Cost Reduction Cannot Solve Everything
FLORAHOLLAND (14 December 2010) - So said FloraHolland’s chairman Bernard Oosterom in his lecture at a conference on cooperative affairs. He believes that growers should not focus only on cost saving, but also on creating demand and revenue growth. The growers have achieved cost reduction through up scaling, automation, and mechanization. However, the profitability of the producers not really improved. The beneficiaries were sometimes other parties along the value chain, like trading. Therefore, FloraHolland supports its members by focusing on marketing.
These conclusions are relevant also for the small producers, who serve niche markets. They are as important for FloraHolland as the big-scale producers.
The threats on the Dutch floriculture producers are in the translocation of production to other countries and the dictating of new ‘rules of the game’ by the supermarket chains. The big food chains buy in a totally different way than the traditional trade. The products must conform to very strict standards; they buy only when they are sure that the product can be sold and they determine a low price level.