| The global floriculture business is booming, but the Netherlands is having to dig deep to safeguard its pre-eminence. Boyd Farrow reports The floriculture industry is currently midway through its busiest quarter: bulbs are being planted, delivery mechanisms tweaked and marketing campaigns buffed as growers prepare for Christmas, then Valentine’s Day, then – the most lucrative of all – Mother’s Day. But while the trade relies on these consumerist displays of affection as much as ever, a battle is intensifying for the very heart of the business. For half a millennium this heart has beaten in the Netherlands, the world’s biggest flora exporter. According to the agency Bloemenbureau Holland, the country accounted for 52% of all flowers sold globally in 2006. To put this in context, the second-largest exporter was Columbia with an 11% market share, followed by Ecuador and Kenya with around 5% each. Up to 30% of all Dutch flora exports are actually repackaged exotica from East Africa, the Middle East and South America, however; they are rerouted through the Netherlands, which boasts centuries of trading expertise and transport links to Germany, France and the UK. Around 60% of the global flower trade passes through Dutch flower auctions. The largest, Bloemenveiling Aalsmeer, draws more than 5,400 growers daily and takes place in the world’s largest commercial building. Floriculture is worth around €5bn a year to the Dutch economy. The Product Board for Horticulture says the country’s flower exports were worth €6.28bn in 2006, with cut flowers accounting for €3.2bn and potted and garden plants making up €1.8bn. In the horticultural industry, it is not only the export of plant-based products that is an important earner; a further €2.5bn is raked in by breeding companies, producers, tissue culture companies, traders and the like. The high-tech greenhouse construction and logistics industries account for more than €1bn. Not only has the focus of flower production gradually shifted to the shadows of the Andes and lush slithers of east Africa, areas that offer unrivalled cultivation conditions and cheap labour; globalisation and soaring energy costs are also starting to gnaw away at the Netherlands’ dominance of the industry. For instance, China has been investing billions of yuan in a bid to become the world’s second-biggest flower producer and exporter within 15 years, having started exporting cheap roses to the US last November, according to the Flower Association, a government agency. Five hundred new types of rose will be unveiled for the 2008 Olympic Games. In January Bangalore opened its International Flower Auction Centre, with others planned for Mumbai and Kolkata as India’s flower export market is on course to exceed $1bn (€710m) by 2010. According to Bloemenbureau Holland, Dutch cut flower exports were worth €3.23bn in 2006, up a mere 2.9% from €3.14bn in 2005 after annual growth of 4% for the past three years. Dutch firms supplied 3.8% fewer cut flowers to the auctions in 2006, according to the auction body Vereniging van Bloemenveilingen in Nederland, while imported supplies decreased by 2%. Bloemenveiling Aalsmeer and the world’s second-biggest flower auctioneer, FloraHolland, have just given the green light to merge in a bid to tackle the “international developments” that threaten their supremacy. The merged company, which will control 30% of the European market, will begin trading on 1 January, 2008. The biggest threat to Dutch flower power comes from a most unlikely place, however: the desert. July, 2006 saw the opening of the €50m state-bankrolled Dubai Flower Centre, which is capable of handling 180,000 tonnes of perishable goods annually and which has already attracted scores of international shippers and wholesalers. Whereas an established market made Amsterdam a trading hub for foreign flowers, the tax-free emirate aims to triumph by undercutting the costs of shipping to this hub and then back out to retailers. By channelling African and Asian produce through Dubai, which is increasingly well connected to the global markets, time and money can be lopped off the chain linking producers to consumers. Dubai is certainly poised to exploit the Indian flora export market and has been enthusiastically schmoozing Latin American countries keen to expand their business into the booming flower industries of the Middle East, Asia – Thailand alone grows more than 1,000 species of orchids – and Russia. The latter market has seen a fivefold increase in Dutch imports since 2004. Ecuador is desperate to expand its market base due to a delay in signing the free trade agreement with the US. Even less likely producers are muscling in. In August, for example, Iran announced that the country’s flower production should double by next March (the current Iranian calendar year started on 21 March), largely due to construction of a new flower export terminal, Mostafavi, in Tehran Province. In the first five months of 2007, over 1.2 billion flower stalks were produced in Iran, 2.5 million of which have been exported to neighbouring states like Tajikistan and Turkmenistan. In a bid to promote Iran’s flower exports, flower producers will soon be sent to the Netherlands, Germany, France and Columbia to learn about packaging and industrial production. While Iran’s president, Mahmoud Ahmadinejad, is unlikely to exchange bouquets with Israel premier Ehud Olmert any time soon, Israel is the region’s flower-producing superpower. Its flower, plant and propagation-material exports bring upward of $200m into the economy annually. The country is third only to the Netherlands and Kenya in supplying the EU with flowers. Each year 1.5 billion stems are exported, twice as many as only 10 years ago. Designed initially as a transportation centre, Dubai eventually intends to open a flower auction but is reluctant to discuss a timescale. Bloemenbureau Holland spokesperson Hermine Warringa says: “We don’t know how much business Dubai will take from us – it is too soon to tell.” Quint Wilken, who runs the Dutch operation of German shipping giant Cool Chain Group, says: “If the Dubai Centre is successful as a handling depot, it will be a big blow to the Netherlands. If it also becomes an auction house, that will be a disaster.” Paul van den Brink, marketing director at Schiphol Area Development Company, reckons that Dubai is only two years from being able to compete with the Netherlands in terms of expertise and suggests that Dutch knowledge is being directly tapped. So what is the Dutch flora industry doing to safeguard the pre-eminence of a sector that the Netherlands government banks on being worth €7.5bn annually by 2014? Well, for starters, an extra 450 hectares surrounding Schiphol is being developed for perishable goods processing operations that will exploit both air and high-speed rail transport links. “Whether the flowers are grown in Africa or in Europe, distribution to the consumer market is still a key factor,” explains van den Brink. Further afield, Dutch producers and auction houses are investing in production and handling agencies in Africa and Israel, while Latin America is in the pipeline. Closer to home, far more cost-saving innovations are coming to the fore. Most significantly, flowers are getting noticeably greener (if you’ll excuse the pun). Not only does the Dutch floricultural sector plan to be totally independent of fossil fuels by 2020, the sector might even become a sustainable energy supplier. Between 1980 and 2003 the Dutch greenhouse cultivation sector successfully halved energy consumption per product unit by applying energy-saving technology, while at the same time achieving a rise in yield per m2. In 2010 savings should have reached 65%, a figure agreed by the government and the sector in 1997. Under a five-point programme implemented by the Ministry of Agriculture, Nature Management and Food Quality, solar energy, geothermal energy, biofuels, other low-energy fuels and improved utilisation of sunlight are being implemented. The programme is also counting on “normal” energy-saving measures, sustainable electricity and sustainable CO2. Already more than 10% of domestic electricity consumed in the Netherlands is supplied by horticulturalists with cogeneration plants. This involves a gas engine that efficiently converts natural gas into heat and electricity, and the growers either use the energy themselves or supply it to third parties. Since September 2006 some 400 greenhouse growers in the western Netherlands have been using the surplus of CO2 from a Shell refinery that was formerly emitted into the atmosphere. The growers save 95 million m3 of natural gas a year, and annual emissions of CO2 have been reduced by 170,000 tonnes. Meanwhile, the first energy-producing greenhouse, opened in May 2006 by Hydro Huisman in Bergerden, eastern Netherlands, harvests solar energy that can be stored underground and used to heat the greenhouses in winter. The same principle is being applied by orchid grower Van der Hoorn, which has created the country’s first “greenhouse without gas”. Hydro Huisman chief executive Stef Huisman says: “Over the last two or three years, saving costs in production has become very important to producers – it gives them an edge – but also, consumers have become more interested in environmental concerns. It is very important for the Dutch industry to get this message across.” The Dutch are also leading the world in the development of new flower breeds that can be protected with rigorously enforced copyright legislation, even if they are grown abroad. For example, small roses now come mainly from east Africa – the world’s largest rose grower, Sher, is in Kenya, but Europe produces more new rose varieties, grown under glass. The Dutch are counting on the flower trade paying a higher price for premium varieties. This means flower breeders must cooperate closely with the blooming Dutch biotech industry. According to Henk van Oosten of Stichting Innovatie Glastuinbouw, the organisation for innovative greenhouse horticulture, the fact that floriculture is a free market keeps entrepreneurs on their toes. “Their creed is to innovate faster than the competition,” he explains. “This makes entrepreneurs very market-driven and highly sensitive to trends and developments in the fields of design, fashion, emotion, feeling, beauty and surprises. They are able to respond extremely quickly.” By way of an example, last year a research team in Wageningen developed a series of combinations of Asiatic and Oriental types of lily that is hardier for transport and has longer vase life. Within the field of plant breeding and biotechnology, there is a wealth of new public and private collaborations. For example, the Technological Top Institute Green Genetics four-year programme was launched this year with a budget of €40m, co-financed by the industry, research organisations and the government. While those concerned with the scheme are cagey about divulging too many details, all parties scent high returns. EB |