Promotion order thoughts

[Ocean Rose]

Before posting answers to the many questions that have been raised in this chat room about the promotion order (and thank you as it gives me a forum to answer them), I would like all of us to ponder the following thoughts.[/b]
Can you recall when we had anti-dumping duties which ranged all the way from 0 to over 200 percent based on each growers revue, AND just a few years ago, we had the duties back on flowers coming in from Peru, Colombia, and Ecuador as congress did not re-new the duty free position of these countries?

These duties went into the General Treasury of the USA; they did not help promote our wonderful flower industry at all. We had no say as to what was done with these monies.

But during these time the industry paid the duties and we lived on. Other then the growers with the very high duties, the industry did not come to its knees as we paid the duties. I am not suggesting the duties were right or wrong, just that they were part of our business lives.

In the last round of duties when the Govt. failed to renew the free duty position of Peru / Colombia / Ecuador all “importers of record” had to pay the duties which were from 3.2 to 6 percent. Again, did not help our industry, just went to the general treasure of the USA.

Think back to that time. The duties did get passed on in many ways, but I know of no company that went under as these duties were in place. Our industry absorbed them and we went on about our business.  Would it not be wonderful if this type of revenue could go to promote and increase flower consumption in the USA?

Now, we have a chance to have the Department of Customs collect a Promotion Duty for our industry to expand the awareness of flowers to the buying public of the USA. The consumer gets many messages all day long to have them spend their money. Our industry needs a bigger loud speaker, to gain the consumers dollars.

For our USA flower industry (all parts of it), with the USA Customs Department collecting the promotion order percent, it creates a wall around the USA so that any grower wanting to “play in our market” needs to help promote the market.

There are many new countries that are trying to ship flowers into the USA market, should they not have to pay something in advertising to allow the industry to move these flowers?
The above thoughts are just that “thoughts” the process is far from complete and in fact, the small group that is working on this at this time is only a “fact finding” group. Suggestions from all are welcome. I would only hope that if you really have strong negative feelings, you at least let the process go forward before you make choices based on incorrect facts. You will have plenty of time to voice your concerns and to Vote your concerns.

Another closing fact. Why would so many of us believe so strongly in the need for promoting our wonderful product call “Fresh Flowers” actually spend our own money to try organize a system to promote something that was going to “cost us money”?

Answers to each of the questions about the Promotion Order coming in future posts. But remember, all questions cannot be answered perfectly as this is still a work in progress for the flower industry.

[blackmagic_82]

Maybe you could begin by answering the questions I posed in the "Questions for Charles Kremp" thread. 

The argument that we have paid duties in the past that did not give the industry any benefit and thus should willingly agree to contribute $25 million a year for advertising without a clear sense that the benefit will exceed the cost is very troubling.

[Williee Harley Armellini]

Ocean Rose you obviously you have inside information and therefore we welcome you and any insite you can give us. If you have been following this dialog here you can see that it is a lighting rod and you are likely to be struck soon. This a difficult issue and one that needs more thought and discussion. Please keep us informed and that will hopefully keep you from being roasted.

[oldnews]

Some of these larger companies in Miami are looking at an additional tax bill of 1-2 mil if this order goes thorugh..based on 5%.....what are you goinig to provide in ROI for their 1-2 Million?

My company paid 35k during Promoflor......thats the cost of an additional Salesperson.....today this new POI would cost me $350,000.....its insane.....this will not only hurt the smaller companies, but the larger ones as well....Think of the companies that will declare bankrupcy.....and how that will trickle downhill

This first year of an order like this will NOT be passed on uphill or downhill....to consumers, supermarkets, or down to growers.....the first year will be a killer for the companies that the taxes are imposed on...and with these kinds of numbers...it will be devestating.

[oldnews]

Ocean....Yes...please you are welcome here.....thank you for your time and insight into the thought process

[Ocean Rose]

Old News: your statement below .... I have a thought ... might not be the one that you want, but it is the one that I think is important for you to give thought to.

"If the free trade agreement, did not get re-newed" ... that is from Jan 1, 2007, you had to pay the duty from 3.2 to 6 percent to the US Customs, went to the US GOVT. AND this amount cost you $350,000 .... would your company go out of business? Or would you as any good business person needs to do, and adjust to new costs.

 How are you staying afloat when you are paying (actually not sure what business you are in) 24 percent fuel surcharge at this time. The fuel surcharge is a much higher cost to our business the the promotion order would be. I know I would not be in business today if I just absorbed the fuel surcharge. I had to "pass it along" in my cost of goods and also in delivery charges.

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"Old News said" ......Some of these larger companies in Miami are looking at an additional tax bill of 1-2 mil if this order goes thorugh..based on 5%.....what are you goinig to provide in ROI for their 1-2 Million?

My company paid 35k during Promoflor......thats the cost of an additional Salesperson.....today this new POI would cost me $350,000.....its insane.....this will not only hurt the smaller companies, but the larger ones as well....Think of the companies that will declare bankrupcy.....and how that will trickle downhill
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[oldnews]

I also pay a high tax bracket on my annual returns.....I don't need another 350k in taxes because a group of people know whats best for me.

I stand by my point....during all the tarrifs for Antidumping as well as Promoflor....for the first year it was a fight to get customers to accept line items on their bill...the largest customers told me to take a leap....eventually it always works out....its that interium period...

We're looking at high fuel surcharges, an import duty on Ecuador coming, and now a possible tax from industry insiders....how much more can we take...and for what return? Clients with Standing order pricing didn't like to see the first fuel surchages a few years ago....many cancelled their orders in protest.....today, its a norm

There is no doubt in my mind...that what you're trying to do....is based on good intentions....but many don't agree...and I don't understand how you feel your will should be imposed on them....I'm not in the industry anymore....so my objections are based on principle. You are right...eventually the industry could absorb this change....but why should they have to


Thanks for repsonding

[oldnews]

Ocean...I applaud your willingness to come on and discuss your point of view....Blackmagic has some great questions that possibly you could answer to the best of your ability.....and Ricky has some good questions that maybe can't be answered at this time since its still a work in progress....

One of my big questions is....if this is an industry issue....what will the steering committee do to ensure everyone is heard....will there be a vote of any kind of the effected parties and if not... why?

We have some great trade shows coming up where this could be debated....and with e-mail and direct mail...surveys could be done and data can be collected.....this will nevr succeed without industry support....it will be struck down like Promoflor if not handled properly


Thanks again

[Ocean Rose]

Harley said ...... Ocean Rose you obviously you have inside information and therefore we welcome you and any insite you can give us. If you have been following this dialog here you can see that it is a lighting rod and you are likely to be struck soon. This a difficult issue and one that needs more thought and discussion. Please keep us informed and that will hopefully keep you from being roasted.............

Harley, actually being struck is not so bad. Keeps you alert. Also being roasted is not so bad if in the end the everyone enjoyed the trip, but the result was an increase in our floral business.

 "The Brave don't live forever, but the cautious don't live at all"

[Ocean Rose]

Ricky, sorry that you feel that I am "Drunk on Power". My personal thoughts has guided our company over the years from a sold foundation from my parents. I do not consider "power" as my my goal, I only view the flower business as an example of how hard work and the chances you take, can lead your company to allowing your employees to gain in the success of your ventures.

 And, there is nothing wrong with this process. Each company has to choose their path. I choose one that will allow the flower business to grow, and buy doing that, our company has the opportunity to grow with it.

[ecuagrower]

Ocean
Promotional orders and initiatives have historically come from producers. The bulk of any advertising comes from the producers. (Think Cafe de Colombia, California Rasins, Toyota) Why are South American growers shut out from this process? We account for a large percentage of your consumption. Should not we have a vote? If not then why not?

[Justaflorist]

Ecuagrower, I think that's an excellent question.  As I was reading background on promotion orders today the origins of the act are rooted in US agriculture -

Evidence: Evidence: The Commodity Promotion, Research and Information Act of 1996 states that "The production of agricultural commodities plays a significant role in the economy of the [U.S.]. Thousands of producers in the [U.S.] are involved in the production of agricultural commodities, and such commodities are consumed by millions of people throughout the [U.S.] and foreign countries. Agricultural commodities must be of high quality, readily available, handled properly, and marketed efficiently to ensure that consumers have an adequate supply. The maintenance and expansion of existing markets and the development of new markets for agricultural commodities through generic commodity promotion, research, and information programs are vital to the welfare of persons engaged in the production, marketing, and consumption of such commodities, as well as to the general economy of the [U.S.]."

Considering 70% of the flowers covered by this POI are not of US origin, the entire premise of falling under the original mandate given to the USDA seems a big stretch.

P/S. Hopeful must love the part about "handled properly". 

[Ocean Rose]

Ecuagrowr ...... has a question ........Ocean ..............
Promotional orders and initiatives have historically come from producers. The bulk of any advertising comes from the producers. (Think Cafe de Colombia, California Rasins, Toyota) Why are South American growers shut out from this process? We account for a large percentage of your consumption. Should not we have a vote? If not then why not?

Ecuagrowr, as in the import duties, they are paid by the "importer of record" by the US customs. This (if this is the final path) process for a flower promotion order would be the same.... paid by the "importer of record". You (if you are a Ecuadorian grower) would not be charged with the percent for the Promotion Order. That would be paid by the importer of record of your flowers.

As in past import duties, the importer of record, would choose their path to "pass forward" to the industry this cost. But, a big difference .... these monies would now be turned into a Promotion of our industry.

 I keep trying to understand why we all did not go out of business when we had to pay duties to the US Customs (and they went to the US Govt) and now "IF" we have to pay a charge for a Promotion Order to US Customs (that will go to help our industry) there are some that feel it will put us "out of business".

 How will a percent collected by the US customs to promote our business, feel worse then duties collected by US Customs that went to the US Govt, with no help to our industry .... same money .... just going to a different path?

[ecuagrower]

Ocean, Thank you for your reply.
The idea is that the Importer of Record will "pass forward" the added cost.
So two simple questions:
1)What occurs if the client of the importer says "no" to this cost? (Think DVWF, Tipical Small Wholesale florist, Sam's Club, Costco). Their customers may not be willing to pay anymore for their flowers. Do you see that the cost will be passed backward?
2)How much do you calculate that this will cost per half box of flowers? If it is 5% Miami then perhaps USD$2.00-3.00?
Gracias. And yes I am an Ecuadorian grower. With USA partners in Miami.
 

[Ocean Rose]

Ocean, Thank you for your reply.
The idea is that the Importer of Record will "pass forward" the added cost.
So two simple questions:
1)What occurs if the client of the importer says "no" to this cost? (Think DVWF, Tipical Small Wholesale florist, Sam's Club, Costco). Their customers may not be willing to pay anymore for their flowers. Do you see that the cost will be passed backward?
2)How much do you calculate that this will cost per half box of flowers? If it is 5% Miami then perhaps USD$2.00-3.00?
Gracias. And yes I am an Ecuadorian grower. With USA partners in Miami.
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To answer your question #1 .... what do you think happened with the duties (that went to the US Govt)?
All that I know is that no company in Miami (importer of record) could have absorbed these costs. So, I would assume that they got passed forward in a higher "FOB cost" or in a higher "Box Charge" or in a "Line item" on the invoice.

To answer your question #2 .... I can not really answer this at this time ( I would if I could) as the rate and any "alternative" process is not settled on at this time. Only that the process of the US Customs to collect the monies, is thought to be important. This would mean that ALL flowers coming accross our shores would be assigned the Promotion order system charges. Just as in duties .... the US Customs is the "gate keeper" to make sure that no one slips thru the cracks.