The International Association of Horticultural Producers (AIPH) recognises that many governments have announced financial support packages for businesses in their country. However, some governments do not understand the specific threats facing ornamental horticultural producers.
In response, AIPH has prepared a document explaining the impact that the current crisis is having on production businesses in the sector.
The current situation for ornamental horticulture producers during COVID-19 pandemic
Sales have ceased due to the following reasons:
• Closure of many retail outlets
• Consumers are focusing on essential purchases only
• Closure of borders or reduction of available flights for flowers
• Landscape and construction projects put on hold
Retailers still open are focused on food products, and some have stopped sales of ornamental horticulture products. Some online and delivery sales are continuing, but this represents a small market share for these typical impulse purchase products. For flowers, the sales windows have passed, and crops must now be disposed of on-site. Growers of flowers and seasonal plants must decide whether to risk planting/sowing the next batch and unsold stock reduces space available for subsequent planned crops.
Consequences for producers without financial support
- Urgent cash flow crisis
Revenue has dropped to almost nothing during a period when most profit is usually earned (Spring in the northern hemisphere) and when the return on investment is expected. This pause leaves no money to pay staff and re-invest in crop maintenance and new crops.
- Stock wastage
Considerable volumes of stock are rapidly becoming unsaleable due to perishability or missing sales windows. This stock will have to be written-off. This action will reduce the stock valuation on company balance sheets making many businesses insolvent within weeks.
Typically, businesses in this sector run on narrow profit margins. Without support, a significant proportion of these businesses are likely to go out of business during 2020.
Financial Support Required
Ornamental horticulture producers urgently require the following financial assistance to remain in business:
• Grant funding to support the cost of staff (including those who cannot work and those maintaining crops) during the crisis.
• Grant funding to support the cost of stock, which will be written-off.
• Grant and/or liquidity assistance for the additional costs of managing stock for longer periods than normal.
Commenting on the situation AIPH Secretary General, Tim Briercliffe said “It is critical that governments act now to financially support ornamental horticulture producers. These are not like manufacturing businesses where production can be paused and re-started later with only staff costs to cover. The perishability and timing of plant and flower products make this sector particularly vulnerable and requiring significant additional help. The industry supports the need for measures to control COVID-19 but for it to survive then urgent financial support is required.”