Floriculture
This section comments on the major flower crops grown in New Zealand, with the major emphasis on flowers with a strong export component to the marketing mix.
Key Points
- Weak Japanese market conditions resulted in lower prices for most flower exports to Japan this season. At over 70% of New Zealand flower exports, Japan continues to be the major export market.
- Returns from the United States (US) market were good because of the favourable exchange rate and development programmes in this market. Export volumes to the US were greater than last season.
- Flower growers voted against the introduction of the New Zealand Flower Industry Federation Inc (FloraFed) commodity levy on flowers which was proposed at 0.25% of exports and 1.00% of domestic market sales. An industry forum was to be held in June 2001 to Identify the reasons for the negative vote and to determine the next course of action.
Physical Factors
Orchids
Total Cymbidium orchid export volumes during the 2000 harvest season were similar to 1999. However, early season production from May to July was greater due to an "early" flowering season and increased production of early season varieties from recent new plantings. Strong prices for early season crops in recent years have driven an expansion in the greenhouse area dedicated to production over the May to July period. Recent plantings are now in production, but it is estimated that 20-25% of the early season plantings are still to come into full production.
Callas - Cut Flowers
Calla flower production in 2000/01 was higher than the previous season, despite cool summer conditions around the country reducing flower production volumes for many growers. The overall increase in flower volumes is due to new growers entering the industry and represents a reversal of recent years when many growers exited the industry.
Callas - Tuber Production
Calla tuber production is expected to be similar to last season, although there has been a reduction in grower numbers. Economies of scale have driven some smaller growers out of production, but a number of the larger growers are expanding and demand is still strong for larger-grade tubers. Competition from Holland, Africa and Latin America is expected to become more significant over the next 2-3 years. However, a number of New Zealand companies have undertaken joint ventures with growers in these countries.
Sandersonia
An increased area of Sandersonia was grown over the 2000/01 season as a result of higher prices for tubers last season stimulating expectations of higher profits. Most of this additional area has been grown for tuber production rather than cut flower sales. Sandersonia flower production in 2000/01 was down on the 1999/2000 season as lower flower prices in 1999/2000 resulted in less planting of tubers for flower production this season.
Over the past 3-4 years, Sandersonia tuber export numbers have been relatively static at approximately 4 million/year. This seems to be the current upper limit of the Japanese market to absorb New Zealand-grown tubers at current tuber prices. It is likely that many of the extra Sandersonia tubers grown this year will not be sold, but tuber quality supplied onto the market is expected to be higher as exporters will have a greater choice of tubers to market.
Three or four large growers dominate the Sandersonia flower market, the result of dropping flower prices over the last 6-7 years. Only growers that have expanded to achieve economies of scale have been able to remain cost competitive in the market.
Lilies
Oriental lily production is focused largely on the high-priced Chinese New Year market. Many growers missed the very early timing of the Chinese New Year this season and, as a result, received lower prices. Lily flower quality was good, with long stems and good bud numbers, due to the relatively cool early season conditions.
Proteacea
Proteacea exports over the past five years have been very steady at $1.4-$1.5 million/season. Prices fluctuate from one year to the next, depending on the exchange rate and market conditions. Proteacea are grown from Northland to Banks Peninsula, with most of the industry being centred around the Bay of Plenty.
Many growers produce a range of species other than proteacea for foliage production, and the industry association is known as the New Zealand Protea and Foliage Growers Association. The association is highly supportive of FloraFed and is particularly disappointed that the compulsory levy was unsuccessful. Their view is that a united industry body is necessary to strongly represent industry issues in a wide range of forums.
Peonies
Peony flower production over the 2000/01 season is expected to be a little higher than last season due to increased production from new plantings starting to come on stream. Weather over harvest in most areas was a little wetter than usual. However, this did not appear to greatly affect flower quality or the quantity produced.
Flower quality at exporters' warehouses in Auckland was higher than last year and this has generally been attributed to an improved "coolchain" between growers and Auckland. Origin Pacific Airways handled all domestic airfreight this season and was able to meet the industry's specifications for coolstorage during transit.
Gentian
The new "Ashiro" gentian varieties have increased demand for gentian on the Japanese market and New Zealand production levels are increasing. Production in the South Island during 2000/01 was about double the previous season, while North Island growers exported relatively low volumes this season due to quality problems. The Japanese company that controls the Ashiro variety has initiated a policy this season of not accepting any new growers to produce these varieties.
Hydrangeas
Hydrangeas are a relatively new flower crop and have been attracting a lot of interest from growers and exporters over the last 4-5 years. New Zealand-grown hydrangeas are highly regarded by export markets due to the very high colour intensity that develops under our environmental conditions. Hydrangeas are grown from Northland to Southland and exported flowers range from specific Dutch varieties grown under shade house conditions through to outdoor-grown flowers harvested from home gardens.
The Hydrangea Growers Association was formed in July 2000 and publishes a quarterly newsletter. The initial focus of the association has been to develop a grower database. In the future it plans to establish flower quality and colour standards, and support new growers with information. The 2000/01 season was not good for hydrangea production, with many areas of the country experiencing at least one period of adverse weather conditions which affected flower quality. Prices for good quality flowers were high. As new plantings come into production over the next few years, there are expected to be significant increases in the volume of hydrangeas exported.
Roses
Production and returns to growers were very similar to last season. Importation of roses in winter keeps the prices in the medium range rather than the high price range.
Chrysanthemum
New chrysanthemum varieties being introduced have stimulated an increase in export to Japan. These new varieties are coming from Holland and are considered superior to the older varieties.
Alstroemeria
Exports have increased compared with previous years. The introduction of improved varieties and better production has made this a more attractive crop both to the grower and the exporter.
Financial Factors
Revenue
Total export flower and foliage sales for the 1999/2000 season was $46.8 million, which is a little lower than the record 1994/95 exports of $49.9 million. The main export crop in 1999/2000 was orchids ($22.4 million), followed by callas at $7.7 million and Sandersonia at $3.1 million.
Japan continues to be the main export market accounting for over 70% of export sales in 1999/2000.
Orchids
Market prices over the 2000 season showed large fluctuations in price from June to August, largely as a result of increased orchid production coupled with a large supply of other flower varieties and generally weak demand on the Japanese market.
The significant volumes of flowers on the Japanese market this season has been attributed to increased Japanese domestic production through farmers converting from other crops to flowers. This trend is expected to reduce or reverse over the next few years as growers leave the industry due to the general reduction in Japanese flower prices.
The Japanese economy as a whole is considered to be weakening and the average general flower market prices in Yen are reported to have dropped by about 5% every year for the last 4-5 years. Prices to New Zealand Cymbidium growers have been maintained by favourable exchange rates rather than by strong market conditions.
Good returns to Cymbidium growers over the coming 2001 season will depend on a "later" production season and a continuation of the current favourable exchange rate.
| Table 1: Flower Export Statistics ($ fob value) | |||||
| 1996 | 1997 | 1998 | 1999 | 2000 | |
| Orchids | 20,306,373 | 20,531,804 | 19,141,170 | 20,071,075 | 22,387,422 |
| Calla | 8,803,069 | 7,048,913 | 9,712,061 | 9,138,870 | 7,705,211 |
| Sandersonia | 5,042,469 | 3,705,543 | 3,811,781 | 2,693,344 | 3,132,496 |
| Lilium | 1,917,353 | 1,605,952 | 2,706,364 | 2,205,013 | 1,872,738 |
| Protea | 1,494,566 | 1,322,683 | 1,389,786 | 1,522,948 | 1,384,821 |
| Total exports | 48,403,678 | 47,093,481 | 47,346,407 | 45,994,173 | 46,819,159 |
| Source: Statistics New Zealand | |||||
Callas - Cut Flowers
Export flower prices during the 2000/01 season from Christmas onwards were generally lower than the previous season, although early season prices maintained their usual good levels. Higher than normal flower production over the Christmas period resulted in a slump in prices that did not recover to the previous season's level. The high Christmas production appeared to be due to several factors, including a "late" season in the Bay of Plenty as a result of cool spring conditions. In addition, fewer South Island-grown calla tubers were lifted over winter, leading to greater flowering over the "natural" flowering time of the Christmas period.
The lack of recovery in calla export prices appeared to be the result of lower demand in Europe due to increased volumes from Kenya, and generally weak market conditions in Japan. The only positive market was the US, which accounts for only a small percentage of calla exports.
Sandersonia
Sandersonia flower export prices for 2000/01 were better than last season, largely as a result of the lower Sandersonia flower volumes, particularly early in the season. The extremely high early season production levels of 1999/2000 did not occur this season, which avoided a strong downward pressure and expectations by buyers of cheap prices.
Sandersonia tuber export prices for 2000/01 are expected to be a little lower than last season due to increased volumes of tubers on the market. Total export receipts are expected to be similar due to slightly higher volumes being sold at a lower price.
Lilies
Prices for the Chinese New Year were very good this year with lower market volumes. Prices achieved post-Chinese New Year were lower than last year due to the relatively weak Japanese market conditions.
Peonies
Export flower prices for top-grade product of premium varieties were considerably higher than previous seasons with prices up to $5.80/stem. This was twice the price received for the same varieties three years ago. The favourable US exchange rate was a major factor in generating the high prices, particularly since this market accounts for over 50% of peony export sales. Prices for varieties that are usually less in demand were also steady.
Net Result
Gross margins for a number of the flower crops discussed above are presented in Table 2. These assume average to above-average grower management skills under Auckland growing conditions. The revenue, yields and expenditure levels are based on what is considered typical of this type of grower under the market and climatic conditions of the season. Labour costs for the labour-demanding crop management activities, e.g. flower harvest and packing, are included.
| Table 2: Gross Margins ($/m2) | ||||
| Crop | Growing Method |
1998/99 Season |
1999/2000 Season |
2000/01 Season |
| Calla - Cut Flowers | Greenhouse | 22.02 | 32.04 | 25.04 |
| Calla - Cut Flowers | Field | 11.32 | 16.33 | 12.62 |
| Calla - T1 Tubers | Greenhouse | 10.09 | 10.09 | 10.09 |
| Cymbidium | Greenhouse | 28.14 | 30.32 | 35.18 |
| Rose | Greenhouse | 37.65 | 30.69 | 30.69 |
| Peony Rose | Field | 5.00 | 6.31 | 9.14 |
| Sandersonia - Cut Flowers | Greenhouse | 31.83 | 53.27 | 40.78 |
| Sandersonia - Tubers | Shadehouse | 31.12 | 36.76 | 31.12 |
| Source: AgFirst Consultants NZ Ltd | ||||
The gross margins presented are on a per square metre basis, but crops are not necessarily directly comparable with each other. Some gross margins are based on crops that produce year-round, e.g. roses. Other crops are produced over a 6-8 month period, e.g. calla tubers, and there can be a considerably different capital investment for the different crops, e.g. glasshouse versus outdoor growing.
Export Values of Main New Zealand Flower Crops |
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The gross margin figures illustrate that most crops achieved lower gross margins in 2000/01 than the previous season, which was largely due to weaker conditions in the Japanese market.
In addition to this, the following points should be noted:
- Cymbidiums produced higher yields in 2000 due to improved weather conditions.
- Peonies achieved better prices as a result of strong market conditions in the US.
- The influence of the favourable US exchange rate.
Issues and Trends
FloraFed
The proposal by FloraFed to introduce a commodity levy to collect 0.25% on export flower sales and 1.00% on domestic flower sales was rejected by flower growers. The voting turnout was estimated to be around 700 growers, which is a little over one-third of the 1,800 growers to which voting forms were sent. The votes on the domestic levy showed 47% in favour and 53% opposed, representing $11.9 million and $15.9 million worth of production per year respectively. Export producers cast 191 votes in favour of the levy and 202 votes against. In dollar value this was $6.2 million in favour and $11.3 million against.
A forum meeting of FloraFed members was to be held in mid-June to establish the future direction of the organisation. Analysis will be undertaken to determine why the voting turnout was so low, the reasons for the ballot being turned down, and if and when a possible second ballot could be held. At this stage there is a feeling that, as so much time and commitment has been put into FloraFed and the ballot was reasonably close, "packing up and going home" is not an option.
Some opinions on the reasons for the low voter turnout and negative result include the following:
- Growers had no major issues to get excited about.
- Large growers would, by voting for the levy, be assisting small growers to catch up.
- Reliance on only printed media for communication with growers did not encourage grower participation.
- Presence of a vocal and vociferous minority urging growers to vote against the levy.
FloraFed intend to work through the various issues at the forum to establish the most appropriate course of action.
Sandersonia Marketing
Marketing of New Zealand Sandersonia flowers and tubers is seen to be the major limiting factor to further growth of the industry. Sandersonia is not particularly difficult to produce now that research and increased grower experience in the crop has solved many of the early problems.
Japan is the main market for New Zealand tubers and is likely to continue to remain so in the immediate future. Growers consider that more co-ordination is required between New Zealand exporters to prevent price undercutting in the marketplace. Sandersonia is a relatively expensive bulb for Japanese growers to purchase compared with other bulb types that can be purchased from Holland, and Japanese agents are always seeking to reduce prices.
At this stage the industry recognises that there is a limit to market growth with the way the industry is currently operating. However, it does not have the resources to develop a solution and is actively looking at ways to address this situation.
Domestic Market Sales
Floramax, the new Dutch auction market in Auckland (owned by Turners and Growers), was opened in June 2000. The volume of flowers going through the local markets continues to increase and is now estimated to be over $100 million, about twice the size of the export market.
Local market prices are believed to be lower on average due to increased volumes year-round and a greater range of new flowers being produced for the local market.
Bulb Export Industry
Exports of lily and tulip bulbs are continuing to increase and the potential for expansion is good. Negotiations between the Japanese and New Zealand governments to allow access for New Zealand-produced bulbs into Japan, without the need for quarantine, is benefiting both New Zealand bulb growers and Japanese flower growers.
New Zealand-grown bulbs are available in the "off" season to Japanese growers. They produce superior flowers to those grown from bulbs from Northern Hemisphere growers in Holland or the US that have been stored for 6-12 months. While New Zealand grown bulbs are generally more expensive than Dutch or American ones, their better performance makes them a good option for Japanese growers.
New Zealand growers wanting to supply bulbs to Japan must comply with a comprehensive programme of bulb stock testing prior to planting. Field inspections are carried out during the growing season by both New Zealand and Japanese MAF inspectors. New Zealand growers will often work in conjunction with Dutch bulb companies that arrange sales in Japan to their existing growers. This trade in bulb material depends entirely on all parties complying with the relevant plant health requirements of both the New Zealand and Japanese authorities. The maintenance of good communications is essential to ensure that systems appropriate to all parties are put in place.
The industry is currently in discussions with the New Zealand MAF regarding possible changes to requirements and, based on results to date, the industry is confident that resolution of these issues is likely to be achieved. The only frustration reported by growers is that the various restructurings of MAF over the years has changed staff and the requirements that they have to meet.
Calla Price Monitoring
In the 2000/01 season the calla industry introduced a price-monitoring scheme, similar to that used by the peony industry, to try and improve communication between exporters and growers on weekly market conditions and expected production volumes. The much larger size of the calla industry meant involvement of all the major players on a weekly basis was not possible and a monthly reporting programme is seen as more feasible. This would still provide grower feedback on volume sales, prices, markets, and exporter information on production volumes, and allow comparison with previous seasons' data for decision-making by both growers and exporters.
Contact for Enquiries
Farm Monitoring Programme Manager
Monitoring and Evaluation
MAF Policy
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0623
Fax: +64 4 894 0741
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