It seems that the production branch needs to exist before initialising git-flow.

May I suggest then that this just be documented?

In particular, in the help section "Initialising a repository for Git Flow / Hg Flow" it states:

Git Flow initialisation

On initialising, Git Flow will ensure that the production branch (e.g. 'master') and the development branch (e.g. 'develop') already exist, or it will create them.