properties like the already mentioned ethylene resistance, and the way we grow them. The longevity reduces in-store waste, which is very attractive for our buyers.”
One of the company’s values is trust-based relationships with all the partners in the chain. Queen supports the marketing of the partners with eye-catching packaging and displays for finished plants.
Another value is sustainability. “We do our best to minimize impact on the environment and optimize work conditions for our employees. Focus points are: minimizing our energy consumption, optimizing processes and further developing integrated pest management”, says Pulat.
The nursery is using coal as the main heating source. “Due to heavy tax and availability problems we cannot utilize other heating resources for the time being. But our coal burner is state-of-the-art technology so emissions are kept minimal. We also pay attention to use coal with low sulphur content,” he says. The company is now investigating possibilities to store excess heath in the summer for use during the winter. In the near future also investments in renewable energy resources are planned.
All the irrigation needs are met by rainwater, collected in three basins. “In this way we minimize our burden on the local water supplies. Moreover rainwater is best suited for our plants, because it’s free of sodium and chloride.”
The third aspect of sustainability is integrated pest management: “We use biological methods to combat pests and plant diseases and contribute to a pleasant working environment for our employees. This is both an environmental and a rational choice, as kalanchoe do not tolerate most pesticides. Good hygiene and cleaning up help prevent the spread of diseases.”
Queen Tarim aims to become market leader in Turkey and neighbouring countries for pot plants and preferred cutting supplier for world’s most important breeders. Pulat: “As long as we can produce high quality products for reasonable prices and act accordingly to our motto ‘Quality on time’ we will achieve our expanding goals. We should keep our production as flexible as possible to fit the market demands. This doesn’t mean that we will be driven by customer’s demands only: we have to be able to create new trends in the pot plant market in the target countries.”
Also the other branch of the company, the cuttings and young plants, is focused on growth. The director sees interesting matching opportunities as his company can be both supplier and customer for the breeders: “We are able to produce cuttings for them for competitive prices; thanks to the low labour costs and logistic advantages of Turkey. And by producing pot plants – out of the cuttings – we create royalty income for our customers. That means we also become a customer for our customer. It is a known fact that protection of breeder’s rights is not easy in this region, but due to the transparent knowledge flow between the breeder and our nursery there is a 100% control on the royalty fees. Thus we are an attractive platform for breeders to reach the fast growing markets in Turkey and neighbouring countries.”
Denmark based Knud Jepsen and the Turkish company Agrico formed the joint venture Queen Tarim, which produces both cuttings and pot plants in the region Izmir. Pot plant market in Turkey is growing fast and the company aims at expansion of the current 6 ha, thus becoming market leader for pot plants and preferred supplier of cuttings for breeders. Sustainability is an important issue.
Text: Tijs Kierkels. Photos: Queen Tarim and Tijs Kierkels