In this article, we report how the Russian war in Ukraine is affecting the Dutch greenhouse horticulture in general and the Dutch flower and plant trade in particular. Later this week, we hope to get more insights into how exporters from other countries are affected.
Looking at the trading of flowers, most worrisome is the suspension of air traffic to and from Russia. "No flights means no flowers", confirms Mark Loos, director with IP Handlers. "Nothing is shipped at the moment, we have to hope the situation changes for the better soon."
Over the last week, since Russia's invasion of Ukraine, there have also been no flights to and from Kyiv. Most flowers intended for International Women's Day were already sent before.
Closed is closed
Whether those flowers can be paid for is yet another point of concern. Not only the ruble it falling at dazzling speed, but the exclusion of Russian banks from Swift is also a major problem. "If it's closed, it's closed and no money will come this way," says Marcel Zandvliet, CMO at Dutch Flower Group. “It's that simple. In any case, things will take longer.”
Flowerportal, A Dutch flower and plant exporter who ships a lot of products to Ukraine and Russia, says it has put everything on hold. “We did receive some payments yesterday,” says general manager Christina van der Voort, “but there are customers who are now effectively unable to pay. In the coming days, we will look at possible individual solutions.”
The possible measure to exclude various Russian banks from the international transfer system Swift was already announced last Friday, but it actually came into effect this weekend. According to insiders, it often is possible to work around Swift, but things get way more complicated.
This particular measure has consequences for trade and for the Russian economy as a whole. Today, news outlets shared photos of Russian citizens en masse trying to get their money out of banks.
Trade largely undisturbed until last Friday
Last Friday, Royal FloraHolland reported that initially, the dramatic situation in Ukraine was not having a major impact on the trade-in flowers and plants in general. However, they did see individual companies being hit hard. 'On Friday, February 25, the day after the Russian invasion started, there were no serious disturbances in price formation at the auction. Supply was slightly less, however, almost all product was sold. The prices of products in demand in Eastern Europe in the run-up to International Women's Day on March 8 are clearly lower than last year. This is especially true for chrysanthemum, gerbera, freesia, rose, and lisianthus. However, one should account for the fact that prices in 2021 were at a higher level than in previous years.'
The Intraday gas price on the Dutch gas trading platform Title Transfer Facility (TTF) opened at 1.25 euros per cubical at 8:00 this morning. That is a sharp increase as compared to the 93 euro cents it closed with on Friday, but lower still than last Thursday's price peak at the moment the war broke out.
However, after this morning spike, prices dropped back to 1.06 euros. Until quarter 1 of 2023, long-term contract prices are all above the 1 euro mark. It is beyond the scope of this update, but it is clear these prices jeopardize a sustainable future for many growers.
The Average National Advisory Price for gasoline, diesel, and LPG in the Netherlands also reacts to the crisis. These prices now equal €1.90 euro for diesel and € 2.22 for gasoline. Click here for actual prices.