THE SOCIO-ECONOMIC
Currently, tulips are known as one of the national symbols of the Netherlands. Tulips have attracted many people all over the world. They reflect social customs, and finally became symbols of the Dutch nation. This enthusiasm of people for tulips did not limit the trade in tulips. The tulip trade even led to tulip manias, sometimes confusing the financial markets. On this page, I would like to introduce five stories about the Dutch tulip market.
ORIGINS OF THE "DUTCH AUCTION"
In the early 17th century, Dutch tulip auctions began. Tulips came from the Ottoman Empire. They were unique and unlike other flowers in Europe at that time. People were eager to grow tulips themselves. Because of tulips' popularity and their botanical rarity, a trade bubble generated the unique economic system which is still famous as the “Dutch auction”.
The auction designs the trade to end as expensively as possible and in as few trades as possible. It starts from an artificially high price for which there is no demand. Once a price decreases and the first bid is received, the trade ends. The benefit is transparency, easiness, and quickness. However, the classical Dutch auction requires all bidders to attend the instant auction. Also, the mechanism is preferable for sellers.
In the early 17th century, Dutch tulip auctions began. Tulips came from the Ottoman Empire. They were unique and unlike other flowers in Europe at that time. People were eager to grow tulips themselves. Because of tulips' popularity and their botanical rarity, a trade bubble generated the unique economic system which is still famous as the “Dutch auction”.
The auction designs the trade to end as expensively as possible and in as few trades as possible. It starts from an artificially high price for which there is no demand. Once a price decreases and the first bid is received, the trade ends. The benefit is transparency, easiness, and quickness. However, the classical Dutch auction requires all bidders to attend the instant auction. Also, the mechanism is preferable for sellers.
TULIP BUBBLE
It takes 7~12 years for a tulipto go from seeds to a tradable bulb. Also, the blooming flowers are only available in April and May. These limitations made the demand curve sharpen and the price increase. The situation generated the new system called the future contract. Thanks to the contract, people were able to trade in tulip futures throughout the year. Moreover, the contract traded among buyers; it made the prices increase and led to the Tulip Bubble of 1673. In order to deal with the bubble, the Dutch parliament passed a law that allowed sellers to cancel the contract if they paid 3.5% of the price at anytime. There were many customers who lost their assets at that time.
Interestingly, the tulip bubble in 1673 is not just a past accident. Mark van der Poll’s Sierteelt Bemiddelings Centrum (SBC) , one of two shady companies, also faced a similar crisis in the 21st century. The company made a scheme for tulip trade in 2000. The company sold various kinds of tulips and the contract for next year spread among traders. The business generated as much as 85 million dollars from investors and 35 million from trading. However, the potential buyers cancelled the contract; the bubble burst dramatically. The financial conditions of SBC went from worse to bankrupt.
It takes 7~12 years for a tulipto go from seeds to a tradable bulb. Also, the blooming flowers are only available in April and May. These limitations made the demand curve sharpen and the price increase. The situation generated the new system called the future contract. Thanks to the contract, people were able to trade in tulip futures throughout the year. Moreover, the contract traded among buyers; it made the prices increase and led to the Tulip Bubble of 1673. In order to deal with the bubble, the Dutch parliament passed a law that allowed sellers to cancel the contract if they paid 3.5% of the price at anytime. There were many customers who lost their assets at that time.
Interestingly, the tulip bubble in 1673 is not just a past accident. Mark van der Poll’s Sierteelt Bemiddelings Centrum (SBC) , one of two shady companies, also faced a similar crisis in the 21st century. The company made a scheme for tulip trade in 2000. The company sold various kinds of tulips and the contract for next year spread among traders. The business generated as much as 85 million dollars from investors and 35 million from trading. However, the potential buyers cancelled the contract; the bubble burst dramatically. The financial conditions of SBC went from worse to bankrupt.
THE CULTURE OF FLOWERS
The concept of "the culture of flowers," which anthropologist Jack Goody suggested, means that flowers reflect culture and life. The flower is a kind of luxury, so it links people's sense of beauty and a lifestyle. This notion can apply to Dutch tulips. Dutch tulip markets have stimulated many tulip manias around the world, and the Dutch horticulture industries attracted attention from tulip manias. Like civilization, tulips became popular among citizens. The tulips came to be a symbol of affluence and leisure in the 19th centuries.
The business model for horticulture was established in the modern nation. The producers preferred cooperative institutions rather than individualistic styles. The system is suitable for tackling the negative effect of free competition on the producers. It can share knowledge and resources, and hedge risks. The characteristic of cooperation is still a significant style in the Netherlands' agriculture overall.
The concept of "the culture of flowers," which anthropologist Jack Goody suggested, means that flowers reflect culture and life. The flower is a kind of luxury, so it links people's sense of beauty and a lifestyle. This notion can apply to Dutch tulips. Dutch tulip markets have stimulated many tulip manias around the world, and the Dutch horticulture industries attracted attention from tulip manias. Like civilization, tulips became popular among citizens. The tulips came to be a symbol of affluence and leisure in the 19th centuries.
The business model for horticulture was established in the modern nation. The producers preferred cooperative institutions rather than individualistic styles. The system is suitable for tackling the negative effect of free competition on the producers. It can share knowledge and resources, and hedge risks. The characteristic of cooperation is still a significant style in the Netherlands' agriculture overall.
![Picture](/uploads/1/2/4/3/124335238/editor/ottawa.jpg?1557136167)
DUTCH TULIPS IN CANADA
You can see tulips not only in the Netherlands but also in New York, which the Dutch settled during the 17th century, and in Holland, Michigan. Besides the former colonies, you can see plenty of Dutch tulips at Ottawa-Gatineau. The Netherlands send thousands of tulip bulbs there every year. The reason why these tulips come from the Netherlands every year dates back to World War Two. It can be said that the tulip is a symbol of the friendship between Canada and the Netherlands.
Dutch Princess Juliana and her family were forced to leave their homeland since the Netherlands was invaded during the war. During their stay in Ottawa, she was pregnant. According to the then laws, anyone who was born in Canada acquired British nationality. Therefore, the government arranged for one of the hospital rooms to have extraterritoriality for a new member of the Dutch royal family. Thanks to the measure, the Princess’ third child, Margriet, was born in Ottawa. After the war, they sent thousands of tulips bulbs to Ottawa.
You can see tulips not only in the Netherlands but also in New York, which the Dutch settled during the 17th century, and in Holland, Michigan. Besides the former colonies, you can see plenty of Dutch tulips at Ottawa-Gatineau. The Netherlands send thousands of tulip bulbs there every year. The reason why these tulips come from the Netherlands every year dates back to World War Two. It can be said that the tulip is a symbol of the friendship between Canada and the Netherlands.
Dutch Princess Juliana and her family were forced to leave their homeland since the Netherlands was invaded during the war. During their stay in Ottawa, she was pregnant. According to the then laws, anyone who was born in Canada acquired British nationality. Therefore, the government arranged for one of the hospital rooms to have extraterritoriality for a new member of the Dutch royal family. Thanks to the measure, the Princess’ third child, Margriet, was born in Ottawa. After the war, they sent thousands of tulips bulbs to Ottawa.
ENVIRONMENTAL EFFECT OF TULIP HORTICULTURE
The horticulture sector resembles energy-consuming industries. It requires much oil and gas to raise and deliver tulips and other flowers. Therefore, its advance and retreat sometimes corresponds with energy issues or environmental problems.
Horticulture became industrialized as agriculture innovation proceeded in the 1960s. The main reason for the progress in the Netherlands was the discovery of gas fields in Groningen. Tulip-farmers made use of the energy for greenhouses.
Recently, the producers have established a green market since about half of their customers are in Europe. At the end of the 1990s, EU policy came to care about environmental issues. From an agricultural perspective, EU legislation preferred organic products, which were produced by environmentally sustainable methods. Some non-governmental organizations also made campaigns against pesticides. One of the biggest problems for organic bulbs is fighting against disease without using pesticides. The government and retailers tried to prepare a distinction between organic and non-organic tulip bulbs. Research into the possibility of organic bulbs is proceeding in the 21st century.
The horticulture sector resembles energy-consuming industries. It requires much oil and gas to raise and deliver tulips and other flowers. Therefore, its advance and retreat sometimes corresponds with energy issues or environmental problems.
Horticulture became industrialized as agriculture innovation proceeded in the 1960s. The main reason for the progress in the Netherlands was the discovery of gas fields in Groningen. Tulip-farmers made use of the energy for greenhouses.
Recently, the producers have established a green market since about half of their customers are in Europe. At the end of the 1990s, EU policy came to care about environmental issues. From an agricultural perspective, EU legislation preferred organic products, which were produced by environmentally sustainable methods. Some non-governmental organizations also made campaigns against pesticides. One of the biggest problems for organic bulbs is fighting against disease without using pesticides. The government and retailers tried to prepare a distinction between organic and non-organic tulip bulbs. Research into the possibility of organic bulbs is proceeding in the 21st century.
References
Photos cited
-- Fumie
- Pimentel Claro, Danny & Onno Omta (2005), "Building Collaborative Relationships with Distributors in the Dutch Potted Flower and Plant Industry", Journal of International Food & Agribusiness Marketing, 17:2, 15-38.
- Gebhardt, Andrew (2014) Holland Flowering: How the Dutch Flower Industry Conquered the World. Amsterdam: Amsterdam University Press.
- Kamphuis, E. (2002) Organic Flower Bulbs From Holland - Outlook for the French Market. s.n.
- Abernethy, Michael. “Getting to Know Dutch Auctions”, at https://www.optimalauctions.com/getting-to-know-dutch-auctions.jsp
- Government of Canada. "Tulips in Canada's capital", at https://www.canada.ca/en/canadian-heritage/services/tulips-capital.html
Photos cited
- "Canada cheers its own Princess, Margriet", at https://gpdhome.typepad.com/royalblognl_news_summary/2010/05/canada-cheers-its-own-princess-margriet.html
-- Fumie