. . . . .
Market Research – Eastern Europe
Fresh flowers in Hungary
...... Proexport – Colombia Equipo de Trabajo Dirección de Información Comercial Jorge Luis Gutiérrez – Director Fernando Piñeros – Subdirector Proyectos Especiales Bibiana Gutiérrez – Analista de Inteligencia de Mercados
[email protected] www.proexport.gov.co www.proexport.com.co
Calle 28 No. 13ª – 15, Piso 35 Tel: (571) 5600100 Fax: (571) 5600118 Bogotá, Colombia
GRUPO CONSULTOR EUNITE, Nederland
Todos los derechos reservados. Ni la totalidad ni parte de este documento puede reproducirse o transmitirse por ningún procedimiento electrónico o mecánico, incluyendo fotocopias, impresión o grabación.
Estimado Empresario:
La búsqueda de acuerdos comerciales que nos permitan como país ampliar los escenarios y mercados de exportación, nos reta como PROEXPORT a apoyar en forma directa a los empresarios en sus iniciativas exportadoras, ofreciendo servicios dentro de un modelo del gestión comercial y compartiendo un conocimiento más detallado sobre los mercados y sus oportunidades.
Para lograr lo anterior, PROEXPORT, con inversión de recursos propios y de cooperación técnica no-reembolsables del BID-FOMIN, emprendió una labor de recolección y análisis de información de primera mano en los principales mercados de interés a través de la contratación de consultorías internacionales especializadas en investigaciones de mercados. Los resultados de estos trabajos permitieron analizar y conocer la dinámica comercial de los sectores en los cuales existe un potencial para nuestras exportaciones, así como detallar aspectos de competitividad, información valiosa para la orientación de las iniciativas exportadoras de nuestros empresarios.
La información que contiene este estudio, sobre la dinámica del sector, la demanda y consumo, la situación competitiva de los productos, estructura y características de la comercialización y logística de acceso al mercado, es una contribución e invitación a profundizar y conocer aspectos que nos permitan avanzar en la realización de negocios en escenarios internacionales.
Cordialmente,
Luis Guillermo Plata P. Presidente PROEXPORT
Contents
1. Introduction ...... 7 1.1 Introduction ...... 7 1.2 Methodology...... 7 2. General sector data ...... 9 2.1 Current market developments within the specified sector...... 9 2.2 Sector’s participation in total GDP ...... 11 2.3 Sector’s participation in employment ...... 11 2.4 Developments in production...... 12 2.5 Sales-, export-, import, activities ...... 14 2.6 Available data about the sub sectors ...... 17 2.7 Recommendations ...... 18 3. Market composition and characteristics ...... 19 3.1 Market size...... 19 3.2 Analysis of the apparent consumption dynamics ...... 20 3.3 Governmental plans and programs...... 20 3.4 Demand in the market...... 20 3.5 Recommendations ...... 23 4. Competition analysis...... 25 4.1 Main trademarks available in the market ...... 25 4.2 Features of the commercialized products ...... 26 4.3 Marketing and advertising strategies ...... 27 4.4 Participation in the market and segments that are served ...... 28 4.5 Quality of the product ...... 29 4.6 Expansion plans...... 29 4.7 Pricing strategy ...... 29 4.8 Segmentation of enterprises by sectors and its categorization...... 31 4.9 Recommendations ...... 31 5. Distribution channels ...... 33 5.1 Distribution channels...... 33 5.2 Recommendations ...... 40 6. Commercial Access Guide...... 41 6.1 Preferential Tariffs...... 41 6.2 Tariffs imposed by major competitors ...... 42 6.3 Norms of origin...... 43 6.4 Barriers...... 45 6.5 Import Licenses...... 45 6.6 Quotas...... 49 6.7 Approvals & 6.8 Technical standards...... 49 6.9 Packaging ...... 50 6.10 Import Documentation...... 50 6.11 Import Modalities or regimes involved in the process ...... 58 6.12 Requirements for import of samples and accompanied luggage ...... 59 6.13 Website links to rules and regulations...... 59 6.14 Flow chart of the process and related costs...... 60 6.15 Recommendations ...... 61
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7. Physical access ...... 63 7.1 General description of available transportation infrastructure in Hungary ...... 63 7.2 Identification of ports, airports, roads- border passes- railways, waterways ...... 64 7.3 Description of status, operation, security, costs, distances, transportation arrangements and intercommunity customs...... 73 7.4 Identification of other handling and distribution infrastructure ...... 73 7.5 Identification of carriers that transport goods imported from Colombia ...... 76 7.6 Alternatives of transport and carriers providing services from Colombia...... 79 7.7 Costs of transportation from Colombia and main competing countries for the three types of cargo (loose cargo, general cargo, refrigerated cargo) in each modality of transport...... 79 7.8 International Freight and Transportation Costs ...... 80 7.9 Other costs involved in international physical distribution ...... 82 7.10 Physical distribution services address book ...... 82 8. Recommendations to the exporter...... 83 Annexes ...... 85 Annex 1: Certificate of origin form A...... 85 Annex 2: Plant health movement document...... 86 Annex 3: Phytosanitary certificate ...... 87 Annex 4: DV1 Form...... 89 Annex 5: Single Administrative Document (SAD) ...... 91 Annex 6: Photo documentation ...... 92 Annex 7: Companies Directories...... 94
6 Proexport Colombia 1. Introduction
1.1 Introduction
This report aims at providing in-depth information on the flower sector in Hungary. The report has been composed for PROEXPORT Colombia to provide Colombian exporters with a practical guidebook on how to approach the Hungarian market. The report will focus on all relevant aspects regarding market entry and has been drawn up in accordance with the Terms of Reference. The main objective of the report is to offer detailed information about the Hungarian market to Colombian entrepreneurs, gathering and analyzing market information about the flower sector development within the market as well as market access, product requirements, legal affairs and product competitiveness, that is, useful information in order to identify the market’s general trends and opportunities.
1.2 Methodology
The report is conceived as a compilation of edited information from numerous sources. The most important information was taken from the Ministry of Economy and Transport Hungary, Ministry of Agriculture and Regional Development and the Hungarian Development Bank. All the used data is also the latest data available.
Enormous help was given by the Hungarian Association of Flower Wholesalers and its workers and by the Agrarmarketing Centrum. Also helpful were the international organizations dealing with the economic wellbeing of the flower industry in Hungary. The International Monetary Fund (IMF) made a survey in 2004, which contained useful data for this report and the World Trade Organization’s trade policy reviews in the years 1998, 2003 and 2004 were also beneficial. Additional information was acquired via the Internet and drawn from major daily and weekly newspapers (Heti Világgazdaság /HVG/, Népszabadság, Magyar Nemzet, Dísznövény kereskedelem, Floraculture International) etc.
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2. General sector data
2.1 Current market developments within the specified sector.
Hungary’s 93,000 km2 territory features a fairly typical continental climate: very hot and dry in the summer and chilly, sometimes snowy in winters. These climatic conditions help determine Hungary’s agricultural and horticultural possibilities. Both have long traditions and have always been the most important strategic sectors in the country. Almost 20% of the agricultural production is horticulture which is around € 1.4 billion.
Last year, the European Union expanded with ten countries. Throughout the European floriculture industry, expectations were fairly high that these new members—who were well on their way to incorporating free-market economics into their own political systems—would be a beacon of hope in an otherwise depressed European market. Hungary is a prime target in terms of consumption and production for a number of industries that run the gamut between software engineering, industrial manufacturing and floriculture.
In October 2004, the international financial services and investment firm Price WaterhouseCoopers published the “European Economic Outlook”, which showed that the Hungarian economy was very balanced in the second quarter of 2004. Growth is expected to pick up to around 3.6% in 2004 and 3.8% in 2005.” The national currency (the forint) stabilized in 2004, which allowed the central bank to cut interest rates by 11%. However, the report cautions, “headline inflation has risen to over 7% on the back of one-off hikes in VAT and excise duties, accelerating private sector wage growth and higher oil prices.” Hungary also postponed the adoption of the euro as the country’s official currency until at least 2010.
Hungary is beginning to look beyond its own borders for potential markets. Ornamental plant production, particularly in Hungary, is increasing and some believe that with sufficient volume, these growers will have no problem supplying the needs of Slovenia, Croatia, Bosnia-Herzegovina, Serbia-Montenegro, Bulgaria and Romania.
Since the regime change in the beginning of the nineties, the consumption of flowers in Hungary increases every year. The growth rate of the consumption of cut flowers in the years 1999 to 2003 amounted 10,3 %, the growth rate of the consumption of pot flowers amounted even more: 12,4 %.
The domestic production of cut flowers and pot plants has developed near the large towns, mainly Budapest, as well as in the southern western borderlands. As domestic production of fresh flowers is restricted by climatic conditions and is therefore not able to fully saturate the demand of the market, Hungarian imports of flowers increased in the past few years, mainly from Israel, Colombia, Kenya and the Netherlands.
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The table shows how much land is used for growing flower and ornamental plants.
Table 2.1.1 Use of land for growing flowers and ornamental plants
Source: http://eurostat.cec.eu.int
10 Proexport Colombia Fresh flowers in Hungary
2.2 Sector’s participation in total GDP
As can be witnessed in the table printed below, various sectors take up a different part of the Hungarian Gross Domestic Production (GDP). Agricultural products combined, amongst which flowers can obviously be counted, take an 8.0 % share of GDP. Because total GDP has been rising in Hungary for the past few years, the share of income that is spend on flowers is rising. This is easy to illustrate by imaging an average person just given a pay rise; this person can suddenly buy luxury products such as flowers. So proportionally this person ends up spending less of his salary on primary needs, such as food, and more on luxury items, like flowers.
Table 2.2.1 Sector’s participation in total GDP (%) Branch 1995 1996 1999 2000 2001 National economy 100 100 100 100 100 Agriculture 6,4 6,4 4,6 4,0 4,0 Food industry 4,2 4,0 3,2 3,4 3,7 Forestry 0,3 0,3 0,3 0,3 0,3 Agrarian economy altogether 10,9 10,7 8,1 7,7 8,0
Source: Central Hungarian Office of Statistics
Analysts expect a boom in the domestic production of bedding plants (annuals and biennales), extra-large potted foliage plants and fragile, hard- to-transport cut flowers, as freight costs and weight could prohibit imports. The country’s geographical advantages and national traditions make Hungarian rose stock, flower seeds, dried flowers and nursery plants competitive with Western European imports. In fact, Hungarian growers hope to one day become the central distribution point between the Middle East and the rest of Europe. Meanwhile, the import of cut flowers is on the rise as domestic production switches to lower cost production methods, such as low-cost heating measures and open field culture.
2.3 Sector’s participation in employment
The Central Hungarian Office of Statistics frequently researches different sector’s participation in employment. The data emerging from these researches is printed below. As can be seen in the first table, absolute numbers of employment have basically remained the same and so have the relative numbers. Only the agricultural branch has seen a significant loss in participation in employment; it lost some 25.000 workers over a period of five years.
Proexport Colombia 11 Market Researches in Eastern Europe
Table 2.3.1 Sector’s participation in employment (1000 persons) Branch 1998 1999 2000 2001 2002 Branches 3 697,7 3 811,5 3 849,1 3 883,3 3 883,6 altogether Agriculture 258,7 250,3 234,0 226,3 223,7 Forestry 20,1 20,1 17,7 17,1 17,2 Food 158,6 155,1 152,2 158,0 161,2 industry Source: Central Hungarian Office of Statistics
Table 2.3.2 Sector’s participation in employment (%) Branch 1998 1999 2000 2001 2002 Branches 100,0 100,0 100,0 100,0 100,0 altogether Agriculture 7,0 6,6 6,1 5,8 5,8 Forestry 0,5 0,5 0,5 0,4 0,4 Food 4,3 4,1 3,9 4,1 4,2 industry Source: Central Hungarian Office of Statistics
The flower sector in specific provides secure jobs and/or part-time income for 8,000 to 10,000 families.
2.4 Developments in production
Hungary’s total 320 ha of greenhouse production is divided between production under glass (about 100 ha) and production under plastic (houses and tunnels, 200 to 220 ha). Cut flowers, cut foliage, pot plants, annual young plants and nursery rootstocks are all actively cultivated. Most production is cut flowers (70%), with pot plants taking 30%. However, as the production in greenhouses is without subsidies, most of the greenhouses are old and inadequate and therefore they do not compose serious competitors for Colombian exporters.
Open field production includes nursery plants (1,200 ha), rose stock (120 ha), perennials (10 ha), flower bulbs (60 ha), flower seed (35 ha), cut flowers (40 ha), dried flowers (250 ha) and young plants (15 ha).
Dianthus dominates cut flower production, with 30 million stems produced annually. Gerberas are cultivated on 35 ha with an average yearly yield of 15 million stems; the country’s 60 ha of roses annually yield 10 million stems. Other typical Hungarian crops include cut bulb flowers (including lilies and iris) and cut and spray chrysanthemums. Other cut flowers (such as alstroemeria and aster), cut foliage and gypsophila are also
12 Proexport Colombia Fresh flowers in Hungary produced and sold on the domestic market. Pot plants are produced on 30 to 40 ha. To cover domestic consumption, this volume is supplemented by 20 to 30% of imported pot plants (equivalent to about 12 ha of domestic production).
Table 2.4.1 Production of cut flowers in EU countries in € million
Source: EU Market Survey 2004
Table 2.4.2 European Flower and Plant Production Total production Value in Euros area in ha (indoor (millions) and outdoor) No. of companies Austria 1,982 (a) 240 (a) 1,357 (a) Belgium 1,562 263 2,953 Czech Republic 215 43 3,000 Denmark 444 354 1,054 Finland 176 76 998 France 6,628 956 7,663 Germany 7,056 1,174 11,197 Greece 990 n/a n/a Hungary 600 95 3,000 (a) Ireland 300 19 n/a
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Total production Value in Euros area in ha (indoor (millions) and outdoor) No. of companies Italy 8,463 1,826 n/a Netherlands 8,363 3,542 7,751 Norway 118 129 690 Poland 705 186 n/a Portugal 240 n/a 704 Spain 7,617 345 6,454 Sweden 209 112 864 Switzerland 645 110 543 United Kingdom 7,670 473 (c) 9,400 (a) Total 54,815 9,996 57,902 Source: AIPH International Statistics Flowers and Plants, 2004.
Table 2.4.3. Domestic flower production 2003. Outdoor production Indoor production Production (million (ha) (ha) euros) Cut flowers 55 173 43,4 Cut greens 20 10 2,45 Dry flowers 25 0 2,26 Pot plants 21 83,6 54,26 Source: AIPH International Statistics Flowers and Plants, 2004
2.5 Sales-, export-, import, activities
Table 2.5.1 Export and import data of the floriculture sector ( € x 1000 ) 1991 1993 1995 1997
Cut flower export 55.08 16.02 85.82 98.77
Cut flower import 362.51 1637.12 2673.72 3103.46
Dried flower export 254.43 277.00 420.05 480.74
Living ornamental plant export 516.78 337.75 356.90 549.59
Living ornamental plant import 849.34 2299.06 2925.87 2558.96
14 Proexport Colombia Fresh flowers in Hungary
Rose stem export 232.19 321.89 531.41 868.03
Flower-seed export 187.59 207.09 332.39 361.89
Flower-seed import 228.73 330.68 467.34 638.83 Source: www.kertnet.hu
Table 2.5.2 New EU member states exports of cut flowers and foliage, 2003, value in € thousand, volume in tons
Source: Eurostat, 2004
Table 2.5.3 Imports by the new EU member states of cut flowers and foliage, 2003, € 1000 / tons
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Source: Eurostat, 2004
According to AIPH statistics from 2000 and 2002, the export of Hungarian ornamentals has decreased by nearly 1 million euro, while imports have increased from 9 million euro to 29 million. Dried flowers (1 million euro) and raised stock (406,000 euro) top the list of Hungarian exports. In terms of imports, 2.2 million dianthus stems came into Hungary in 2002, mostly from Spain. The import of propagation materials is also on the rise because Hungarian growers have realized that starting from high-quality basic material can result in a larger selection of varieties of better quality. The import volume of cut foliage and other durable, versatile items such as eucalyptus, palm leaf, pittosporum, protea, leucadendron, philodendron, fatsia and others is also rapidly rising.
General economic trends found their way into the floriculture sector. According to statistics from the Dutch Wholesale Board (HBAG), exports from the Netherlands to eight of the ten new EU members had increased by nearly 8% by October 2004. Hungary showed the strongest growth in exports (+19.4%), followed by Poland (+10%). Pot plant and bedding plant exports to Eastern European countries increased by 12% and propagation materials experienced a 17% jump; meanwhile, cut flower exports rose by a modest 5.5%.
The ornamental flower and plants production is not sufficient to cover the internal market. In 2002, 2.2 million carnations were imported. These originated for 70% from Spain. Pot plants usually come from the Netherlands, Germany, Denmark, Italy and Spain, as well as roses and chrysanthemums.
It is expected that the export of flowers to the ten new member states will grow with 12% each year, based on the expected growth in level of consumption. This growth in the demand for foreign flowers is expected to be the highest in Hungary and the Czech Republic.
Table 2.5.4 Main suppliers of fresh flowers to Hungary per flower variety value-wise, 2004 Roses (CN 06031010) Import value
1) Netherlands € 5 307 850 2) Israel € 84 830 3) Kenya € 53 480
16 Proexport Colombia Fresh flowers in Hungary
Roses (CN 06031010) Import value Carnations (CN 06031020) Import value
1) Spain € 403 650 2) Netherlands € 102 630 3) Colombia € 35 690
Chrysanthemums (CN 06031050)
1) Netherlands € 2 180 680 2) Italy € 6 220 3) Spain € 3 390 Source: DG Trade
The import of augmentation material is on a rise, which shows that national growers are trying to get a higher quality and a larger supply with a more varied assortment.
The main Hungarian export products in this market are dried flowers and rose pedicles. The cheaper export products are mainly sold to Slovenia, Croatia, Bosnia-Herzegovina, Serbia- Montenegro, Bulgaria and Romania, where domestic production and flower markets are very poor. Shipments from Hungary could quickly reach these destinations.
2.6 Available data about the sub sectors
As for the sector of cut flowers, the production of roses, gerberas, and carnations is the most important, as these cut flowers are the most popular in Hungary. The total production value of the cut flower sector is 22 billion forint (86,9 million EUR), within which greenhouse cut and potted ornamental plants represent 8-9 billion forint (31,6 – 35,6 EUR) and garden-tree nursery products represent 5 billion forint (19,74 EUR) of production value. The main cultivation areas are: the south of the Great Hungarian Plain, Budapest and its environs and West- Transdanubia. As for ornamental plants, this sub sector includes 4500 farmers and more than 3000 traders; it provides living for 35.000 people in Hungary.
Because a tariff position matrix is not available, this chapter presents minimum, maximum and average prices quoted on major flower stock markets. The biggest wholesale market in Hungary is near to Budapest. The wholesale prices of this market influence the floricultural sector in the whole country.
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Table 2.6.1 Prices paid to producers for cut flower products procured for processing or resale (EUR/kilogram) 2003. 2004. 2004. 2005. Products Jan-Dec. Jan-Dec. Jan-Aug. Jan-Aug. Chrysanthemums 0,348 0.334 0,30 0,330 Carnations 0.161 0,14 0,318 0,154 Gerbera 0,252 0,212 0,20 0,245 Gladioli 0,223 0,60 0,651 0,677 Lilies 0,739 0,713 0,710 0,414 Roses 0,333 0,317 0,333 0,289 Source: Central Office of Statistics
Table 2.6.2 Prices of wholesale flower markets (EUR/ single flowers) 2003. 2004. 2004. 2005. Products Jan-Dec. Jan-Dec. Jan-Aug. Jan-Aug. Chrysanthemums 0,442 0,444 0,528 0,436 Carnations 0,164 0,155 0,162 0,146 Gerbera 0,259 0,256 0,260 0,2336 Gladioli 0,250 0,216 0,263 0,236 Lilies 0,831 0,868 0,900 0,860 Roses 0,261 0,276 0,287 0,271 Source: Central Office of Statistics
2.7 Recommendations
Both production and consumption of flowers have been increasing in the past few years. Expenses on flowers, both cut flowers as pot plants are increasing as households’ disposable incomes are growing.
Due to the climatic conditions, Hungary’s domestic production of cut flowers and pot plants is not able to fully saturate the demand of the market. Therefore, Hungarian imports of flowers increased in the past few years, with no reduction expected in the future. The Hungarian flower market will see a rising trend in the upcoming years. Therefore, the Hungarian fresh flower sector is definitely important, so there is a relatively big potential for new entrants. However the main supplier for Hungary is the Netherlands, followed by Spain. Colombian exporters will face though competition from the Netherlands, as this country has a vast share in the Hungarian flower market.
To enter the Hungarian flower market is therefore not easy, but as the consumption of flowers is growing and the production is expected to decline in the future, there definitely is potential for Colombian exporters.
18 Proexport Colombia 3. Market composition and characteristics
3.1 Market size
43% of the Hungarian flower supplies originates from the Netherlands. This share is so big, because the Netherlands have a logistic advantage over other flower producing countries such as Spain. The local production in Hungary is quite low and it is expected to decline even more in the future, because currently local producers are not able to compete with foreign import, both price and quality wise.
The production of ornamental crops is the fastest developing sector, growing by 7 to 8% each year due to the annual enlargement of production areas and production volumes. According to statistics from the Hungarian Professional Ornamental Plant Growers and Traders’ Association and Commodity Board, approximately 2,400 ha of open field and 320 ha of covered facilities (glass 100 ha and 220 ha for plastic houses) are used for flower production, which produces € 184 million worth of flowers annually.
Of the open ground cultivation 1200 ha is used by tree nurseries, 250 ha for dried flowers, 120 ha for rosebushes, 60 ha for flower bulbs, 40 ha for fresh cut flowers and 35 ha for flower seeds.
The total growth of cut flowers in Hungary is divided among 60 ha of carnations (30 million pieces), 60 ha of cut roses (10 million pieces) and 35 ha of gerberas (15 million pieces). 25 ha are annually used to grow 2 million lilies and 5 million irises. Chrysanthemum is grown on 20 ha, which results are 6 million stems and 7 million bushes.
The total surface of cultivation (based on estimates) is added up of the following cultures.
Table 3.1.1 Surface of cultivation of fresh flowers in Hungary Carnation 60 ha
Gerbera 40 ha
Rose 30 ha
Bulbous plants 25 ha
Autumn Chrysanthemum 20 ha
Other cut: Alstroemeria 5 ha
Asters 30 ha
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Gypsophila and cut greens 15 ha
Total: 220 ha Source: www.kertnet.hu
3.2 Analysis of the apparent consumption dynamics
Table 3.2.1 apparent consumption of fresh cut flowers 2004, in EUR 2004 Production 19.000.000 + Import 12.471.321 -/- Export 288.850 = Apparent Consumption 31.182.471 Source: Own calculations
As table 3.2.1 shows, domestic production of fresh cut flowers is not sufficient to cover the Hungarian demand. Therefore a large part of the flowers offered in Hungary are imported from third countries, most of them being other European Union member states. A small part of domestic production and import is being (re-) exported again. This usually concerns the lower quality produce, which can be sold at low prices abroad.
3.3 Governmental plans and programs
During the era of socialism, ornamental plant producers had a “privilege”. Unlike other sectors of the national economy, they were not obliged to produce a certain volume. Cut flowers were considered a luxury product, so growers could produce relatively freely. This freedom made it easier for Hungarian growers to become accustomed to the country’s transitioning market brought about by the political changes of 1989. In comparison with neighboring (former) socialist countries, Hungarian growers had great advantages that allowed domestic production to survive. They successfully controlled the aggressive penetration of Dutch flowers to the Hungarian flower market. The grower’s union even prevented the Dutch from building a wholesale market in Hungary and in the 1990s eventually financed and built their own. Today the Flora Hungária wholesale market operates on 18,500 m2 in Szigetszentmiklós. Currently there are however no government plans, concerning the fresh cut flower sector, running.
3.4 Demand in the market
Consumers are becoming more and more demanding. They have become more aware of what they want to buy and are becoming professional buyers. Besides, consumers ask for wider choices in product quality levels depending on the purpose of the purchase, as well as for higher levels of service and a wider and deeper assortment.
20 Proexport Colombia Fresh flowers in Hungary
Consequently, in the floricultural export business, selling is no longer considered synonymous with selling simple products but so called - precisely 'fitted'- products for each individual consumer.
Table 3.4.1 Information on the new EU member states
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The graph above contains data on:
1) Inhabitants 2) Average bruto income a month 3) GDP 4) GDP per capita 5) Average growth of GDP 2003-2007 6) Level of welfare 7) Consumption of pot plants per head per year 8) Consumption of fresh flowers per head per year 9) % of net income used to buy flowers and plants 10) Export 2002 (total ornamental production) 11) Growth in respect to 2001 12) Export 2002 (cut flowers) 13) Growth in respect to 2001 14) Export 2002 (pot and garden plants) 15) Growth in respect to 2001 16) Dutch share in cut flowers 17) Dutch market share in pot plants
Source: Dutch Flower Agency,2002
22 Proexport Colombia Fresh flowers in Hungary
As we can see from the graph above the consumption of fresh flowers per head in 2002 is € 12,50 and concerning the pot plants per head per year it is around € 6,50. In total the Hungarians spent 0.51 % of their income on flowers and plants. The level of consumption has seen quite a rise; in 2001 per capita consumption of fresh cut flowers averaged just € 10,70.
Flowers in Hungary are mainly bought as a gift, usually because of someone’s name day. In this case flowers are purchased by relatives or friends. Price noticeably go up around the name days of the most popular names. The production is also focused around these days. Mothers’ day and more recently, Valentines’ day, also provide an increase in flower sales.
3.5 Recommendations
Hungary does not have an ideal climate for flower production and not enough financial resources to grow them on covered areas. Therefore Hungarian domestic production has being going down for the past few years and a further decline is expected in the future. Current local producers are not able to compete with foreign import, both price and quality wise. Especially large producers and suppliers such as the Netherlands, will continue to dominate the European flower market.
The average level of consumption in Hungary will rise as a consequence of the increasing disposable income, which enables buyers to buy products that were previously considered to be luxury items. Export to Hungary will therefore grow with more than 12%, which promises a considerable rise in consumption. This enlargement of the market could offer potential for flower suppliers from third countries, such as Colombia.
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4. Competition analysis
4.1 Main trademarks available in the market
Because of the type of the product under study, no particular trademark can be distinguished. Mostly, customers consider the type of flower important, as well as freshness and do not pay attention to trademarks or the company producing it. Most Hungarians buy their flowers in retail shops where customers choose between products (variety, color, and price) and do not pay attention to any particular trademarks.
In Hungary, annually 30-33 million pieces of flowers and ornamental plants are cultivated for commercial purposes. 20-22 million of this are annual- and 10-12 million are bi-annual flowers. While the previous is cultivated mainly in greenhouses (either covered with plastic or not), the latter is grown mainly in free-range cultivation. Of the total cultivation area, 20-22 ha is in greenhouses and 8-10 ha is free-range cultivation.
Besides cut flowers, ornamental plants are very popular amongst Hungarian consumers. In 1990, The Ornamental Plant Association was established. This association acts as a representative of interests for organizations and individuals active in ornamental plant cultivation and distribution.
Flora Hungaria Ornamental Plant Growers Association President: Dr. Sándor EKE Address: H-2370 Dabas, Szent István u. 90. Phone: (+36 20) 410 361 Fax: (+36 29) 367 086 [email protected]
There are several growers of cut flowers and ornamental plants on the Hungarian market. Flower producers generally import flowers as well. Besides that, they often act as retailers and wholesalers. The most important growers are mentioned below. However, as most producers also are importers, wholesalers and retailers, the majority of important companies is mentioned in chapter five.
Kocsis Flóra This company can be found in the biggest and oldest agricultural region of Hungary, in the delta of the river Tisza and river Maros. Their activity includes flower and plant growing and trading. They produce roses for already 25 years, mainly tea hybrid roses. Rosebushes and high stam roses are available in whole year. Next to roses, the company grows cut flowers like tulip, lily, hyacinth and iris.
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Kocsis Flóra Kereskedelmi és Szolgáltató Kft. H-6771 Szeged, Szegfü u. 4 (Garden: H-6771 Szeged, Föld u.) Hungary e-mail: [email protected] Telephone: +36-62-540-102 Fax: +36-62-540-103
Aster Dísznövény This company produces all kinds of fresh flowers for decorations. They mainly focus on special species (also tropical) of plants and flowers. Hunyadvár u. 62. 1165 Budapest, Hungary Tel.: +36-1/407-4689
Fráter Rózsafaiskola This company is specialized in producing all kinds of roses, stam roses, tea hybrid roses etc. Marostorok út. 6771 Szeged, Tel.: +36-30/9436-748 Fax:+36-62/405-380 e-mail: [email protected]
Gombos Kertészet This company specializes in the production of cut lilies. They produce in greenhouses which makes it possible to produce the whole year. They offer the largest color selection in Hungary. Tanya 65 6764 Balata Tel.: +36-20/9821-284 Fax: +36-62/278-342 e-mail: [email protected]
4.2 Features of the commercialized products
Hungarian consumers rarely buy cut flowers or pot plants for themselves. High prices, the standard of living and tradition mean that flowers are bought primarily as gifts. Name days are the most important occasions for celebrations. The most common names in Hungary are Catherine (25th November), Maria (12th September) and Elisabeth (19th November)
Name days mark sharp increases in flower consumption and prices. Graduations (celebrated in early June) are important flower-giving celebrations, as is Mother’s Day (the first Sunday in May). Valentine’s Day was introduced by the Hungarian Association
26 Proexport Colombia Fresh flowers in Hungary of Florists about ten years ago. Since then, flower sales in February have increased annually. In contrast, interest in celebrating socialist holidays like International Women’s Day is on the wane (on this 7 March holiday men are expected to give flowers to the women in their lives as a gesture of appreciation).
Another important flower day in Hungary is All Saints’ Day (1 November), when single- stemmed, large-flowered white or yellow chrysanthemums are brought to cemeteries. Tradition also dominates the major holidays of Christmas and Easter.
Flowers as rose are common gifts when visiting a friend, celebrating a birth and comforting someone in the hospital. Sending large and expensive bouquets through delivery services is becoming fashionable. Flower arrangements are common in government offices, at public events and on television shows. This latter exposure is allowing Hungarian consumers to become acquainted with (and potentially imitate) Western European flower consumption habits.
In Hungary, except for All Saint’s day, no special kinds of flowers are bought on name days, Mother’s day and other kinds of holidays. Each person chooses a single flower or a bouquet according to his budget and taste. However there are preferences such as roses (at Valentine’s Day) and lilies. Carnations are also sold in large number due to its accessible price.
Flowers are sold especially in flower shops, which can be found on the streets, underpasses and shopping centers. With the arrival of supermarket-chains, more and more bouquets are bought there, however most people still prefer buying flowers in retail shops. For examples of bouquets, please refer to the annexes.
The most important sales dates: 14 February, Valentine’s Day 7 March, International Women’s Day March or April, Easter First Sunday in May, Mother’s Day Early June, Graduation 1 November, All Saints’ Day (white or yellow chrysanthemums)
4.3 Marketing and advertising strategies
Hungarian flower producers are not very well organized. There are various associations of flower and plants producers, but their active participation is quite low; they have no websites and publish no magazines. Actively advertising oneself in the Hungarian flower market therefore usually happens within trade fairs and exhibitions. A list of the biggest events related to the flower market in Hungary and internationally, are displayed below.
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The most important Hungarian horticulture fair is the Hortus Hungaricus International Horticultural Exhibition and Trade Fair held annually. In 2006, it will be held from 22-24 September 2006.
In 2005, 365 exhibitors where present of which 14% where from abroad. Fresh cut flowers make 10% of the exhibition. The Hortus Hungaricus is considered to be one of the most important horticultural events in Eastern and Central Europe. The exhibition has a total surface area of 15,000 m2. Products of ornamental plant growers, vegetable, fresh cut flowers, medical plant and spice, and grape and wine sectors are presented. The majority of the exhibition area is devoted to ornamental plants – cut flowers, pot plants, dried flowers, landscape and park architecture, ornamental nursery -, but the presence of the fresh cut flower sector is substantial too.
Besides the Hortus Hungaricus, International fair are of importance as well. The most important Western European horticulture fairs that are of importance for Colombian exporters are listed in the table below.
Table 4.3.1 Main European Horticulture Fairs Name Location Frequency Description Hortifair Amsterdam (the Annually Cut flowers, Netherlands) (November) (ornamental) plants and florists’ requisites IPM Essen (Germany Annually (January) Cut flowers, plants, equipments and florists’ requisites Source:www.flowercouncil.org
4.4 Participation in the market and segments that are served
Traditionally, cooperatives and grower associations have had significant influence on the market. The Floracoop Flowermarket, Budaörs, was founded and organized by state- owned cooperatives and companies in 1984. Located near Budapest, a space shortage led to the opening of Flora Hungária in 1993. This wholesale market was founded by growers who are still the owners and operators. The Flower Market on Szent László Street is in the heart of Budapest. This flower distribution center was organized to offer more suitable opening hours than those of the Floracoop.
Virágpaletta PO (Flower Palette producers’ organization) was founded in 1997 with the purpose of preventing the expansion of Dutch exports. Owned by Hungarian flower growers, Virágpaletta operates 13 wholesale flower markets around the country, with varying levels of success and effectiveness. Virágpaletta primarily sells the products of its members, but each manager can also choose to supplement the offerings of individual markets.
28 Proexport Colombia Fresh flowers in Hungary
Wesseling Hungária is a Dutch-owned wholesale flower market also located in Budapest. Open all day, this market offers convenient and favorable purchasing conditions. Products of Dutch origin are the main offerings, but the operator of this market can buy any kind of quality domestic products that suits stipulated delivery conditions. Meanwhile next door, a 100% German-owned wholesale center for florists’ supplies operates under similar purchasing conditions.
4.5 Quality of the product
Hungarians especially like very brightly colored flowers. They are particulairly fond of pink, purple and bright yellow. Some flowers are artificially colored to get this desired result. Flowers are mostly bought separately or in flower tributes.
Bouquets are becoming more and more popular, but are still too expensive for the average Hungarian.
4.6 Expansion plans
There are no real expansion plans concerning the Hungarian flower producers. The majority is struggling to keep their businesses alive in the face of the harsh competition from other European Union member states, such as the Netherlands.
4.7 Pricing strategy
The rose is the number one cut flower being sold in Hungary. Almost all flowers sold in Hungary originate from the Netherlands. In 2002, 3,266 million pieces of roses were sold at the Aalsmeer auction, at a total turnover of € 699,8 million. € 5 million worth of roses was sold to Hungarian importers and wholesalers.
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Table 4.7.1 Average prices at Dutch auctions, 2002-2003 per stem
The average price of a rose almost has not changed since 1998-2002. At the Dutch auction the price per piece averages € 0.20. Prices vary from flower to flower, depending on the quality and amount offered; Sacha, for example, ranges at € 0.09 and Passion was sold at € 0.35 per piece.
In the Hungarian wholesale market, roses are sold at different prices, because they are first bought and transported from the Netherlands. A single rose for example goes for about € 0.33 to € 0.74. More expensive types of imported roses, usually originating from Central Africa, cost € 0.82 to € 0.98. When a customer buys that same rose in a flowers store in Hungary, they have to pay anywhere between € 2.05 to € 2.46 to be able to take it home.
The most important flowers on market are roses, carnations, gerberas, gladioli, lilies and chrysanthemums. Retail prices of these flowers are presented in the table below.
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Table 4.7.2 Retail prices of the most important flowers 2005 (EUR/single flower) Products 2005. Jan-Dec. Chrysanthemums 0,64 Carnations 1,50 Gerbera 2,00 Gladioli 2,50 Lilies 3,00 Roses 2,50
4.8 Segmentation of enterprises by sectors and its categorization
Hungary has four main growing areas: the south of the Great Hungarian, which focuses on cut and dried flowers, ornamental bushes and flower bulbs. The second one is the area around Budapest which mainly grows cut flowers en pot plants under cover and has a great number of tree nurseries; the area around Györ has a lot of cut flowers under glass cover. Finally West-Trans-Danubia is famous for its ornamental bushes and pot plants.
4.9 Recommendations
As Hungary’s standard of living improves, the country’s flower consumption is expected to increase in value. With the country’s new membership into the European Union, florists and growers have to face new problems and challenges. Not everyone will survive in this huge market, where Hungarians are not only consumers but also competing producers for other European countries. It will be very difficult to conquer a piece of the Hungarian flower market, since it is already dominated by strong foreign competitors. To be able to get in touch with Hungarian wholesalers and importers, it is highly recommendable to visit or participate in one of the Hungarian or European flower trade fairs.
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5. Distribution channels
5.1 Distribution channels
A schematic overview of the Hungarian flower distribution channels is given below.
Figure 5.1.1 Imported cut flower distribution channels (%)
15 Importer 5 Wholesaler
70 10 25 Importer wholesaler Wholesale Market Retailer
55 100 Wholesaler 55
15 Consumer
Major distributors of ornamental plants to Hungary are the Netherlands, Germany, Denmark, Italy, Spain, Israel and Austria. Trade is primarily handled by domestic importers, but some producers have begun purchasing propagation materials on their own.
While sales at small florist shops have experienced a decrease, flower shop chains (especially those in hypermarkets) are increasingly having success. Flowering pot plants offered by shopping centers and hypermarkets and bouquets sold at petrol stations are becoming more common.
Traditionally, the Hungarian flower trade is centralized in Budapest, however this situation is changing and other areas, like for example the South, become important as well. The distribution system is professionalizing quickly in Hungary. Mostly wholesalers distribute flowers to the retailers, bit as mentioned before, most producers also act as
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importers, wholesalers and retailers, so the sector is somewhat diffuse. There is huge competition between importers in Hungary, but they are also very often buying goods from each other to supplement their goods. Some of importers import only pot plants, while they get cut flowers from another importer.
The figure below shows the distribution in percents of the domestic production of cut flowers
Figure 5.1.2 domestically grown cut flower distribution channel (in %)
30 15 Wholesaler
60 15 30 Grower Wholesale Market Retailer
45 98 Wholesaler 45
8
2 Consumer
Importers/ Wholesalers/ Distributors
As mentioned above, the production, the import, export, retail and the wholesale of flowers in generally not divided. Mostly, companies dealing with production also play an important role in flower import.
Oázis Kertészeti Kft. One of the most important companies in the import of ornamental plants is Oázis Kertészet, which also a retailer and a producer of flowers. The company has several shops all over Hungary. The company deals with all kinds of plants and flowers. The most important cut flowers the company deals with are roses, carnations, gerberas, lilies and orchids. KĘbányai út 47 1101 Budapest Tel.: +36-1/261-3160
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Fax: +36-1/261-8782 e-mail: [email protected] http://www.oazis.hu
Európa 5 Kertcentrum This importer imports all kinds of pot plants, mainly from the Netherlands and Germany, but also from Belgium and Italy. FĘ út ErdĘ 4. 2351 Alsónémedi, Tel.: +36-29/338-851 Fax: +36-29/537751 e-mail: [email protected]
Béker Kft. This company is a wholesale dealer in the Flora Hungaria Wholesale Market. They concentrate on fresh cut flowers and pot plants, but also textile flowers for decoration. Ady E. u. 2. 4821 Ópályi Tel.: +36-30/9451-538 Fax: +36-44/300-664 e-mail: [email protected]
Kis-Tisza Kft. This company is an exporter and importer of cut flowers. They also produce cut flowers themselves. Kis-Tisza u. 6. 6640 Csongrád Tel.: +36-63/483-021 Fax: +36-63/483-021
Most of the existing wholesalers are active on the market since the regime change in the beginning of the nineties. These wholesalers’ importance is increasing from year to year. There are a few important wholesale markets in Hungary where virtually all retailers buy their goods from the wholesalers and importers active in Hungary. The wholesale markets that are of importance for Colombian exporters are:
Flora Hungaria The Flora Hungaria is the biggest and most influential Hungarian flower market. It is located in Szigetszentmiklos, 17 km from Budapest. This private wholesale market was established in 1993 by a number of growers. Today it has 450 members, and around 140 wholesalers and importers. The sales are divided as follows: 45% of cut flowers, 35% of accessories and dry flowers and 20% of pot plants. It works also as a forum. The sales surface is 18,500 m2. Retailers are willing to travel to Flora Hungária from all over the country because it allows them to buy everything in one place. To ensure better distribution, the wholesalers’ network covers nearly the whole country.
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Virágpaletta, the Hungarian Flower Growers, Distributors and Purchasers Association The Virágpaletta is also a major wholesaler, established in 1997 by 36 private growers. By 2000, the number of the members has risen till 75, where most of the growers owned 0.5 or 1 ha of covered fields. The Virágpaletta was established to prevent the Dutch export expansion. The Association has spread all over the country, it has its markets in 13 cities all over Hungary. The prices are comparable with the Flora Hungaria in order to compete with the Virágpaletta. Concerning the flower sales, it can be divided as follows: cut flowers 60%, pot plants 35%, and balcony greens 5%.
Private Wholesalers Association - Floranet Floranet was established in 2000, by ten private sellers. They have their markets in 17 cities all over the Hungary. The head office is in Budapest. The aim is to coordinate distribution and sales domestic and imported flowers.
Floracoop Association Traditionally, cooperatives and grower associations have had significant influence on the market. The Floracoop Flowermarket, Budaörs, was founded and organized by state- owned cooperatives and companies in 1984. Located near Budapest, a space shortage led to the opening of Flora Hungária in 1993. This wholesale market was founded by growers who are still the owners and operators.
Szent Laszlo street market The Flower Market on Szent László Street is in the heart of Budapest. It was established in 1991 and is run by the Szent Laszlo family. This flower distribution center was established to offer more suitable opening hours than those of the Floracoop.
Auctions Auctions are wholesale markets created by the growers to market their products. The first flower auctions were set up in the early 20th century in the Netherlands. Nowadays, there are about 10 flower auctions in Europe, 4 of which are in the Netherlands. Floricultural products submitted to the auctions are sold either by means of the auction clock or through the Intermediary Office.
Of the flower auctions in the EU, three are of particular interest to exporters from developing countries. These three auctions also have their own import departments that can facilitate foreign suppliers with necessary support when supplying the auction. The contact details of these three auctions are.
Aalsmeer Flower Auction (VBA) Internationally oriented auction with an annual turnover of over € 1.6 billion in 2003, of which € 995 cut flowers. Legmeerdijk 313 1431 GB Aalsmeer, the Netherlands
36 Proexport Colombia Fresh flowers in Hungary
Phone: +31 (0)297 -393939 Fax : +31 (0)297 - 390039 E-mail : [email protected]
FloraHolland Internationally oriented auction with 5 branches in Naaldwijk, Rijnsburg, Bleiswijk, Venlo and Eelde in The Netherlands. In 2003, total turnover amounted to € 1.9 billion. Middel Broekweg 29 Postbus 220 2670 AE Naaldwijk, the Netherlands Phone: +31 (0)174 63 33 33 Fax: +31 (0)174 63 22 22 E-mail: [email protected]
NBV/UGA Germany's leading sales organization and auction with an annual turnover of € 715 million in 2003. Veilingstr. A1 47638 Straelen-Herongen, Germany Phone: +49 (0) 2839 - 59 00 Fax: +49 (0) 28 39 - 59 1997 E-mail: [email protected]
It is important to understand the importance of Dutch auctions as an international distribution hub for products from developing countries. Hungarian importers are especially oriented to the Aalsmeer Flower Auction, which is on of the most important distribution channels of fresh flowers to Hungarian. The Netherlands' auctions in particular function as a pivot around which the international floricultural trade revolves. Through their concentration of supply and demand, they act as a price-setting mechanism for the trade and have developed into a major centre for the distribution of domestic and foreign grown products to the European markets. The Dutch auctions now handle about handle 89 percent of the Dutch produce and 70 percent of imported flowers. The auctions dominate the world trade and determine the prices, in particular in Europe, where they have a 30 to 40 percent market share in cut flowers. The auctions in the Netherlands are cooperatives, owned by domestic growers and open to membership for all growers in the EU, but not yet for growers outside the EU. Their main purpose is to handle produce from their member growers. The Federation of Dutch Flower Auctions (VBN) is the coordinating centre.
Dutch wholesalers are the customer base of the auctions. They typically focus on exports and their infrastructure is developed to coordinate product flows, which are sold all-over Europe.
Besides the auctions in the Netherlands and the NBV/UGA auction in Germany, other countries also have national auctions. Although the importance of these auctions for international trade is small compared to the Dutch auctions, some of them are gaining in significance.
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Figure 5.1.3 Distribution network of the cut flower trade in the European Union
Source: EU Market Survey 2004
Retailers In the nineties the domestic flower trade has been structurally reformed. The big retail trade chains disappeared and many flower stores opened around the country. Different types of retailers can be distinguished.
x Underpass trade; where the flowers are sold from baskets, which are of low quality x Street kiosks, stalls; in this category, the sellers are people specialized in flowers, with a good knowledge of the flowers they sell x City markets x Hypermarkets (mostly international chains like Auchan, Cora, Tesco, Metro, Interspar)
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Table 5.1.4 Data about physical distribution of retail sales (cut flowers) % Flower shops 60 Kiosk, stalls 25 Street sales 5 City markets 8 Hypermarkets (malls) 2 Total 100 Source: Hungarian Association of Flower Wholesalers
Table 5.1.5 Data about retailers who buy (cut flowers) from Domestic % Import % Wholesale markets 45 60 Wholesalers 40 40 Not from wholesale, but 15 directly from growers Total 100 100 Source: Hungarian Association of Flower Wholesalers
Although the market share of hypermarkets is rather small, their share is growing. International Do It Yourself (DIY) chains as Bricostore and BauMax, began offering flowers and ornamental plants as well for relatively low prices. Therefore, these companies may develop into big competitors for other retailers in the sector.
The most important DIY chains are:
BauMax Magyarország Rt. Since 1992, BauMax is present in Hungary. The company has 14 stores all over the country. They have six shops in Budapest and shops in GyĘr, Székesfehérvár, Pécs, Szeged, Kecskemét, Debrecen and Nyíregyháza. BAU-MAX ÉpitĘ- és Szolgáltató Ltd. Komócsy street 14 1141 Budapest
Bricostore Bricostore has shops in Hungary since 1997. Bricostore Hungaria Barkácsáruház Kereskedelmi Kft. Anker köz 2-4 1061 Budapest
Praktiker Praktiker Építési - és Barkácspiacok Magyarország Ltd. 1095 Budapest Mester u 87. Adószám: 12136849-2-44
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Agents The role of agents is growing in all European countries, in Hungary as well. Before the regime change, the import of ornamental plants and cut flowers was regulated by government owned companies. After the privatization, these companies continued their businesses privately. Nowadays, agents play an important role in transferring flowers from air-transport-based to auction-based packaging and exporters. The number of agents in Hungary is growing, but still very small. Besides this, most agents are working alone and are not registered. The number of agents active on the markets changes frequently. Due to this, it is very hard to provide detailed information about the most important agents on the market.
5.2 Recommendations
As importers, distributors, retailers and even producers generally overlap each other in Hungary, the best way to enter the Hungarian flower market is by directly contacting the leading companies in the market. The Hungarian flower wholesale market is centralized and therefore relatively easy to enter. This way of supplying the Hungarian market is more economic than through the (Dutch or German) auctions since many levels of the distribution channel can be left out. However, supplying via auctions needs more organizing activity such as transportation.
Auctions are very important sales channels in Hungary as well as in whole Europe. In order to supply an auction, the exporter has to have an annual license to supply specific varieties over a specific period. An exporter should have at least three flights per week, and must supply an agreed percentage of his output. Failure to comply can mean that the license is not renewed the following year.
40 Proexport Colombia 6. Commercial Access Guide
6.1 Preferential Tariffs
All goods entering the EU are subject to import duties. External trade conditions are mostly determined by EU regulations. Hungary also uses the EU´s Harmonized Tariff Schedule (Nomenclature) on the TARIC (Integrated Tariff of the European Community) which is issued by the Commission and the Member States for the purpose of applying Community measures relating to import and exports. The level of the tariffs depends on the country of origin and the product. If there is not a special trade agreement in force, the general import tariff (conventional duty) applies.
In January 2005 Commission Regulation (EC) No 1810/2004 entered in force which is binding in all Member States. In its Part Two “Schedule of Customs Duties”, Section II “Vegetable products” Chapter 6 deals with”Live Trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage”. The subcategories 0601, 0602, and 0603 contain the fresh cut flowers relevant for this report.
Colombia is included in the general system of preferences – GSP. This agreement allows products originating in the countries concerned to be imported at preferential tariffs or, for the least developed countries, duty-free. A “Certificate of Origin Form A” has to be filled in by the exporter and issued by the competent authorities. Tariff contingents and tariff ceilings do not exist anymore.
According to international agreements Colombia is included in the SPGE group of preferences and therefore benefits from 0% tariff preference on the basis on Regulation (EC) No 2501/2001 and Commission Regulation (EC) No 2331/2003. Until July 1st 2005, this meant that Colombian exporters could introduce so-called “non- sensitive” products at a 0% tariff rate and “sensitive” products, such as all products under nomenclatures code 0601, 0602 and 0603 at a 3.5% reduced rate.
However since July 1st 2005, Colombia is a member of the GSP Plus program, which assists the countries of the Andean Community, such as Colombia, in their battle against drugs. The GSP Plus will officially enter into force on the 1st January 2005, but has already started to run in its preliminary form for 14 countries on the 1st July 2005. Exporters based in one of the GSP Plus programs are also exempt from duties on sensitive products. Therefore all flowers and flower buds can be imported into the European Union from Colombia duty free.
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6.2 Tariffs imposed by major competitors
Major Colombian competitors in the fresh cut flower market are Spain and the Netherlands. Since them both are European Union member states they do not face tariffs of any kind.
Other important competitors are countries that also belong to the GPS Plus group (Bolivia, Costa Rica, Ecuador, El Salvador, Honduras, Guatemala, Nicaragua, Pakistan, Panama, Peru and Venezuela) and therefore a 0% preferential tariff relate to them as well. Israel, Turkey and LOMA (e.g. Kenya or Zimbabwe) also benefit from a 0% tariff preference.
On the other hand, the SPGL group (e.g. Thailand, China, South Africa and India) has a 1,6% tariff preference for 0601 group and a 8,5% tariff preference for CN 0603, excluding Chile having 3,4% tariff preference.
The conventional rates for third countries that not have a general system of preferences with the European Union are the following:
Figure 6.2.1: EU Tariff schedule Convention- Supple- CN code Description al rate of mentary duty (%) unit 0601 Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant, in growth or in flower; chicory plants and roots other than roots of heading 1212: 0601 10 Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, dormant: 0601 10 10 Hyacinths 5,1 p/st 0601 10 20 Narcissi 5,1 p/st 0601 10 30 Tulips 5,1 p/st 0601 10 40 Gladioli 5,1 p/st 0601 10 90 Other 5,1 - 0601 20 Bulbs, tubers, tuberous roots, corms, crowns and rhizomes, in growth or in flower; chicory plants and roots: 0601 20 10 Chicory plants and roots Free - 0601 20 30 Orchids, hyacinths, narcissi and tulips 9,6 - 0601 20 90 other 6,4 - 0603 Cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached,
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impregnated or otherwise prepared: 0603 10 Fresh: 0603 10 10 Rose (1) p/st 0603 10 20 Carnations (1) p/st 0603 10 30 Orchids (1) p/st 0603 10 40 Gladioli (1) p/st 0603 10 50 Chrysanthemums (1) p/st 0603 10 80 Other (1)- 0603 90 00 Other 10 - Source: TARIC, Simulation date 10/06/2005
6.3 Norms of origin
To be able to benefit from the GSP Plus 0% duties on sensitive and non-sensitive products it is necessary to prove that the product that is being imported is really from Colombia or another GSP (Plus) country. Some products clearly originate in a given country, e.g. because they are grown there from local seed. These are called “wholly obtained” goods. But increasingly in today’s world, others are not produced in a single country.
In general terms, products are wholly obtained in a particular beneficiary country (or in the EC, in the case of cumulation) if only that country has been involved in their production. Even the smallest addition or input from any other country disqualifies a product from being "wholly obtained". In the case of flowers this means that the flowers have to be grown and harvested within Colombia.
In practice, except for naturally-occurring and related products, situations where only a single country is involved in the manufacture of a product are relatively rare. Globalization of manufacturing processes has resulted in many products being made from parts, materials etc. coming from all over the world. Such products are not, of course, wholly obtained, but they can nevertheless obtain originating status.
The condition is that the non-originating materials used (in practice: the materials imported into the beneficiary country) have undergone "sufficient working or processing". It must be stressed that only the non-originating materials need to be worked or processed sufficiently. If the other materials used are by themselves already originating (either by virtue of being wholly obtained, or by having been worked or processed sufficiently), they do not have to satisfy the conditions set out.
What can be considered as sufficient working or processing, depends on the product in question. For the products that belong under Chapter 6, all fresh cut flowers, the requirements are that the working or processing carried out on non-originating materials, which confers originating status is manufacture in which:
1 From 1 January to 31 May: 8, 5; from 1 June to 31 October: 12; from 1 November to 31 December: 8, 5.
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- All materials of Chapter 6 used are wholly obtained and - The value of all the materials used does not exceed 50 of the ex-works price of the product
Figure 6.3.1 sufficient working or processing requirements
Source: Official Journal of the European Union
There are three principal forms of proof used in the context of the EC GSP: x The certificate of origin Form A2, used as proof of origin at import into the EC and in regional cumulation. o Regional cumulation can be present between the countries of one of the regional groups recognized by the EC GSP4.3 Materials originating in one country of the group which are further worked or processed in another beneficiary country of the same group are considered to originate in the latter country. x The Invoice Declaration, which can be used for goods whose total value does not exceed € 6000 (Article 89). x The Movement Certificate EUR1, which may be used as may an invoice declaration, when goods are exported to beneficiary countries from the EC in the context of bilateral cumulation. (Article 90a). o Under bilateral cumulation, materials originating in the EC, within the meaning of the EC GSP RoO, and further worked or processed in a beneficiary country, are considered to originate in the beneficiary country.
2 We kindly refer you to the annexes for an example of Form A 3 The regional groups (listed in Article 72) are: - Group I: Brunei-Darussalam, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam; - Group II: Bolivia, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru, Venezuela; - Group III: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.
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The period of validity of a proof of origin is 10 months.
6.4 Barriers
Levying of any customs duty or charge having an equivalent effect and the application of any quantitative import restriction or measure having an equivalent effect are prohibited in trade with third countries.
For exporters in developing countries legislative standards enforced through EU legislation and possibly through EU member states, increasingly pose obstacles when exporting to the EU. Although standards are developed in order to protect consumers, environment or improve the harmonization of the internal EU market; they are often seen as technical, non-tariff barriers to trade or as a green wall protecting the fortress of Europe when looking at environmental standards.
When looking at the situation of exporters in developing countries who would like to access the EU market, there are many differences to overcome. Differences between the EU and third countries in their technical regulations and conformity assessment procedures are based on legitimate origins, such as differences in local preferences regarding health, safety and the environment, and differences in levels of income and labor conditions.
Moreover, exporters in developing countries often are critically constrained by the lack of important issues such as: - Access to credit and insurance and investment climate - Human and physical capital, management and marketing skills - Sufficient facilities for transport and storage infrastructures - Transparent legal and regulatory framework - Awareness and knowledge - Participation in the development of standards - Certifying bodies, test laboratories, standardization institutes etc.
Therefore, the standards in the EU could be seen as obstacles when accessing the EU market, though official barriers do not longer exist.
6.5 Import Licenses
Plant Health Control The imports into the European Union (EU) of plants, plant products and any other material capable of harboring plant pests (e.g. wooden products and containers, soil, etc) may be subject to the following protective measures, as established by Directive 2000/29/EC:
1. Import Bans; 2. Phytosanitary certificate and/or phytosanitary certificate for re-export;
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3. Customs Inspection and plant health checks; 4. Importers Register; 5. Advance notice on imports.
These phytosanitary measures are intended to prevent the introduction and/or spread of pests and organisms harmful to plants or plant products across the EU boundaries. Those measures enforce the International Plant Protection Convention (IPPC)–FAO, to which EU Member States are contracting parties and which sets out the basic rules and control procedures to secure a common and effective action to protect the countries' agricultural and forestry resources.
The IPPC requires every contracting country to establish a national plant protection organization to inspect growing crops and to report on pests and control them. A complete listing of the national plant protection organizations (NPPOS) can be found at the official website for the IPPC (http://www.ippc.int/).
French Overseas Departments and Spanish Canary Islands, in view of its agricultural and ecological characteristics, may request additional conditions to those laid down in the Directive assuming they are justified on grounds of the protection of health and life of plants in their territories.
Directive 2000/29/EC establishes several exemptions for each phytosanitary measure (e.g. plants and plant products for trial, scientific purposes, work on varieties selection; internal transit; small quantities that do not pose a risk of spreading harmful organisms etc.). They are usually granted for a limited period, subject to special import conditions and to a specific license.
1. Import bans4
Member States shall ban the introduction into their territory of:
A. Certain particularly dangerous harmful organisms, which are listed in Annex I, Part A. B. Plants and plant products listed in Annex II, Part A, where they are contaminated by the relevant harmful organisms listed in that part of the Annex. C. Plants or plant products listed in Annex III, Part A, where they originate in the relevant countries referred to in that part of the Annex. D. Plants, plant products and other objects listed in Annex IV, Part A, except for those meeting the special requirements indicated in that part of the Annex.
In relation to wood packaging, the new provisions introduced by Directive 2004/102/EC establish that wood packages of any type (cases, boxes, crates, drums, pallets, box pallets and other load boards, pallet collars, etc) shall go through one of the approved
4 All appropriate annexes can be found at http://export-help.cec.eu.int/
46 Proexport Colombia Fresh flowers in Hungary treatments to FAO International Standard for Phytosanitary Measures No. 15 and bear the corresponding mark.
Decision 2005/51/EC, authorizes Member States to provide derogations with regard to the prohibitions referred to in point 14 of Annex III Part A and point 34, section I, Part A, Annex IV above mentioned for soil originating in certain third countries under specific conditions provided for in the Annex of the same Decision and destined for treatment in dedicated hazardous-waste incinerators.
Certain areas of the EU, that are free from plant pests established elsewhere in the EU, have been designated as “protected zones” and may be affected by special bans and requirements to prevent spreading of harmful organisms to particular crops (Annex I Part B; Annex II Part B; Annex III Part B and Annex IV Part B) .
2. Phytosanitary certificate and/or phytosanitary certificate for re-export.
Imports of plants and plant products listed in Annex V, Part B, which are all products belonging under Chapter 6 including all kinds of fresh cut flowers must be accompanied either by an official “phytosanitary certificate” or a”phytosanitary certificate for re-export” (in case the consignment after being dispatched from a third country, has been stored, repacked or split up in another non-EU country).
Those documents certify the phytosanitary conditions of plants and plants products, and also that the shipment has been officially inspected, complies with statutory requirements for entry into the EU and is free of quarantine pests and other harmful pathogens.
They shall be at least in one of the official languages of the EU and shall be issued by the designated authorities of the third country of export or re-export and made out not more than 14 days before the date on which the plants, plant products or other objects covered by it have left the country of issuance.
Phytosanitary certificates shall be issued in compliance with the provisions of the IPPC and taking into account the FAO International Standard for Phytosanitary Measures No 12 on Guidelines for phytosanitary certificates.5
3. Customs inspection and plant health checks.
In addition to the above mentioned certificates, the plants and plant products listed in Annex V, Part B shall, from the time of their entry in the EU, be subject to customs inspections and supervision by the responsible official bodies.
The inspections shall consist in:
5 For an example of a phytosanitary certificate, please see the annexes
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x Documentary checks establishing that the required certificates, alternative documents or marks have been issued or satisfied x Identity checks establishing that the plants, plant products or other objects conform to the ones declared on the required documents and x Plant health checks establishing that the plants, plant products or other objects, including their wood packing material if any, comply with the specific requirements and phytosanitary measures specified in Directive 2000/29/EC and can be imported into the EU.
The inspections must be made at the point of entry into the EU at the proper Member State’s border inspection post (BIP). However, identity checks and plant health checks may be carried out at the place of destination provided that there is satisfaction of specific guarantees and documents regarding transport of plants and plant products determined for each particular case
4. Importers register
Importers, whether or not producers, of plants, plant products or other objects, listed in Annex V, Part B, must be included in an official register of a Member State under an official registration number.
5. Advance notice on imports
Member States may require airport authorities, harbor authorities, importers or operators to give, as soon as they are aware of the imminent arrival of a consignment of plants, plant products and other objects advance notice to the customs office of point of entry and to the official body of point of entry.
In addition and without prejudice to provisions of Directive 29/00, plants, plant products and any other material capable of harboring plant pests may be subject to emergency measures.
Additional information for Hungary
Health control procedure Health inspection has to be applied for by the importer or his representative prior to the importation by submitting a plant health movement document6 (Növényútlevél száma), accompanied by an enclosure of the mandatory certificates related to the goods in question. 7
In addition to the verification of the documents, the authorities at the customs points of entry will inspect the products upon arrival by identity and/or physical checks. Sampling
6 Please see the annexes for an example of a plant health movement document 7 For the full document in English we refer you to the annexes
48 Proexport Colombia Fresh flowers in Hungary procedures for quality analyses can be carried out at designated control laboratories. Additional checks can be executed at all stages of the supply chain.
If the results of the inspection procedures have been proven to be favorable for the importation of the goods, the commodities can be released for free circulation.
Health controls of plants and plant products are only carried out at designated Border Inspection Posts - BIPs (Ellenorzo állomások).
Competent authority / competent bodies
FöldmĦvelésügyi és Vidékfejlesztési Minisztérium - FVM (Ministry of Agriculture and Rural Area Development) Növény- és Talajvédelmi FĘosztály (Plant Protection and Soil Conservation Department)
Kossuth Lajos tér 11. H-1055 Budapest Tel: (+36) 1 301 4214 Fax: (+36) 1 302 0408 E-mail: [email protected] Website: http://www.fvm.hu
6.6 Quotas
Quotas have been assigned by the European Union to specific countries for specific products, which allow for the controlled importation of specific products.
There are however no quotas for any of the products under Chapter 6 originating from Colombia.
6.7 Approvals & 6.8 Technical standards
Quality standards for flowers are fixed in the Regulation (EEC) No 316/68. The European consumers demand an extremely high quality of fresh cut flowers. The above mentioned regulation determines quality requirements, classification of produce, sizing, quality and length tolerances, packaging rules and marking.
High quality of cut flowers is requested by Hungarian consumers. As Hungary is an EU member, the quality requirements are outlined by the EU law. Regulation (EEC) No 316/68 fixes general standards for flowers. These rules include minimal requirements, tolerance for quality and branding. The regulation determines minimum quality requirements, requirements for class I, II and extra class.
The minimum requirement specifies that flowers must be carefully cut and be in a proper phase of development. Flowers in class I must be of a good quality and possess the feature characteristics for a given flower variety. The flowers must be fresh, whole and
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free of disease, pests, damages and alien substances. Shoots must be strong and solid in order to be able to carry flowers.
Flowers in II class must be also fresh, complete and free of disease and pests. However, the flowers may have some imperfections such as small distortions, mechanical damages or not serious damages caused by pests. On the other hand these imperfections cannot decrease quality, appearance and utility of flowers.
The unit of package of I class flowers can have 5% of insignificant imperfections, of II class flowers 10%. Extra class consists of flowers classified as I class but without any imperfections.
Quality standards also describe rules of sorting according to the length of flower (including a head of flower). In a package unit the difference between the longest and the shortest flower must not exceed 2,5 cm for flowers up to 20 cm, 5 cm for flowers 20- 60 cm and 10 cm for flowers longer than 60 cm.
6.9 Packaging
Packaging of cut flowers has to satisfy a number of conditions, mainly lying in the field of handling, and the protection of the quality and presentation. EU regulation 802/71, a supplement to EU regulation 316/68, specifies also minimum standards concerning packaging and presentation.
A unit of presentation (bunch, bouquet, box, and the like) must consist of 5, 10 or a multiple of 10 pieces. However, this rule does not apply to flowers normally sold single flowers normally sold by weight and flowers for which seller and buyer agree expressly to derogate from the provisions concerning the number of flowers in a unit of presentation.
Each package must contain flowers of the same genus, species or variety and of the same quality class, and must have reached the same stage of development. However, mixtures of flowers or mixtures of flowers with foliage of different genius, species or variety are permitted so long as products of the same quality class are used and that they are appropriately marked.
6.10 Import Documentation
When importing products from a third country, like Colombia, into the European Union six different documents are required;
1) Commercial invoice
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The commercial invoice is a record or evidence of the transaction between the exporter and the importer. Once the goods are available, the exporter issues a commercial invoice to the importer in order to charge him for the goods.
The commercial invoice contains the basic information concerning the transaction and it is always required for customs clearance.
It is similar to an ordinary sales invoice, though some entries specific to the export- import trade are added. The minimum data generally included are the following:
x Information on the exporter and the importer (name and address) x Date of issue x Invoice number x Description of the goods (name, quality, etc.) x Unit of measure x Quantity of goods x Unit value x Total item value x Total invoice value and currency of payment. The equivalent amount must be indicated in a currency freely convertible to EUR or other legal tender in the importing Member State x The terms of payment (method and date of payment, discounts, etc.) x The terms of delivery according to the appropriate Incoterm x Means of transport
No specific form is required. The commercial invoice is to be prepared by the exporter according to standard business practice and it must be submitted in the original along with at least one copy. It generally needs not be signed. In practice, the original and the copy of the commercial invoice are often signed. The commercial invoice may be prepared in any language. However, a translation into English is recommended.
2) Customs Value Declaration
The Customs Value Declaration is a document which must be presented to the customs authorities where the value of the imported goods exceeds EUR 10 000. The Customs Value Declaration must be drawn up conforming to form DV 18, laying down provisions for the implementation of the Community Customs Code. This form must be presented with the Single Administrative Document (SAD).
The main purpose of this requirement is to assess the value of the transaction in order to fix the customs value (taxable value) to apply the tariff duties.
The customs value corresponds to the value of the goods including all the costs incurred (e.g.: commercial price, transport, insurance) until the first point of entry in the EU. The
8 Please see the annexes for a sample of a DV1 form
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usual method for establishing the Customs value is using the transaction value (the price paid or payable for the imported goods).
In certain cases the transaction value of the imported goods may be subject to adjustment which involves additions or deductions. For instance: x commissions or royalties may need to be added to the price; x the internal transport (from the entry point to the final destination in the Community Customs Territory) must be deducted.
The customs authorities shall waive the requirement of all or part of the customs value declaration where: x the customs value of the imported goods in a consignment does not exceed EUR 10 000, provided that they do not constitute split or multiple consignments from the same consignor to the same consignee, or x the importations involved are of a non-commercial nature; or x the submission of the particulars in question is not necessary for the application of the Customs Tariff of the European Communities or where the customs duties provided for in the Tariff are not chargeable pursuant to specific customs provisions.
3) Freight insurance
The insurance is an agreement by which the insured is indemnified in the event of damages due to a risk covered in the policy. Insurance is all-important in the transport of goods because of its exposure to risks during handling, storing, loading or transporting cargo, and other rare risks, such as riots, strikes or terrorism.
There is a difference between the goods' transport insurance and the carrier's responsibility insurance. The transport insurance is a contract whose covered risks, fixed compensation and indemnity are let to the holder's choice. Nevertheless, the hauler’s responsibility insurance is determined by different regulations depending on the means of transport, indemnity is limited by the weight and value of the goods and is only given if the transporter was unable to evade responsibility.
The insurance invoice is required for customs clearance only when the relevant data do not appear in the commercial invoice indicating the premium paid for insuring the merchandise.
The standard extent of the transporter's responsibility is laid down in the following international conventions:
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1. Road freight
International transport of goods by road is governed by the Convention for the Contract of the International Carriage of Goods by Road (CMR Convention) signed in Geneva in 1956.
Under this Convention, the road hauler is not responsible for losses of or damages to the goods if he proves that they arise from:
x the merchandise's own defect(s); x force majeure; x a fault by the loader or consignee.
There is no European Union's regulation regarding indemnifications for road freight.
2. The rail carrier
International transport of goods by rail is regulated by the Convention concerning Intercarriage by Rail (CIM Convention), signed in Bern in 1980.
The rail carrier is not responsible for losses of or damages to the goods if he proves that they arise from:
x the merchandise's own defect(s); x force majeure; x a fault by the loader or consignee.
With reference to compensation, there is currently no European regulation. Indemnification is normally limited to a maximum amount per gross kilo lost or damaged. This system means that, for the most part, the company is unlikely to receive anything approaching the value of its goods.
3. The shipping company
The 1968 International Convention on Bill of Lading, better known as "The Hague Rules" or the "Brussels Convention" dictates the marine carrier's responsibilities when transporting international goods.
The shipping company is not responsible for losses of, or damage to, the goods if it proves that they arise from:
x the merchandise's own defects and loss in weight during transport; x a nautical mistake by the crew; x a fire;
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x if the ship is not seaworthy; x force majeure; x strikes or a lock-out; x a mistake by the loader; x hidden defects on board ship, which went unnoticed during rigorous inspection; x an attempt to save lives or goods at sea.
As far as compensation is concerned, there is currently no harmonization at the European Union level. It is normally limited to a certain sum per kilogram of lost or damaged goods. This system causes the same problems as with rail accidents, the exporter is likely to lose much of the value of the goods.
4. The air carrier
The 1929 Warsaw Convention as well as the Montreal draft Treaty of 1975 determines that the air carrier is not responsible for damages or loss of goods if it is proved that:
x the carrier and associates took all the measures necessary to avoid the damage or that it was impossible for them to be taken (force majeure); x the losses arise from a pilotage or navigation mistake; x the injured party was the cause of the damage or contributed to it.
Concerning the injured party's indemnification, there is no European standard. Compensation is normally limited to a set amount per gross kilogram of damaged or lost goods.
The air carrier can state specific reservations at the time of receiving the cargo. These reservations will be written on the air consignment note (ACN) (air transport contract) and will be used as evidence. However, airlines will normally refuse dubious packages or those not corresponding to the ACN.
4) Customs Import Declaration (SAD)
All goods imported into the European Union (EU) must be declared to the customs authorities of the respective Member State using the Single Administrative Document (SAD)9, which is the common import declaration form for all the Member States, laid down in the Community Customs Code (Regulation (EEC) 2913/92.
The declaration must be drawn up in one of the official languages of the EU which is acceptable to the customs authorities of the Member State where the formalities are carried out.
9 See annexes
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The SAD may be presented either by:
x Using an approved computerized system linked to Customs authorities; or x Lodging it with the designated Customs Office premises.
The main information that shall be declared is:
x Identifying data of the parties involved in the operation (importer, exporter, representative ...) x Custom approved treatment (release for free circulation, release for consumption, temporary importation, transit ...) x Identifying data of the goods (Taric code, weight, units), location and packaging x Information referred to the means of transport x Data about country of origin, country of export and destination x Commercial and financial information (Incoterms, invoice value, invoice currency, exchange rate, insurance...) x List of documents associated to the SAD (Import licenses, inspection certificates, document of origin, transport document, commercial invoice...) x Declaration and method of payment of import taxes (tariff duties, VAT, Excises, etc)
The SAD set consists of eight copies; the operator completes all or part of the sheets depending on the type of operation.
In the case of importation generally three copies shall be used: one is to be retained by the authorities of the Member State in which arrival formalities are completed, other is used for statistical purposes by the Member State of destination and the last one is returned to the consignee after being stamped by the customs authority.
Documents associated to the SAD
According to the operation and the nature of the imported goods, additional documents shall be declared with the SAD and shall be presented together with it. The most important documents are:
x Documentary proof of origin, normally used to apply a tariff preferential treatment x Certificate confirming the special nature of the product x Transport Document x Commercial Invoice x Customs Value Declaration x Inspections Certificates (Health, Veterinary, Plant Health certificates) x Import Licenses x Community Surveillance Document x Cites Certificate x Documents to support a claim of a tariff quota x Documents required for Excises purposes
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x Evidence to support a claim to VAT relief
5) Freight documents Depending on the means of transport used, the following documents are to be filled in and presented to the customs authorities of the importing European Union (EU) Member State (MS) upon importation in order for the goods to be cleared:
x Bill of Lading x FIATA Bill of Lading x Road Waybill (CMR) x Air Waybill (AWB) x Rail Waybill (CIM) x ATA Carnet x TIR Carnet
Bill of Lading
The Bill of Lading (B/L) is a document issued by the shipping company to the operating shipper which acknowledges that the goods have been received on board serving as proof of receipt of the goods by the carrier obliging him to deliver the goods to the consignee. It contains the details of the goods, vessel and port of destination. It evidences the contract of carriage and conveys title to the goods, meaning that the bearer of the Bill of Lading is the owner of the goods.
The Bill of Lading may be a negotiable document. A number of different types of bills of lading can be used. "Clean Bills of Lading" state that the goods have been received in an apparent good order and condition. "Unclean or Dirty Bills of Lading" indicate that the goods are damaged or in bad order, in this case, the financing bank may refuse to accept the consignor's documents.
FIATA Bill of Lading
The FIATA Bill of Lading is a document designed to be used as a multimodal or combined transport document with negotiable status which has been developed by the International Federation of Forwarding Agents' Associations (FIATA).
Road Waybill (CMR)
The road waybill is a document containing the details of the international transportation of goods by road, set out by the Convention for the Contract of the International Carriage of Goods by Road 1956 (the CMR Convention). It enables the consignor to have the goods at his disposal during the transportation. It must be issued in quadruplicate and signed by the consignor and the carrier. The first copy is intended for the consignor; the second remains in the possession of the carrier;
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and the third accompanies the goods and is delivered to the consignee. Usually, a CMR is issued for each vehicle.
The CMR note is not a document of title and is non-negotiable.
Air Waybill (AWB)
The air waybill is a document proving the transport contract between the consignor and the carrier's company. It is issued by the carrier's agent and falls under the provisions of the Warsaw Convention. A single air waybill may be used for multiple shipments of goods; it contains three originals and several extra copies. One original is kept by each of the parties involved in the transport (the consignor, the consignee and the carrier). The copies may be required at the airport of departure/destination, for the delivery and in some cases, for further freight carriers. The air waybill is a freight bill which evidences a contract of carriage and proves receipt of goods.
The IATA Standard Air Waybill is used by all carriers belonging to the International Air Transport Association (IATA) and it embodies standard conditions associated to those set out in the Warsaw Convention.
Rail Waybill (CIM)
The rail waybill (CIM) is a document required for the transportation of goods by rail. It is regulated by the Convention concerning International Carriage by Rail 1980 (COTIF-CIM). The CIM is issued by the carrier in five copies, the original accompanies the goods and the duplicate of the original is kept by the consignor and the three remaining copies are intended for internal purposes of the carrier. It is considered the rail transport contract.
ATA Carnet
ATA carnets are international customs documents issued by chambers of commerce in most major countries throughout the world for the purpose of allowing the temporary importation of goods, free of customs duties and taxes. ATA carnets can be issued for the following categories of goods: commercial samples and advertising film, goods for international exhibition and professional equipment.10
TIR Carnet
TIR carnets are customs transit documents used for the international transport of goods a part of which has to be made by road. They allow the transport of goods
10 Further information may be obtained in the International Chamber of Commerce's website: http://www.iccwbo.org/index_ata.asp
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under a procedure called the TIR procedure, laid down in the 1975 TIR Convention, signed under the auspices of the United Nations Economic Commission for Europe (UNECE)11
The TIR system requires that the goods travel in secure vehicles or containers, all duties and taxes at risk throughout the journey are covered by an internationally valid guarantee, the goods are accompanied by a TIR carnet, and customs control measures in the country of departure are accepted by the countries of transit and destination.
6) Packing list
The packing list (P/L) is a commercial document accompanying the commercial invoice and the transport documents, and providing information on the imported items and the packaging details of each shipment (weight, dimensions, handling issues, etc.)
It is required for customs clearance as an inventory of the incoming cargo.
The data generally included are:
x Information on the exporter, the importer and the transport company x Date of issue x Number of the freight invoice x Type of packaging (drum, crate, carton, box, barrel, bag, etc.) x Number of packages x Content of each package (description of the goods and number of items per package) x Marks and numbers x Net weight, gross weight and measurement of the packages
No specific form is required. The packing list is to be prepared by the exporter according to standard business practice and it must be submitted in the original along with at least one copy. It generally needs not be signed. However, in practice, the original and the copy of the packing list are often signed. The packing list may be prepared in any language. However, a translation into English is recommended.
6.11 Import Modalities or regimes involved in the process
After 1st May 2004 the custom free zones in Hungary no longer exist. Before this date those zones were regarded as a foreign entity within the Hungarian borders by customs officials. When importing products into these zones custom duties and VAT payment could be postponed till the products were actually brought into the Hungarian market.
11 Website; http://www.unece.org/trans/bcf/tir/welcome.html.
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6.12 Requirements for import of samples and accompanied luggage
The requirements for the import of samples are the same as for the general import of flowers, because flowers are a perishable product.12
6.13 Website links to rules and regulations
http://europa.eu.int/comm/taxation_customs/dds/en/qotcau.htm - The quotas page of EU
http://europa.eu.int/comm/taxation_customs/dds/cgi-bin/tarchap?Lang=EN - The page of TARIC provides calculation of duty rates
http://europa.eu.int/comm/taxation_customs/customs/customs_duties/rules_origin /index_en.htm http://www.srs.cz - The State Phytosanitary Administration
http://europa.eu.int/scadplus/leg/en/lvb/l11060.htm - Common Organization of the Agricultural Markets
http://www.cs.mfcr.cz/info/taric/taric2005.pdf EU Tariff schedule – TARIC - Integrated Tariff of the European Community
http://europa.eu.int/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc &lg=EN&numdoc=31968R0316&model=guichett - Regulation (EEC) No 316/68 of the Council of 12 March 1968 fixing quality standards for fresh cut flowers and fresh ornamental foliage
12 Source: Dutch Customs Office
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6.14 Flow chart of the process and related costs
6.14.1 Flow chart of the process and related costs
Customs Transportation of Goods guarantee goods to the inland Customs and Office Import docume nts Customs Declaration agent or for the Hungarian chosen subsidiary customs regime
The duties Confirmation Handling are paid or of customs of the custom declaration customs debt is that serves as proceedin secured VAT documentatio Source: Calculation by EUNITE BV
In general, only EU entities can clear goods for customs in Hungary. Non-EU entities can carry out customs proceedings only on goods under the transit regime or under temporary admission. In other cases, foreign entities can clear goods for Hungarian customs only in exceptional cases with the permission of the Customs Office.
A foreign company exporting to Hungary and wishing to import into the country must either establish a Hungarian subsidiary to handle importation or engage a customs agent to handle customs proceedings. It is usual practice that the Hungarian purchaser of imported goods will handle customs proceedings.
When imported goods reach the EU border, they are released to the transit regime. The customs debt (all import duties that would apply on import under free circulation) must be secured with a customs guarantee at this time. The goods must then be transported to the inland Customs Office of final destination without delay. Here the goods are declared for the chosen customs regime based on the customs declaration filed by the importer (or his customs agent). The final customs debt assessed by the Customs Office is either paid or guaranteed, depending on the import regime and the conditions negotiated with the Customs Office.
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If import duties are properly paid (or the customs debt is secured), the Customs Office issues a confirmed customs declaration, which serves as a VAT document for the reclaim of import VAT. In general, import VAT is applied on the total declared customs value of imported goods and the applicable amount of customs duty and any other charges levied by the Customs Office (e.g., excise duty).
From 1 January 2005, importers can reclaim the amount of import VAT paid by including the amount in their regular VAT returns, provided the importer is registered for Hungarian VAT.
VAT rates are the same as for domestic products, currently 25%, 15% or 5%. The VAT for fresh cut flowers is 15%. Importers registered for Hungarian VAT can normally recover import VAT costs, provided a valid customs declaration (tax document) is obtained from the Customs Office.
Customs Valuation is on an ad valorem basis. The Customs Law declares the principle of the prompt payment of the "customs debt." Customs debt comprises the customs duty assessed, the general turnover tax (VAT), the consumption tax, any statistical fees and the customs clearance fee (1% on goods originating from GATT member countries), and any miscellaneous fees such as road fund contributions and/or environmental protection fees. The customs debt is due and payable within 5 business days following notification thereof.
6.15 Recommendations
We recommend potential flower exporters to Hungary to get in contact with some or all of the above mentioned institutions. The best way to avoid any difficulties would be to get in contact with a Hungarian lawyer specialized in this field, who can provide useful tips and guidelines on the best and most efficient ways of entering the market.
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7. Physical access
This chapter describes various ways and means to transport fresh cut flowers to Hungary. The highest effort was put in to give a detailed overview of various road, train and sea routes from Colombia to Budapest, with an emphasis on inter-European Union transportation. Price details are offered wherever possible, however it is important to keep in mind that after accession of the Eastern European countries to the EU, competition within the transportation market has become murdering. Therefore forwarders are extremely cautious with revealing price information and because of this it might be more useful for potential exporters from Colombia to contact transportation companies themselves. Contact details of various transportation companies are presented below.
7.1 General description of available transportation infrastructure in Hungary
By (rail) road The railroad network extends over 7.606 km, of which 2.191 km are electrified. The train is mostly used for the transportation of the goods. Just like road transportation, this sector was privatized. Therefore, the infrastructure is directly administered by the territorial communities. The privatization and the concession of activities of the public service in 1998 accelerated the modernization of the structures to match the European standards.
By air The unique international airport of the country is Budapest-Ferihegy. The main airline company MALEV Hungarian Airlines is intended for passengers and MALEV air Cargo for freight transportation. In 1999, the freight transportation recorded an increase of 26 % as compared to the previous year.
By sea Since Hungary is landlocked on all sides, direct entry by sea is not possible. However entering from nearby ports and than transportation by truck to f.e. Budapest is definitely amongst the possibilities. However, when transporting fresh cut flowers from Colombia to Europe, it is not possible to use water transport since this way of transport is far too slow. No transport company would guarantee the freshness of flowers after transport when water transport is used. Therefore, cut flowers are mostly first transported by air to a mayor airport in Europe and later by truck or, in some cases, by train.
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7.2 Identification of ports, airports, roads- border passes- railways, waterways
Border Crossing Points Because Hungary has six neighboring countries, there are various points on the Hungarian border where the country can be entered. However the all have different opening hours and possibilities. Therefore a list of border crossing points (BCP) in the Republic of Hungary with the different opening hours and the traffic passing through is printed below.
Table 7.2.1 BCPs on the external border of the European Union Road Name of border crossing point Opening hours of Traffic through the BCP the BCP
a) Hungarian-Ukrainian border Záhony- night Goods and passenger traffic; Veterinary and phitosanitary border Csop & day station; Post for the transport of double-use products and technologies, cultural values, drugs and psychotropic substances and dangerous waste
b) Hungarian-Romanian border Ártánd-Bors night & day Goods and passengers traffic; Post for the transport of double use products and technologies, cultural values, drugs and psychotropic substances and dangerous waste Battonya-Turnu night & day Goods and passenger traffic (restriction of 3,5 tons) Gyula-Varsand night & day Goods and passenger traffic; Post for the transport of cultural values, drugs and psychotropic substances and dangerous waste Csengersima-Petea night & day Goods and passenger traffic; Post for the transport of dangerous
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waste Kiszombor-Cenad night & day Goods and passenger traffic (restriction of 3,5 tons) Nagylak-Nadlac night & day Goods and passenger traffic; Veterinary and phitosanitary border station; Post for the transport of double-use products and technologies, cultural values, drugs and psychotropic substances and dangerous waste Méhkerék-Salonta night & day Goods and passenger traffic (restriction of 3,5 tons)
c) Hungarian-Serbian border Röszke- night Goods and passenger traffic; Veterinary and phitosanitary border Horgos & day station; Post for the transport of double-use products and technologies, cultural values, drugs and psychotropic substances and dangerous waste Tompa- night Goods and passenger traffic; Post for the transport of drugs and Kelebija & day psychotropic substances and dangerous waste
d) Hungarian - Croatian border Barcs-Terezino Polje night & day Goods and passenger traffic Berzence-Góla night & day Goods and passenger traffic (restriction of 20 tons) Drávaszabolcs-Donji Miholjac night & day Goods and passenger traffic; Post for the transport of dangerous waste Letenye-Gorican night & day Goods and passenger traffic; Veterinary and phitosanitary border station; Post for the transport of double-use products and technologies, cultural values, drugs and psychotropic substances
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and dangerous waste Udvar-Knezevo (road) night & day Goods and passenger traffic
Railway
a) Hungarian-Ukrainian border night & day Railway goods traffic; Eperjeske-Batyevo Veterinary and phitosanitary border station; Záhony-Csop night & day Goods and passenger traffic; Post for the transport of dangerous waste
b) Hungarian - Romanian border Tiborszállás-ÁgerdĘmajor-Carei night & day International goods and passenger traffic Biharkeresztes-Episcopia Bihorolui night & day Goods and passenger traffic; Post for the transport of double-use products and technologies, cultural values and dangerous waste Kötegyán-Salonta night & day Goods and passenger traffic Lökösháza-Curtici night & day Goods and passenger traffic; Phitosanitary border station; Post for the transport of dangerous waste Nyírábrány-Valea lui Mihai night & day Goods and passenger traffic
c) Hungarian - Serbian border
Kelebia-Subotica night & day Goods and passenger traffic; Veterinary and phitosanitary border station; Post for the transport of double-use products and
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technologies, cultural values and dangerous waste Röszke-Horgos night & day Goods and passenger traffic
d) Hungarian - Croatian border
Gyékényes-Koprivnica night & day Goods and passenger traffic; Veterinary and phitosanitary border station; Post for the transport of dangerous waste Magyarbóly-Beli Monastir night & day Goods and passenger traffic Murakeresztúr-Kotoriba night & day Goods and passenger traffic; Post for the transport of double-use products and technologies and cultural values Source: Hungarian Customs Office
Table 7.2.2 BCPs on the internal border of the European Union on the river Danube Mohács night & day Goods and passenger traffic; Phitosanitary border határkikötĘ station; Post for the transport of dangerous waste Baja Ro-Ro from sunrise Vessels dealing with combined transportation and pier till sunset transportation and their staff
On the river Tisza: Szeged border pier from sunrise till Passenger and goods sunset traffic
IV. By air
Budapest Ferihegy International Airport night & day Goods and passenger traffic; Veterinary and phitosanitary border station; Post for the transport of double-use products and technologies, drugs and
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psychotropic substances, cultural values and dangerous waste Debrecen 08.00-20.00 International goods and International Airport passenger traffic Source: Hungarian Customs Office Hungary is a transit country with more Trans-European Network lines on its territory. These are between the Slovenian and Ukrainian border (No. 1), between Austria and Romania (No. 2) and between Slovakia and Serbia-Montenegro (No. 3).
Borders Hungary has a land area of 93 thousand square kilometers. It has borders with seven countries, of which 4 are important for this report, namely the following:
1. Austrian, where the transports from Germany come from. The most important road border stations are Hegyeshalom-Nickelsdorf and Rábafüzes-Heiligenkreutz. The trains come over Hegyeshalom. 2. Slovakian, where the containers of Polish ports came through. In this case the border of Rajka-Bratislava or Komárom is particulairly important. The trains going to Budapest cross the border at Nagymaros. 3. Croatian, where the lorries come over Letenye. There are no big capacity train lines in this direction, but the motorway runs all the way to the Hungarian border. 4. Slovenian, which has an access to the Croatian motorway and since 2001 has a direct one-line train in the direction Koper, which was built by support of the European Union and the Central European Initiative (CEI).
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Figure 7.2.3 Map of Hungary
Source: Hungarian Customs Office
Once the Budapest-Csepel Free Port was a sea port, but today because of the large number of bridges across the Danube, it is a delta. Today the Hungarian most important water way is the river Danube, which – through the Danube-Main-Rhine channel – ensures the contact between Hungary and the Atlantic-ocean. The river ways do not play an important role because ships are very slow and usually carry raw materials as grain, coal, brick, etc.
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Road, railway data
Length of roads (in km)
Romania 198,603 Hungary 188,203 Ukraine 169,491 Austria 200,000 European Union 4,634,810
Length of train lines (in km)
Ukraine 22,473 2003 Romania 11,385 2003 Czech Republic 9,520 2003 Hungary 7,937 2003 Austria 6,021 2003 Switzerland 4,533 2003 Slovakia 3,661 2003 Croatia 2,726 2003 Slovenia 1,201 2003
Main railway companies:
MÁV – Magyar Államvasutak (Hungarian State Railways) Gysev-Roee – GyĘr-Sopron-Ebenfurt Vasutak (GyĘr-Sopron-Ebenfurt Railways)
Table 7.2.4 Number of foreign train coaches passing through Hungary annually Ukrainian Romanian Serbian Croatian Budapest Total Number of train 108 430 122 840 109 341 134 564 0 475 175 coaches in 2003 Number of train 116 097 156 951 125 689 127 656 0 526 coaches in 2004 Source: The Hungarian National Railway
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Graph 7.2.5 Number of train coaches in 2003/2004 compared
Source: The Hungarian National Railway
Explanation of the graph: - Yellow: number of train coaches in 2003 - Blue: number of train coaches in 2004 - In the line below: total-Budapest-Croatian-Serbian-Romanian-Ukrainian
Table 7.2.6 Foreign lorries passing through Hungary annually Ukrainian Romanian Serbian Croatian Budapest Total Lorries in pieces 145 266 868 824 304 904 421 301 0 1 740 295 2003 Lorries in pieces 159 985 912 061 337 479 316 314 0 1 725 839 2004 Source: The Hungarian National Railway
Mayor competitors of Colombia Freight from the major competing countries is being transported by all of the listed ways, however, regarding flower transport in specific, common practice in all competing countries exporting flowers to Europe, is sending products from the country of origin to the Netherlands and then forwarding it to Hungary. No transport company could guarantee freshness of transported commodity when water transport is used. So, the flowers are sent by air transport to Europe and then by trucks to their final destination.
Table 7.2.7 Transport used for importing flowers by various countries Group European and close European Other (oversea) countries countries Example Italy, Slovakia, Germany etc. Africa as well as Southern American countries Transport Road and rail transport to Air transport to the main airports in the ways used Hungary Netherlands or Germany, than rail or road transport to Hungary Source: Hungarian Transportation Association
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Figure 7.2.8 Distances from the most important places for flower trade in the Netherlands and Germany to Budapest Place Country Distance to Budapest (km) Amsterdam The Netherlands 884 (airport) Aalsmeer The Netherlands 894 (flower auction) Straelen-Herongen Germany 994 (flower auction) Frankfurt Germany 834 (airport) Source: Hungarian Customs Office
Figure 7.2.9 Map of Hungary
Source: Lonely Planet Guides
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7.3 Description of status, operation, security, costs, distances, transportation arrangements and intercommunity customs
Flowers and plants are mainly transported in special CC containers. The packaging is standard and returnable. One truck semi-trailer can be freighted with 38 – 43 CC containers (according to the type of semi-trailer). Some companies use special tandem- axle semi trailers/sets where 48 CC containers can be freighted. The container is mobile as it has 4 wheels. Several shelves can be fit on the container for transport of flowers. A part of the flowers are transported on a carrier’s pallet.13
As the CC containers are relatively expensive (the price of a container ranges around 100 EUR) they have to be returned to the consignor. There are other types of containers (trolleys) than the CC containers, like for example auction containers, euro containers, e.g. yet the most used ones are the CC (by another name, Danish container trolleys).
Long distance flower transport A "systems" approach to flower packaging and transport is presented integrating the "bottom air" or "reverse flow" technologies. Trailer load quantities of flowers packed properly in boxes designed with top and bottom vent holes can be cooled to their 7/8 cooling point in 10 to 12 hours if the refrigeration system is adequate. Such refrigeration systems can be either of a trailer or an intermodal container design and have "T"-bottom floor of at least 5.7 cm high, discharge temperature control, bottom air delivery pattern, and at least 57 m3/min air movements at 5 cm water head pressure.
During the transportation of fresh cut flowers, the flowers must be kept strictly conditioned.14 Exporters can either transfer this commodity in special aircrafts or in a personal one.15 When transporting goods from the big Dutch or German harbors or airports and the Dutch flower auction to Hungary it will most likely be cheaper to use a Hungarian over a Dutch transporting company. Therefore, most competitors use roads and rails to transport their goods to Hungary. The Hungarian transportation infrastructure is still below the level of the Western countries, however reliable and secure. Virtually all providers of road transportation in Europe offer transport in climate controlled truck. For more information we refer to paragraph 7.5.
7.4 Identification of other handling and distribution infrastructure
The freight forwarders have their own storehouses and most of the storehouses below belong to a forwarding company. Below is a list of storage, logistic and custom service providers:
13 See more www.container-centralen.com 14 See more in chapter 7.3. 15 For available cargo agents and forwarders refer to the appendix.
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ABC European Air & Sea Cargo Distribution Hungaria Kft, Budapest, Közdülö 1-2, Budapest, H-1181 Tel: +36 (06)1 294-2428, Fax: +36 (06)1 296-0404, e-mail: [email protected], Website: www.abc-airsea.com Branch Offices - Budapest Airport, Igló utca, LRI-Cargo Bázis, H-1185 Budapest- Ferihegy. Tel: +36 (06)1 296-8191, Fax: +36 (06)1 296-7710, e-mail: bud@abc- airsea.com
Gebrüder Weiss Kft, Vecses, Tel: +36 (06)29 553-900, Fax: +36 (06)29 553-953, e- mail: [email protected], Website: www.gw-world.com
AES Kft, Budapest, Tel: +36 (06)1 266-0183/4, Fax: +36 (06)1 266-3010, e- mail: [email protected], Website: www.aescargo.com
AH Volán Kft, Budapest, Tel: +36 (06)1 260-4406, Fax: +36 (06)1 260-5369, Website: www.hartrodt.com
Airfarm Hungary Kft, Budapest, Tel: +36 (06)1 431-8534, +36 (06)1 431- 8535, +36 (06)1 431-8476, Fax: +36 (06)1 261-2799, e-mail: [email protected], Website: www.airfarm.com
Airmax Cargo Budapest Ltd, Budapest, Tel: +36 (06)1 297-6106, Fax: +36 (06)1 297- 6105, e-mail: [email protected], Website: www.airmaxcargo.hu
Aviart, Budapest, Tel: +36 (06)1 427-0620, Fax: +36 (06)1 427-0619, e- mail: [email protected], Website: http://fly.to/aviart . Bellville Rodair International KFT, Budapest Airport, Tel: +36 (06)29 551-306, Fax: +36 (06)29 551-311, e-mail: [email protected] or [email protected], Website: www.brihungary.com
Cargo Agencies Ltd Co, Budapest, Tel: +36 (06)1 370-8606, Fax: +36 (06)1 369-3864, e-mail: [email protected], Website: www.cargoag.hu, SITA: QIFDEMA
Cargo partner Hungaria Kft, Budapest, Tel: +36 (06)1 294-2428, Fax: +36 (06)1 296- 0404, e-mail: [email protected], Website: www.cargo-partner.com
Cargoline, Budapest Airport, Tel: +36 (06)1 296-9600, +36 (06)1 296-6756, Fax: +36 (06)1 296-8621, e-mail: [email protected]
Cargoline Kft, Paty, Tel: +36 (06)23 556-600, Fax: +36 (06)23 556-681 Chapman Freeborn Air Market Ltd, Budapest, Tel: +36 (06)1 235-7858, (Airport Office) +36 (06)1 296-5483, (24H Mobile) +36 (06)30 951-3122, Fax: +36 (06)1 235-7859, e-mail: [email protected], Website: www.chapman-freeborn.com, SITA: BUDFFLO
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Corstjens Worldwide Movers-Budapest, Budapest, Tel: +36 (06)1 261-2651, Fax: +36 (06)1 260-1055, e-mail: [email protected], Website: www.corstjens.com Danzas Ltd, Budapest, Tel: +36 (06)1 296-8239, +36 (06)1 296-7430, +36 (06)1 296- 6062, Fax: +36 (06)1 296-8621, +36 (06)1 296-8238 Door To Door Express, Tatabanya, Tel: +36 (06)34 305 209, Fax: +36 (06)34 305 209, e-mail: [email protected], Website: www.dtdexpress.hu Euro-Line Air Cargo Kft, Budapest Airport, Tel: +36 (06)1 296-5305, Fax: +36 (06)1 296-5306, SITA: QIFANMA Expeditors International Hungary Kft, Budapest Airport, Tel: +36 (06)2 955-2600, Fax: +36 (06)2 955-2601 FastAir-Cargo Kft, Budapest Airport, Tel: +36 (06)1 296-8828, Fax: +36 (06)1 296- 8737, e-mail: [email protected], Website: www.fastair-cargo.com, SITA: QIFALMA Fix Bellville International Air Kft, Budapest, Tel: +36 (06)29 551-306, Fax: +36 (06)29 551-311, e-mail: [email protected], Website: www.bellvillegroup.com or www.brihungary.com Hungarocargo International Forwarding Co Ltd, Budapest, Tel: +36 (06)1 471-5150, Fax: +36 (06)1 471-5151, (Head of Airfreight) +36 (06)1 296-7490, e- mail: [email protected] or [email protected], Website: www.hungarocargo.hu Hunicorn International Forwarding Ltd, Budapest, Tel: (Director) +36 (06)1 433-1318, (Aircargo/Financial) +36 (06)1 433-1310, +36 (06)1 433-1314, Fax: +36 (06)1 260-1056, e-mail: [email protected], Website: www.hunicorn.hu In Time International Forwarding & Courier Ltd, Budapest, Tel: +36 (06)1 262-2222, Fax: +36 (06)1 262-3333, e-mail: [email protected] Intercargo Hungary Kft, Budapest, Tel: +36 (06)1 278-3133, Fax: +36 (06)1 278-3116, e-mail: [email protected] International Forwarding Solutions Ltd, Budapest, Tel: +36 (06)1 264-3689, Fax: +36 (06)1 264-3699, e-mail: [email protected], Website: www.ifscargo.hu, SITA: QIFARMA JAS Cargoways Inc Kft, Budapest, Tel: +36 (06)1 296-9600, Fax: +36 (06)1 296- 7912, +36 (06)1 296-7799, e-mail: [email protected], Website: www.jashungary.com, SITA: QIFCJMA, QIFBLMA Lagermax, Budapest, Tel: +36 (06)1 414-6217, Fax: +36 (06)1 414-6202 MASPED Schenker Air & Sea Forwarding Ltd, Budapest, Tel: +36 (06)1 452-8115, Fax: +36 (06)1 452-8141, e-mail: [email protected], Website: www.masped-schenker.hu Maurice Ward & Co Kft, Vecses, Tel: +36 (06)29 551-274, Fax: +36 (06)29 551-275, e- mail: [email protected], Website: www.mauriceward.com
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Menlo Worldwide (Hungary) Kft, Vecses, Tel: +36 (06)29 55-1250, Fax: +36 (06)29 55-1269 Multiway Cargo Ltd, Budapest, Tel: +36 (06)1 290 59 19, Fax: +36 (06)1 291 56 17, e- mail: [email protected], Website: www.mwcargo.hu NNR + Dachser Hungary Ltd, Budapest, Tel: +36 (06)26 53-0279, Fax: +36 (06)26 33- 4271, e-mail: [email protected] RGW Express Kft, Budapest, Tel: +36 (06)12 96-8810, +36 (06)12 96-5500/2, Fax: +36 (06)12 96-6639, +36 (06)12 96-5500/2, e-mail: [email protected], Website: www.rgw-express.hu, SITA: BUDFJMA Seatrader Budapest, Budapest, Tel: +36 (06)1 424-7349, +36 (06)1 424- 7048, +36 (06)1 424-8462, Fax: +36 (06)1 424-7350, +36 (06)1 424-8463, e- mail: [email protected], Website: www.seatrader.hu Yusen Air & Sea Service GmbH, Vecses, Tel: +36 (06)29 551-294, Fax: +36 (06)29 551-290, e-mail: [email protected] Logmaster Kft, Tel: +36-27-538-800, Fax: +36-27- 538-820, Budapest, 1139, Vaci ut 85, Racz Miklos, www.logmaster.hu
Waberer’s Holding, Budapest, 1239, Nagykörösi ut 135, Tel: 421-6600, Fax: 421-6609, www.waberers.com
Logsped Kft. Web page: www.logsped.hu
Tranzit Rt., Web page: www.tranzit.hu
Forcont, Budapest, 1092, Raday utca 16, Tel: 455-4020, Fax: 455-4021
Dunaferr Portolan, 1139 Budapest, Frangepan utca, 7, Tel: 465-6150, Fax: 465-6199, Web page: www.portolan.hu, Web page: www.dunaferr.hu
Rynart Transport Kft. Web page: www.rynart.hu
7.5 Identification of carriers that transport goods imported from Colombia
This section identifies various Hungarian forwarding companies which can transport different products by road through Europe. When boarding in a Dutch or German harbor like Hamburg, Bremerhaven, Rotterdam or Amsterdam it is always cheaper to have these goods transported by transport companies from Hungary than by local Dutch and German forwarders.
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Imported flowers mainly come from the Netherlands to Hungary by road or by plane, but if it comes by plane it is more expensive. So, Hungarians prefer to transport the imported flowers by road.
Hungarian Transportation Companies
Agentsped KFT. 1097 Budapest, Vaskapu utca 6/A Tel: +36-1-476-0993, +36-1-476-8271 Fax: +36-1-215-0193, +36-1-216-1585, +36-1-216-1587
Birkart Logistics Magyarország Kft Budapest, 1052 Deák Ferenc u 10 Tel: +36-1-266-4475 Fax: +36-1-317-3711 www.birkart.com
DUNAFERR Portolan Kft. Budapest,1139 Frangepán u 7. Tel: +36-1-465-6150 Fax: +36-1-465-6199 www.portolan.hu
Jadran Shipping Kft Budapest, 1055 Stollár Béla u 12/C Tel: +36-1-353-2014 Fax: +36-1-353-3294 [email protected]
MASPED Logistics KFT. Budapest, 2120 Dunakeszi Alagi major Tel: +36-27-540-330 Fax: +36-27-540-331
Seahorse Kft Budapest, 1121 Tállya u 16-18. Tel: +36-1+212-7654 Fax: +36-1-213-8898 www.seahorse.hu
Mávcargo Budapest, 1062, Andrássy út 73-75. Tel: +36-1-432-3419 Fax: +36-1-351-7941 www.mav.hu
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Bilk kombiterminál RT. Budapest,1239 Európa út 4. Tel: +36-1-289-6000 Fax: +36-1-289-6060 [email protected]
Hungarocargo KFT. 1146, Budapest, Hungária körút. 140-144. Tel: +36-1-471-5150 Fax: +36-1-471-5151 www.hungarocargo.hu
Pannoncont KFT. 1037, Budapest, Montevideó u. 4. Tel: +36-1-430-3040 Fax: +36-1-436-7980 www.pannoncont.hu
One of the main providers of climate controlled road transportation throughout Europe is Fresh logistics (Raben-Group). Fresh Logistics developed, as one of the first logistic companies, a special dedicated system for fresh products. The quality of performed services was confirmed by obtaining a HACCP certificate. The modern solutions guarantee the highest quality of servicing the market, flexible reaction to its needs, faster and prompt deliveries, professional stock management and detailed administration. Fresh Logistics delivers goods of various volumes to indicated addresses - from one consignment to full truck loads. Domestic deliveries to retail-, wholesale- and network consignees are executed on the next working day. The company offers services of international forwarding of consignments:
¾ groupage loads from 50 to 3 000 kg (fresh products from +2 to +6°C) ¾ part loads over 3 000 kg (fresh products from +2 to +6°C) ¾ full truck loads (frozen products, fresh products from +2 to +6°C, food products with various temperature ranges: -18°C; +12°C; +18°C)
For more information please see: www.freshlogistics.com or the carrier website www.raben-group.com
Another provider of climate controlled road transportation is Waberer’s. Waberer’s is market leader in all segments of transportation in Hungary. It has the biggest privately owned vehicle park of Eastern Europe. The Central commercial unites are divided in three main sections: ¾ Complete and partial freight (FTL, LTL) transportation related carriages and the assignments entrusted to their 600 subcontractors which are in close relation with the company. ¾ Cold Storage department
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Waberer’s Holding Logisztikai 1239 Budapest NagykĘrösi út 351. VAT: 10387128-2-44. For more information please see: www.gw-world.hu
7.6 Alternatives of transport and carriers providing services from Colombia
TAMPA – Transportes Aéreos Mercantiles Panamericanos S.A. Address: Aeropuerto José María de Córdoba, Medellín Colombia Tel: (57-4)-569-9200 Email: [email protected] Fleet: Boeing 767 F Activity: Cargo to South-America and USA Founded: 1973
Lineas Aereas Suramericanas S.A. Address: Av. Eldorado, entrada 2, interior 7, Bogotá, Colombia Tel: (57-1)-413-8084 Email: [email protected] Fleet: Boeing 727 DC 9 Activity: cargo domestic, Mexico and the Caribbean Founded: 1972
Aerolineas ATC S.A. Address: Terminal de Carga Internacional, Bogotá, AA81001 Colombia Tel: (57-1)-414-8470 Email: [email protected] Fleet: Lockheed L101 1f, DC8 Activity: cargo in South-America, EU, USA
Information on exact prices can be given by forwarders. Unfortunately they were not able to determine the price without knowing the exact amount of freight. They are able to give potential clients the required information within a week.
7.7 Costs of transportation from Colombia and main competing countries for the three types of cargo (loose cargo, general cargo, refrigerated cargo) in each modality of transport.
Multiple transportation companies have been approached to be able to give price information about transportation costs and possibilities from Colombia. However, due to the though competition in this market, companies were unable and/or unwilling to provide their pricelists, without a set amount of transport on which the quotation would have to be based.
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7.8 International Freight and Transportation Costs
This section contains information on the related freight and transportation costs from the larger European harbors by road to Budapest. It is quite difficult to obtain price indications without a precise order, so the numbers below are rough estimates of costs involved with the transportation of fresh cut flowers. For exact price information the forwarding companies, whose details are displayed in this section and the other sections of this chapter can be contacted.
Intercargo Hungary Kft. Contactperson: Szabó Katalin, Sales Dept. Tel: +36 1 278 3133 – ext 125 Fax: +36 1 278 3116 Sales Dept: [email protected] Website www.intercargo.hu Price offer made by Intercargo:
Hamburg - Budapest door Container 20' normál 40' normál 8 tons brute weight16 € 790,- € 1110,- 16,5 tons brute weight € 870,- € 1150,- 24 tons brute weight € 980,- € 1400,-
Costs include: Rail transportation Hamburg Rail terminal expenses Expenses of custom Delivery within Budapest The costs do not include: The shipment expenses (drop off, doc expenses, port expenses)
Metcosped Ltd. Contactperson: Melinda Mlinkó E-mail: [email protected] Tel.: +36 1-462-2075 Mobile: +36 30-626-5121
Price offer Metcosped:
16 Brute weight = the weight of the product combined with the containers’ own weight 80 Proexport Colombia Fresh flowers in Hungary
Amsterdam airport17– Budapest door Container 20' normál x 2 40' normál x 1 € 1600 € 1600
These costs are purely transportation costs. Any additional help with custom documents, certificates etc. will be an extra charge for the exporter, as well as costs for cooling trucks.
Seahorse Kft Budapest, 1121 Tállya u 16-18. Tel: +36-1+212-7654 Fax: +36-1-213-8898 www.seahorse.hu
Price offer Seahorse Where it specifically concerns the transportation of fresh cut flowers, Seahorse KFT can facilitate this in refrigerated containers from CFR Hamburg – DDU Budapest: EUR 1.355,- / 20’ reefer ctr, upto 20,5 to cargo weight EUR 1.355,- / 40’ reefer ctr, upto 19 to cargo weight
And from CFR Bremerhaven – DDU Budapest:
EUR 1.355,- / 20’ reefer ctr, upto 20,5 to cargo weight EUR 1.355,- / 40’ reefer ctr, upto 19 to cargo weight
Rates including:
Freight charges by road carriage ex Hamburg to Budapest door; “Maut” charges German toll Empty return of ctr to Budapest ctr-depo (if Shipping line let us do it);
Rates excluding: THC and handling charge in ports; Customs formalities and documentation at the place of dispatch; Storage charges of ctrs on terminals; DEMMURAGE / DETENTION charges; Outlays of phytosanitary and/or veterinary inspection; Fees and outlays of any mighty customs inspection ordered random or incomplete by Customs Authorities of Budapest terminal; Duties and taxes relating to final clearance of goods at the place of arrival; Demurrage charges of truck at the place of delivery (for stripping of ctrs 1 day is free, for any additional day used in full or part for stripping € 210,-/truck/day is to apply)
17 Prices from the Flower auction in Aalsmeer will be virtually the same.
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In that case the company has to move the container back to Hamburg, it has to charge € 370,-/20’ per container and € 660,-/40’ per container.
7.9 Other costs involved in international physical distribution
The additional fees for international physical distribution are presented below
Table 7.9.1 Additional distribution costs for water transport Hamburg/Bremerhaven Sluice fee EUR 80 Container return EUR 180-290/20´ EUR 330-510/40´ Drop off EUR 100-330 cont. THC in the port EUR 170 + the costs for processing the container app. 100 Euro
7.10 Physical distribution services address book
Contact details are found throughout this chapter arranged according to method of transportation; either sea, road or train.
82 Proexport Colombia 8. Recommendations to the exporter
In many cases, growers of cut flowers in developing countries benefit from their climatic conditions. This is often one of the most important factors that positively distinguish your company from competitors in other countries, particularly from competitors in Europe. Other positive factors are for example labor costs, availability and costs of land, etc.
Needless to say, there are also factors which weaken your competitive position. European companies, for instance, have the advantage of being close to their customers which in general facilitates the marketing of products and communication. Another important difference is the fact that cultivation technology and input is readily available to European companies.
Growers of cut flowers in other developing countries also represent an important group of potential competitors.
Due to its trade structure, the cut flower industry is relatively open to new entrants and you should expect increased competition. Constantly check with customers, suppliers and your competition to see if they have heard of any new businesses. These sources may also give you some insight in where and how the competition is selling their products.
Of course, trade shows can be helpful for making contact with new customers and learning about market developments. They can however also be used to find out more about competition. If you sell cut flowers, take the time to attend industry trade shows to see what your competition is like.
Exporting directly to European wholesalers is suitable for large as well as small and medium-sized exporting companies. In general, European import / wholesale companies, which offer a wide assortment of products to their customers, mostly prefer to do business on an arm's-length basis without long-term contracts. Importers are often on the lookout for specific products to complete their assortment. As the products which importers are looking for can vary per company, information on the type of products and varieties can best be obtained from these companies themselves.
When cut flowers are sent directly to the consumer countries rather than via the auctions they leave out a number of links in the chain. This can save time and costs of preparation for the auctions and onward transport. However, besides the advantages, it also presents problems of its own like the need to get all the boxes to the buyers and dealing with claims and collecting the money. Therefore selling fresh cut flowers through one of the major Dutch auctions and thereby indirectly accessing the Hungarian market might be highly recommendable.
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Annexes
Annex 1: Certificate of origin form A
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Annex 2: Plant health movement document
86 Proexport Colombia Fresh flowers in Hungary
Annex 3: Phytosanitary certificate
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88 Proexport Colombia Fresh flowers in Hungary
Annex 4: DV1 Form
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90 Proexport Colombia Fresh flowers in Hungary
Annex 5: Single Administrative Document (SAD)
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Annex 6: Photo documentation
Florists make all kinds of bouquets – modern ones, traditional ones, one-colored, different-colored, with a few or with many flowers. As Hungarians prefer bright colored flowers and bouquets, most bouquets are multicolor bouquets. The prices indicated in this annex are no fixed retail prices, but average prices for these kinds of bouquets. The prices may differ according to the size of the bouquets and the kind of flowers used.
6400 Ft (25,22 EUR) 6800 Ft (26,80 EUR)
9000 Ft (35,46 EUR) 7500 Ft (29,55 EUR)
92 Proexport Colombia Fresh flowers in Hungary
3500 Ft (13,79 EUR) 4200 Ft (16,55 EUR)
6800 Ft (26,80 EUR) 6000 Ft (23,64 EUR)
11400 Ft (44,92 EUR) 8500 Ft (33,50 EUR)
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Annex 7: Companies Directories
Companies Directory Country: Hungary Sector: Fresh Flowers Página Web Idioma Idioma del Información General de Empresas Requiere Información Contenido Disponible sin Costo Registro Adicional con Costo Directorios Europeos http://www.kompass.com/ E E; I; O Contenido: Nombre de la empresa; SI SI País; Dirección; Teléfono; Fax; Sitio Web; Numero de empleados; Fecha de constitución; Capital; No de registro; Identificación del IVA. Descripción: Información de empresas para 70 Países. Opciones de Búsqueda: País; Productos/Servicios; Empresa; Sector; Subsector; Marcas; Dirigentes; Códigos. http://worldyellowpages.com/ I I Contenido: Nombre de la empresa; SI NO País; Dirección; Teléfono; Fax; E- mail; Sitio Web; Descripción corta de la empresa y sus productos. Descripción: Paginas amarillas - Lista alfabética de productos y servicios; lista de empresas; Permite acceder a las páginas amarillas de cada País; Acceso a una pagina de Información de negocios con algunos Países entre los que se encuentran Polonia y Republica Checa. Opciones de Búsqueda: País; Productos/Servicios; Empresa; Listado de productos; Listado de países; Oportunidades de negocio con algunos países. http://www.europages.com/ E; I; O E; I; O Contenido: Nombre de la empresa; SI SI País; Dirección; Teléfono; Fax; Sitio Web; Productos/Servicios. Descripción: Directorio en línea (en 25 idiomas) de la empresas europeas mas dinámicas; Consulta gratuita de las licitaciones publicadas en el diario oficial de la Unión Europea; Directorio impreso (en 6 idiomas) de los compradores europeos mas dinámicos; Directorio en CD-Rom (en 14 idiomas) de la empresas europeas mas dinámicas. Permite contactar las empresa vía intra mail. Opciones de Búsqueda: Productos/Servicios; Empresa; Temática; País; Sector. Directorios Húngaros
94 Proexport Colombia Fresh flowers in Hungary
Companies Directory Country: Hungary Sector: Fresh Flowers Página Web Idioma Idioma del Información General de Empresas Requiere Información Contenido Disponible sin Costo Registro Adicional con Costo http://www.tudakozo.t-com.hu/ H H Contenido: Nombre; Dirección; NO NO Ciudad; Teléfono; Descripción corta. Descripción: Información de empresas Húngaras. Opciones de Búsqueda: Texto; Región; Sector; Productos/Servicios. http://www.hungarytrade.co.uk/ I I Contenido: Nombre de la empresa; NO NO Dirección; Teléfono; Fax; E-mail; Sitio Web; Productos/Servicios. Descripción: Comisión de Comercio Húngara - Buscador de la oficina de asuntos económicos, con Información sobre las empresas Húngaras. Opciones de Búsqueda: Lista de proveedores; Sector; Productos/Servicios. http://www.internetszaknevsor.hu/ I I Contenido: Nombre de la empresa; NO NO Dirección; Teléfono; Fax; E-mail; Sitio Web. Descripción: Paginas amarillas de Hungría - Listado de empresas Húngaras. Opciones de Búsqueda: Selección de Categorías; Texto; Ciudad; País; Sector; Productos/Servicios. Directorios por Sector http://www.foodtrader.com/ I I Contenido: Información sobre SI SI potenciales compradores. Descripción: Pagina especializada en las industrias de alimentos y agricultura. Opciones de Búsqueda: Productos/Servicios; Categorías Idioma: E: Español; I: Ingles; A: Alemán; C: Checo; H: Húngaro; P: Polaco; O: Otros; W: Idioma del Sitio Web
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