War of the Roses: Mother's Day Bouquet Is an Economic and Political Battlefield
In the flower business, the week of Mother's Day perennially marks the pinnacle of sales. Even with all those hopeful Casanovas dropping beaucoup bucks for bouquets on Valentine's Day, we still shell out more for mom.
But the holiday isn't all sunshine and roses. Behind the scenes, there's an economic and geopolitical battle going on over imported flowers.
With about two-thirds of consumers buying them for Mother's Day, U.S. spending on cut flowers for this holiday alone will be $2.2 billion. But it's less of an economic shot in the arm than it could be, because nearly 80% of all flowers sold in the U.S. come from South America. And part of the reason for that is a policy in Washington that supports some foreign flower-growers with U.S. tax dollars.
A Brief History of Blooms
Historically, the flower market has often been a tumultuous business: Consider the Tulip Mania that took place during the 17th-century Dutch Golden Age. That infamous and odd period, widely considered the first economic bubble, saw prices for tulip bulbs soar to completely insane levels before the entire bulb market crashed spectacularly. At the peak, the price for a single bulb was more than 10 times the annual income of a typical skilled craftsman, and even topped the value of a deluxe house in Amsterdam.
Tulip Mania has been compared to the dot-com bubble and the subprime mortgage crisis. In 2010's sequel to the 1987 classic Wall Street, Gordon Gekko compares the the way bulb buyers behaved those long centuries ago to the way the market behaved in the lead-up to the Great Recession -- with similarly painful results.
But the current brouhaha in the sector stems from Washington giving economic support for South American flower growers at the expense of domestic growers -- a hot-button issue, especially at a time when "buy American" is being stressed as a way to boost the flagging U.S. economy.
A Long Way to Grow
Odds are, the blossoms in your Mother's Day bouquet were grown in Colombia or Ecuador.
"That's right -- grown, flown, then trucked to various destinations in the U.S.," said Kasey Cronquist, CEO for the California Cut Flower Commission. "But given the option, over half of all consumers have said they'd rather purchase domestically grown stems."
Those well-intentioned patriotic urges are sidetracked in part by the fact that about 85% of consumers don't know where their flowers come from, according to a 2007 Fleishman Hillard survey. During 2011, U.S. Customs and Border Protection processed approximately 5.1 billion cut flower stems. The CBP's flowery workload gets extra heavy in the run up to Mother's Day, when customers clamor for imported pink and lavender rose varieties that get marked up an extra 25% or more in light of the high demand.
In response, a "buy local" flower movement has sprung up, but its supporters will have their work cut out for them.
Why Our Flowers Are Foreign
Forty years ago, America grew and sold its own roses. Then the energy crisis of the 1970s hit. Prices for the natural gas used to heat greenhouses soared, and it became more cost-effective to grow the flowers of love in warmer climes.
Today, explains Patrick Dahlson, CEO of Mayesh Wholesale Florists, the U.S. supply of flowers can't come close to meeting our vast demand.
"There's simply not enough," he said. "If you want to talk about roses, there's next to nothing domestically. They make up 30% to 35% of cut flower sales here, but U.S.-grown roses would account for under 1% of roses sold here. If you're going to say 'We only buy California,' then you're saying we don't have roses any more."
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Places like Colombia and Ecuador were ideally equipped to become flower-growing hubs. They had plenty of cheap labor and warm equatorial temperatures that meant a reduced need for natural gas. In addition, near the equator, growing conditions are more favorable, with every day getting about 12 hours of sunlight, while those nations' elevations encourage a 90- to 95-day growing cycle (versus 60 days at sea level), which allows rose heads to become more fully developed.
But it was more than just good growing conditions and high fuel costs that cultivated South America's boom in blooms.
The War on Drugs Meets the War of the Roses
For more than two decades, the South American flower industry has been shored up by the U.S. government in order to subvert the drug trade.
In 1991, the U.S. government created the Andean Trade Preference and Drug Eradication Act, which provided duty-free access to the U.S. for flowers imported from South America, giving Colombians an economically attractive alternative to growing coca for the cocaine cartels. By giving U.S. distributors an incentive to buy from Colombian growers, the government could bolster the war on drugs and ease the flower trade in one fell swoop.
Just since 2007, Washington has directed an estimated $560 million of taxpayer money into the Colombian economy though "Plan Colombia," according to the State Department. Much to the chagrin of U.S. flower growers, a large fraction of that money directly subsidized Colombia's flower industry. The State Department reported in 2009 that Colombian flower growers have received some $210 million in incentives and subsidies since 2005.
Those involved in flower growing in the U.S. naturally feel wronged by these trade incentives.
"Our core concern is not about what Colombian growers have done," CCFC Chairman Lane DeVries said. "It's about the failed trade policies of our own government."
An Imported Rose, Is an Imported Rose, Is an Imported Rose
In their push for trade policies that favor domestic production, American flower growers see themselves as part of the same agenda that supported the bailouts of Detroit, encourages Americans to buy domestic cars, and urges us to wean our economy off OPEC's oil.
"The analogy to the auto industry is one that I use often," said the CCFC's Cronquist. Cut flowers are Colombia's third-largest export, which makes them "as important to that country as the auto industry is to the United States," he noted. "This means that the cut flower growers of California, now representing 80% of what is grown domestically, stand primarily alone against a tremendously sophisticated competitor that has unequivocal support of its government and therefore ours."
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As the domestic flower industry has declined, jobs in this country have been lost. Still, in California alone there are 14,850 flower industry jobs just at the farm level, and flowers have an estimated $1 billion in economic impact. For every dollar a U.S. flower farmer earns, 92 cents go back into the local economy.
But even if policy changes in Washington, it's tough to imagine California regaining a much larger share of the flower market.
"California is a tough place to do business, and they're tough on growers," Dahlson said. "It's no different from other industries there."
Indeed, California has garnered an unenviable reputation as one of the worst states for conducting business -- mostly the result of its complex regulatory network and heavy taxes. The effect gets amplified during a recession when the cash-strapped state government tries to collect additional fees.
Still, flower growers who are part of the "buy local" movement are continuing to push their agenda this Mother's Day.
"I can see a future where consumers request local flowers from local florists," DeVries said. "And that's a future worth fighting for."
