The year 2016 had the second consecutive unfavorable harvest for Bulgarian rose production. This year started off with warmer than usual weather during the last of the winter months and the month of April. This lead to a record-early start of the harvest with the first rose flowers arriving in the last days of April. However, since then the whole month of May and the first half of June were characterized by cold weather combined with strong rainfall throughout the whole production period. We had low day temperatures of 15 to 17 degrees Celsius and very low night and morning temperatures of 4 to 7 degrees Celsius. Such weather conditions are not characteristic of Bulgaria for this time of year. The result was a lower concentration of essential oil in the flowers which had a direct effect on worsening the production yield by approximately 25% to 30%.
Due to the extremely unfavorable previous 2015 rose harvest, clients and rose producers entered into the 2016 campaign with no stock of 2015 crop rose products and thus were in desperate need of raw material. This fact, along with the unfavorable weather conditions created a record-high demand for rose flowers with fierce competition between the producing companies. Firms without established network of farmers and suppliers were constantly increasing the price of rose flowers in desperate need to attract established farmers or get some rose supply from the free market. This situation resulted in the increase of the price of rose flowers by approximately 30% compared to 2015 crop average final price of rose flowers.
On top of the above mentioned issues, we experienced a drastic shortage of pickers. The unfavorable harvesting conditions drove workers away which immediately and substantially increased the labor cost— approximately 100% (double vs. last year) and caused a higher price for rose picking in combination with higher side costs (transportation of pickers and commissions to their organizers). Moreover, this year for the first time in Bulgaria we incurred additional labor expenses, which came as a result from the newly implemented State social security taxes. We had to sign one-day contracts for all workers who were collecting roses for several hours only, but nonetheless we were forced by government to pay the social benefits for a full 8-hour working day.
The good news is that for our regular and loyal clients we managed to produce and secure the forecasted quantities. This is our number one priority during each and every harvest.
For you, we managed to produce the forecasted quantity for Benedetta.
We kindly ask you for a very prompt re-confirmation of the quantities until 8 July 2016 in order to be able to fix your reservation and be able to guarantee product availability at the quoted prices.
Please also kindly note that first exports can be carried out starting 14 July 2016. Last exports of all reserved quantities should be carried out before end of March 2017.
I am looking forward to hearing from you and I remain at your disposal for further questions or comments.
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