Coronavirus crushes the global flower market
The arrival of spring is one of the few things the coronavirus has so far proven unable to disrupt. And while that might be good news for those of us who have been waiting for more colorful views from our quarantine windows, it’s a sensitive topic for participants in the multi-billion dollar global flower trade. The industry, which is a prime example of the globalization of our world, is in the midst of a pandemic freefall with no immediate end in sight, as Bloomberg reports.
COVID-19 has put an indefinite pause on various activities – from daily events to design industry mainstays such as home stagings, decorator show homes and photo shoots. As such, this sudden halt in activity has caused floral demand to wilt to previously unthinkable levels. It’s a phenomenon that has affected every link in the $8.5 billion industry’s globalized supply chain, from florists placing bulk orders to huge auction houses from the Netherlands to farmers around the world who have no market for a product that stubbornly refuses to stop growing. . Laura Clare, a New Jersey florist who normally orders at least $5,000 a week from wholesalers but is now seeking a loan from the Small Business Administration, described the situation to Bloomberg as completely unprecedented. “I’ve been through 9/11, I’ve been through Hurricane Irene, Hurricane Sandy,” she said. “I’ve never seen anything like it before.”
Flower auction houses in the Netherlands, a clearinghouse through which 40% of the world’s flowers pass, probably feel the same way. Royal FloraHolland, which runs four massive auction sites that typically inspire more than 100,000 daily transactions, saw its activity come to an ominous halt in mid-March. As prices rose to $0.08 a rod on March 16, the auction house realized it had no choice but to destroy nearly 70% of its usual supply, a process which took a week and a half in its factory in Naaldwijk. With once-bustling auction rooms nearly empty, the company now expects a cumulative loss of around $2 billion.
Unsurprisingly, the rapid collapse of the flower market has created problems with cultivation sources. Great rose growers love Nini Flowers in Kenya faced lost sales due to fixed cultivation costs, a situation made all the more painful by the fact that staff had to harvest flowers to destroy them. If the situation persists, the approximately 150,000 already struggling workers on Kenyan horticultural farms will see their jobs disappear.
The floral industry is far from alone in experiencing a sudden pandemic-induced collapse that has wreaked havoc on supply chains. American farmers had to throw various crops which cannot reach the market in time before perishing. Elsewhere, furniture retailers, which rely on physical purchases, are struggling at levels that even an increase in online sales can’t help offset.