Michelle Castellano Keeler of Mellano & Company, Oscar Fernandez of Equiflor/RioRoses, and Harrison “Red” Kennicott of Kennicott Brothers Company, are among members of the drafting committee that is proposing a national floral promotion order. Castellano Keeler, Fernandez and Kennicott discussed the proposal on Nov. 16 during the Society of American Florists’ virtual panel discussion.
If the proposal for a national floral promotion order, Floral Board, passes, who will stand to benefit? Will it raise the cost of flowers? What will the marketing look like?
These are some of questions that were raised Nov. 16 during a webinar by the Society of American Florists, where three panelists who are members of Floral Board’s drafting committee took questions from SAF Senior Content Strategist Amanda Jedlinsky and viewers.
If instituted, the marketing order would levy an assessment on domestic growers and importers with annual gross sales more than $100,000. That money would finance a generic marketing campaign designed to increase flower purchases in the U.S. Like other familiar and long-standing promotion orders for agricultural products — such as cotton, eggs, avocados and Christmas trees — the marketing order would require broad industry support. Importers and domestic growers subject to assessment would cast their vote during a referendum, and the majority of both sectors would need to vote in favor of the promotion order for it to pass.
The panelists — Michelle Castellano Keeler, AAF, of Mellano & Company; Oscar Fernandez of Equiflor/Rio Roses; and Red Kennicott, AAF, of Kennicott Brothers Company — addressed the following questions, among others, during the webinar.
Demand for flowers is stronger today than it has been for a long time. Why propose a marketing order now?
The pandemic has generated a new appreciation for the value of flowers in everyday life and as a means of social expression. That heightened awareness represents an unprecedented opportunity to keep the momentum going, said Castellano Keeler. “We don’t want to go back to that old normal,” she said. Going forward, flowers will continue to compete with other products that are heavily marketed —far more so than flowers. And, getting the marketing order approved and implemented will take some time. So, now is the perfect time to plan ahead, she said.
Who ultimately pays for the campaigns?
The funds to pay for marketing campaigns designed to put flowers at front of mind for consumers would be raised via an assessment on domestic growers and on importers with gross sales of more than $100,000. Domestic growers would be assessed half of one percent (0.5 percent), while importers — including wholesalers who are also importers — would be assessed 1 percent. That assessment is estimated to generate about $19 million a year.
As with other promotion orders, for the sake of efficiency, the assessment is made at the producer level only. However, as with any other cost of doing business, the producers are expected to pass the cost on to their customers, and on down the line, Kennicott said.
“Ultimately, it is the consumer who pays the cost,” said Kennicott. But by the time one-half or 1 percent trickles down to the consumer, the consumer won’t feel or notice it, he added. Compared with the volatile increases that have taken place recently in freight charges, 1 percent is insignificant, agreed Fernandez.
Why are domestic growers assessed less than importers?
Originally, the drafting committee proposed the same 1 percent assessment on both. Given that the price of imported flowers is significantly lower than the price of domestically grown flowers, domestic growers would have ended up paying a portion of sales. An adjustment was made, Castellano Keeler explained, to help equalize the burden. The proposal also includes a plan to set-aside from 2 to 3 percent of all the monies collected specifically for marketing of domestic flowers.
How do we know the marketing campaigns will make a difference?
Promotion orders for other industries have been in business for a long time, Kennicott said, and most have been very successful. “Statistics show that these promotional campaigns can yield back as much as $2 to $18 for every dollar spent,” he said. Marketing dollars stretch even further than in the past thanks to social media, suggesting that $19 million is enough to have a large impact, Kennicott said. “We just can really get a lot of bang for the buck,” he said.
How can the industry support a marketing campaign it hasn’t seen?
The content and effectiveness of the marketing campaigns — in whatever form they take — can’t be determined or evaluated until after the promotional order is funded and the U.S. Floral Board, composed of six domestic growers and six importers, is in place to oversee the effort.
Isn’t the assessment like a government tax? And how involved is the USDA?
“As a domestic grower, I don’t think any of us want the government getting more involved in our businesses,” said Castellano Keeler. “And while I can see people thinking it’s a tax, it is actually not that. It’s an assessment that has to be voted in by the industry, for the benefit of our industry.” If the order is approved by a majority of those who would be assessed, the USDA is responsible for collecting the funds. But the marketing order itself is run by the board of 12 directors, who are nominated by the industry and appointed by the USDA.
After just four years — a shorter time than other promotion orders have instituted — the order would be subject to a revote.
Will all sectors of the industry benefit — or just the order gatherers and wire services?
Look at what happened when demand for flowers saw a surge during the pandemic, said Fernandez. The uptick brought benefits to everyone in the industry: growers, importers, wholesalers, mass-market retailers and neighborhood florists. “This is no different. We’re not directing anyone to buy from one type of outlet or another, domestic versus imports. We’re directing everyone to buy more flowers. And if everyone buys more flowers, we all win.”
What happens next?
The drafting committee will spend the next few months educating and surveying the industry. If there is broad support for the proposal, the USDA will put it to a referendum. If passed, the USDA will accept nominations for board members, which it then appoints.
Bruce Wright is a contributing writer for the Society of American Florists.
