With the precision & harmony of a symphony orchestra, the global floriculture industry involves an intricate, interconnected and interdependent chain of farmers, wholesalers, airlines, cargo ships, traders, florists and supermarkets. To bring you through this floral journey series, we have spoken to florists, wholesalers and more to understand how the global – and local – floriculture world is being changed before our very eyes. Over the next few weeks join us in exploring this fascinating world!Fleurica
Not many traditions and business practices have run unchanged for decades, even centuries, the way the Dutch flower auctions have. While the bell rings at the New York Stock Exchange, the “Dutch Clock” keeps the global florticulture industry pulsing with life in Aalsmeer, the heart of global trade in cut flowers.
The world’s largest global flower auction house was created over 200 years ago, with the first auction in a pub. Today, Royal FloraHolland, receives cargo loads of cut flowers from growers all over the world; tulips & spring flowers from the Netherlands, roses and more from Ecuador, Colombia, Ethiopia, and Kenya. The flowers are gathered in giant air-conditioned warehouses, ready to be auctioned, sold, and shipped off to waiting wholesalers on location.
The Aalsmeer Flower Auction building is one of the largest buildings in the world, spanning 518,000 square metres. Because of its scale, Royal FloraHolland is almost like a village and community of its own, housing its own fire brigade, and more.
THE SEAMLESS ORCHESTRA THAT NEVER SLEEPS
While the world catches some Z’s, the Aalsmeer Flower Auction is bustling with activity. Cut flowers are delicate perishables and every minute counts in the race to ensure each stalk and stem travels from farm to florist in the shortest time possible. Every night at 10pm, cut flowers arrive at the warehouses, where cooling, sorting, description noting and photography takes place ready for the auction screens the next morning.
THE DUTCH CLOCK
The “Dutch Clock” is the unique way in which flowers are auctioned. Against what seems the obvious way to conduct an auction, the opening bid starts at the highest price the flower bundle is expected to cost… and declines until it is sold to the first & only bidder.
Timing is key – buy too fast, you risk overpaying. If you are too slow, another bidder will secure the lot you need. This unique auction system started in the 17th century with Dutch tulip bulbs, and is now centered around a pricing system developed by Nobel prize winning economist William Vickrey. This type of declining bid auction means that the sale is completely transparent, every bidder has equal opportunity to secure the lot, and sellers achieve a price that truly reflects market sentiment. It is also an efficient way to move large quantities of highly perishable goods.
Today the demand and supply data analytics produced by the auction, are extremely powerful in providing growers seasonality trends. This allows them to plan and optimize their production efficiently to match demand, and minimize wastage; planning that must be done months in advance to match the growing season of their flower crops.
Everyday, more than 39 auction clocks are in operation at the auction centres, fulfilling more than 125,000 auction transactions, amounting to more than 12 billion cut flowers and over half a million plants a year.
Time spent at each step is critical in ensuring freshness of flowers for the end consumer. For every extra day spent travelling flowers lose 15% of their value. By late afternoon all flowers will have moved out, and the warehouse prepares for the cycle to repeat again. Another day, another auction, another 30 million plants and flowers transacted…
Since mid-March the auction house in Aaslmeer has all but ground to a halt. When lockdown measures came into effect in Holland and around the world, flower shipments arriving at the auction house had no buyers, and without buyers there could be no auction. Thousands of kilos of flowers were composted or simply thrown out – a very sobering thought, knowing the effort, cost and resources involved in producing cut flowers. Without auctions, flowers do not reach wholesalers, who then cannot supply flower shops and independent florists around the world; many of them small businesses struggling to survive. Today the flower auctions have come to a standstill, as the global flower industry tries to cope with the absence of demand just as we enter the peak spring growing season.
Our next piece is an interview with local flower wholesalers, Kampong Flowers, where we discover the impact of the current global lockdown on flower imports and business in Singapore.