Annex 21 – AIPH Board Meeting – 19 October 2015

International Vision for Ornamental Horticulture

Background, objectives and proposed project plan
Tim Briercliffe, Secretary General, AIPH
27 August 2015

Issues for the international ornamentals sector

 New developing markets are emerging

 Increase in crop production in ‘new’ countries to meet these new market needs
 Stagnation/decline in production in traditional horticultural producing nations
 Stagnation/decline or slow growth in market demand in developed countries
 Globalisation of trade in all industry sectors is increasing
 Lack of adequate knowledge on how the dynamics of global ornamentals production and
demand is changing
 Need to identify new market opportunities and where these are in the world
 Need to identify countries with greatest potential for increasing competitive production
 Need to understand scope for increased international trade including barriers to trade

In the past the production and marketing of ornamentals has been focused around servicing demand
in developed countries. The associated trading and logistics infrastructure has developed around
this model. For many years the industry has been expanding production in developing countries
(with lower production costs) but still with a market focus on the traditional market, particularly
Northern Europe and North America. In these cases the majority of product exported from
developing countries has been cut flowers, rather than potted plants, due to transport costs.

There are a number of countries undergoing rapid economic development and urbanisation. For
example Bloomberg Business reports on the top 20 fastest growing economies based on their survey
(Source: http://www.bloomberg.com/news/articles/2015-02-25/the-20-fastest-growing-economies-
this-year). Their analysis is below:

The world is expected to grow 3.2 percent in 2015 and 3.7 percent next year after
expanding 3.3 percent in each of the past two years, according to a Bloomberg survey of
economists. China, the Philippines, Kenya, India and Indonesia, which together make up
about 16 percent of global gross domestic product, are all forecast to grow more than 5
percent in 2015.

By comparison, the U.S. and U.K., which combined account for about a quarter of global
growth, are expected to grow 3.1 percent and 2.6 percent this year, respectively. The
euro area probably will expand just 1.2 percent as European Central Bank President
Mario Draghi deals with a fragile Greece and embarks on a bond-purchase program to
stimulate the region's growth.

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China still remains the fastest-growing G-20 nation, even though the Asian economy
is no longer expanding at the pace it did a few years ago. China's economy grew 7.3
percent in the fourth quarter of 2014 from a year earlier, and is expected to slow to 7
percent in 2015.

To counter that slowdown, People's Bank of China policy makers are boosting monetary
stimulus. The central bank cut its benchmark interest rate in November for the first time
since 2012. This month officials lowered by 50 basis points the deposit reserve ratio,
which is the amount of reserves that banks need to keep on hand.

Nigeria, Africa's largest economy, is projected to expand 4.9 percent this year, according
to the Bloomberg survey. Kenya will probably grow 6 percent in 2015, even as
unemployment and poverty remain stubbornly high, with over 40 percent of Kenyans
living below the poverty line.

U.S. growth forecasts for 2015 are coalescing around 3 percent even as the dollar soars
to its highest level in more than a decade. As growth picks up, the Federal Reserve is
weighing whether to raise interest rates for the first time since 2006. Their benchmark
federal funds rate has remained near zero since December 2008.

These countries are changing the structure of international trade and developing their own
production capabilities and alongside this their own research and innovation which will in turn
strengthen their competitive position as they take control of their own industries rather than just
responding to or being led by the ‘old markets’.

Not all of them will develop an ornamentals production capability, export capability or market but
some of them will and the international ornamentals industry needs to understand what is

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happening and to forecast what may happen in the future. In East and South East Asia for example
urbanisation is being facilitated through the construction of high-rise housing to feed the economic
development of the cities. Without domestic gardens city planners are integrating trees, plants and
green spaces within cities driving significant growth in outdoor plant production. As countries
develop so personal wealth increases so spend on luxuries like flowers increases too. As countries in
Africa develop they may take a different path and of course climate plays a big role in assessing
scope for the use of ornamentals.

These developing countries will vary in their ability to produce and distribute ornamentals. Their
ability to understand and access both their own and global markets will vary too. Government
policies may restrict or promote production and export and the priority given to the development of
infrastructure will impact heavily on the growth potential of the sector.

Overall the power base for global ornamentals production is shifting. How and where needs to be
more fully understood for the benefit of growers in every country.

This project is designed to increase this understanding, forecast future changes in the structure of
the industry and to identify opportunities to grow the overall international market for ornamental
crops.

This will include an analysis of existing international organisations and it will propose a model to
improve future information sharing and collaboration to capitalise on this work and make it
increasingly beneficial to the industry in the future. The International Association of Horticultural
Producers (AIPH) is uniquely positioned to facilitate the collation and analysis of industry data,
information (quantitative and qualitative) and experience through its existing international network
with grower associations around the globe. The project will also identify how this role can be
strengthened for the future in a way that genuinely includes all the relevant nations of the world.

Project Plan

AIPH proposes the following project plan to achieve these objectives:

1. Establishment of a Steering Group and Management Group

For this project to be successful it requires the participation of many stakeholders worldwide. A
steering group will fulfil the following role:

 Recommend lines of research and information sources

 Help ‘open doors’ to information for researchers
 Help determine priorities and focus
 Monitor progress against the plan
 Ensure stakeholder interests are looked after
 Comment on findings and ‘sense check’ conclusions

It is proposed that the steering group consists of AIPH members including:

 Bernard Oosterom (NL) – AIPH Vice President

 Tim Briercliffe (UK) – AIPH Secretary General
 Gijs Kok (NL) – FloraHolland
 Project Manager – TBC
 Andras Treer (Hungary) – Chair AIPH Statistics Committee
 Tim Edwards (UK) – Chair ENA and AIPH Board member

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 Haiyan Kong (China) – CFA - AIPH Board – Asia regional representative

 USA representative

Remote access (by conference call or Skype) will be facilitated for group members that cannot
always be physically present.

It is proposed that the steering group meets in the following periods:

 September 2015 at FloraHolland, Aalsmeer

 January 2016 at IPM Essen, Germany
 October 2016 at AIPH Congress, Antalya, Turkey or November 2016 at IFTF or FHTF in NL
 January 2017 at IPM Essen, Germany
 November 2017 at IFTF, NL
 Other meetings to be agreed by the group.

These times and locations are selected as times when group members are most likely to be present
together anyway.

The first meeting is scheduled for September 2015 to maximise the benefit of the AIPH Congress in
Milan in October. Due to time and location this meeting may not involve all group members.

AIPH and the Project Manager will report progress to each Steering Group meeting by way of a pre-
circulated report and presentation at the meeting. Steering Group minutes will be recorded and
circulated within the group.

In addition a Management Group will be formed which will oversee day-to-day management of the
project, the use of project funds and the allocation of spending. The Management Group will consist
of:

 George Franke – VBN

 Gijs Kok – FloraHolland
 Tim Briercliffe – AIPH

2. Defining the information/knowledge required

The first task of the Steering Group will be to agree the project objectives. From this will be defined
the exact information that needs to be collected which could include:

Production (area and value) and consumption statistics (volume and value) for the last ten years (list
just a suggestion at this stage) broken down by product category (e.g. flowers, potted plants, trees,
bulbs, etc) for:

 Traditional producing nations: Australia, Austria, Belgium, Bulgaria, Canada, Denmark,

Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Netherlands, New Zealand,
Norway, Sweden, Switzerland, UK, USA
 Significant trading nations: Colombia, Ecuador, Ethiopia, Israel, Kenya, Poland, Spain, Turkey
 Potentially important nations (for production and/or consumption): Brazil, China, Chinese
Taipei, Costa Rica, Guatemala, India, Korea, Mexico, Morocco, Thailand, Philippines,
Indonesia, Nigeria, Malaysia, Peru, UAE, Kazakhstan, Saudi Arabia, Singapore, Russia,
Tanzania, Uganda, Rwanda, South Africa, Iran

Information is required to enable the project to identify:

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 The top 10 countries in terms of size of market for ornamentals

 The top 10 countries in terms of potential for market growth
 The top 10 countries in terms of production (area and value)
 The top 10 countries in terms of potential for increasing production

Within the countries with production and market potential we then need to identify:

 Factors affecting import and export potential - including Government policies, subsidies, tax
issues, plant health controls, bureaucracy (administration), logistics and accessibility,
infrastructure, IT capability, welfare conditions for staff, national security and terror threat,
certification, government involvement, level of foreign investment, environmental
responsibility and ability to produce sustainably
 Factors affecting potential to increase production – including ownership and investment
policies and practice, Government incentives/dis-incentives, attitude of banks/lenders,
availability of labour (skilled and unskilled), cost of labour, technical expertise, access to raw
materials and equipment (water, growing media, pots, greenhouses, machinery, pesticides,
etc), corruption and crime, climate, political stability, foreign investment policy and attitude
to foreign investors, union activity, attitude to plant breeders rights
 Factors affecting potential to increase consumption – including consumer confidence,
household income trends, taxes, national economic growth, GDP, unemployment, housing
construction, inflation, fashion, environmental awareness

3. Understanding current state of knowledge - Existing data sources

The project will review current data sources including the AIPH/UF Statistical Yearbook and market
research (contact Sheila Mahmood, FloraHolland), market information reports (e.g. Mintel etc),
Eurostat trade data, etc

There will be a session held during the AIPH Annual Congress in Milan on 21 October 2015. This will
include a structured session to identify information available and qualitative views on global trends.

4. Defining knowledge gaps

From this the gaps in knowledge can be identified and detailed.

5. Plan for filling the gaps in data and knowledge – including identifying information sources

At this stage the project will develop the following:

 Country questionnaire to be circulated to AIPH members and other contacts (e.g. UF

members and industry contacts). This will also request further data sources where
necessary or work to be done to make production/consumption estimates
 Planned interviews for ‘priority’ countries (i.e. those in Top 10 potential lists) – face to face
or telephone along with key people to be questioned.

The plan will be approved by the Steering Group.

6. Conducting the research

Questionnaires, interviews and data searches will be completed and recorded.

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7. Collation and analysis of results/findings

Results will be collated and a SWOT analysis carried out on each of the ‘priority’ countries as agreed
between AIPH and the Steering Group.

An event could be organised to ‘test’ the draft findings on an invited audience of industry players
and academics (e.g. via ISHS) alongside an existing international event (e.g. IPM Essen and/or IFTF,
ProFlora, etc). They could be provided with an ‘exclusive preview’ of the results as long as they give
their comment. This will be a double check that we have got it right!

8. Conclusions and recommendations

A final report will be prepared that lays out the work completed, the objectives, the findings as well
as the conclusions. These conclusions will form the basis of the ‘International Vision’ for the industry
and will be formulated in association with the Steering Group.

This will include recommendations on how national and international associations and
representative organisations can work together to identify and exploit the opportunities that exist to
grow the global market for ornamentals. This will include recommendations on how to strengthen
AIPH as an international leader on this topic for the good of growers worldwide. It could also
propose specific initiatives that will hasten progress towards the vision. These could relate to
market information, production and trade data collection/sharing, promotional/marketing
campaigns and resources and PR/communications.

9. International knowledge sharing – identify mechanism and communication plan

Important to the success of this project will be the effective international communication of the
results and conclusions to reach a genuinely shared international vision. The following could be
considered to deliver this:

 Formal report available in different languages (to be agreed by steering group) online from
AIPH, AIPH member and stakeholder websites
 Powerpoint presentation summarising the project to be available to all and promoted
through members, steering group network and national/international trade media.
Members will be encouraged to present and promote within their own countries
 Filmed presentation available online and promoted. This could be available in different
languages (e.g. with subtitles or voiceovers) to maximise global reach
 Presentations, debates and report circulation at international industry events e.g. IPM trade
shows, IFTF, Proflora, IFTEX, Cultivate, AIPH approved Expos, etc
 Promotion through the AIPH international media database
 Active ‘sell in’ to consumer and international business media could also be considered.

Project Delivery

Delivery of the project will be the responsibility of AIPH under the leadership of Secretary General,
Tim Briercliffe.

Reporting to the PT and VBN will be provided as required.

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AIPH will appoint an independent ‘Project Manager’ who will be tasked with delivering the project to
the agreed timescales and milestones.

Where necessary additional contractors (e.g. consultants and experts) will be appointed to assist in
supporting the data and information collection required in the project.

AIPH and the Project Manager will report to the Steering Group with project updates and for
guidance.