Virus wilts Sh900b global flower trade
By Bloomberg | April 20th 2020
When Meredith Dean pictured her May wedding, she imagined her guests walking through a meadow of wildflowers.
The bridesmaids would carry bouquets, the groomsmen would wear boutonnieres, and a circle of flowers would surround Dean and her beau as they exchanged vows.
A wall of flowers would serve as a backdrop for photos. Vases of buds would run down the centre of long dining tables in a barn in New York’s Catskills. Still, more flowers would hang above the dance floor.
Dean had chosen the date so spring blooms would be at their peak: bright yellow daffodils, fragrant purple hyacinth, puffy peonies, hydrangea, and, of course, roses. She hadn’t set a budget yet, leaving it to her floral designer to decide how many stems to order. “It would be a lot,” she says.
As reports of US Covid-19 cases mounted in early March, Dean, a 29-year-old who works in development at the Museum of Modern Art in Manhattan, checked the news obsessively.
When authorities cautioned against holding events for more than 250 guests, her colleagues told her not to worry—the wedding was still months off. And then on March 15, the Centres for Disease Control and Prevention said Americans should avoid gathering in groups larger than 50 for the next eight weeks.
Dean’s wedding was seven weeks away, and she was expecting about 100 guests. There wasn’t much for her and her fiancé, David Bradley, a research scientist for a pharmaceutical company, to discuss. Neither of them would put friends and family at risk. The next day, her first working from home in New Jersey, Dean called her wedding planners and told them she wanted to postpone the celebration.
She was calm on the call, but when she hung up, she sobbed. “I’m not ashamed of having feelings,” she says.
A delayed wedding is hardly a disaster during a pandemic that’s killing thousands of people a day, as Dean is quick to note.
But in greenhouses from the highlands of Ecuador and Colombia to the shores of Kenya’s Lake Naivasha, growers were already stacking roses in compost heaps. Within days of the lockdown orders in the US and Europe, as events were cancelled, restaurants closed, and offices emptied, demand for stems evaporated.
The crash of the $8.5 billion (Sh901 billion) global trade in cut flowers shows how quickly and distinctively the new coronavirus is disrupting supply chains, even in places where it isn’t yet pervasive. After only a few weeks of quarantine, Vermont farmers are dumping milk in manure pits because of cancelled orders from schools. Crops are withering in Europe as closed borders prevent migrant farmworkers from harvesting them.
American chicken wing prices cratered before what’s normally a March Madness-driven boom.
In India, farmers are unloading ripening grapes at one-sixth the usual price. It’s an open question whether, when consumers start spending again, their former suppliers will still be around to sell to them.
One of the first people Dean texted after she postponed her wedding was her floral designer, Laura Clare, who works from the first floor of a quaint grey building with white trim in Bernardsville, NJ Clare, who’s been in business for 20 years, sells bouquets during the week, and on weekends she designs elaborate arrangements for big events. Her wedding clients typically spend from $5,000 (Sh530,000) to $10,000 (Sh1.06 million). Dean was one of the first brides to contact Clare after the CDC recommendation. Within a few days, all Clare’s clients planning April weddings were scrambling to pick dates in the fall. She had to tell brides that some flowers, such as cherry blossoms, might not be available then.
Soon, as the number of Covid-19 cases in New Jersey passed 1,000, the governor ordered all but essential businesses to close. Florists didn’t make the cut.
With her supply wilting, Clare started giving bouquets away, delivering some to older parishioners at a local church. She furloughed her five full-time employees and cancelled her flower orders, which usually total at least $5,000 (Sh530,000) a week. She’s applying for a Small Business Administration loan that would let her put her workers back on the payroll.
“I’ve been through 9/11,” Clare says. “I’ve been through Hurricane Irene, Hurricane Sandy. I’ve never seen anything like this before.”
Flowers are usually ordered about two weeks in advance, so Clare hadn’t yet placed orders with her wholesaler in New Jersey for Dean’s wedding. But she’d been planning to request some hard-to-find blossoms from an auction in the Netherlands.
More than 40 per cent of the world’s flower exports pass through that country’s auction houses.
The flower trade is a miracle of modern capitalism. A chain of cold storage starts with stems being picked in places as far-flung as Africa, the Middle East, and South America, then packed into refrigerated trucks, driven to refrigerated planes, and flown to Amsterdam to be auctioned off. They’re then repacked into more cold trucks and planes and delivered to supermarkets, florists, and bridal bouquets across Asia, Europe, and the US.
The auctions are run by a cooperative, Royal FloraHolland, formed a century ago by a group of growers who met in a pub and devised a system to better control how their flowers were sold.
Royal FloraHolland now runs four auction sites that handle the bulk of the global trade.
Its facility in Aalsmeer, a concrete warehouse larger than 75 soccer fields, is one of the biggest buildings in Europe. Each day before sunrise, workers fill it with truckloads of chrysanthemums, roses, and tulips. Buyers assemble in rooms filled with computer screens, where photos of each lot are displayed. Clare’s order likely would have gone from her wholesaler to a broker here. The blooms are sold under the traditional Dutch auction system, in which prices start high then tick lower as a clock counts down.
The first buyer to pounce wins. As the lots are bought, electric tractors pull long trains of wagons loaded with blooms from one side of the warehouse to the other. The average day sees more than 100,000 transactions. Most of the flowers end up elsewhere in Europe, in under 12 hours.
Spring is usually a busy season, with weddings, Mother’s Day, and Easter. And in the early days of March, even as the Netherlands was reporting its first coronavirus infections, the auctions went off as usual. But after Italy imposed a national lockdown, France ordered nonessential stores to close, and Germany called for the cancellation of most events, the market collapsed.
March 16, the same day Dean postponed her wedding, was the “blackest day” at the auctions, says Fred van Tol international sales manager at Royal FloraHolland. Growers were calling him in a panic. “Those are difficult phone calls,” he says.
“Their life work is about to implode.” Rose prices dropped to €0.07 (8¢) a stem that day, down 70 per cent from their price a year earlier. Traders struggled to make any deals. At the Naaldwijk auction site, outside The Hague, workers tossed cartful after cartful of wrapped bouquets and potted houseplants on the floor so small tractors could scoop them into dumpsters. The auction house could stabilise prices only by capping supply at 30 per cent of last year’s level.
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