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“We appreciate your flowers!!!” Netherlanders often accept such a grateful sentence from people even as Pope said so in his New Year message. Cut flower, or fresh flower, refers to blooms that are cut from their stems and made as corsages, wreaths and other special flower arrangements for different occasions, such as weddings, birthdays, and other festivities. Not only that, cut flower can also be used as additives in perfume processing or for other purposes.

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The cut flower industry has been one of the leading industries in Netherlands for over hundreds of years. Traced back to 1634-1637, the Dutch tulip mania always appears as the most-quoted case of speculative excess, even becoming a jargon for a speculative mania. Since the mid-1970s, the production and distribution of cut flowers in Netherlands have grown at an incredibly speed.

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Today, up to 50% of cut flowers come from Netherlands; over 35 trillions of flowers and 3.7 billions of plants are traded in the biggest market in Aalsmeer, Netherlands; 6 millions of stems are planted in Keukenhof including the hugest tulip farm, where are approximately 3,000 different breeds of tulip. Moreover, the flower industry supports a total of 100,000 full time jobs related in Netherlands.

In 2000, the total market of cut flower was up to $7.66 billion while the international trade is characterized by a high degree of concentration by product and sources. Roses, carnations, and chrysanthemums are the main traded products, which make up close to 50% of the world cut flower trade, Germany is the biggest single market for imports, and the Netherlands is the world’s leading exporter.

More specifically, this market can be divided into four types. First of all, those are self-sufficient markets, such as Japan, 95% of its demand is satisfied by local producers. Furthermore, China and India are also two of them, as purchasing power of these two nations is too low for sizeable imports to take place and quality of their domestic products is too low for sizeable exports to develop. Secondly, there are countries which have sizeable markets satisfied by imports. Germany is the typical example with 70% of total domestic demand supplied by import products.

The third type of countries is opposite of the second. This group of countries includes Kenya and Colombia, which have very small domestic markets and export nearly all of their production abroad. Something needed to be concerned here is that exports of cut flowers in those countries are growing at a very rapid speed. Last, there is a group of countries with a large home market and a large export share at the simultaneously. Netherlands is the best example here. The annual consumption per capita in Netherlands reaches 150 flowers which is far more than that, 80 flowers, in France.

Among international trades, only top-quality flowers are able to be sold abroad. Quality can be discussed into several dimensions. First of all, flowers should be free from plagues and diseases and undamaged. Through visual inspection, this is able to be judged more easily. In addition, when being cut, flowers should be correctly handled since this determines that their vase life and whether or not the buds will open or not. From this point, it’s difficult to make a judgment. Therefore, it makes a lot of sense that reputation of suppliers and producers is the most important factor for buyers to decide whose flowers are worthy to buy.

Due to Netherlands’ overwhelming market share, market prices of cut flowers are basically determined by its auction markets. There are four types of price trend which can be observed. First, average annual prices have been to some extent declining in the last decade, but impact of profits has been attenuated through growth in productivity. Second, there is an obvious seasonal price pattern existing. Prices go highest in winter and lowest in summer. Third, prices differ considerably by quality, which means vase life and opening of buds. Last, large price gaps exist between new and bulk products. New and special flowers can be priced extremely high. For instance, the price of “Rising Sun” is seven-fold of price of “Royal Dutch”, which are both roses.

 

As the world leading exporter of cut flowers, Netherlands is also one of the largest single markets in world. The annual consumption per capita in Netherlands reaches 150 flowers which is far more than that, 80 flowers, in France. Though domestic consumers are less demanding, they play a very important role in the consumption of lower quality and surplus production to support the industry. Strong and sophisticated demand from other European countries As a member of EU, Dutch flowers can flow freely without tariffs in most wealthy markets within Europe. German, followed by France and UK, is the largest export market to Netherlands which accounts for 43% of total exports. However, they are the most demanding markets as well since for a long time they have been supplied by high-quality flowers from Netherlands. Thus, the standard is set very highly, and consumers in those markets are spoiled already.

Due to consumers’ growing concerns about the way flowers and plants were being produced, in 1995 Dutch floricultural sector created the MPS foundation to measure growers’ production procedures. Participating growers are ranked by three environmental levels, A, which is the best, B, and C, on a basis of energy consumption, insecticides and fertilizer usage, and waste disposal. In addition, a Geneva-based independent organization, C SGS Agrocontrol, checks on a regular basis whether the growers are recording the data as required and make sure the MPS logo is used according to related regulations.

The auction houses constitute a critical part of the trading process. There are seven flower auctions, owned by cooperatives of growers, in Netherlands dealing with thousands of buyers and growers everyday, and the two largest are in Aalsmeer and Naaldwijk. Auction houses not only gather buyers and growers together, but also carry out a well-designed procedure of trading and logistics of flowers. From farms to retailing points, all flowers are stored in uniform carts regulated by auction houses to let transportation easier and faster.

In the auction hall, the famous “Dutch auction” method, which is considered more favorable to growers since prices are started from high to low, is used to efficiently make deals done because Dutch auction method reduces haggling and related problems. An average of a thousand transactions can be made per hour. In addition, auctions are also in charge of mediating and settling all buyer-grower disputes. Thus, many foreign growers even transport their flowers to Netherlands auctions for sale in order to make presence in front of thousands of buyers and obtain good deals.

In short, auctions in Netherlands are price setters of world cut flowers trade which means they have gained world competitive advantage in this field. Glasshouse industry Agriculture in Netherlands is characterized by intensive glasshouse systems, and glass houses in Netherlands are characterized by intensive industrial facilities. The long term development of glasshouse technology has been continuously improved since the end of World War I. Many highly automatic facilities, such as irrigation, heating, and lighting, are all integrated into glasshouse production to reduce labor costs, which account for 35% of total flower production costs in Netherlands. Through glasshouses, those industrial technologies successfully endow with Netherlands agriculture merits of economy of scales.

There are numerous companies offering different technologies used in glasshouses in Netherlands. More specifically, around 7 to 8 glasshouse construction companies have international exporting ability to serve foreign customers, especially those in developing countries. So far, Netherlands companies have 80% of total commercial glasshouse market. Also, the glasshouse area they build in Netherlands is up to 1.1 billion square meters, which account for one fourth of total glasshouse area in world.

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Kylie Garcia

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