World Floriculture Map 2016: equator countries gathering speed

Rabobank’s 2016 World Floriculture Map, published in cooperation with Royal FloraHolland, highlights some key global trends in the very diverse floriculture sector. Colombia, Kenya, Ecuador and Ethiopia—have passed the share of the Netherlands in 2015 and now account for 44% in global cut flower exports.

On the consumption side of the business, the rise of online floriculture sales is definitely one of these trends. Although the US floriculture market is showing signs of recovery, the total global floriculture market is still rather fickle.

In Europe, the picture is very varied. The Russian market has been declining, resulting in decreasing and changing cut flower imports. The Netherlands is still a major junction in global cut flower trade, but the four cut flower exporters close to the equator—Colombia, Kenya, Ecuador and Ethiopia—are gathering speed.

Colombia is also steaming ahead and has become a frontrunner in cut-flower sea freight. Looking at the future, predictability will become more difficult. Therefore, companies in the global floriculture market must be prepared for the unexpected.

Floriculture sector is extremely diverse
The ornamental plant sector is very diverse and includes the production of floral crops such as cut flowers and cut foliage, flower bulbs, potted flowering as well as foliage plants and bedding plants.

Global floral production value is estimated at USD 55bn. Tree nursery—the production of trees, shrubs and other hardy plants—is worth another USD 35bn. But whereas cut flowers, cut foliage and flower bulbs are traded globally, mainly from south to north, more bulky live plants, such as potted plants and nursery products, are mainly traded regionally.

Potted plants and nursery products are bought through a wider range of retail channels than cut flowers. However, there is one major trend impacting both categories: the rise of online sales (see Figure 1). The market share of online sales of cut flowers in total cut flower sales ranges from 4% in Russia to 10% in the UK.

Online potted indoor plant sales already account for 7% in Germany, 8% in Russia, France and the Netherlands and 12% in online retail forerunner the UK. It seems that garden centres are challenged as they are the ones losing most market share in the UK, France, Germany and the Netherlands.

Global floriculture market recovery is frail
Total global floriculture sales, regardless of the channel of purchase, have become rather fickle in the last eight years, as indicated by global trade figures. Volatile exchange rates had a major impact on these figures too.

It is uncertain if the uptick in cut flower trade, in both 2014 and 2015, will last. Some of the main floriculture markets are showing clear signs of recovery, others are flat or even in decline. The world’s largest import market for cut flowers is the US. In the US, floral sales have increased for four consecutive years.

Ecuador has profited most from the surge in the US’ cut flower imports. Mexico and Canada have also grown their share in the US market. Imports from Colombia, by far the largest supplier to the US, have not kept pace with total imports.

Removing trade flows into Russia
The European picture is more diverse when it comes to both market development and overall expenditure levels. One of the main changes seen is Russia’s decreasing appetite for (imported) flowers.

Up to 2013, Russia’s share in global flower imports rose steeply, but since the economic and political turmoil in Russia, imports have been declining. Moreover, the origin of trade flows to Russia has clearly changed.

Ecuador, Kenya and Italy have grown their market share in Russia’s cut flower imports, mainly at the expense of the Netherlands. Russia has not banned flowers from the EU, but the decreasing value of the Russian rouble has made imported products more expensive, and on top of that, exporters have become more hesitant to do business in Russia. This has mainly hit Dutch floriculture exporters.

The rising four have surpassed the Netherlands
The Dutch share in global cut flower exports has continued to decline since we first published a World Flower Map in 2005.

Currently, the Dutch share stands at 43%. As the cut flower production area measures only 4380 ha (both covered and in the open field), the Netherlands is still a major junction in international floriculture trade.

However, for the first time the four rising flower stars—Colombia, Kenya, Ecuador and Ethiopia—have passed the share of the Netherlands in 2015 and now account for 44% in global cut flower exports. Just two years ago, their share was 33% (in 2005 it was 25%).

While roses are the main cut flower traded by these four countries, Colombia has a relatively diversified product range and is also the largest exporter of chrysanthemum and the second largest global exporter of carnations in the world.
Despite low production costs, a favourable climate, large farm size, and increasing efficiency and quality, it remains challenging to grow cut flowers in these countries. There is (hardly) any domestic demand, producers have to deal with (a lack of) air freight capacity and high transportation costs, volatile exchange rates, and challenging political and social circumstances.

Colombia is the global leader in cut flower exports over sea
Where possible, exporting nations try to move away from expensive and relatively unsustainable air freight. Colombia is leading global sea freight in cut flowers. Part of Colombia’s market share gain in the global chrysanthemum market is related to the use of container shipping.

In East-Africa, the infrastructure is not yet developed well enough to boost these countries’ cut flower transportation over sea.

Retail shares of cut flower and indoor potted plants sales, 2015.

World’s largest cut flower export countries, 2005 vs 2015.

Cut flower trade by sea container (excluding cut foliage).