Floribusiness Danish growers are making money again

Danish growers are making money again

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The last couple of years weren’t great for Danish pot plant growers. The turnover was disappointing and the high tax on electricity was disastrous for many nurseries. But things seemed to have changed at last. Since a year and a half, the trade has picked up. That’s the picture we got during our visits to Handelspladsen and Flowertime in Odense and to a few growers in Aarhus.

According to Peter Larsen-Ledet of Floradania, “2016 was a good year for the Danish pot plant growers and this year is even better”. The Danish marketing organisation of and for growers organised the August edition of Handelspladsen in Odense last week. The growers with a booth at the fair presented their products for autumn.

    The Flowertime initiative took place at the same time, a few kilometres down the road, at Gartneriet 3Kanten. The hosts at this event are Danish breeders, who present their varieties to growers. During our visit to both events, the atmosphere was very positive. Danish growers are making money again. It was about time, though. Larsen-Ledet: “From 2008 until 2015 things were very bad.”

    Absurdly high

    These difficult years were caused by the imbalance of supply and demand of pot plants. The financial crisis was of course the root cause. And another aspect that certainly didn’t help the Danes was the extremely high electricity tax, which nurseries using greenhouse lighting in particular, suffered from. Growers were paying absurdly high amounts for this Public Service Obligations (PSO) each year. The tax applied to both businesses and individuals in Denmark. The government used the proceeds to invest in green energy.

    “Our nursery was the horticultural company with the highest PSO tax in Denmark. We had to pay €1 million per year”, says Torben Moth Madsen at Flowertime. He owns Rosa Danica, a company that specialises in the breeding and production of pot rose. In 2011, the PSO tax went up to unprecedented heights. But in the meantime, the big nurseries made a deal with the Danish government. Since then, they’ve been receiving a compensation, which made a big difference.

    Rosa ApS also suffered greatly because of the PSO tax. At some stage, this producer of pot roses paid €300,000 per year. Installing CHP was out of the question, as they would have had to pay tax for every single kWh used. And the CHP wouldn’t even be used throughout the year, as production goes down dramatically during the summer. Another aspect that the company had to take into account with regards to CHP is that they would be dealing with fluctuating gas prices. So, they decided to buy heat from a waste incinerator in the city for a fixed, low price.

    Rosa ApS now also has a partnership with the government, just like Rosa Danica. If they reduce their energy usage, they receive a compensation on the PSO tax, explains Anders Eskelund, product manager at Rosa ApS.

    Slight decrease

    But all concerns about PSO are over now. The government has decided to get rid of this tax over the next couple of years – by 2022 it will no longer exist.

    Good news for the nurseries, but Larsen-Ledet thinks that the positive change in the pot plant industry is also thanks to a better distribution of supply and demand. There’s been a slight decrease in the supply from Danish growers and they learned from the figures published by the Dutch statistics office that the supply of their biggest competitor, the Dutch pot plant growers, went down too. The fact that the financial crisis seemed to have neared its end in most parts of Europe also helps. And what might contribute to better plant sales at the important domestic market, is that the interest in Denmark is negative at the moment. It encourages people to spend money.

    All in all, demand has increased and people are spending more on pot plants. And that’s not limited to green plants, which are currently very popular with European consumers. Flowering plants are doing better, too. Phalaenopsis is perhaps the exception, said Christian Schwartz.

    Most other growers at Handelspladsen sounded very positive. Kim Bjørnekær of Eurostar Plants for example, said: “Yes, we’re making money again.” His company currently has 8 ha under production. 25,000 m2 of this is filled with small pot sizes kalanchoe, rose and chrysanthemum. His most important customers are in Germany, Belgium, Italy, France, Russia and the Netherlands. The remaining part of his nursery is used for herbs.

    Awkward position

    The fact that things are going well in Denmark, doesn’t mean that the Danes are now heavily investing in new greenhouses, according to Larsen-Ledet. Ageing is a problem. There aren’t too many young people that are interested in taking over their parents’ nursery.

    This leaves the Danish floricultural industry in an awkward competitive position. Another issue which plays a role at the moment is the use of pesticides. “The Danish government has a much stricter policy than other countries. According to Larsen-Ledet, Danish growers have tried to explain to the government that if Danish nurseries end up closing down because they can no longer use certain pesticides, the market will obtain pot plants from abroad, which have been cultivated with pesticides that are much worse. The union, Dansk Gartneri, is now talking with the government about a possible solution.

    Transport and labour costs are also relatively high in Denmark. According to Moth Madsen’s calculations, an employee at a Danish nursery costs around €24 per hour. This amount applies to both Danish and foreign employees. Moth Madsen: “As a consequence, we’ll simply have to produce the best quality.”

    Danish export

    In 2015, Denmark exported pot plants for a total value of  €233 million. Last year’s value was higher. The most important destinations are Germany, Sweden, the Netherlands, Norway and the United Kingdom. The total acreage of pot plants in Denmark is around 227 ha. According to Danmark Statistik, this figure was 303 ha in 2002. The main production area is Odense and surroundings, followed by Aarhus. Pot rose is the main product.

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