Ten years after PromoFlor, can the cut flower industry make another promotion order fly?
September 22, 2008
Learning from past mistakes and encouraged by results from voluntary efforts, cut flower leaders are convinced our industry can get it right with a national research and promotion program.
Since March, the Floral Marketing Initiative Coalition has made significant progress investigating options for the floral industry to launch a viable promotion order. Ten years ago, the industry did have a national promotion order for cut flowers and cut greens called PromoFlor, which only lasted three years and was killed by a referendum. One of the many differences this time will be the promotion order will not go forward until there is a vote with at least 70 percent of those paying assessments in favor of it, although a mere 51 percent would be necessary.
The coalition’s officers addressed industry members at the OFA Short Course in Columbus, Ohio, last month, seeking input and support, as well as identifying potential hurdles and roadblocks. The officers include: Red Kennicott of Kennicott Brothers Co. in Chicago as chairman; Charles Kremp of Kremp Florist in Willow Grove, Pa., as president; and Clay Sieck of Sieck Floral Group in Baltimore as treasurer.
Representatives of USDA and Produce Marketing Association were also there to represent government oversight and mass market channels, respectively. Mass market retailers and supermarkets represent 60 percent of cut flowers sold in this country, so their support is vital for growers and importers to feel confident in their abilities to pass assessments through the distribution chain. Importers handle 80 percent of the cut flowers sold in the United States.
The goal is to raise $50 million. One of PromoFlor’s failures was assessments were not perceived as broadly based or fair. Only $12 million of the projected $25 million was ever collected. Assessments were one half of one percent of gross sales volume on about 900 qualified handlers – wholesalers and growers with at least $750,000 in annual sales. Under reporting led to low collections.
Assessments could be based on stems instead of dollars and U.S. Customs & Border Protection could collect the assessments as flowers enter the country for imports, but there would need to be more accountability in domestic collections.
The mango industry is an example where much more is imported than produced domestically. The key is to make the assessment equitable on both sides to not add a new tax or tariff on imports only.
So far, the most feasible point of collection is importers and growers. Another detail that would need to be resolved is if the vote will be one grower/one vote or based on industry volume.
The next step is for marketing professors from the famous Wharton School at the University of Pennsylvania to present what the industry would look like with an effective marketing program, how much it would take, and how the industry would look if nothing is done. The results will be shared with the industry in September, most likely at the Society of American Florists’ convention. The Wharton School’s objective look at our industry should be very worthwhile.
I’m encouraged by the due diligence the coalition is doing this time around. In addition to working closely with USDA, Kremp has visited Wal-Mart’s top person in charge of perishables seeking support. The coalition knows that if the five largest supermarkets won’t support it, it’s dead in the water. Best of all, the coalition is not in a hurry. Building consensus is the priority.
Research and promotion programs are in place for 17 agricultural industries ranging from $600,000 for popcorn to $250 million for dairy. Most get $3 to $6 return for each dollar invested. I believe the cut flower industry would benefit from a fair and focused program.