In the beginning of October, FloraHolland, Turkish growers’ and exporters’ interest organisations and Turkish ministers of Economic Affairs and Agriculture, started negotiations about lowering the high Turkish import duties on plants and flowers. FloraHolland expects the fees to go down drastically within a year.
Lucas Vos, CEO of Royal FloraHolland, signed a collaboration agreement with the chairmen of the Turkish interest organisations of growers and of exporters, Susbir and Export Union respectively, on the 3rd of October. Later that same day, the three parties began negotiations with the Turkish ministers of Economic Affairs and of Agriculture, about the lowering of the high fees for plants and flowers.
High import duties
The aim of FloraHolland’s efforts is to promote the export of plants and flowers of its members, to Turkey. With 80 million inhabitants, Turkey is a growing economy and an interesting market. The country already has a mature retail channel, but relatively few plants and flowers have found their way in so far. Thanks to its strategic geographical location, Turkey might also become a hub for plant and flower exports to countries further beyond. Turkey’s export market consists of 56 different countries with a total of 1.5 billion consumers within a 4-hour flight distance.
The main obstacle for the Netherlands at the moment are the high Turkish import duties on cut flowers (46.8%), green and flowering (indoor) plants (19.5%), outdoor plants (3.9%), bulbs (6.3%) and young plant material (3.9%). In an attempt to get these fees lowered, FloraHolland is seeking collaboration with Turkey. The auction is trying to develop two production areas in Turkey, as well as the market and supply chain in Turkey and surrounding countries. In exchange, Susbir and Export Union are helping to try and get the import duties lowered.
Turkey has its own, serious ambitions with regards to the floricultural industry. The country has announced that it is their objective to reach the top 10 largest economies in the world by 2023, the year during which the republic will celebrate its 100th anniversary. Turkey wants to professionalise its own floricultural industry, broaden their production and increase their plant and flower exports to €500 million by 2023 (+85%). In addition, Turkish Airlines is investing heavily in the optimisation of the trading routes. They want to become an important fresh produce freight carrier.
A question that comes to mind is why Turkey would lower the import duties on plants and flowers, when they want to become a large producer and exporter themselves? According to Monique Heemskerk, manager Turkey/Eurasia, Turkey won’t be able to fulfill its ambition of becoming a large plant and flower exporter without any imports. “Turkey wants to become a major hub for the export of flowers, plants, vegetables, fruit and fish. They won’t be able to do that without importing plants and flowers. All sorts of calculations have shown that the high import duties don’t make sense considering the Turkish ambitions.”
Heemskerk isn’t afraid that FloraHolland’s assistance with the development of two Turkish production areas – the auction contributes in the form of Dutch knowledge – will backfire. For example that FloraHolland’s investment of hundreds of thousands of euros per year in Turkey will result in a situation where member growers suffer from large quantities of Turkish plants and flowers flooding the European market. She explains that a market development project has been incorporated in the conditions of the development of the new horticultural areas. The market development project focuses on new markets in the Turkish hinterland. “If Turkish growers shipped their produce to the Netherlands, they would get in the way of the Dutch growers”, says Heemskerk. “But by selling the Turkish plants and flowers to the countries further beyond, the gateway to the East will be developed and the Dutch platform will be expanded.”
The manager Turkey/Eurasia points out that another condition of the development projects in Turkey, is that any products they choose to cultivate must be derived from Dutch breeders. “We’ve also stipulated that the new Turkish growers must pay royalties to these breeders. Breeders who know that they’ll be receiving the appropriate royalties are more willing to invest in Turkey.”
Heemskerk has noticed on the local, Turkish market that supermarkets are currently going through the same development as those in Germany 15 years ago. Supermarkets are expanding and are starting to include plants and flowers in their assortment.
“If that trend continues, the Turkish market will develop and demand will increase. Product diversity will then become an important requirement. And that creates opportunities for all our members, because they’ll be needing Dutch and Kenyan plants and flowers to achieve that diversity.”
“I don’t believe that Dutch growers are afraid of the developments in Turkey”, says Heemskerk. “They know that Turkey is still behind with regards to expertise. Some Dutch growers have shown interest in starting something up in Turkey. The Turkish growers need the Dutch growers.”
How confident is Heemskerk that the import duties will be lowered within a year? She can’t say that it’s 100% sure. FloraHolland has been active in Turkey for 2.5 years now and Heemskerk says that during that time, she’s learned that the sector approach seems to work well. The fact that FloraHolland has teamed up with Turkish branche organisations to negotiate with the ministries, means that the negotiations won’t be influenced by any political struggles between Turkey and the EU or between Turkey and the Dutch government. The Dutch-Turkish diplomatic incident from March this year for example, had no impact on FloraHolland’s approach, according to Heemskerk.
And the veto of Dutch Minister of Foreign Affairs Bert Koenders last September, regarding the Turkey-EU Customs Union review, didn’t play a role either. Heemskerk: “All of that is politics. The Netherlands is Turkey’s largest import country. That makes the Netherlands very important for Turkey. Political tensions don’t influence the business relations. Much more tiresome for us than the politics, is that Turkish president Erdogan keeps changing around his ministers. Turkey has great ambitions and this is our response. The country managed to get the largest marketplace for plants and flowers in the world on board for the development of their floricultural industry. That’s something they are proud of and that’s what we’re responding to.”