Is the End of Dutch Ornamental Horticulture in Sight?

We Can’t Ignore It: Skyrocketing Gas Prices

Gas prices have surged dramatically, and the news is filled with dire reports about this crisis, one more alarming than the next. It's a fact that the horticulture sector, with its high energy and gas consumption, is taking a significant hit. Recently, Steven van Schilfgaarde, CEO of Royal Floraholland, made an urgent appeal to the Dutch government. The supply of Dutch ornamental plants has already plummeted this year, leading to irreversible consequences, including an ominous threat to many family-owned businesses: will they manage to stay afloat?

The Impact of Rising Gas Prices

Marc van der Drift, owner of Van der Drift Roses, has been taking measures for years. “Over five years ago, we started using geothermal energy to heat our greenhouses. It was already a significant investment back then, costing around €18 million. A geothermal installation is now even more expensive. What does geothermal energy do? It generates heat from the earth, making you independent of fossil fuels.” However, Marc says that geothermal energy isn’t a complete solution to escape rising gas prices. In the past, geothermal energy was more expensive than gas, and subsidies were available. As more entrepreneurs adopted geothermal energy, subsidies have diminished because the cost of natural gas is now higher than a heat pump.

Despite using geothermal energy for heating, Marc still relies on natural gas for lighting his crops, which he uses as efficiently as possible and partly pre-purchases. Nevertheless, the effects of soaring gas prices are acutely felt.

Peter Vrouwe, from wholesale company Hoven en de Mooij, sees the situation differently from Marc. “We notice that the supply of flowers is shrinking. Some growers are putting their crops into a ‘rest mode,’ meaning they won’t produce ornamental plants during the winter. Others cut corners in cultivation, producing flowers that are just ‘good enough.’ This affects quality, so we stop purchasing from them because we can’t sell inferior flowers to our clients.” This creates serious consequences for Dutch horticulture. Wholesalers are obligated to meet their clients’ expectations of top quality. As a result, they increasingly turn to foreign growers who can meet those standards, which is devastating for Dutch growers.

Dennis, owner of hydrangea nursery Hollander-Voorn, has a different perspective. “We’re entirely dependent on gas. Geothermal energy is a multi-million euro project, and as a small business, it’s simply not feasible. We have replaced our boilers with high-efficiency models, which save 40% on gas, but even that doesn’t make much of a difference with these extreme gas prices.” Hydrangeas are a seasonal product that can technically be grown without heating. Normally, the hydrangea season runs from April to November, but without heating, the season becomes two months shorter. This seasonal reduction impacts workload and sales prices. “All growers are in the same boat; a shorter season means a larger volume in a short time, leading to low prices at auction due to oversupply.” Many growers can no longer produce year-round, and when they do produce, they must sell at lower prices due to the abundance of hydrangeas during the season.

Measures Against the Gas Crisis

Marc, Peter, and Dennis share the measures they’re taking to survive the rising gas prices and keep their businesses profitable.

• Marc: At Van der Drift Roses, they’ve reduced lighting to only half of their lamps. “Given the prices, it’s not feasible to purchase more expensive gas.” This measure slows down the production process, leading to higher production costs. Marc finds periods of low sales prices particularly stressful, as costs remain high during these times.

• Peter: At the wholesale level, no drastic measures like layoffs have been needed yet. Instead, they continuously adjust their product range to reduce costs. Peter is optimistic about avoiding extreme measures but fears for other businesses in the ornamental plant sector.

• Dennis: “We simply don’t heat.” Unable to cope with the gas price surge, Dennis focuses on retaining natural warmth in the greenhouse, such as by keeping windows closed on warm days. “It might extend production by a few days to a week, but it’s not enough to start the season in April.”

The Consequences for Growers Dependent on Gas

Dennis believes year-round growers without fixed gas contracts have no choice but to stop or leave their greenhouses empty. Those with fixed contracts can manage for now but often still need to buy additional gas, which is unsustainable at current prices.

Peter stays optimistic but realistic. He notes that rising costs will be fatal for many growers. Established businesses with reserves can weather the storm, but newer growers without financial buffers are struggling. “We’ve grown accustomed to high-quality ornamental plants, but with these gas prices, that’s no longer feasible.”

Marc divides growers into three groups:

1. Growers without gas contracts are the hardest hit and may have to sell or shut down.
2. Growers selling their pre-purchased gas often choose not to cultivate during the winter.
3. Growers like Marc, who use 40-60% of their energy needs efficiently, are attempting to continue.

Solutions to the Gas Crisis

Marc predicts that gas prices will drop by March 2023 due to full reserves and lower demand. He also expects seasonal cultivation to become more common, with less supply during the winter and more imports from Africa and South America. Marc advocates for energy-efficient solutions like LED lighting, solar panels, and electric boilers to adapt to the volatile energy market.

In the long term, he sees hydrogen as a promising solution, especially if it can be produced on a large scale and transported through existing gas lines. However, this development is at least ten years away.

Dennis is less optimistic. While geothermal energy is a potential solution, it’s unaffordable for small businesses unless shared within clusters.

Peter emphasizes the need for sustainability to reduce reliance on fossil fuels, though this is a lengthy process. He foresees more reliance on international production, with innovations like cooled sea containers enabling flowers to be shipped overseas without spoiling.

Stopping Cultivation Isn’t an Option

Growers face many challenges, including shorter production periods and lower prices. Despite this, Dennis refuses to quit. “2023 won’t be a great year, but giving up isn’t in my vocabulary.”

Marc echoes this sentiment. “As long as I see solutions, I’ll keep going.” He acknowledges being tempted to sell his pre-purchased gas but concludes, “There’s something more important than financial gain, and that’s cultivation itself.”