‘It would be much too risky to continue our activities in Ethiopia’

2016 has been a very tough year for Esmeralda Farms. Last June, Peter Ullrich, founder and driving force behind one of the largest floricultural companies in the world, passed away. In August, their farm in Ethiopia was attacked by rebels. Present owner Clarisse Ullrich decided subsequently that Esmeralda would cease their activities in Africa. And the office in Aalsmeer, the Netherlands, was shut down as well. In the beginning of December, Clarisse Ullrich tells us her story. “What would you do? We lost millions in Ethiopia. Would you invest another couple million to repair the damage, knowing that the same thing might happen again? Probably not!”

By Arie-Frans Middelburg

“When I heard that our Ethiopian farm had been attacked, I responded exactly like my husband would have done. Make sure everyone is safe.”

For many years, Clarisse Ullrich supported her husband Peter Ullrich with his business and since he passed away, she’s taken over the leadership of what might be the largest flower company in the world: Esmeralda Farms. She had only assumed her new position for two months, when Esmeralda’s farm in Ethiopia was raided by rebels. Following the events, Clarisse Ullrich was faced with having to make hard decisions.

This meant that Esmeralda’s African adventure, which had started a year and a half earlier, was over. They had initially started supplying their European customers (through Esmeralda’s Dutch branch in Aalsmeer) gypsophila and spray roses from Ethiopia, because it was cheaper than from Latin America. But this strategy was suddenly abandoned last September after several Ethiopian flower companies, including Esmeralda, had become a target of tribal fights, despite the fact that Ethiopia had been such a stable place for floricultural companies before.

Completely destroyed
Esmeralda’s departure from Ethiopia was questioned in the media. How bad was the situation, really? Had the farm been totally destroyed, like employees in the Netherlands claimed? Or was the damage not as severe and could cultivation continue as normal without too much effort, like the Ethiopian Horticulture Producer Exporters Association (EHPEA) suggested? And those 10 million dollars of investments that had gone up in smoke? Had Esmeralda really invested such a large amount of money in Ethiopia? And why did they have to close down the office in Aalsmeer as well?

The image painted by the media was inaccurate from Mrs. Ullrich’s perspective so she was happy to give us an interview and clarify their side of the story.

Why did Esmeralda leave Ethiopia?
“The Ethiopian government suggested that our farm wasn’t damaged too badly and that we could continue our activities without too many problems. But we have absolutely no assurance that this isn’t going to happen again. And there isn’t anyone who will give us that guarantee either. There’s a good chance that if we invested another couple of million in the restoration of the farm, that we would lose that money as well. Furthermore, we can no longer guarantee our employees in Ethiopia a safe work environment. And on the 2nd of September, we received a letter from the Solidarity Movement for a New Ethiopia. It said that the land in Bahir Dar, that we were leasing from the government, didn’t actually belong to the government. The land had been confiscated from the original owners by the government during the communist revolution. The land was never returned to its rightful owners and they wanted us to know. In the end, we felt that we had been deceived into leasing what sounded like a land grab and caught in the middle of a war over it.

Was the farm really totally destroyed?
“I’ve seen many pictures and videos of the farm, taken after the attack by the rebels. Restoring the farm would require a substantial amount of money and time to reorganize the employees. The fact that a packing house isn’t totally destroyed, doesn’t mean that it can be repaired and operations resumed immediately. Regarding our initial investments, they did really amount to 10 million dollars. We put down 2 million ourselves, the remaining 8 million was financed. Many people are unaware of what it takes to get a farm up and running, but we invested heavily in irrigation and infrastructure. Support from the government came by way of leasing the land.”

They say that Ethiopia is quite safe now yet a state of emergency was declared and nurseries are now guarded by the military… “There you go. Nurseries are guarded. Who can guarantee that things will be better in six months time? Would you invest a few million dollars to repair the damage, knowing that the same thing might happen again? Probably not!”

Are you sure you won’t ever return to Ethiopia?
“I’ve spoken with many growers at trade shows that are also in Ethiopia and they all share my opinion…It’s a gamble. Especially after that letter from the Solidarity Movement, it would be much too risky to continue our activities in Ethiopia.”

One of the stories is that you already planned to sell the farm in Ethiopia?
”If it was generating profits I’m unsure what anyone would gain by saying that.”

Why was the office in Aalsmeer closed down as well?
“Because most of the products sold through that office came from Africa. If the branch in the Netherlands no longer received its production, it’s overhead became too expensive to keep it running.”

Wouldn’t it have been an option to sell Esmeralda’s Latin American production to European customers through the office in Aalsmeer, just like before your time in Africa?
“Yes, we could have but at a significant loss. No one would shut down a profitable office. This was purely a business decision. You don’t make these decisions for personal reasons. The operations cost in Aalsmeer was disproportioned to its revenues. The overhead was much too high to remain profitable.”

Is Esmeralda Farms in its entirety a profitable company?
“Gladly we’re doing well, but after my husband passed away, I concurred with financial counsel that we couldn’t remain that way with the segments of our company that was generating losses. The focus now is reinforcing our strengths and terminating any vulnerabilities.
Supplying the European market from Latin America isn’t cheap either, is it?
“True. Both the production costs and the logistical costs are a bit higher than in Africa. Customers have commented on the increase of cost which we deeply regret but it’s caused by circumstances that are out of our control.” We went out on a proverbial limb trying to provide a better option.

Aren’t you afraid of losing customers?
“Everyone in business is. But more than afraid, it bothers me. Nobody wants to disappoint their customers. We appreciate our customers and value the loyalty they place in our products. This is why we are committed to working really hard in maintaining the relationships we’ve built with them through the years. The circumstances have changed, but we will continue to deliver excellent products suppling them farm direct from South America. At the moment, we’re very much focused on the United States and Europe. But I’m eager to explore other markets too, like China and Russia. Territories that we haven’t really tapped yet.”

Esmeralda reopened a farm in Ecuador, so that they can continue to produce enough flowers for the European market. Is Ecuador the most favorable country for production?
“Depends how you look at it. Balance the production costs against the political situation in a country. The production costs in Ecuador are higher than in Ethiopia, but it’s much safer and stable. From this perspective its a far sounder place to make an investment.”

Esmeralda is also active in Colombia. Why didn’t you expand over there?
“Colombia is doing very well. The production in our farms there is very high and the quality is excellent. But the costs are more or less the same as Ecuador. The advantages or disadvantages are distinctly marked by fluctuations in tax rates, monetary exchange and employment cost. It seems that they take turns when it comes to favorability.

It must have been a very tough year for Esmeralda Farms?
“An extremely tough year. But it was sown to be strong by an amazing man. Our company boasts a powerhouse of employees, who love what they do and who are really committed to its success. This attitude is reflected in the quality of our flowers. He left us with all the ingredients to not only to survive, but come back even stronger. I have always supported my husband and through his legacy, I always will. Peter was Esmeralda Farms’ heartbeat and that will never change. He was a gift to all that knew him and invested much of himself in his employees. He would expect nothing less than for all of us to flourish.”