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Members' Council approves 2023 rates

December 12, 2022

The floriculture sector is facing exceptional market conditions. The difficult economic conditions combined with the energy crisis are having a major impact on everyone in floriculture and also on Royal FloraHolland. The financial results of many growers are under enormous pressure and numerous growers are being forced to draw on their reserves. Due to sharply increased costs of energy, among other things, and less income due to lower supply volumes, Royal FloraHolland will also suffer losses in 2022, and certainly also in 2023. This is despite substantial cost savings this year and in recent years. Royal FloraHolland continues to invest wholeheartedly in Floriday, new logistics and nationwide auctioning, among other things.

Against this background, a proposal for tariffs for 2023 was drawn up by the Board of Directors and approved by the Council of Members. This incorporated input and feedback from discussions with the Council of Members and the Finance Committee of the Council of Members. Responses from sessions with members were also taken into account. The management sought a balance between the effect of the increase in fees on the business operations of growers and limiting the loss of Royal FloraHolland. A difficult puzzle, in which various alternatives for this rate adjustment were considered and discussed, all with pros and cons, with differences between members and non-members. As a result, Royal FloraHolland's rates for growers and also buyers in 2023 will unfortunately rise more than in previous years. Something that is unavoidable.

1. We have sought the right balance in the rates proposal

For members of the cooperative, the increase in the Basic Rate will be 0.20% (from 1.50% to 1.70%). In addition, the Sales Surcharge will be increased by 0.10% for the trading channels Clock (from 1.20% to 1.30%) and Clock Presales (from 1.40% to 1.50%). However, the trolley levy for both Clock and Direct will not be indexed.
The Volume Advantage Discount will be adjusted. Due to economies of scale among members, the Volume Advantage Discount paid out by Royal FloraHolland increases year on year. This has a negative effect on our revenues. On the cost side, however, this consolidation does not benefit Royal FloraHolland. A recalibration is therefore needed. The percentage discount at one to three million euro turnover will be reduced by 0.10% (from 0.20% to 0.10%). The percentage discount at three to ten million euro turnover will be reduced by 0.15% (from 0.45% to 0.30%).

2. We are strengthening the benefits of membership

For non-members, the suppliers, the Basic Rate and Sales Surcharge will be increased more than for members. The increase in the Basic Rate is 0.45% (from 2.25% to 2.70%). There will be an additional increase of 0.15% in the Sales Surcharges for Clock (from 3.50% to 3.65%) and Clock Presales (from 3.70% to 3.85%) for suppliers.

3. We are bringing simplicity to the rates model

The Basic Rate and the Sales Surcharge will be replaced by a single rate per trade channel: the Sales Commission. Clear and transparent. In practice, the Basic Commission and Sales Surcharges are already added together. In addition, it’s not possible to sell via our sales channels unless the financial settlement is linked to this. Therefore, there is no reason to charge them separately. For members of the cooperative, the Sales Commission will be for Direct 1.70%, for Clock 3.00% and for Clock Presales 3.20%. For suppliers that are not members, the Sales Commission will be for Direct 2.70%, for Clock 6.35% and for Clock Presales 6.55%.

4. We are supporting our strategy by making it even more attractive to use Floriday

As of 1 July 2023 at the latest, there will no longer be a service charge for any transaction where the buyer places the order via Floriday (in the screens, via the Floriday API link, VMP link, FloraMondo or FloraXchange). The condition is that the grower also handles the order financially via Floriday (settlement).

5. Deviating from the standard results in higher charges

From 1 July 2023 at the latest, the use of the Connect-EAB will be additionally charged to growers. This is because the Connect-EAB is not resilient to future developments required for digital business. Moreover, maintaining the Connect-EAB generates extra costs for Royal FloraHolland and stands in the way of further simplification of the IT landscape (and accompanying cost savings) in the future. The level of this fee has not yet been determined.
Payments to growers into a non-SEPA accout, involve significant additional costs for Royal FloraHolland. Not only for dollar payments, but also in euros. We will pass on these costs through a levy of 0.02% for member suppliers and 0.04% for suppliers on the amount paid. This makes following the regular route more attractive for you as a grower.

6. We are implementing regular adjustments to keep the rates up to date, in line with previous years

Indexation of lot levy by 5%, from € 1.73 to € 1.82.
Increasing the maximum amount on which the variable contribution/association costs can be levied, from € 950,000 to € 1,050,000.
The introduction of a maximum rate for processing the withdrawal: €40 per load carrier
Changes to rates for various Logistic Supplies, including: Rent increases for various packaging codes:
- Fc510 (multiuse Amaryllis box) from 25 cents to 37 cents
- Fc502 (subturn code Fc510) from 8 cents to 10 cents
- Fc519 (multiuse Chrysanthemums or Lily box) from 18 cents to 19 cents
- Fc509 (subturn code Fc519) from 8 cents to 10 cents
- Fc503 (subturn code Fc523) from 8 cents to 10 cents
- Fc533, Fc544, Fc560, Fc566, Fc580 from 13 cents to 14 cents
- Fc577 and Fc588 from 14 cents to 15 cents
Rental fee reduction and change to rate structure of multiuse plant trays red and grey:
- Red from 7 to 6 cents
- Grey from 12 cents to 10 cents

Increase in rate for CC storage:
- CC container from 4 cents to 5 cents
- CC shelf from 1 cents to 1.2 cents
Trolley lock plate rental fee is increasing from € 219 to € 227 per year, with shorter periods charged pro rata.
Indexation of other rates by ~5%.