What are the arguments for and against the temporary NAT basic commission fee exemption?15 December 2020
There were both supporters and opponents of the proposal for a temporary NAT basic commission fee exemption on specific international trade lanes. The proposal was first discussed with the Leading Team for Membership, then several times by the Finance Committee and in the Members' Council. On 10 December 2020, there was a formal vote at the Members' Council meeting. The Members' Council voted in favour of the proposal, but it was not unanimous.
What does the temporary NAT basic commission fee exemption entail?
- Growers will temporarily not have to pay the basic commission
for NAT on international trade lanes where Royal FloraHolland
cannot support payment.
- All members will be eligible for this exemption.
- The grower must request an exemption for each individual buyer (outside the SEPA zone) who cannot pay via Royal FloraHolland. After acceptance by Royal FloraHolland, an exemption will be granted for the NAT transaction in question.
- In the case of new members who make use of the NAT exemption, supply agreements will apply to the clock for the first year.
- This is a temporary solution, until new financial services have been developed. In the short-term it provides a way of targeting the loyalty of international growers. The first new financial service provision (payment in American dollars on the trade lane Kenya-Saudi Arabia) has already been rolled out. So the exemption no longer applies in that instance.
What are the most common arguments for and against the temporary exemption?
What arguments are there in favour of temporary exemption?
- This scheme will help to retain our market scale while realising our strategic plan. Scale is extremely important in this regard to achieve optimal pricing at minimal cost.
- A temporary exemption would offer opportunities for attracting new international members and preventing current international members from leaving for this specific reason.
- Growers with trade on trade lanes outside the SEPA zone* experience the NAT levy as a major barrier. Royal FloraHolland is not (yet) able to facilitate payment here. Growers do pay the NAT basic commission but without receiving any added value.
- Thus, on trade lanes outside the SEPA zone, members are responsible for their own deal making, invoicing and collection. This creates a number of risks. It therefore does not feel justifiable to levy NAT on these lanes, especially because international growers have been asking Royal FloraHolland for some time to develop (financial) services like those Royal FloraHolland does offer on the other trade lanes. But this has not occurred so far.
- It would only be a temporary exemption because Royal FloraHolland is already actively setting up the first financial services for certain trade lanes, and when up and running this temporary exemption would lapse.
- The temporary exemption sends an important message to international members. The diversity of our membership is increasing, and in future we will have to think more frequently in terms of different segments.
*This concerns trade lanes outside the SEPA zone. SEPA stands for Single Euro Payments Area. SEPA is the standard payment service for transactions within Europe, with 36 participating countries.
What arguments are there against a temporary exemption?
- The NAT scheme exists precisely to give entrepreneurs room to find their own way if Royal FloraHolland doesn't offer it or doesn't offer it as attractively.
- A temporary exemption may cause negative emotions based on a perceived sense of unfairness in groups of members who pay the NAT fee and experience insufficient added value in certain flows (e.g. in Tulips, in certain retail flows, and for large grower concentrations).
- When it comes to basic principles, membership in the cooperative entails both rights and obligations.
- An international grower who ships to Japan, for example, can always re-route to Europe and Royal FloraHolland if the contract in Japan is cancelled.
- We will recruit growers with this plan, but as soon as they have found a trading partner, thanks to Royal FloraHolland, they will pull out.
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