Floribusiness Articles Brazilian floricultural industry full of confidence

Brazilian floricultural industry full of confidence

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The Dutch enclave of Holambra is the most important floricultural area of Brazil. While things have slowed down for cut flower growers, the pot plant growers are currently doing good business. They’ve got great confidence in the market. ‘With a domestic market of more than 200 million people, we don’t need exports.’ Floribusiness travelled to the other side of the ocean and had a look around.

By Arie-Frans Middelburg

‘Brazilian floricultural industry not yet flourishing’ was the headline of an article published in a 2006 edition of Het Vakblad voor de Bloemisterij. Colleague Cindy van der Zwet visited Holambra that year. She concluded that things weren’t looking great for the entrepreneurs in the floricultural industry. ‘Investments and expansions are being put off for now’, she wrote. Twelve years later, the situation for the growers in Holambra and surroundings has turned for the better. The acreage is increasing, pot plant growers are investing heavily and young successors are taking over their parents’ companies with a feeling of optimism.

Recession

It’s remarkable that the pot plant growers are doing so well. Brazil went through an economic crisis in 2015 and 2016, but their turnover was still good. Kalanchoe and calandiva grower Joost van Oene thinks it’s because of a visionary outlook.

Veiling Holambra, which Van Oene is the chairman of, developed a strategic plan in 2013. “We learned from interviews with customers and supermarkets that sales through supermarkets had great potential.”

The auction decided to start taking part in APAS, a large trade fair for supermarket suppliers. Their goal? To get supermarkets to become auction customers. Van Oene: “That was a good decision, because it’s thanks to the supermarkets that we weren’t hit by the crisis in 2015 and 2016.”

At the moment, the auction has 60 supermarkets among its members. The potential of plant sales via supermarkets seems endless. There are more than 700 supermarket chains in Brazil. With their lower prices, supermarkets can introduce plants to a wider range of people. Plants used to be something for the country’s richer upper class only. And the supermarket also stimulates purchasing plants for personal use.

Until recently, that was quite unusual. Flower sales were mostly linked to special days, like Valentine’s, International Women’s Day, Mother’s Day, All Saints’ Day, Springtime and Christmas. Apart from supermarkets, DIY stores and chains of pet stores have also started selling plants.

Own interest

You could accuse Van Oene of singing his own praises, since he’s the chairman of Veiling Holambra. But whichever pot plant grower in Holambra you talk to, they all mention how important the supermarkets have been for potted plant sales the last couple of years.

Frans van de Weijer, who grows phalaenopsis, dendrobium and bromeliad for example, says: “New supermarkets are opened monthly and regional supermarkets are expanding. The retail segment is important. It helps pot plants become more popular and ensures they’re available in more and more sales locations.” It’s clear from the many investments and expansions, that the pot plant companies are doing well. And this goes for phalaenopsis in particular.

Is everything really that great when it comes to supermarkets and pot plants? No, the auction remembers some very difficult negotiations with a large supermarket chain, which accounts for 8% of the auction turnover, regarding Veiling Holambra’s payment terms. The chain felt they were too strict. The auction put its foot down.

And there’s still plenty to improve with regards to sales through supermarkets. Many supermarkets forget about shelf management, with wilted plants and flowers on display as a result. And presentation isn’t always great, either.

Recession has an impact

The optimism of the pot plant growers in Holambra and surroundings is quite an uncommon sound in Brazil, according to Kees Schoenmaker. He owns the large floricultural company Terra Viva. In his role as chairman of Ibraflor, the Brazilian organisation of floricultural producers, he recently heard at a national meeting that tree and shrub growers were feeling a considerable impact of the recession. Gardening and landscaping is the last thing on people’s minds, when the economy is doing badly.

Schoenmaker continues to explain that unlike the pot plant growers, many flower growers in Holambra were also hit by the recession. In addition to the peak days, a lot of flowers are used for events, and there weren’t as many of those as normal in 2015 and 2016.

“We aren’t part of the pot plant segment’s celebrations”, says Adriano van Rooyen. He has 7 ha of rose in Andradas, the flower area that’s a 1.5-hour drive away from Holambra. It consists of 200 ha of flowers, mostly rose, followed by alstroemeria.

Van Rooyen: “We’re in survival mode. 70% of the flowers is used for decoration. That’s what was saved on the most during the crisis. And since supermarkets started selling potted plants, many florists have gone bankrupt. They can’t exist on the sale of cut flowers alone.

Adriano van Rooijen.

Van Rooyen has been based in Andradas since 2006; in the beginning, he’d expand his acreage by a hectare each year. But the past three years, he hasn’t been able to invest at all. In fact, he’s had to cut back on staff. In the beginning of last year, he had 70 employees, nowadays he has 57.

Rob van Rooyen and Roberto Kievitsbosch of Rosas Flamingo, which has 24 ha of rose cultivation in Andradas, are also holding back. They’re putting off investments and make do with 10% fewer workers. Van Rooyen and Kievitsbosch did notice some improvement during the days leading up to International Women’s Day though, and they’re also getting in quite a few orders for Mother’s Day in May.

Different story

Rose grower Geraldo Reijers – 31 ha in Andradas and a branch in Ceará – is telling us a different story. He sells a large part of his production through Cooperflora, a cooperative of mostly flower growers, who left the auction twenty years ago. He feels that Cooperflora negotiates more aggressively than Veiling Holambra and has a stronger position with the supermarkets when it comes to flowers.

“We weren’t hit by the crisis too badly, because we’ve been selling to supermarkets for longer.” A big advantage of Cooperflora in his opinion, is that they do more direct sales with end customers.

In the meantime, Veiling Holambra has developed a strong focus on flower sales through the supermarket chain. They launched the Poética Flor concept. Their goal is to increase their flower sales through supermarkets up to a value of more than 1.25 million euros. With a view to possible future requirements of the retailers, Veiling Holambra has also started a certification programme covering the entire chain, including producers, auction and logistics operators. The space needed for an increase in supermarket customers isn’t a problem at Veiling Holambra.

But there’s still a lot to be improved in the cold chain from producer to end customer, according to Roberto Okubo of Okubo Flores. He grows snapdragon, gypsophila and cut flowers 60 kilometres from Sao Paulo. It’s a fact that flowers are more delicate than plants in Brazil’s tropical climate.

Longer shelf life

“The cold chain for flowers isn’t adequate and supermarkets don’t know much about flowers yet”, says Okubo. Supplying to supermarkets also requires certain adjustments on the growers’ side. Flowers need to have a longer shelf life.

“For events, it doesn’t really matter if the flowers only last a couple of days. But if you want to sell them in a supermarket, shelf life needs to be better than that. And supermarkets want shorter stems. Growers need to review their post-harvest processing and their choice of varieties. But we should focus more on supermarkets. It provides a steady sales flow. We’re too dependent on events.”

Rob van Rooyen is convinced that things will improve again. “We’ve gone through difficult periods before. But we’ve also had some very good years, otherwise we wouldn’t have been able to expand like we did. Our hope for the future lies with the supermarket chain. Our initial strategy is to get in with the supermarkets that are selling potted plants. The infrastructure is already there.”

 

Brazilian corruption and bureaucracy

Brazil is a country where corruption is rampant. Former president Luiz Inácio Lula da Silva was convicted of corruption and had to go to jail. Ex-president Dilma Rousseff was accused of tampering with the accounts and there’s also a corruption investigation against current president Michel Temer. Corruption is found at all levels of government administration. Auction director Van Kruijssen says: “The corruption is deeply rooted, but this is addressed now. That’s positive. We need new regulations and inspections, as well as a new generation of politicians, who are willing to work for the country without enriching themselves.”

The next elections will take place in October. Are they going to have an impact on the horticultural industry? Possibly, if a political crisis is going to lead the country into an economic crisis. That could have a negative impact on the exchange rate between the reais and foreign currencies, which is bad for the imports of plant materials, greenhouse materials and royalty payments. Fuel prices might go up, which has a negative influence on plant and flower transports. Many growers aren’t afraid of the elections, though. ‘Things can only get better’, said one of them.

Bureaucracy is another problem in Brazil. For example, all workers at a nursery are obliged to wear clothing that protects them against the sun. If this isn’t provided, an employee can take the employer to court. Bureaucracy plays a role in imports, too. Not all reproductive materials can be imported.

And when it comes to plant and flower exports, bureaucracy is also a hindrance. But that doesn’t really bother the Brazilians too much. With more than 200 million people, the domestic market is huge and not yet saturated.

Despite the fact that the wages are comparable with those in Ecuador and Colombia, the growers don’t feel they can compete with the heavier flowers, with larger buds, from those countries. Ceará is located near the equator, but it’s only 800 metres above sea level. They don’t see themselves competing with the Africans on the European market either, because their costs are lower. KLM is planning to fly to Fortaleza, near Ceará. The airport of São Paulo, two hours away from Holambra, doesn’t have adequate cooling facilities to export flowers. Some Brazilian growers are considering distributing plants and flowers to neighbouring countries. But with all the bureaucratic hassle, that won’t happen overnight either.

 

 

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