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The world of buying flowers on the international markets can be a tough game. Prices of flowers are through the roof this week from the dutch auction.
Last week was an odd one, with International Mother’s Day falling on Sunday May the 9th this year. Because we in Ireland, share the same Mother’s Day as the UK which falls on a different date to international mothers day, prices were due to increase anyway, with an increase in demand from other countries around the world. We were all expecting that increase to happen, but you would expect that after all the panic buying during International Mother’s Day week (week 16) that the prices would drop back off to a more normal level, but they haven’t!!
So what’s happened?
To understand that, maybe we should try and explain a little bit about how the Dutch Auction system works.
The Dutch Flower Auction System is very unique in how it trades flowers.
The Dutch Auction Clock
The dutch flower auctions has always owed its strong position to “the clock”. This method of selling is known as the ‘Dutch auction’. The Dutch auction works by buyers bidding on products in what could be described as a reverse auction. The price starts high and drops until the product is sold. This means that you need to be sure of the confidence of the market and the potential demand for a product on a given day, to be able to get the products you need at the best prices. If you are unsure you can end up missing out on the product or paying more that you should for the product. This works well, because it means that products get sold at a higher price when demand is high and a lower price when there isn’t as much of a demand. It means that growers can plan their seasons based on demand predictions and try to optimise their production to match the demand on the auction.
A very wide and deep assortment of flowers and plants are available though the Flora Holland auction clocks on a daily basis. Every day, 39 auction clocks are in operation at FloraHolland centers. This means 125,000 auction transactions every day. In other words, 12 billion cut flowers and over half a million plants a year.
Remote Buying takes advantage of new market demand, economic developments and technological possibilities, dealers buy a lot of their products remotely. With the help of such services as Remote Buying FloraHolland is able to attract an increasing number of (international) buyers to the auction. And the stronger the ‘purchasing power’, the more attractive it is for growers to trade their products through FloraHolland. Image auctioning is also popular the case of image auctioning, flowers and plants no longer appear in front of the clock but photographs of the products are displayed in the auction rooms. The main advantage is that flowers and plants can be taken out of the cold stores to the customer immediately after they are sold. Projection auctioning To ensure the clock remains attractive, the auction process needs to be continually renewed and improved. At the Aalsmeer location, all the traditional clocks have already been replaced by large projected clocks. The projected clocks have been redesigned to offer even more information to buyers. This allows you as a grower to display your logo and photographs while your products are being auctioned. This assists buyers in their purchasing decisions.
So what’s happened this week?
Demand was at high last week, and it appears that it was a reasonably successful time for florists, wholesalers and growers on the continent, considering the recession etc. So it appears growers sold everything they forecasted to sell and some more by all accounts, which is great for the business in general. However due to the cold weather in spring 2010, it seems that growers have been under production pressure in Holland which has caused the price of flowers to go up on the auction because they don’t that the volume of product available to meet the auctions demands. It’s nobody’s fault, it’s simply the ecomonics of the system working themselves out. This sort of a supply vs demand gap happens very rarely and most of the time it happens for a single product type, like for example, Hydrangea stems were €7 + on the auction running up to the 07/07/2007. It seems that there was a huge increase in Weddings on that one particular day which caused an run on white flowers, like Hydragea.
So buyers on the auction this week are under serious pressure. They can’t buy flowers at a reasonable price because supply is down. Growers can’t produce them fast enough at the moment because of the hectic week last week and the cold weather in general. With international flight restrictions also having some effect of certain products from different parts of the world, things are set to be unstable for the coming days.
Despite all of this, at Flowers Made Easy, we will still have the same availability, at the same prices as if it were a normal week thanks to the wonderful efforts of our partners in Holland.
Hopefully for everyone concerned, it will come back to some sort of normality next week.
Please feel free to post comments below.
Sources for this article & other interesting info I found when researching this article: