Floraholland introduces new supply regulation starting 24th March
From Tuesday 24th March a new supply regulation will be in force for the clock supply. Based on the volumes for 2019, this regulation provides clarity about the maximum daily volume that may be supplied to the clock. For the clock supply before Monday 23rd March, last week's supply regulation will still be in force.
Why a new supply regulation?
At the beginning of this week, all growers were called upon to temporarily supply fewer products as an emergency measure. Since then, the auction has been monitoring on a daily basis which and how many flowers and plants one is allowed to supply in order to keep the turnaround as limited as possible and to restore price formation. Because Royal FloraHolland assumes that trade will not recover to normal levels in the coming months, a new supply regulation has been drawn up which can evolve in line with demand.
What does the new supply regulation look like?
"For each product group, the percentage of your daily volume that you, as a grower, are allowed to supply will be determined on a daily basis. For a product group in a recovering market, more can be supplied in this way than for a product group where demand has recovered even less. With this we introduce a regulation that we can bridge in the coming months, to a situation in which the market fully recovers. This supply regulation is based on solidarity between members: every grower receives a fair share of the temporarily lower market demand."
Important starting points in this new supply regulation (effective Tuesday 24th March):
- Each grower will have a maximum daily volume per product group based on their total volume in 2019 (number of units in direct and clock).
- The maximum daily volume per product group includes both direct volumes and clock volumes. The clock volume counts for 100% and the direct volume for 30%.
- The number of trading days (clock and direct) is also taken into account in determining the maximum daily volume. This gives seasonal growers a proportional daily volume.
- The auctioneer determines per day, per product group, the maximum percentage that growers are allowed to supply from their daily volume for the clock. The auctioneer uses this to steer themselves to set a good price and to limit turnarounds. Supply and demand are thus attuned to each other.
- The grower may round up his maximum supply to a whole cart so that full carts can always be supplied.
- Growers who supply more than permitted will be removed from the supply. Their entire supply will be destroyed at a fee.
Advantage and protection for member growers
For non-member suppliers, the same calculation is used to arrive at the maximum daily volume, with an additional reduction of 50%. This emphasizes the advantages of membership. All non-self-growing suppliers who bring trade to the clock that does not originate from a member of Royal FloraHolland will be banned until further notice. This measure gives members protection against dumping on the clock.