Flowers returning to Power
It has been a rough ride for many exporters over the past several years and cut flower exports have certainly not been an exception to this. However the outlook according to a number of sources may be brighter. In addition some New Zealand businesses recognising the costs and logistical challenges of exporting ‘ready for market’ product, have concentrated instead on exporting variety rights to new and exciting plant material, making royalties on the varieties developed as long as that variety continues to sell well in the offshore markets involved.
Reports from the Northern Hemisphere indicate that the primary European markets are showing good growth and recovery, in particular England, Germany and Eastern Europe while Greece Spain and Portugal continue to be effected by the financial crisis. Eurostat data indicates a rise in EU Cut Flower imports in the first half of 2012 compared to the same period in 2011. Some trends impacting the EU markets are increasing direct selling to European Retail Buyers by international suppliers of cut flowers, increased internet sourcing at wholesale and the feeling is that with more sophistication of on-line logistics and management this area will continue to grow. Markets of key significance for New Zealand have been more Japan and the USA, both needless to say have been hit hard economically in recent times and these two export destinations account for 80% of New Zealand’s cut flower exports, whereas the EU takes 7% currently.
The following information is an extract from the NZTE website putting some context to the recent market volatility. Income from exports of cut flowers dropped by 10% over the past two years to $37 million, Flower Exporters Association chairman David Ballard says the global market is already showing signs of improvement with growth expected this year.
“As a discretionary spend, flowers were hit at the luxury end of the market,” Ballard said.
“Prices were down rather than volumes – all perishable prices are highly volatile, reflecting the short-term supply and demand balance, so what is put on the market must be sold quickly.
“January to April last year was the worst time for us although we were shielded by a low New Zealand dollar until it recovered faster than the markets, making most of the year very difficult.”
Ballard, managing director of Auckland exporter NZ Bloom, said New Zealand was an off-season provider of high-value flowers for Northern Hemisphere markets.
It could not compete against the general range including roses, chrysanthemums and carnations produced in countries such as Columbia, Ecuador and Kenya, which paid low wages in a labour-intensive industry.
New Zealand’s biggest market for 20 years had been Japan, which at one stage took 80 percent of flower exports.
Volumes fell to 45 percent in the past 10 years but recovered to 55 percent as other markets slowed in the economic downturn.
The US is the second-biggest customer with around 25 percent followed by Europe at 7 percent and many smaller markets including Canada, Asia, the Middle East and the Pacific islands.
Ballard said New Zealand has around 450 export growers ranging from small hobbyists to large enterprises of several million dollars turnover.
Cymbidium orchids, grown in the temperate climate north of the Bay of Plenty, make up about half of cut flower exports, while calla lilies, hydrangeas and peonies are also in strong demand.
“And it is critical for us to be plugged into the global supply of new flower varieties,” Ballard said.
“They are being bred all over the world as well as here so we must have access to those coming in and New Zealand product going out – a two-way flow is very important.”
New Zealand is particularly well placed to take new varieties to the world, and one company, Bloomz, is leading the charge.
Tauranga-based Bloomz managing director Andy Warren says New Zealand exporters have stayed with the disciplines they are good at – innovation, research and breeding new types of bulbs for export while retaining IP and maintaining royalty streams.
“New Zealanders are very entrepreneurial, always looking for something new and that has been applied to floriculture,” Warren said.
High-tech breeders have created new and exciting high-end quality flowers and shrub varieties for offshore growers to cultivate and sell under the licence-royalty arrangement.
Specialist New Zealand breeders offer new patented flower and ornamental varieties to overseas growers who are licensed to propagate them, mainly for the cut-flower and garden hobbyist markets.
A percentage of revenues generated by the bulbs is remitted to New Zealand for as long as sales continue.
Advantages of the export licensing system include avoiding high freight costs and allowing bulbs to acclimatise and reach flowering stage at their destinations to produce better results.
Plant stock has traditionally been exported to major Northern Hemisphere markets such as the Americas, Europe and Japan and Warren said exports of New Zealand-bred varieties were now going into Kenya, Colombia, Chile and Ecuador and beginning to countries such as China, India and Brazil.
The most popular types include the zantedeschia calla lily family, cordylines ornamental cabbage trees and phormium New Zealand flax.
“And we are developing new varieties for cut flower and pot-plant buyers through high-end niches in our existing markets,” he said.
“We are getting out there with new high-value flowers – commercially viable product - which makes money for the growers.
“NZTE has spent a huge amount of time assisting with commercialisation of our material and opening new markets.
“With NZTE’s assistance we expect good steady growth and in the next three to five years we will see substantial New Zealand influence in those high-end market niches.”
NZTE’s Bay of Plenty Regional Manager Lionel Crawley said the relatively small company had become a real expert in what it did.
“It is a very sophisticated and exciting international business,” Crawley said, “and is one of the world’s top four zantedeschia breeders.
“Bloomz persevered through the downturn, strengthened opportunities and is now very well positioned as Northern Hemisphere demand for cut flowers returns.”
Source: NZTE http://www.nzte.govt.nz/features-commentary/Features/Our-economy/Pages/High-value-floriculture-exports.aspx?pageId=0
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