The end of 2018 is nearing, so it's time to look back. How was the year for cut roses? We checked in with some growers from the main rose producing countries: Ecuador, Colombia, Kenya, Ethiopia and India to review the year. All in all, 2018 seems to have been a challenging year with unusual weather, volatile market and auction prices and exchange rates playing a key role.
Let's start with the largest rose producing country in the world, Ecuador. Weather, logistics and market demands made 2018 a challenging year for many Ecuadorian rose growers. However, the preserved and dyed roses seem to have been getting good results this year.
"Weather affecting production"
Unusual weather affected production, particularly in summer. "A strange and long summer with some very unusual cold weeks resulted in the production being very variable", says Sebastian Padula of Josarflor, who grows roses in Cayambe. Santiago Luzuriaga, General Director of BellaRosa and Rose Connection, also mentions the weather as a main challenge this year. "We had atypical weather conditions that couldn’t be forecasted that affected production for several months, which resulted in a lower quantity of exports." Earlier this month, they presented 16 years of rainfall data (recorded at their BellaRosa farm in Tabacundo) in which November 2018 emerged as one of the rainiest November's over the tracking period.
But in most of the structure of the business it has been challenging. "Also for the sales, the behavior of the market was very variable, and the logistics (limited space on airlines) have increased the problems this year", says Padula.
Russia is an important market for many Ecuadorian growers, and when looking at this market, it has been an interesting year as well. Josarflor's Padula, for whom Russia is an important market: “Until May, the demand has been stable, and then from June till August it has been very bad as demand dropped a lot. Then the demand increased a bit and August was okay, partly due to the first day of school for the Russian children - which is an important day for the flower industry. We've had good demand, but unfortunately we did not have that many flowers. It was a challenge to fulfill the orders, which was a pity.”
According to Sebastian, the Russian market demand is a bit more stable now, but the devaluation of the ruble against the dollar made it challenging. “Customers at the FlowersExpo, held in September, have been asking for lower prices. At the beginning of the year, it was still 62 ruble against 1 dollar, while at the show, it was 68 ruble against one dollar.”
When BellaRosa and Rose Connection analyze their target markets and compare 2018 with 2017, they see the biggest growth in Asia. "The Asian market had a growth of 24%, the European and Russian market remained constant and the American market had an increase of 6%."
Good results for preserved and dyed roses
Products that did very well this year were the preserved and dyed roses, Luzuriaga tells us. "In preserved roses we tripled our exports compared to 2017. In dyed roses we had an increase of 20% of our exports compared to 2017. And in fresh roses we maintained the volume of our exports. This was the outcome of the market structure that we planned and executed in the current year."
"All in all, in our case, this year was more challenging than 2017, but for 2019, we project better results", says Padula. Luzuriaga also has good hopes for 2019. "2019 seems like a year with stable markets, shaped by the competition and growth of companies positioned in the global flower industry. We see the participation of new companies, which generates a scenario where companies that have a unique position will have a high probability of having a good year."
The year has been a challenging one for Colombian growers as well.
“Huge efforts to get green numbers”
Talking to Jorge Ortega of Matina Flowers, who grows roses in Bogota, to review 2018, he says the following: "Let’s say numbers were a little better than 2017, but the effort to make this happen was huge, every year we have to make more efforts in order to get green numbers due to the constant challenges in the global market, like logistics, weather, market prices. But overall, we are very satisfied with the results.”
At the start of the year, the weather seemed to be a little atypical for that time of the year and decreased the production at some farms. "Normally in Colombia we have a lot of sun and is now a little cold and cloudy", Liliana Rodriguez, Agricola Circasia and Vuelven, who grows roses in the North of Bogota told us about a week in advance of Valentine's Day 2018.
Better holiday sales
So, what went well? According to Ortega, sales were better in the high-demand seasons like Valentine's Day, Mother’s Day and so on. "We managed to get all the productions for each specific holiday on time, so all the product was successfully sold at the estimated prices. Achieving this has a very positive effect on the customers' behavior in low-demand seasons, giving you purchase priority over the other companies that compete in the same niche."
Logistics in 2019
The name of the game in 2019 will be logistics. "This part of the chain is becoming very complicated, with freights going up, and there is very limited space in the planes. In turn, it is making the high-demand seasons a nightmare for our customers. And at the end it ends up affecting the markets."
All in all, Ortega found 2018 an educational year for the company. "We have learned a lot from some situations, and it will help us to improve even more next year. As I always say, if it were easy it would not be flowers."
Also in Kenya, things have been challenging in 2018. It started out actually quite well in the run-up to Valentine's Day, but introduction of calculating freight costs of volumetric weight, followed by a hot summer in Europe, a long rainy season and the fertilizer shortage since October made it challenging. "It was a tough year for the agriculture business as a whole in Kenya", says Ravi Patel of Subati Group who grows roses in Northern Kenya on the slopes of the Great Rift Valley.
High demand for Valentine's Day
"Partly due to the cold weather in Ethiopia, we have been extremely busy in the run-up to Valentine's Day", Jan Renting of Optimal Connection, a Dutch unpacking company for Kenyan and Israeli farms told us a day in advance of this holiday. "However, also Colombian growers have had cold days, which also resulted in a decrease in production. In Kenya, in contrast, the weather was good and the numbers and quality therefore too."
“In early June it started off with the introduction of volumetric weight for freight instead of weight by kilos, which is much more expensive, particularly for the high altitude farms that supply the big-headed roses", Sachin Appachu of Bliss Flora told us. In previous years, during low season freight charges were reduced to cater for the low seasons, but this year it was the same high freight prices all year round. That was biting the cherry twice.”
Hot summer in Europe
The hot summer in Europe resulted in low demand. Rose grower Ivan Freeman of Uhuru Flowers, who grows roses on the northern slopes of Mount Kenya, told us in July that he could feel the heat in the export figures. "In the rest of the world, the sales are okay, only in Europe, the sales are down", he said. Also at the auction, they felt the heat. "There was no demand", says Aart Buizer of Fresco Flowers, a packaging company for Kenyan and Ethiopian farms based at the FloraHolland auction. "Fortunately, we had good Mother's Day sales, he says.
Early and long rainy season
"Highly variable and unpredictable weather conditions throughout the year made it difficult to prepare the fields for harvest and time the high seasons accordingly", says Patel.
The rainy season for example, started off too early and lasted too long. "It already started in March instead of April," Paul Wekesa of Panocal, who grows roses just outside the town of Kitale, informed us in March. As a result, the production volumes decreased.
In September, the cold period with cloudy days took longer than usual. It delayed the crop, Florence Didy of Harvest Flowers Kenya told us earlier this year. "Usually the cold period runs until mid-July or the beginning of August, but we did not expect to still have it in September. Due to the lack of sunlight, the cut points remain dormant for quite long and the overall sprouting and growth of the crop is very slow, hence the low production being experienced."
Also Subati's production was affected by the weather. "We struggled more than anything else due to excess rainfall on farms and this led to low sales in 2018."
Since October, the high prices of fertilizers also started to play a major role in this challenging situation. The prices have been very high as a result of new and stringent measures on local inspection of all fertilizers introduced by the Kenya Bureau of Standards, Appachu explained in November. "The economic forces of supply and demand caused fertilizer prices to more than double", Patel adds.
"I have never seen a year as bad as this year"
All in all, it has been a very challenging year and for some even the worst they have seen during their career. “In my 24 years of experience in the flower industry, I have never seen a year as bad as this year”, says Appachu. Also Patel has seen better years. "The farming industry always goes through ups and downs, and we consider this year as a down. But after all, we are satisfied with the figures, it could always have been worse." Over the last year, Subati increased sales into China and the US and this gives them good hopes for 2019. "I am optimistic that it's going to be our best year", says Patel.
In Ethiopia, it was no different. Also in this country, 2018 can be characterized as challenging, with a cold start of the year, political unrest, and low auction prices. Fortunately, the weather conditions improved and the devaluation of the Birr against the dollar and euro was good for the exporting companies. The low auction prices resulted in the biggest challenge this year, causing some growers to worry about the future.
Over the years, the Ethiopian winters are getting colder. "The last two years have been extremely cold", says Buizer. And this resulted in a lower number of Ethiopian roses at the Dutch auction in the run-up to Valentine's Day.
After the election of new Prime Minister Abiy Ahmen in late March, unrest arose at some farms in the Oromia region. "There was a mismatch between expectations and reality that caused unrest", Frerik Kampman, Aid and Trade Officer at the Netherlands Embassy in Addis Ababa told us. Fortunately, there were several farms that did not have any difficulties, Kampman pointed out. "Upholding a good relationship with the community and communication towards the community is essential and is bearing fruit."
"Good weather and exchange rate but bad auction prices"
When we ask Ethiopian grower Esayas Kebebe of Ethio Agrio Ceft plc, who grows roses in Bahar Dar and Holeta and supplies them to the Dutch auction, to review 2018, he says: "In 2018, we have had good weather conditions and the devaluation of the birr against the dollar and euro was good for the exporting companies. Unfortunately, the auction prices in 2018 were very bad compared to previous years, making it the major reason for this challenging year." If the prices remain this low, he fears for the future of several farms. “Some will close in the near future as growers are working at a loss.”
Optimistic for 2019
Even despite the challenging year, Kebebe is optimistic for 2019. “I have good hopes that 2019 will be a good year for the flower industry.” Buizer adds: "It all depends on the weather conditions, the exchange rates, and political situation."
Indian rose grower Narendra Patil of Soex Flora is overall pleased about 2018. "Compared to last year, the demand was good and so was business." The only thing that was not as good as last year was the freight situation. "Since oil prices went up, freight rates got expensive. And due to our price commitments, we had to bear the cost burden."
This year, Soex Flora was - after a short break - again present at the FlowersExpo in Russia. Over the last year, he has seen the demand from this country for Indian roses increasing. "Our roses have a similar quality to the Kenyan roses, and for our Russian customer, it is important to have suppliers from different regions - and particularly with this year's weather situation in Kenya that decreased the production at many farms", he told us earlier this year.
When looking at 2019, Patil has good expectations for 2019. "As of now, 2019 looks promising, and with our new hi-tech packing hall we can handle huge volumes at an instant."
Valentine's Day 2019
Valentine's Day (14 February) is for many growers one of the most important days of the year. And for 2019, hopes are high as it again falls on a weekday. "Historically speaking, weekdays are better for flower sales than weekends", says Buizer.