Dutch Expertise Can Help Grow Mexico’s Ornamental IndustryBy Karel van Laack | Wed, 09/29/2021 - 14:52
Mexico has the world’s third-largest production area dedicated to the cultivation of ornamental plants and flowers. The effects of the COVID crisis have painfully highlighted several of the main weaknesses of the industry. A lack of organization in production and commercialization processes, lack of investments, and obstacles in traditional distribution channels have been identified. Simultaneously, the nearby US and Canada markets provide ample growth opportunities for Mexico’s floriculture businesses. Dutch expertise, technology, and innovation can benefit the growing ornamental industry in Mexico internally and in its expansion in foreign markets.
Latin America possesses key elements that achieve high productivity, including extraordinary natural resources, adequate altitude, excellent geographical location, a strong labor force dedicated to the production of crops, and other economic frameworks that support the further development of the production and exportation of ornamental crops. Ornamental crops in Latin America have been subject to significant development in recent years, particularly due to the optimization of three key scenarios for production: agronomic issues, crop science, and technological innovation.
Mexico has the world’s third-largest production area dedicated to ornamentals. The country accounts for 23 percent of ornamental crops in Latin America, positioning itself as the second-largest producer in the region with 12,600ha of land dedicated to ornamental crops. Of these, 11,500ha are cut flowers and 1,200ha are ornamental plants. The State of Mexico has consolidated its position as the main flower producer in the country, with 54 percent of total production. It is also the most important exporter at the national level. Hence, the production of ornamentals is of high economic importance in the country.
Ninety percent of ornamental production in Mexico is concentrated in six states, namely: State of Mexico, Puebla, Morelos, Michoacan, Jalisco, San Luis Potosi and Baja California. It is important to note that 80 percent of production is destined for the local market and only 20 percent is exported. It is estimated that there are about 10,000 producers, the vast majority of those being small and medium-sized companies. Therefore, floriculture is considered a profitable business for small Mexican farms. Over two-thirds of production takes place in the open air, with main crops including gladiola, carnation and sunflower. A quarter of the production is in greenhouses and nurseries for roses, gerbera, and potted plants.
In 2019, Mexico ranked third in production of ornamental plants in the world. It was also the 17th-largest exporter to the US and Canada. The COVID-19 outbreak in 2020 has caused numbers to plummet, as the pandemic has had a harsh effect on the ornamental industry worldwide. Confinements and lockdown measurements around the world were cause for a tremendous collapse in consumption of ornamental plants and flowers. In Mexico, the ornamental industry was not deemed “essential” by the government, causing businesses to close their shops for prolonged periods during 2020. Furthermore, exports fell due to severe restrictions in Europe.
The effects of the COVID crisis have highlighted several of the main weaknesses of the Mexican ornamental industry. Firstly, a lack of organization in production and commercialization processes can clearly be identified. Secondly, a lack of investments was noted. Thirdly, a lack of promotion to end consumers that take shifting consumer preferences into account can be observed. Lastly, the crisis underlined obstacles in traditional distribution channels.
The Netherlands and Floriculture
The Netherlands is the largest producer of cut flowers in the world, producing 1.7 billion cut flowers annually, roughly 60 percent of the world's trade. The country is the leading exporter to Germany, Switzerland, France, and the UK. With the famous Dutch Flower Belt in full bloom, visitors are treated to purple hyacinths, saffron roses, countless varieties of tulips, and bright yellow daffodils. The Dutch flower trade is clustered in a unique economic system: Royal Flora Holland. Royal Flora Holland is the main marketplace for cut flowers in Europe. Flowers worldwide find their buyers through this auction and the Dutch network of flower traders. It serves as an important trade platform for traders from developing countries and is open all year round.
The Netherlands is famous for its tulips, and for good reason. The country is the world’s largest cultivator of tulips, growing the majority of bulbs planted in Europe and North America. The export of bulbs and the cultivation of flowers, in its different species, is one of the economic mainstays of the country and one of its biggest tourist attractions. The Netherlands is Europe’s central floriculture trade hub.
It should come as no surprise that the COVID-19 pandemic also left a mark on Dutch floriculture. Struggling with a steep drop in ornamental consumption at the start of the pandemic, producers tried to preserve crops and bulbs in warehouses and in the fields. Companies in the sector saw demand disappear due to contractions in the external market and their largest domestic market: the catering industry. The Netherlands Horticultural and Agricultural Organization (LTO) estimated the damage to the local industry at 5 billion euros. In response, the Ministry of Agriculture, Nature and Food Quality (LNV) allocated the ornamental sector 600 million euros to compensate for losses due to damages suffered. However, the industry proved solid enough to overcome the crisis largely on its own. According to Royal Floral Holland, not one producer went out of business due to the COVID outbreak. The financial support from the Dutch government proved largely unnecessary and the industry eventually showed a modest growth totaling 10 billion euros over 2020.
Dutch Expertise to Boost Mexico’s Industry
The weaknesses in Mexico’s ornamental industry can be transformed into opportunities for the future. Experts agree that Mexico has a largely unexplored export market in the US and Canada, particularly due to the proximity and the opportunities offered by the Free Trade Agreement between the three countries (USMCA). Dutch expertise can benefit the growing ornamental industry in Mexico in their quest to expand on foreign markets. The Dutch are the largest distributors of ornamental plants and flowers in Europe, providing models of distribution that can be applied in Mexico.
The Dutch have ample experience with production and commercialization processes that can reinforce the Mexican industry through the exchange of best practices, the application of technology, and the implementation of innovation. The Dutch industry offers sustainability-oriented technology via energy-saving equipment, biological crop protection, re-usable substrates, eco fertilization components and units, and other characteristics that make Dutch solutions attractive. The Netherlands is Mexico’s main supplier of flower bulbs, with an export value of almost 25 million euros of flower bulbs in 2019. The Dutch can further support the Mexican industry by supplying products and solutions that optimize the cultivation of such bulbs.
Holland House Mexico
Holland House Mexico (HHM) is the bilateral Chamber of Commerce between Mexico and The Netherlands. We are a nonprofit organization based on memberships that aims to help Dutch companies be successful in the Mexican market, and to contribute to sustainable business development between our two countries. HHM was founded in February 2019, as an initiative supported by local Mexican organizations, the local embassy, and large Dutch corporations with a presence in Mexico, and particularly the Dutch organization NLinBusiness. Based in The Hague, NLinBusiness was founded as a private initiative to support Dutch companies with international ambitions. They execute this task through a global network of independent, nonprofit business councils where Dutch companies can receive guidance and support in similar fashion. Holland House Mexico is proud to be one of these “hubs.”
Our mission is to facilitate the success of Dutch companies in the Mexican market and to promote international trade, investment, and sustainable business development between The Netherlands and Mexico. We carry out this mission through a synergy of soft-landing services, the HHM community, and our greater network, which together enhance business development. Membership to our Chamber includes offline and online brand exposure, Dutch branding, innovation branding, easy access to information on relevant industry events, opportunities to act as speakers at HHM events, interaction and networking opportunities with potential clients, discounts at several industry fairs organized in Mexico and The Netherlands, and opportunities to work together with other companies on relevant themes.
If you are a Mexican producer interested in learning more about Dutch innovations that can boost your business, feel free to reach out to us. In turn, we can also help Dutch businesses bring their technology, innovation and expertise to Mexico.
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