Now that Russia has invaded Ukraine, the floral industry too is increasingly worried, not only about the export of their product to these (and surrounding) countries but also about the falling ruble, the enormously high gas prices, and the question of whether all payments can be met if Russia were to be disconnected from the global Swift payment network.
"It goes without saying, but the main concern as of now is the well-being of Ukrainians," says Ronald Olsthoorn of Arcadia Chrysanthemums.
Trade-wise, for Dutch chrysanthemum growers, International Women's Day (March 8) is one of, if not the, most important day of the year. "Most of the flowers are already in Russia. The chrysanthemum - along with the tulip are the most important flowers for Women's Day - is a flower that is often ordered first and because has a long shelf life, it can also be shipped early."
However, normally this week they would still receive many orders from the surrounding countries, such as Ukraine, Latvia, Estonia, Lithuania, Belarus etcetera, "but of course, this was not the case this week, and whether this will happen remains to be seen."
Cancellations
Some export orders have already been put to a stop. "The first orders are already being canceled," Wouter Duijvenstijn of Beyond Chrysanthemum informed Dutch broadcast WOS yesterday. He too first of all expresses his sympathy to the victims.
Traders are even seeing trucks return. "It's terrible not because of the trucks, but because our Ukrainian employees don't know if their families are safe," says a trader.
Value of ruble plummets
Not only exports but also the value of the ruble is affected. Bert van Ruijven of Arcadia Chrysanthemums says the value of the ruble has collapsed. Yesterday he told WOS that the price has dropped from 90 cents per branch to 50 cents per branch. This morning, he informed us that this has not changed for today.
Blockage of payment service Swift?
On top of that, then, there is the question of whether Russian companies can continue to access the global payment network Swift. This option is still on the table, and will have major consequences not only for the Russians, but also for Western companies. Fruit wholesaler Roveg, for example, called all its Russian customers on Thursday to ask if they would like to pay that day, reports the Dutch newspaper Financieel Dagblad.
Borders still open
Last year, Dutch flower growers earned 185 million euros from the export of flowers and plants to Russia. It is about 2.5 percent of total exports. "It is not our main market," director of Association of Wholesalers in Floriculture Products (VGB) Matthijs Mesken told the Dutch newspaper Volkskrant. Above all, he is very concerned about the political tensions: "Of course, we hope that there will be a diplomatic solution; if the borders are closed it is a big problem," says Mesken. He says the current sanctions are not yet having an effect on sales, but that could change at any time and he expects exporters to become more cautious.
The phone of the director of the Association of Wholesalers in Floricultural Products (VGB) Matthijs Mesken doesn't stop ringing, he reports in a LinkedIn post yesterday. The question "What are the consequences for the export of flowers and plants now that Russia has invaded Ukraine?" is the one he gets every now and then. "It feels uncomfortable to talk about the sale of flowers and plants now... My thoughts are with the people of Ukraine.... It will not be long before sanctions will be imposed on Russia. And yes, they will also affect the trade in flowers and plants." As far as he knows, many shipments have already been sent and that the borders haven't been closed (yet). (Click here for the entire post)
High gas prices
Further in Matthijs' Linkedin post, he also states that the price of gas has exploded and that also affects the floriculture sector. "Even more growers will 'cold store' their greenhouses, which means fewer products will be available and prices will rise. These are worrying developments, especially for all those people who have now ended up in a war. On top of that, the high gas prices are causing even more unrest among growers."
Contract prices for March and April closed yesterday at prices above 1.30 euros per cubic meter. This morning, however, the price did drop back slightly. However, with prices around 1 euro, there is no peace in the market.