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Lily sector recovers well after difficult years

The export of lily bulbs, especially to China, was problematic in 2018 and 2019. In 2020, the COVID-19 pandemic landed right on top of this. In the meantime, the lily sector has recovered, but it is important to stay alert. You can read all about it in this update from Rabobank.

Recovery after export problems
In 2018 and 2019 there were many problems with the export of lily bulbs, especially with exports to China. Some buyers there had placed too large orders with Dutch exporters and ran into payment problems. In 2020, the global problems of COVID-19 were added to that, including higher freight costs. In 2019 and 2020, the (Dutch) supply adjusted to this situation and now the sector is slowly but surely recovering. The foreign demand for lily bulbs has remained at a good level during COVID and the pre-sales for 2022 look promising. Lily bulb growers (growers of cut flowers) are also getting a good price for the flowers. The average price at Royal FloraHolland for lilies rose last year by around 20% compared to 2020. The demand for lily bulbs by Dutch growers can therefore be maintained. But everything has a downside.

The area with deliverable bulbs in 2021 has increased about 10% from 3,787 hectares in 2020 to 4,175 hectares in 2021 (source: BKD). Because cultivation results of the lilies in 2021 were below average, the consequences of this area increase were not yet visible. Finally, the Dutch lily sector leads the world with 85% of the global supply. Figure 1 shows the supply balance for the lily sector. An increase in the cultivated area in the Netherlands therefore directly affects the supply on the world market. This makes Dutch companies in the lily sector each other's biggest competitor.

Click on the image for a larger view.

Peaks and troughs in lily bulb yields
The worldwide demand for lily bulbs is reasonably stable. Because the acreage of lily bulbs can be expanded quickly thanks to the cheap propagation with scales, overproduction quickly looms large. Entrepreneurs can let the production grow relatively fast by outsourcing a part to growers with arable crops and open field vegetables. The other way round is also possible of course, as a result of which the supply of lily bulbs will quickly shrink. The supply fluctuates, while the demand is stable. This causes peaks and troughs in the return. As a result, the profitability of lily farms varies enormously from year to year. The difference is also caused by the difference in cultivated varieties both within and between the various groups of lilies (Asiatics, LAs, Orientals and OTs). Finally, there are different costs for energy and fertilizer at farms that cause differences in returns.

Lilies in the future
The lily sector has recovered well after a bad period, but that is no reason for celebration. First of all, the sector must find an answer to the high use of chemical crop protection in bulb cultivation. In addition, the disposable income in various European countries is decreasing due to the current inflation. As a result, the purchase of flowers may decrease in the long run, since flower sales react quite strongly to increases or decreases in income. However, lily growers in China, Vietnam and the United States are currently able to sell their flowers well, so demand for good lily bulbs will remain strong there for the time being.

Source: Rabobank

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