What do you get when you combine a sunny mountain with thousands of workers who earn $300 a month?
200 million roses.
A Rose Supply Chain
Our story begins with the U.S. government. Hoping to disrupt Colombia’s cocaine cartel, in 1991, they said no more import taxes on flowers from Colombia, Peru, Ecuador
You can see why U.S. rose production fell right after the ATPA (Andean Trade Preference Act):
And it kept falling:
Meanwhile, we have a supply side with thousands of pickers in the mountains near Bogotá. Their job is to do a
And that’s it. They are ready to go anywhere in the U.S.
One likely destination? Walmart buys 24 million Colombian roses.
Our Bottom Line: Comparative Advantage
Our rose story connects Adam Smith, David Ricardo, the U.S.
As Ricardo might have explained, Colombia was able to grow roses at a lower opportunity cost than the United States. Combined with a supply chain that facilitated “distant sale,” Colombia could optimize its comparative advantage as a rose grower.
My sources and more: Thanks to the Washington Post for its wonderfully detailed article on the rose supply chain. Then, if you want more, do look here at the environmental benefits of not using local growers. And finally, for a fast statistical read, the National Retail Federation has all you could want to know
Please note that a similar version of Our Bottom Line was previously published at
Ideal for the classroom, econlife.com reflects Elaine Schwartz’s work as a teacher and a writer. As a teacher at the Kent Place School in Summit, NJ, she’s been an Endowed Chair in Economics and chaired the history department. She’s developed curricula, was a featured teacher in the Annenberg/CPB video project “The Economics Classroom,” and has written several books including Econ 101 ½ (Avon Books/Harper Collins). You can get econlife on a daily basis! Head to econlife.