“A combination of factors makes Valentine's Day a challenge this year. There is a lot of product in the market and the demand is not good either. As a result, the prices at the auction are lower than ever before during this time of the year. On top of that, Kenyan growers also have to deal with the higher freight costs.” This is said by Yvonne Tirop, the Marketing and Business Development Manager at Sian Roses, a group of three rose farms in Kenya.
No Valentine’s prices for red roses
The prices of red roses are ideally very high towards Valentine’s Day, but according to Yvonne, that is not the case this year. “In the previous years it has been possible to achieve good prices translating to about a cent per centimeter. This year red roses Valentine's prices at the auction have been just normal and not interesting at all. The prices have not gone up in the last week of January as they usually do.”
“Prices have been under pressure at the auction for non-red roses especially yellow and orange”, she says. “Looking at the product portfolio I see at least better, Valentine’s worthy prices for the spray roses in 60-70-80cm.”
But what could be the reason for the low prices? According to Yvonne, the reason for these low prices can be attributed to high supply and low demand. "There has been favorable weather conditions in Kenya and Ethiopia resulting in very good production, poor prices in the last quarter of 2018 led many growers to flush their crop in anticipation for good Valentine's prices contributing also to the above normal production levels”. She attributes the low demand to extreme winter conditions currently being experienced in Europe. The sub-zero temperatures hampers distribution logistics and outdoor sales.
Other than the lower prices, Kenyan growers also have had to deal with higher freight costs as a result of the volumetric weight charging formula for freight that took effect from June 2018, coupled with higher freight charges that come with the extra capacity delivered during Valentine's. "Consequently growers end up with a very low and sometimes even negative return.”
To mitigate the risk, growers try to do as much presales as possible which gives a guarantee on return, explains Yvonne. "it is a real gamble because at times you can get either high or low prices at the auction compared to your presale prices. The beauty about this is that both the buyer and the grower have some guarantees
Lack of balance
The run-up to 2019 wasn't that good either as there was a lack of balance in demand and supply. “Last summer got prolonged into October, so we had a long summer, which resulted in low demand in the flower market. The weather in Kenya warmed up from September after a prolonged cold season in June leading to a production upsurge which was way above the demand hence poor prices all the way to December. We still haven’t had a good balance between demand and supply since Summer.”
Hoping for a better International Women’s Day
Yvonne is hoping for a better International Women’s Day, on the 8th of March - an important flower holiday in Russia. Women’s Day has become more important as the Russian market has rapidly grown over the last years.