Valentine's Day Roses Surge in Price Amid Covid Disruptions : The Indicator from Planet Money The Covid-19 lockdown sent the flower market into free fall, but recently, flower prices have been picking up again. Who are the culprits behind this? Our old friends supply and demand, of course!
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Days Of COVID And Roses

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Days Of COVID And Roses

Days Of COVID And Roses

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UNIDENTIFIED PERSON #1, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

ALEXI HOROWITZ-GHAZI, HOST:

Attention podcast listeners, this is your official reminder that Sunday is Valentine's Day. You have been warned.

STACEY VANEK SMITH, HOST:

Yes, Valentine's Day - international day of romance, chocolates, the where is this going conversations and, of course, the impossible restaurant reservation. At least that is a normal Valentine's Day.

HOROWITZ-GHAZI: Yes. Valentine's Day is a very different kind of day in our, you know, COVID-19 world.

VANEK SMITH: Which is not necessarily a bad thing for a lot of people, right? There's just, like, way less pressure. It's just going to be a lot more stay-at-home-type stuff, which is nice. But this is pretty bad news for a lot of different kinds of businesses - restaurants, they make a ton of money on Valentine's Day, chocolate-makers, of course, and flowers, the florists.

HOROWITZ-GHAZI: Yes. Valentine's Day is a huge day for florists. Often a significant chunk of revenue for the whole year will come from Valentine's Day alone. And it's not just in the U.S. All over the world, Valentine's Day is a huge day for the multibillion-dollar flower business.

VANEK SMITH: No one escapes Valentine's Day, Alexi, no one.

HOROWITZ-GHAZI: I've tried. I've tried.

VANEK SMITH: (Laughter) But just in general, this has been a really hard year for flowers because typically, a lot of the floral business goes to hotels, things like corporate lobbies, weddings, big events. And those haven't really been happening for the last year. And COVID has kind of crushed the flower business.

HOROWITZ-GHAZI: But there are some little green shoots starting to pop up.

VANEK SMITH: (Laughter) Yes, there are.

HOROWITZ-GHAZI: This is THE INDICATOR FROM PLANET MONEY. I'm Alexi Horowitz-Ghazi.

VANEK SMITH: And I'm Stacey Vanek Smith. Today on the show, bloomenomics (ph) - what has happened to the flower industry during COVID and what this means for flower farmers, for florists and, crucially, for your Valentine's Day.

(SOUNDBITE OF MUSIC)

HOROWITZ-GHAZI: The cut flower business is worth about $8 1/2 billion, and it is truly a global business.

VANEK SMITH: A lot of flowers are grown in Africa and South America, and then they're cut and shipped to a handful of giant clearinghouses which have these daily auctions and then ship billions and billions of flowers all over the world.

HOROWITZ-GHAZI: It is also an ancient trade. There was an international tulip bubble that started in Holland in the 1600s. This one kind of tulip cost the same price as a house.

VANEK SMITH: And, in fact, Holland is still a major player in the flower industry. About 30% of the world's flowers go through Holland every day.

MICHEL VAN SCHIE: My name is Michel van Schie, and I'm a spokesman for Royal FloraHolland.

HOROWITZ-GHAZI: Royal FloraHolland is one of the biggest clearinghouses for flowers in the world. It's located just outside of Amsterdam, and it was started 100 years ago by some Dutch flower farmers who wanted a way to standardize prices. But it's now almost unimaginably huge.

VANEK SMITH: Yeah. Royal FloraHolland typically sells 12 billion flowers a year, nearly 35 million flowers every day. And most of them come from Europe and Africa. They're flown in daily, auctioned off and then immediately packed into these giant refrigerated trucks and shipped all over Europe.

HOROWITZ-GHAZI: At least that was how it used to be. Michel says that there was some concern about the virus, and some sales were starting to be affected. But then borders started closing and flights started getting cancelled, and Michel says everything kind of came to a head on one day in particular.

VAN SCHIE: The 16 of March - that was the worst day of the year.

VANEK SMITH: The worst day of the year - Michel says kind of all at once, buyers just vanished. Hotels, weddings, wholesalers - everyone cancelled their orders. And the whole flower industry basically collapsed on that one day.

HOROWITZ-GHAZI: But the farmers were still growing their flowers and shipping them to Royal FloraHolland. And on March 16, Royal FloraHolland found itself in this situation where it had all of these shipments of daisies and roses and tulips and chrysanthemums and lilies and geraniums and pansies from all over the world that had been flown in just sitting there unsold.

VANEK SMITH: This had never happened before, and they just didn't know what to do with all these flowers. So Michel and his team gathered them all up and made a huge pile in the giant deserted parking lot - several football fields' worth of flowers - and tried to figure out what they were going to do, how to get rid of them.

VAN SCHIE: We couldn't destroy them in the normal way because we do not have the infrastructure to destroy flowers in that amount.

VANEK SMITH: Was it, like, millions of flowers?

VAN SCHIE: Absolutely.

HOROWITZ-GHAZI: Like around 50 million flowers.

VANEK SMITH: They brought in bulldozers to scoop the flowers up and just pour them into these dumpsters that were the size of shipping containers. And Michel and his colleagues watched this happen. They just stood there in the parking lot watching all of the labor and care of their thousands of growers just get trashed.

VAN SCHIE: I had colleagues with tears in their eyes looking at that scene because it was really dramatic.

HOROWITZ-GHAZI: And it wasn't just emotional. It was also an economic disaster. Flower prices went into freefall - no demand, huge supply. And Royal FloraHolland went into damage control. They immediately told their 4,000 growers that they would only accept about a third of their flowers.

VANEK SMITH: Which left the growers with most of their flower crops to rot, along with all the money that they had spent on labor and fertilizer and seeds. Michel says this was devastating, and it was especially hard on their growers in Africa, who did not get the multimillion-dollar government bailouts that their Dutch growers did.

HOROWITZ-GHAZI: There were fewer flower growers growing fewer flowers. And also the global flower supply chain got all hamstrung as well. Usually flowers are shipped in the cargo holds of passenger planes. And there are way fewer flights right now, which meant less room for flowers.

VANEK SMITH: Prices kept dropping. A lot of florists went out of business. They just couldn't make it work.

HOROWITZ-GHAZI: But then, Michel says, over the summer, the prices started to rise.

VANEK SMITH: So how come the prices are going up? That's so surprising.

VAN SCHIE: It's a matter of supply and demand.

VANEK SMITH: Supply and demand.

HOROWITZ-GHAZI: Of course.

VANEK SMITH: Always comes back to that. On the supply side, of course, fewer flowers.

HOROWITZ-GHAZI: The demand side was really bad at first. But Michel says it started to come back, and that demand was coming from a few places. First, house plants. Everyone was at home buying house plants.

VAN SCHIE: And garden plants, even better, because everyone was at home, and the only thing they could do was working in the garden.

VANEK SMITH: And also bouquets. Michel says global demand for bouquets has gone up because people cannot visit each other as much as they used to. So now, instead of showing up, people are buying flowers for loved ones to celebrate birthdays, weddings, new babies, also illness, sympathy, things like that.

HOROWITZ-GHAZI: The lower supply and increased demand has pushed prices up. Recently, Michel says, flower prices are, like, 40% higher than they were before COVID hit. And now, Valentine's Day, one of the biggest days for florists all over the world. Michel says demand for bouquets has been especially high this year.

VANEK SMITH: Why is there so much more demand right now?

VAN SCHIE: In Holland, we have to be out of the streets at 9 o'clock in the evening. You cannot go to a restaurant. You cannot go to a pub. So people make it nice and cozy at their own place.

VANEK SMITH: Oh, so people are actually ordering more flowers maybe this Valentine's Day than they - than on a normal one.

VAN SCHIE: Yes.

VANEK SMITH: There's more romance happening now because of COVID.

VAN SCHIE: Yeah, maybe.

(LAUGHTER)

VAN SCHIE: From a distance.

HOROWITZ-GHAZI: Michel says roses now cost around 35 or 40 cents a step, but that's wholesale. Once you factor in overhead, transportation, labor, the cost gets higher.

VANEK SMITH: And U.S. roses are typically a little bit more expensive. I called around, Alexi, just to see, like, what the Valentine's Day bouquet would set you back here in New York.

(SOUNDBITE OF PHONE RINGING)

HOROWITZ-GHAZI: We called a few places, and the prices varied a lot.

(SOUNDBITE OF PHONE RINGING)

VANEK SMITH: How much is a dozen - just like of the regular dozen roses - like the classic?

HOROWITZ-GHAZI: The most expensive dozen roses we found - $129 thaws (ph) included.

VANEK SMITH: But that was kind of an outlier. Most of the prices were a little bit lower.

UNIDENTIFIED PERSON #2: They're $75 - long-stem red roses.

VANEK SMITH: OK, so 75 for a dozen. Is that a little more than last year?

UNIDENTIFIED PERSON #2: They get bumped up a little bit Valentine's because of supply and demand and snow and all that stuff. So 75 is a good price for a dozen some long-stem American Beauties.

(SOUNDBITE OF MUSIC)

VANEK SMITH: This episode of THE INDICATOR was produced by Jamila Huxtable and fact-checked by Sam Tsai (ph). THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

(SOUNDBITE OF MUSIC)

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