European Nurserystock Association - weather and currency dominate trading

ENA representative Tim Edwards reports from the latest meeting of the international nurserystock association.

This year's summer meeting of the European Nurserystock Association (ENA), held in Krakow, Poland, focused on the state of trade across Europe.

We have enough in common to show that we work in the same market and yet the differences highlight our different places in that market - and the differences between our countries.

The weather plays a big part in any UK summing-up of the last season, and that was also common around the European table. The weather is only ever of interest if it's unseasonal, in temperate Britain that doesn't necessarily mean it is especially vicious.

Perhaps we thought last winter was bad, but when the Scandinavian north complains of a hard winter it is far worse. Denmark, Norway and Sweden were all hampered by months of heavy snow and extreme cold, causing exceptional winter losses and holding back sales.

The Swedes complained that the retail season, when it did finally start, was further hampered by weekend rain, but the Scandinavian nations adopt a stoic approach to hard weather - they seemed happy with the level of business once all this was taken into account.

Our Polish hosts had more than a long hard winter to contend with in the first half of 2010. In early April, the plane crash killing president Lech Kaczynski and many of his senior officials plunged the country into seven days of mourning - a period that included two valuable weekends of retail sales.

As if that wasn't bad enough, heavy rain in May caused devastating floods in the south around Krakow and, presumably, ruined retail sales.

Holland and Belgium had a similar winter to that in the UK, although perhaps a bit more extreme.

Financial factors

The pound sterling makes us different from many other European countries. We're not alone in not using the Euro but you certainly can't put all the non-Euro countries in the same bucket.

The Danes retain their Krone but in reality it is closely linked to the Euro. Some Danish nurserymen despair at this closeness, thinking that devaluation of their currency would help stimulate exports, but say their dependence on the Euro Zone prevents this. Denmark is preparing for cuts in public spending just as we are in the UK.

The Norwegians find themselves in a different situation. Their massive petrochemical industry makes the Norwegian Krone far more independent and the currency has strengthened against the Euro in recent times.

Switzerland is not in the EU but takes part sometimes. The Swiss franc has strengthened in recent years, making European imports cheaper, and the strength of the Swiss financial sector seems to be powering its economy along. Swiss unemployment has risen from a very low base and is now 3.7 per cent (it's eight per cent in Britain, and 10 per cent on average in the Euro Zone) and government cutbacks will be small.

Problems in Euro-land strengthen sterling (a little at least) and the Belgians see this as a cause for optimism. If the pound strengthens much more we will discover just how keen UK retailers are to 'Buy British'.

Some of the big exporting countries certainly see opportunities on the horizon and anticipate being more active in the UK in the coming season.

The Poles were not far enough down the road to join the Euro at the time the financial crisis struck, perhaps now they are glad they stuck with the Zloty.

Many Poles have found work outside their homeland and returned when recession hit in those other areas, but many stayed put. This reduces the burden on the Polish economy and even with unemployment up to almost 12 per cent they do not anticipate the sort of cutbacks we do.

Geographical variation

Perhaps it is just the more established EU states - where the cost of government has had time to rise - that must expect the biggest cuts in government spending.

If that is the case, then surely it will be the least financially sound of those that take the biggest hit, often grouped together as the 'Club Med' countries.

The Italian horticultural trade is impressively well developed and rates high as a European exporter, but the wider Italian economy is 'Club Med' to the core. The Italians anticipate big cuts in spending at home and a fall in demand abroad - most countries have reported the largest drop in retail sales coming from the more expensive items, which is often Italian stock.

Although southern Europe escaped extreme weather, the Spanish still had cause to complain about it. It seems that the autumn was too dry, delaying the start of the planting season, and the latter part of winter was too wet, cutting it short at the other end.

The Spanish economy has even greater troubles. The amenity market in Spain has all but ground to a halt. Spanish nurserymen foresee no change for at least two years and fear many nurseries will not make it that far - they certainly see production levels falling.

In Ireland they believe that production levels have already been cut to a more sustainable level. Government spending has fallen and construction levels are low, so the amenity sector has felt a great deal of pain, although the retail sector has done well this season.

Ireland also noted the rise in bad debts, and this revealed another difference between the 'north Europeans' and the 'Club Med' states. In the UK we have been worried about bad debts and certainly been working harder to get debts paid, but most have been surprised that debtor days have held relatively well.

Prompt payment of government spending was written into statute some years ago; companies quoted on the stock market must now report how well they are paying suppliers. The Club Med nurseries complained bitterly of rising debtor days. One Portuguese grower now has average debtors of 206 days; his worst customer is the Portuguese government.

Next time you feel like moaning, just think of your European counterparts.

- Tim Edwards is chairman of Boningale Nurseries


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