It is the time of the year to look back and look forward. Over the past year, 2023, we can be sure it was not as good as the coronavirus years, but it was better than we initially expected.
The increase in costs was higher with the rise in income. Costs for energy, transport, and labour especially grew fast. This meant the income of the flower and plant companies was under pressure.
Prices for roses, chrysanthemums, and orchids (such as Phalaenopsis and Cymbidium) were sour. Prices for other crops, such as carnation, were better. In general, potted plant growers had a better result than flower growers, although the bedding plant season this spring wasn’t as good as the previous years.
What were the causes? The costs of living in the biggest consumption markets, Europe and the USA, were higher through inflation, higher energy prices and higher food prices. Consumers had less money to spend on flowers and plants. These are important conclusions for 2023: costs went up drastically, and the spoken demand was under pressure, where the supply grew.
What will 2024 year bring? I cannot predict the future, but specific economic laws, certain economic codes of conduct, and past experiences provide us with something to hold on to.
Over the ages, farmers have realised that many factors from outside make the future insecure. An agricultural entrepreneur accepts that they can hardly control decisive instruments for success. Wars, political measures, weather, climate changes, fires, floods, and plagues can have unexpected influences and harm farmers/ growers enormously. If you think about this more deeply, a farmer can only try to increase his yield, improve the quality of his products, and limit his costs as far as possible. In our case, harvest more flowers/plants per m and improve the quality of your flowers/plants. Yes, of course, he can switch and decide to grow other crops. Not an easy decision. Switching means enormous investments in know-how and adjustments on the farm.
In this column, I make a few remarks about what 2024 can bring in general and specifically for the breeder, the propagator, the grower, the trader, and the retailer (florist and supermarket, including garden centres, DIY outlets, hardware shops) with a green section etc.
In general, we see the age of entrepreneurs rising, but succession needs improvement. In the agricultural industry, we see many family companies. But the kids want to avoid taking over and running a farm. We also see that people move from the country to the cities. Further, we see that the shakeout and chain integrations go on. Fewer companies, and the ones who stay, are getting bigger and bigger. There are players, but the companies’ turnover in the ornamental industry grows — a process we will see more of in 2024. Vertical and horizontal chain integration continues, breeders also propagate, and growers produce consumer-ready products (such as bouquets and plant scales) to sell directly to the retailer. Even growers set up sales systems (digital internet shops) directly to the consumers.
The importance of intellectual property rights will further increase. The importance of patents, breeders’ rights and trademarks will increase. And that brings me to the Crisper-Cas. Finally, many breeders hope that in 2024, the EU will allow Crisper-Cas patents for agricultural crops. This is a very sensitive discussion where opponents point out the danger of these techniques for animals and humans but also fear that Crisper-Cas makes the position of breeders so strong that growers/farmers are completely dependent on them.
Crisper-Cas technology is allowed in the USA, China, and Argentina, and patents are available. Here, we hear the argument of level playing fields. We already have the United Nations Biosafety protocol with rules regarding importing and exporting genetically modified organisms for foodstuffs.
New technologies in 2023 offered opportunities. I cannot judge the influence of AI, but I am sure it will continue to influence the ornamental world. I also expect propagators will continue to invest in robots. Already taking over this tedious job are impressive robots who can plant cuttings in a pot at a speed you hardly can take your eyes off.
Also, on a production level, automation lightens the work. In some potted plant nurseries, nobody comes in the glasshouse; employees sitting on comfortable stools do the work in the barns. Computers handle the right temperature, humidity, and food and water supply. Tools have also been developed for cut flower growers to automate or even robotise labour. Here, we must find a solution to labour shortages.
Transport To limit transport costs, sea transport is an alternative to the more expensive air transport. Probably for carnations, chrysanthemums, and tulips, a realistic alternative for roses, I am less optimistic, although tests are being done.
Trade Chain integration and concentration shakeouts continue. The baby boom generation has had to transfer leadership, and as said, successors are hard to find. Breeders propagate web shops and the internet, allowing companies to sell directly to retail (note retail, in my definition, is a florist and supermarket) or even consumers. The question who makes the final product? Florist, flower arrangers (parties, funerals, weddings) and bouquet/scale makers for supermarket sales.
The number of production and trading companies keeps going down, horizontal- and vertical integration, but the total turnover grows, so fewer companies strengthen their position in two ways and will be bigger than before.
Let me end with a few notes about consumption. Worldwide, the population (except in Arabian and African countries) is ageing. Older people are the consumers of ornamentals. We see the inflation going down to the government-preferred two per cent level in the EU and the USA. We see marketing efforts to have consumers buy year-round flowers and plants not only on Valentine’s Day, Easter, Mother’s Day, All Saints Day, and Christmas holidays.
I hope 2024 will be a successful year for the ornamental industry with rising demand, costs under control, stronger companies and increasing inventions in heating, breeding, propagating, growing and trading.
Happy New Year.
This article was first published in the January 2024 issue of FloraCulture International.
