THE DIRECTIONS OF FLOWER BULBS SUPPLY AND DISTRIBUTION IN POLAND IN THE YEARS 1990 AND 2004

Wioletta Wróblewska
Department of Horticultural Economics, Uniwersity of Life Science in Lublin, Poland

ABSTRACT

The article presents the changes in the directions of flower bulbs supply and distribution that took place on the Polish market in the years 1990–2004. The research revealed that the biggest, and also increasing role in the sources of ornamental plants flower bulbs supply was performed by the supply itself. In 2004 producers' own material constituted 76.94% of the flower bulbs supply. Leaving the produced material for further reproduction prevailed in its sale structure, which is the cause of Polish farms' low marketability. On average, only 47.31% of the entire production was marketed. At the same time, 23.38% of all the producers did not market bulbs at all in 2004.

Key words: flower bulbs, supply, distribution.

INTRODUCTION

The market of flower bulbs of ornamental plants is the least known branch of Polish floriculture. This also concerns the way the selling market functions. The production of flower bulbs on a commercial scale developed in Poland already in the 1950s. The Head Office of Horticultural Seed Production (Centrala Nasiennictwa Ogrodniczego), which was established in 1951, expanded the cultivation of bulbous plants through the chain of plant and seed breeding stations. Moreover, district Central Offices of Horticultural Seed Production and Arboriculture (Centrale Nasinnictwa Ogrodniczego i Szkółkarstwa – CNOS) started to contract with private horticultural farms to purchase flower bulbs [11]. Additionally, from the beginning of the 1960s the development of flower bulbs' production was stimulated by export, mainly to the Comecon member countries [3]. In the following years CNOS limited itself to purchasing bulbs surpluses which were to be exported and also serve as supply for garden shops. CNOS supplemented its offer with imported bulbs. In the 1990s several big companies were established that were specialised in the distribution of bulbs. They include, among others, Polyanna, Green-Land, Polan [8]. Currently, the way the market is organized depends on supply-demand relations. Therefore, developing efficient distribution systems is a form of reaction to market changes.

The aim of this article is to assess the changes in the directions of flower bulbs supply and distribution, which indicate how this type of domestic market is organized and the way it functions.

MATERIAL AND METHODS

This work contains the analysis of the changes in the directions of ornamental flower bulbs supply, as well as their distribution in Poland that occurred in the period between 1990 and 2004. The base for the analyses was provided by the empirical data coming from the questionnaire survey conducted in the years 2004-2005 among 30 domestic farms dealing with the flower bulbs' reproduction. The farms were located in the area encompassing the whole country. The selection of the sample, as well as the identification of the producers, was mainly based on the list containing members of The Association of Ornamental Bulbous Plants Producers (Stowarzyszenie Producentów Ozdobnych Roślin Cebulowych), to which about 20% of all the producers in the country belong. Moreover, the available company catalogues (e.g. The Gardening Companies' Address Book 2002), the advertisements in specialist magazines, and the information from the identified producers, wholesalers and retailers were all used in this work.

The analysis was carried out for the whole group of 30 farms, and also according to the acreage and the type of cultivation. Therefore, the population was divided into the following groups:

1. According to the reproduction area, the following types of farms were defined: small – with the reproduction area < 1 ha (16 farms), average – with the reproduction area 1-5 ha (10 farms), large – with the reproduction area > 5 ha (4 farms).

2. According to the type of cultivation, the following types of farms were defined: dealing only with the flower bulbs' reproduction (15 farms), combining the production of flower bulbs and protected cultivation of cut flowers (15 farms).

The farms defined above appear respectively as 'bulbs' and 'bulbs and flowers' in the tables and figures, while in the text they are described as the farms only with the bulbs' reproduction and the 'mixed' ones.

The analyses were performed with simple math and statistical methods, mainly using percentages.

RESULTS AND DISCUSSION

Ornamental plants flower bulbs supply. The farms producing flower bulbs use them for two purposes – for further reproduction and for protected cultivation of cut flowers. Such flower bulbs come either from external sources or from one's own farm. This second source, which is so-called 'self-supply', plays a significant role on Polish farms [7]. As the analyses conducted among the examined population revealed, there is a growing tendency towards self-supply. Despite the fact that the proportion of producers using solely their own material lowered by 13.59 percentage points in the years 1990-2004 and currently equals 13.33%, the proportion of one's own material in the flower bulbs supply for further production grew from 70.31% to 76.94% (Fig. 1). In terms of importance, indirect import is the second supply source, however, its significance is diminishing. During the examined fifteen years the average amount of material originating from this source decreased by 1.3 times, and its proportion lowered from 14.25% to 11.02%. There was a slight increase in the significance of direct import. In 1990 this way was used to obtain 3.27% of bulbs, whereas in 2004 – 4.80%. The producers highly assessed import as a supply source, also the indirect one. Such favourable assessment resulted mainly from the material's high health quality and wide availability of species and varieties. Nevertheless, the decrease in the significance of indirect import, and slight increase in direct import as a supply source, may suggest that producers want to lower the production costs by avoiding middlemen's mark-up. At the same time, domestic bulbs' producers lose their significance as a supply source. Their participation in total supply lowered from 9.36% to 4.49%. The producers poorly assess the bulbs of ornamental plants coming from the domestic producers. They justify their opinion mainly by pointing out the poor quality of bulbs and unsatisfactory selection. Relatively the least significant role was performed by the wholesalers – they provided the producers with about 3% of bulbs during the examined period.

Flower bulbs self-supply is the most significant in case of small and average farms. The producers assess their own material as qualitatively good, as well as sufficient in terms of selection, but the main reason for its high participation in total supply is lowering the costs of material's purchase. Although the proportion of farms using solely their own bulbs decreased from 33.33% and 20.00% in 1990 to 20.00% and 10.00% in 2004 (Table 1), the proportion of self-supply in total supply increased respectively from 68.21% and 72.33% to 80.83% and 83.88% (Table 2). The owners of those farms purchase relatively less and less bulbs on the market. Only in the case of average farms there was a slight increase in supply in the form of purchasing bulbs from importers – from 5.08% to 8.56% (Table 2). In the case of large farms self-supply was much less significant and remained at the same level during the examined 15 years. The proportion of self-supply on those farms was 66.67% in 1990 and 65.25% in 2004, and none of large producers used solely their own material. Relatively important role in case of large farms is played by imported bulbs, however, the part of supply they constitute did not generally change and equals about 33% of the whole supply. Moreover, the sources from where the bulbs come did not change either. In the analyzed period approximately 2/3 of bulbs came from direct purchases from Holland, and 1/3 from domestic importers. In the whole supply direct import constitutes 22%, and indirect import's part is 11%. There was also an increase of purchases from domestic producers in the case of large farms, but it still is at a very low level, which is 1.5% of total supply. This is because there is a need for large quantity of supply which would be diverse and of good quality. Frequently, this is something domestic producers are not able to provide.

Due to the fact that the examined population consisted mainly of small and average farms, there was an increase of self-supply by 6-7 percentage points in both groups when comparative analysis of farms producing only bulbs and the mixed ones was carried out. Nevertheless, self-supply's role is more significant in the case of farms which only reproduce bulbs – 84.75% of their bulbs came from self-supply in 2004. In the case of mixed farms this proportion was 72.68%. During the examined period of 15 years the proportion of producers not using any other supply source apart from their own decreased from 33.3% to 13.33% in the case of producers dealing only with reproduction, and from 15.38% to 13.33% in the case of mixed farms. In the latter case, a significant role is performed by purchasing imported bulbs from national middlemen – this source constituted 15.59% of mixed farms' supply in 2004. However, this percentage was 1.3 times lower when compared with 1990. This source is relatively much less significant in the case of farms dealing only with bulbs' reproduction. In 2004 the proportion of bulbs coming from indirect import was 2.75% of their total supply. Moreover, the proportion of their supply from other domestic producers decreased significantly – from 11.52% in 1990 to 3.5% in 2004. Currently, it is at a lower level than in the case of mixed farms, in which case it constitutes 5.11% of total supply.

The majority of the producers which use other supply sources (58.62%) do it annually, however, as it was revealed, the proportion of those sources in the quantity of material meant for reproduction is insignificant. Generally, the bigger the area of bulbs' cultivation on a farm, the more frequent the use of other supply sources. Whereas 100% of large producers used them annually, in the case of average producers this percentage was 60.00% and in the case of small producers – 46.67%. The main reason for using bulbs from outside one's own farm is enriching the amount of species and varieties, which was pointed out by 92.32% of the producers. The aim of purchasing bulbs in the case of large farms was making up for the shortage of one's own material and enriching the amount of species and varieties. In the case of small and average farms the main aim was to enrich the amount of species and varieties. The producers which only reproduce bulbs use other supply sources more frequently than the producers combining the production of bulbs and flowers. Out of the first group 71.4% use bulbs from other sources annually, and in the case of the second group this percentage is only 46.7%. The reasons for purchasing bulbs are also different. The producers dealing only with reproduction make up for the shortage of their material, whereas in the case of mixed farms the majority of producers purchase bulbs in order to enrich the amount of species and varieties.

The distribution of flower bulbs. Leaving bulbs for further production on a farm plays a dominant role in the sale structure of the produced material, and its significance remains at a constant level. On average 54.72% of total production was used as self-supply in the examined population in 1990. In 2004 this proportion was just slightly lower – 53.69%. Therefore, the marketability of the examined farms is very low. On average only 47.31% of total production is marketed. At the same time, ¼ of all the producers in 1990 and 23.38% in 2004 did not market bulbs at all.

The bulbs meant for sale (vendible bulbs) are mainly sold through two distribution channels – through distribution companies and by direct delivery to garden shops. Those distribution channels constitute, by and large, a constant 10% of total sale in the case of garden shops and no more than 30% in the case of distribution companies (Fig. 2). The latter ones obtain 18.40% of narcissus bulbs, 38.75% of lily bulbs, 22.50% of sword lily bulbs and 36.67% of "others" species. Distribution companies are the most important external selling channel of bulbs of the above-mentioned species and their significance is slowly growing. This distribution channel is used the least by the producers of tulip bulbs; they use this channel to sell only 11.62% of their production. The purchases made directly by the producers of cut flowers and other producers reproducing bulbs constitute a growing part of total sell, although it is still relatively low. In the years 1990-2004 the direct sale of bulbs from farms increased from 5.05% to 6.91% in the case of cut flowers' producers, and from 0.31% to 3.75% in the case of other producers of flower bulbs. The latter distribution channel plays relatively the most important role in the sale of bulbs of the species from "others" group, because altogether 15% of this material is sold through this channel, whereas only 0.69% of tulip bulbs and 0.57% of narcissus bulbs. Narcissus bulbs are sold mainly to all cut flowers' producers – they purchased 20.23% of the production in 1990 and 22.78% in 2004. The increasing significance of direct contact between producers proves that producer-buyers wish to reduce production costs. By buying bulbs directly from producers they reduce purchasing costs by the amount of retailer's mark-up. This is very important because of high cost of bulbs in total production costs (of both bulbs and cut flowers) and the increasing bulbs' price which later results in higher price of cut flowers [12].

Export played particularly insignificant role in marketing bulbs by the examined farms in the years 1990-2004. Only 0.14% of total production was sold through this distribution channel in 1990 and 0.37% of production in 2004, however, only tulip and narcissus bulbs were exported. At the same time, only 1.5% of tulip bulbs and 0.33% of narcissus bulbs were sold through this channel in 2004. For example, in Holland as much as 75% of bulbs production was exported in recent years [1]. In this country both export and selling for internal market takes place by means of auctions. 70-80% of the production is sold this way. So-called 'green auctions' conducted on farms before bulbs are gathered, as well as traditional Dutch auctions, by means of which about 5% of bulbs are sold, play the most important role in transactions between producers and middlemen [10]. According to Kleijn and Heybroek [4], auctions may play a significant role in the development of bulbs' production – comparable to the one in floriculture – because they create a more transparent market by providing information about demand and supply. Moreover, specialist agencies function on the Dutch market. On the one hand, they market the material and on the other hand, they offer a range of services connected with processing of bulbs and proper treatment, i.e. preparing or refrigerating them.

Depending on the plantation size and the kind of cultivation there were some differences in the general bulb sale structure presented above. The proportion of bulbs meant for self-supply decreased from 54.17% in 1990 to 47.89% in 2004 in the case of small farms and from 44.24% to 42.42% in the case of average farms. In the latter case, direct sale to flower producers plays relatively bigger and growing role as a method of selling bulbs. This channel was used to sell 8.83% of bulbs in 1990 and 20.21% in 2004, whereas in the case of small farms this percentage was 4.67% and 3.70% respectively. During the examined period of fifteen years average farms reduced their sale to wholesalers slightly – by 3.6 percentage points, so it currently constitutes 27.02% of their production. Small farms use this channel to sell similar amount of bulbs – 30.49% of the bulb production.

Large farms differ considerably when compared to small and average farms because of the substantial amounts of bulbs left for further production, which constituted 94.17% and 85.67% of their production in 1990 and 2004 respectively (Table 4). Such a high proportion can be explained by the fact that during the examined period those farms dynamically enlarged their cultivation area and used a big part of their production for planting new fields. In the group of large farms the average cultivating area in 1990 was 3.63 times bigger than in 1980, and 2.08 times bigger in 2004 than in 2000.

While comparing distribution channels used by farms dealing only with bulbs' reproduction and those combining the production of bulbs and cut flowers, it can be noted that in the first case the amount of the material left on the farms remained at a constant level of about 26% in the years 1990-2004, whereas in the second case this amount decreased from 76.95% to 73.37% (Table 3). Such high percentage of bulbs for self-supply on the mixed farms is not explained by cultivating bulbous plants meant for cut flowers, because in order to do that 25.65% of bulbs were left in 1990 and 21.71% in 2004. Thus, the mixed farms left bigger percent of bulbs for further reproduction than the farms growing only bulbs – it was as much as 51.66% in 2004. It can be concluded from the above that only farms specialising in growing bulbs can be recognized as commercial. The distribution companies are their main selling channel. They obtained 46.55% of bulbs in 1990 and 54.00% in 2004. The mixed farms sell their output mainly to garden shops – 8.21% of bulbs in 1990 and 15.52% of bulbs in 2004. This is because they market only the surplus of their production, so they only have small amount of production at their disposal.

The changes in the general conditions of farming in the years 1990-2004 had significant influence on the possibilities of products' sale. Whereas in 1990 on average 24% of farms had problems with selling their products, fifteen years later this percentage rose to 40% (Table 4). Those difficulties were experienced mainly by farms with the smallest cultivation area – respectively 41.67% of examined farms faced them in 1990 and 53.75% in 2004. However, the worsening producers' situation was indicated mainly by the average and large farms' selling problems. Only 15 years ago not a single producer had problems with selling its bulbs, and in 2004 such problems were experienced among 22.23% of average farm owners and among 33.33% of large farm owners.

According to the producers, the problems with selling bulbs in 1990 were aggravated mainly by the fall in demand resulting from poor material condition of the society. However, it is only a subjective opinion, since it is not confirmed by the research on the demand for cut flowers [2,13]. According to Jabłońska [5,6], Polish society buys more and more flowers with every passing year, and the reaction to this trend is the increasing flower production, which also concerns bulb flowers. For example, the cultivation area of cut tulips increased from 28 ha to 46 ha in recent years. As a result, domestic flower production completely satisfies the needs of the market [12]. There is also a growing demand for bulbs, but flower producers more and more often prefer the imported material than the one from domestic production. The bulb producers' problems with selling bulbs result mainly from poor sale organization together with simultaneous small production scale, as well as from the Polish producer's mentality. The farms with small cultivation area are not able to provide large quantities of bulbs, while producers do not prepare their offer with guaranteed prices, delivery dates and bulbs' quantities early enough. Additionally, it happens that the accepted trade offer is later withdrawn, which hinders the cooperation with distribution companies. Only 47% of the producers from the examined population prepared trade offers in 2004, but all farms with cultivation area over 5 ha did it. In the case of average and small farms trade offers were prepared by only 50% of the producers from the first group and 31% from the second. For example, Dutch producers prepare their trade offers a year or even more in advance, and the flower bulbs are sold even before being collected, frequently several years in advance [14].

Merging into producer groups and offering joint sale could be one of the methods for improving sale organization. However, the main obstacle to do that is the Polish producer's mentality, the unwillingness to cooperate. In recent years there was only one producer group of flower bulbs in Poland – Żuławska Grupa Producentów Ozdobnych Roślin Cebulowych i Upraw Rolnych 'Jantar' (The Marshland Group of Ornamental Bulbous Flowers and Farming Producers 'Jantar'), but in fact the cooperation of its members was not successful [9]. Joint sale of bulbs abroad was ranging from 780 thousand to 1 million bulbs in the years 2000-2003, which constituted only 5–10% of the respective Group members' production. This research revealed that 13.33% of the examined farms were members of the Group 'Jantar', however, none of them used this channel to sell their material.

CONCLUSIONS

1. The Polish flower bulbs market is characterized by high proportion of self-supply in bulbs, which is a growing tendency. In the examined population producers' own material constituted on average almost 77% of the whole supply, and 13.33% of the producers did not use external supply sources at all. On average 54% of the production is meant for the producers' own needs, however, 23.4% of the examined farms do not market bulbs at all.

2. The role of self-supply is less significant in the case of farms which only reproduce bulbs. They market as much as 74% of the bulbs, and their main selling channels are distribution companies and domestic producers of cut flowers. In the case of mixed farms only the production surplus (27%) is sold and it is mainly obtained by garden shops. Because the latter constituted 50% of the examined population it can be concluded that only half of the Polish farms reproducing bulbs are commercial farms.

3. The cooperation with producers is critically assessed both by distribution companies and retail shops. They emphasize the lack of possibility to enter into a contract to obtain larger quantities of merchandise and the general lack of trade offers or their unavailability on time. Only 47% of the producers from the examined population prepared trade offers, although all of those cultivating an area bigger than 5 ha had their trade offers.

4. The producers should be the ones wishing to improve the sale market organization. This could be achieved by, among other methods, running joint sale. Although the producers are aware of this fact, in reality their mutual cooperation encounters a mental barrier.

REFERENCES

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14. www.cebulkikwiatowe.pl

Presented results make use of the material gathered during broader research concerning the market of flower bulbs of ornamental and bulbous plants in Poland and Holland conducted as a part of the project 'Transfer wiedzy jako szansa rozwoju rolnictwa małych i średnich przedsiębiorstw' (Transfer of knowledge as a chance of the development of agriculture in small and average enterprises) which is co-financed from the European Social Fund and from the State budget as a part of the operation 2.6 'Regionalne Strategie Innowacyjne i Transfer Wiedzy' (Regional innovative strategies and transfer of knowledge) of the Integrated Regional Operational Programme.

Accepted for print: 30.04.2009

Responses to this article, comments are invited and should be submitted within three months of the publication of the article. If accepted for publication, they will be published in the chapter headed 'Discussions' and hyperlinked to the article.