"Luckily, the Dutch auctions have opened up, but due to the high freight rates, we cannot increase volumes", says Sachin Appachu, general manager at Kenyan rose farm Bliss Flora. Currently he can send 25 to 30% of his flowers to the auction and about 5-10% to the direct market. As the airfreight situation is expected to hold on till the end of the year, other ways of transportation, like sea transport, are being considered and discussed.
When COVID-19 hit the flower industry, Royal FloraHolland decided to restrict the supply to the auction on several products from different countries, depending on the day. Fortunately, the restrictions have been lifted several weeks ago, but volumes out of Kenya could not increase, due to the lack of airspace and high prices. As a result, in week 18-19-20, the rose prices at the auction were high. "Due to the lack of flowers and the celebration of Mother's Day, prices were good, about 20 percent higher than usual during that time of the year." When looking at the production side of the story, it was lower than usual, during the rainy and cloudy days. And as there is not enough export and production, they are working fewer hours on the farm. "We do not want to lay off workers, so we are still holding on to the workforce, but obviously then with fewer hours."
Currently, the freight prices are still high, almost twice as much of the normal price, and in this price category, there is still not enough space available. "There is space available, but then for a premium price, and this will bring no economic benefit to the farm." On top of that, prices at the auction decreased last week, which make shipping the product not that profitable anymore. "The last 2 days, we decided to ship limited volumes as freight prices are high and auction prices are low." But what is the reason for the low auction prices? Appachu: "Mother's Day is over, so prices usually dip a bit, but now they are lower than usual. On top of that it is said that many flowers are coming from Ethiopia, resulting in a market under stress."
Looking at the weather, it improved as well, resulting in a good quality crop with a production that is increasing as well. "We are currently at 60-70 percent of our usual product and in about a week or two days, if the weather continues to be like this, we and a lot of other farms will be back to normal production."
Looking for alternative shipping
As airfreight costs are so high and are expected to remain at this level till the end of the year, several farms are looking into alternative ways to ship their flowers, like sea transport. There are already several farms that are supplying the direct market, sending out sea shipments day in and day out. And for some time, Royal FloraHolland and their growers, including Bliss Flora, have been discovering the possibilities as well. "RFH is working closely with seafreight agencies and we all have high hopes for this way of transport. On the one hand, prices are lower - with a airfreight rate of 2.5 dollars one will save 60% when shipping by sea, and on the other hand, we can still guarantee a vase life of 7 days after their 30 day transport."
Appachu attends many meetings organized by RFH on this topic and participated in some trials. By the end of the month, they hope to finalize a plan for sending Kenyan roses by sea.
French Mother's Day
This year in France, Mother's Day falls on June 7 and usually, for this holiday, rose prices see a moderate lift at the auction. Also this year, Appachu is hoping for this increase in demand and prices, expecting the prices will start to increase this Thursday or Friday and continue to increase the week after.