After reviewing the year of cut roses together with some growers from all over the world, it turned out that, overall, 2018 has been a challenging year. Next to weather, freight and political circumstances, prices - and particularly at the auction clock - were low. What could be the reason? According to Sachin Appachu, who grows roses in Kenya and sells them at the Dutch auction, the rise of online trade platforms could play a role in this scenario.
2018 has been a very challenging year. Appachu even describes it as the worst year he has ever seen in his 24 year experience in the rose industry. As he does not want to see the same scenario happening again, he started to think of possible factors that could affect the situation and noticed that online trade platforms might work more in the advantage of buyers than that of the growers - particularly if the growers don’t participate in setting minimum prices.
Too much exposure
"I feel that one of the major reasons for such long below average auction prices compared to other years is the too much exposure", he says. "Buyers can easily get flowers on the online platform and they can already see what's available for the coming days. This, in turn, takes off the pressure of the buyer when he is terribly in need of flowers. 'If I cannot get them at the auction, I will check it online' they might think."
Another reason Sachin mentions for the low auction prices is the price indication that is being given at many platforms. "At many platforms, they indicate the future prices based on the current auction prices - for Thursday products, they indicate a price that is just a couple of cents higher than the Tuesday auction prices, for example. When knowing these online prices, a buyer will never bid a higher price at the auction than those that have been quoted on online platforms."
So how to change it? Stop showing the flowers that will be in stock at the online platforms isn't an option, but are there opportunities regarding increasing the prices? "In my opinion, growers should participate in indicating the future price. We know what our costs are and what is necessary to at least cover these costs - if we continue like this, many growers will not break-even and will consequently go out of business. I think we, as growers, can indicate more realistic prices. In turn, we can keep on producing good quality flowers and keep the entire chain satisfied."
Food for thought
Last, but not least, Appachu stresses another price-related concern. "The final consumers haven't got the product any cheaper in 2018, but the growers got lower prices. It is not that difficult to know what happened. So, food for thought"