Management Board column: Cabinet, make energy transition possible!
April 1, 2022
On 1 April, our annual report for 2021 was published. In January, we had already reported that the product turnover on the marketplace last year rose by 5.6 billion to record levels. We therefore look back on a particularly good 2021. Because Royal FloraHolland's operating result is also positive. We made a profit of 6.5 million last year. If we look back at last year, we see that the demand for flowers and plants, both at home and abroad, was very good throughout the year. That is the main explanation for the good price development on our market place. The clock clearly proved its worth as a leading instrument for price setting last year. Nevertheless, there is unfortunately cause for concern. More on that later.
Different cooperative and company
When I turn back the film, I naturally think of the tough discussions within the cooperative during the first six months. Opinions were divided about the pace of strategy implementation, the functionality of Floriday and environmental certification. Our goal has always been to include all our growers in the developments and challenges we face. Solidarity and togetherness are the basis of our cooperative. Partly as a result of clear signals from the Council of Members and based on the concerns in the market, we have deliberately opted for a different approach and pace in the roll-out of our strategy. We are looking more at customised solutions and less at 'one-size-fits-all'. I can safely say that never in the history of our cooperative has there been so much structured dialogue with and between our stakeholders as in the past year. We really are a different cooperative and a different company now than we were at the beginning of 2021. In the further implementation of the strategy, we involve growers and their buyers even more than before. Fortunately, this is now possible again during physical meetings. The member sessions are currently in full swing and the customer platforms with buyers have all met. The meetings I attended were characterised by a good atmosphere and a constructive attitude on the part of those present.
Big steps in strategy roll-out
The core of Royal FloraHolland's strategy is and remains the transformation from a physical marketplace to a digital B2B sourcing platform. Floriday is at the heart of that and will ensure that together we maintain the strongest marketplace in the world. Last year we once again made great strides. The turnover through Floriday last year already amounted to over a billion, and this year we are aiming to double that. With image auctioning and entering quantities we are now prepared for One auctioning. We will start with One auctioning of plants after the summer. We have run successful pilots with our New Logistics and we are now taking the next steps. The integration process within Floriway is in full swing. The first Floriway-labelled truck were on the road by early 2022. Behind the scenes, we are currently working very hard on the new company. Despite the good progress, we have noticed that the strategy and the connection between the components is not yet clear to many. We take that to heart. It means we have to communicate more clearly. This means that we want to communicate more clearly, from the point of view of what this means for our growers and their buyers. We are going to do that more and more.
Many growers in need
Despite all the positive reports about the progress, there is much cause for concern. After a good start of 2022, the demand for flowers and plants fell sharply at the end of February, partly due to the crisis in the Ukraine. This was already noticeable in the run-up to International Women's Day and continued afterwards. This is not only due to the drop in demand in Eastern Europe. Elsewhere in Europe, there is also a drop in demand, great uncertainty in the market and falling consumer confidence. The decline in demand has led to substantially lower prices than last year. Energy prices were already high in the fourth quarter of 2021. In the run-up to Valentine's Day, many Dutch rose growers were forced to scale down their production. Growers in Africa were confronted with higher transport costs. Since then, energy prices have risen to extreme heights. Many entrepreneurs can barely keep their heads above water at the moment, as a result of which the survival of many Dutch growers is in danger. And the end does not seem to be in sight yet.
Energy transition is the only way
The necessary energy transition cannot be realised overnight. And the high costs mean there is no room for growers to invest. The international position of the Dutch horticulture industry is at stake. We are the largest sector within agriculture and horticulture, providing employment for 150,000 people. Without measures from the cabinet, I foresee permanent damage to our sector. The cabinet has said that it will come up with an approach at the end of April. The package that the European Commission published last week aimed at energy-intensive sectors offers interesting possibilities. Compensation of up to 50% of the energy costs, with a maximum of 80% of the total loss due to the crisis situation that has arisen, may be paid. In my opinion, it is highly desirable for the government to use this extra scope for support as part of the 'total package' in order to ensure a level playing field with other Member States. Energy transition must lead to a sustainable ornamental plant cultivation sector. This issue is more topical than ever. In the short term, a solution must be found to enable the sector to work towards a sustainable solution for the long term. The measures the government is now working on must be sufficiently attractive. It must lead to a cost price that makes production in the Netherlands possible and feasible. As a sector, we are fully committed to the energy transition. That is the way to remain competitive as a horticulture industry.