From May, worldwide demand for flowers increased; however, for many producing countries, including Colombia, freight capacity and rates have been a major issue. The normalization of flights will be slow and gradual until the middle of next year. This is explained by Álvaro Villamizar, president of Caproflor, an association that has 75 flower growers especially concentrated in the Sabana de Bogotá, Colombia. He gives us an insight in the impact of the pandemic on Colombia's floriculture industry, how the situation is nowadays and the outlook for next year.
Onset pandemic: demand down, production costs up
When the pandemic started, just a month after Valentine's Day, the uncertainty approached the growers and those who make up the production chain. "As the markets were closed worldwide, the initial demand went from 100% to 10 or 20% and resulted in the vast majority of growers making the decision to prune their crops. Fortunately, the workers could continue going to the farms, but to reduce the risk of spreading of the virus, they had to comply with the phytosanitary requirements and keeping distance, forcing the workforce to be reduced from 100% to 60% - without this implying layoffs of personnel though, as they started to work in shifts. This, combined with the increasing costs of crop protection products, which are mostly imported, resulted in an overall increase in production costs."
Increase in orders, but growers not prepared
The situation started to improve in May. "The orders increased to 65% for Mother's Day, despite the fact that the European borders were still closed for the entry of our flowers and foliage. The US began to open its markets and increasingly more orders were coming. However, our flower growers, due to the pruning. It aroused spontaneous solidarity among growers, within and between unions, supporting each other to fulfill the incoming orders."
Support by the government
On top of allowing the agriculture industry to continue to operate, the government did more to alleviate the negative impact caused by the uncertainty. "Like VAT refunds, support for the payment of the mid-year premium, and loans through Finagro."
Today's orders higher than in 2019
When looking at today's situation, Villamizar explains that orders have improved especially in the United States. "Due to the pandemic, as American families did not go on vacation, households increased the consumption of flowers, foliage and ornamentals, Additionally, the lack of Avalanche roses, one of the main crops grown in Kenya, contributed to an increase in orders of 20%, compared to the same dates in 2019."
Freight capacity still an issue
"There is a very important and worrying issue that is being experienced and that will cause serious problems for the placement of our products in the different markets of the world, and this is that 90 to 95% of the air fleet in the world is on land", Villamizar stresses. "Although it is improving gradually, it definitely affects the capacity of the warehouse and cargo, because the flight frequencies are reduced to the minimum amount, having to resort to charter flights, which increases the freight per kilo of flowers to the USA by almost 30% and 50% to Europe", he says. Although this effect of shipping restriction is more marked to European markets - not to Miami, as there is a greater flow of flights -, the flights to New York and Los Angeles are impacted as well. "Flights from 8 to 9 weekly frequencies were reduced to zero. So, from 250 tons of flowers that were sent weekly to NY, it was reduced to 60 tons, having to resort through Mexican transporters that make the route: Bogota-Quito-Mexico-Los Angeles or NY. In turn, it has a slight impact on the conservation of the cold chain, due to loading and unloading effects. All of this forced shipments to be concentrated in Miami, generating congestion."
Flights expected to normalize mid 2021
The normalization of flights will be slow and gradual until the middle of next year, expects Villamizar. As a consequence, the exports for important holidays are expected to be affected. "The first holiday affected will be All Saints Day in Spain, celebrated on November 1st. From Colombia the main flowers going to this country for this holiday are mainly the mini carnations and, on a smaller scale, roses which will leave in October."
Then, for Valentine's Day (February 14), it is expected that freight costs per kilo will rise by 80 or 100%. "This due to the disproportion between air cargo and trade balance. For example, four full planes leave and only one returns full, the other three empty or with very little charge."
Then, Mother's Day in the UK will follow in March, 2021. "Then, mainly mini carnations will be shipped to this country out of Colombia and also this is expected to be affected. The same will happen with shipments to Japan due to the increase in freight rates and the infrequency of flights."
"All in all, this gives us an idea of all the barriers and obstacles that our growers have to overcome in order to fulfil customer orders globally", he concludes.
For more information:
Caproflor
www.caproflor.com