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Return to OrnamentalsBC Floriculture Industry Overview
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An Overview of the BC Floriculture Industry
Revised October 2003
The floriculture industry in BC is one of the most successful
sectors of the horticultural industry. It is highly dynamic and
competitive on a worldwide basis. There are no marketing boards, set
prices, or quotas to protect local growers against domestic or world
trade. Despite strong competition from overseas for the cut flower
market, the industry continues to expand to meet the growing
consumer demand for fresh cut flowers, potted flowering plants, and
bedding plants.
BC floriculture production is technology and capital intensive.
In order to compete against countries around the world, it has
become essential for BC growers to quickly adopt new technology and
the latest flower and plant varieties. The average sized greenhouse
is a hectare in size and may cost between $200 to $400 per square
meter to build or about $3.5 million in total capital expenditure.
Even with state-of-the-art production systems, new operations can be
obsolete within five years.
Systems optimization is central to greenhouses of this size.
Computer systems are used to monitor and regulate the growing
environment to ensure high quality product, rolling tables increase
useable production area, supplemental lighting helps to offset our
low winter light levels, and mechanization reduces labour costs.
Re-using irrigation water is becoming a common practice in many
greenhouses. It involves the collection, possible sterilization, and
computer monitoring of the return nutrient solution used in plant
nutrition. Growers look to re-using irrigation water as a method to
reduce possible environmental impacts of greenhouse run-off and as a
way to reduce fertilizer costs.
Structure of the Industry
World Floriculture Trade
One of the characteristics of the floriculture industry is its
global competitiveness. BC cut flower growers not only compete with
the rest of Canada, but with the rest of the world as well. Fast,
efficient transportation systems tie together floricultural
production on a worldwide basis. Over-production or changes in
production in one country can affect markets in other countries.
Countries with warmer climates and lower labour costs routinely sell
their product to other countries with higher disposable incomes and
production costs. A cash-and-carry floral bouquet in your local
supermarket could be made of miniature spray carnations from Israel,
spray chrysanthemums from Colombia, boxwood from Oregon, and statice
from California. However, floriculture trade is bi-directional; BC
grown product is shipped across North America and into Europe and
the Far East.
Climate and low wages have made some South and Central American
countries important producers of floriculture crops. Even when
transportation costs are included, the lower production costs of
these countries have displaced domestic production of cut
carnations, roses, and chrysanthemums in North America and Europe.
In fact, Colombia is the second largest cut flower exporter after
the Netherlands. Flowers rank forth behind petroleum, coffee, and
bananas in export earnings. In the United States and Canada, growers
are moving away from traditional flowers such as carnations and
chrysanthemums to different specialty cut flowers such as gerbera,
lizianthus, snapdragons, and alstroemeria that are usually more
difficult to grow and to ship.
World wide trade in floriculture products was estimated at over
US$7.9 billion in 2001. Cut flowers account for 50% of sales, plants
were 41%, bulbs made up 9%, and cut foliage accounted for 9%. Seven
countries export 73% of the value of the world's floriculture crops:
the Netherlands, Columbia, Italy, Belgium, Denmark, the United
States, and Ecuador. The Netherlands continues to dominate the world
floricultural industry; it is becoming the epicentre for world
flower trading. It was estimated that in 2000 almost 50% of exported
floriculture products came from the Netherlands, this figure
includes crops that are grown domestically and crops that are
imported, brokered, and then resold. Columbia was the second largest
exporter at 7.5%, Italy, Belgium, Denmark, the United States,
Ecuador, and Germany followed with approximately 3% each of exported
products. Kenya, Costa Rica, Israel and Spain produced about 2%
each. Major markets are Germany, the United States, Britain, France
and the Netherlands. These five countries account for almost 70% of
all imports of floriculture products.
The Flower Council of Holland estimated that in 2002, the
Netherlands had over 8500 hectares in floriculture crops, including
cut flowers, potted plants, propagation material, and bulbs, with a
farm gate value of $5.4 billion. Most floricultural production is
sold through one of the many floral auctions located throughout the
country. In addition to domestic production, cut flowers arrive by
the planeload from around the world and are then re-sold to other
countries.
The United States is an important trading partner for Canada. The
United States Department of Agriculture estimated that in 2002,
there were 8,463 hectares in floriculture production with a
wholesale value of over US$4.88 billion. California was the leading
state with wholesale value of crops at US$962 million. Florida was
the next largest with sales of US$877 million. These two states
account for 38% of the total. The five largest producing states,
California, Florida, Texas, Michigan, and Ohio, had combined sales
of $2.62 billion or 54% of the total.
Table 1. United
States Floriculture Sales 2002*
Product Type |
Total Sales (million US $) |
Bedding plants |
2,280 |
Potted flowering plants |
822 |
Potted foliage plants |
663 |
Cut Flowers |
410 |
Cut Foliage |
111 |
* Source: USDA NASS
Floriculture Crops, 2002 Summary
Table 1 looks at the sales broken down on a crop basis. Bedding
plants continue to dominate floriculture sales in the United States.
In 2002 bedding plant sales were US$2.28 billion. It represented
close to 50% of floriculture sales. Potted geraniums were the
largest single bedding plant crop with sales of US$150 million.
Impatiens flats were the second largest with sales of US$112
million. In potted flowering plants, poinsettias had sales of US$247
million or 30% of total sales. California was the largest cut flower
grower with sales of US$279 million or 68% of the nation's total.
The top three cut flowers grown were lilies valued at US$57.7
million, roses at US$56.2 million, and tulips at US$28.3 million.
Florida was the largest producer of foliage, accounting for 69% of
potted foliage plants and 78% of cut cultivated foliage.
Canada on the World Market
Exports
Canada experienced a positive net balance of trade in floriculture
and nursery products for the seventh consecutive year in 2002,
reaching a record $165.3 million. Statistics Canada estimated
Canadian floriculture and nursery exports in 2002 were $524.3
million, up 80% from 1997. Nearly two-thirds of theses sales were in
floriculture crops, mainly potted plants, cut flowers and greens.
According to Industry Canada, the main export market for
floriculture products is the United States, it generally purchases
89% of Canada's total floriculture exports. Canada supplies about
24% of the floriculture and nursery product imported into the United
States. The Netherlands was the next largest Canadian floriculture
export market, purchasing 7% of total exports, followed by Germany
at 2%. Ontario is responsible for about 63% of export sales, BC
ranks second with 22% and New Brunswick third with 11%.
Mechanization, crop diversity, and an emphasis on quality enable the
two ornamental industries to expand their export markets.
Imports
In 2002 Statistics Canada estimated imports of floriculture and
nursery products to be $359 million, mainly in cut flowers and live
plants, including cuttings. The largest suppliers were the United
States, the Netherlands, Columbia, Ecuador and Mexico. The United
States supplied 50% of all floriculture and nursery products
imported into Canada. Cut flowers from South America made up 25% of
the total imports and the Netherlands supplied 22%, mainly in bulbs.
Floriculture across Canada
Across Canada, floriculture has enjoyed a steady growth rate over
the years. Statistics Canada estimates the farm-gate sales of
ornamental plants in 2002, at over $1.4 billion. Table 2 shows the
breakdown of production on a provincial basis. Ontario accounts for
over half of the industry with sales of $745 million. Most of
Ontario's industry is located in the Niagara peninsula where growers
are within one day's delivery time to over 100 million American
consumers. BC is the second largest centre with sales of $312
million and Quebec is the third largest centre with sales of $147
million. Over 1,886 hectares of greenhouses were used in the
production of ornamentals and vegetables. Ontario has 958 hectares,
over half of the greenhouse acreage in Canada. British Columbia has
24% of the total greenhouse acreage with 461 hectares of
greenhouses.
Table 2. The Canadian
Greenhouse Industry, 2002*
Province |
Sales
($ million) |
Size +
(hectares, plastic and glass) |
Newfoundland |
8.7 |
6 |
Price Edward Island |
2.8 |
3 |
Nova Scotia |
29.3 |
29 |
New Brunswick |
41.1 |
18 |
Quebec |
147.3 |
255 |
Ontario |
745.1 |
958 |
Manitoba |
27.4 |
25 |
Saskatchewan |
28.7 |
25 |
Alberta |
78.9 |
107 |
British Columbia |
312.3 |
461 |
Total |
1,421.6 |
1,886 |
*
Source: Statistics Canada ,
Catalogue 22-202-XIB
+ The size figures include
vegetable and floriculture production.
Floriculture within BC - Economic Contributions
In 2002, Statistics Canada estimated that ornamental flower and
plant sales in BC were $312.3 million. Figure 1 looks at the last
ten years of floriculture sales in BC. The industry has increased
its sales by 59% over the last five years. In the last ten years, it
increased by more than 230%. The most significant growth year was in
1996. The years with a small increase in sales reflects the industry
concentrating on retrofitting rather than expansion.
Figure 1: BC Floriculture Sales
![](/web/20061229013218im_/http://www.agf.gov.bc.ca/ornamentals/images/overvi4.gif)
Data Source: Statistics Canada , Catalogue 22-202
Of the 461 hectares of greenhouses in BC, it's estimated that
about 233 hectares were used for floriculture production in 2002.
It's estimated that there are about 125 hectares of fields used for
the production of flowering bulbs and cut flowers. There were
significant increases in greenhouse area in 2000. An additional ten
hectares were built and 25 hectares were switched from vegetable
production to floriculture production. Close to 90% of the industry
is located in the Fraser Valley and southern Vancouver Island. There
are between 450 and 550 businesses, most of which are family owned
and operated. There is a large variation in the size between
greenhouse operations; they range anywhere from 150,000 square
meters to a few hundred square meters. The average size is around
6,000 to 10,000 square meters. The industry is moving towards large
and highly mechanized greenhouses, but it still has room for smaller
growers that produce a specialized product.
Table 4. BC Greenhouse Production Input Costs, 2002*
Input |
Number or Cost |
Total Number of Employees |
8,490 |
Gross Yearly Payroll ($) |
120,699,000 |
Total Investment ($) |
833,452,000 |
Total Purchases ($) |
78,465,000 |
Total Fuel Costs ($) |
49,891,000 |
*
Source: Statistics Canada,
Catalogue 22-202 (Figures include vegetable and floriculture
production.)
Table 4 looks at the economic contributions of the greenhouse
industry in 2002. The greenhouse vegetable and floriculture industry
directly employs close to 8,500 people and has an annual payroll of
almost $120.7 million. The capital investment of over $833 million
shows the commitment of growers to the industry. The figure includes
land, buildings, equipment and machinery at fair market value. In
addition to the capital investments, growers purchased close to
$78.5 million of production inputs, such as cuttings, seeds, and
bulbs. Fuel costs approached $50 million. Growers have experienced
extreme fluctuations in fuel costs since 2000 and volatile prices
are expected to continue.
Crops
One of the strengths of the BC floriculture industry is its diverse
range of crops. Several thousand plant genera are grown as cut
flowers or potted plants. The main cropping strategies for potted
plant production on a year-around basis are: a combination of
bedding plants and potted flowering and foliage plants, bedding
plants and poinsettias, or potted foliage and flowering plants. Some
smaller growers may grow bedding plants on a seasonal basis and only
operate a few months of the year. Table 5 shows the production of
some of the main potted plants grown in BC. The largest single crop
is geraniums with over six million pots grown in 2002. The figure
includes both zonal and seed geraniums.
Table 5. BC Potted Plant
Production (000 pots) *
Crop |
1998 |
1999 |
2000 |
2001 |
2002 |
Azalea |
1,215 |
322 |
- |
702 |
559 |
Chrysanthemum |
867 |
800 |
1,297 |
1,070 |
1,556 |
Foliage plants |
3,226 |
3,390 |
3,732 |
3,681 |
4,671 |
Geraniums |
4,918 |
6,371 |
8,207 |
7,529 |
7,200 |
Hanging Baskets
– Foliage |
141 |
211 |
172 |
346 |
281 |
Hanging Baskets
– Bedding |
463 |
547 |
- |
741 |
950 |
Lilies |
444 |
175 |
242 |
242 |
260 |
Poinsettias |
2,156 |
1,662 |
1,801 |
2,285 |
3,082 |
Other |
13,138 |
13,210 |
12,181 |
21,432 |
20 550 |
*
Source: Statistics Canada, Catalogue 22-202
Other important potted crops not shown on the table are:
Flowering potted crops - African violets, potted bulbs, cineraria,
cyclamen, exacum, gerbera, gloxinia, hibiscus, hydrangea, kalanchoe,
Rieger begonias, gloxinia, mini-rose, and orchids.
Bedding plants - Alyssum, begonia, fuchsia, herbs, impatiens,
lobelia, marigold, pansy, petunia, primula, and snapdragons.
Cut flowers include a diverse range of greenhouse and field-grown
annuals, perennials, bulbs, ornamental grasses, and woody cut flower
crops. Producers grow a combination of these, or specialize in a
single crop, either year-around or seasonally. One of the newer
areas is perennial production where coolers and/or moving
greenhouses are used to extend the natural flowering season of bulbs
and perennials. Table 6 looks at the main cut flower crops. Tulips
are the main cut flower grown, with over 21 million stems being
produced in 2002. Gerbera production has increased significantly in
recent years and is now the second major crop. Cut rose production
has decreased in response to a strong increase in South American
rose imports.
Table
6. BC Cut Flower Production (000 stems) *
Crop |
1998 |
1999 |
2000 |
2001 |
2002 |
Alstroemeria |
5,392 |
4,097 |
6,237 |
11,130 |
6,569 |
Chrysanthemum – spray type |
1,606 |
- |
112 |
7,844 |
- |
Daffodil (Narcissus) |
4,495 |
2,830 |
2,801 |
2,641 |
3,087 |
Freesia |
7,893 |
5,610 |
5,080 |
5,149 |
6,106 |
Gerbera |
- |
- |
- |
7,844 |
13,018 |
Iris |
3,728 |
3,437 |
2,939 |
2,432 |
2,463 |
Lily |
3,036 |
4,293 |
4,903 |
6,427 |
5,382 |
Rose – Standard |
9,267 |
12,917 |
12,428 |
11,559 |
8,311 |
Snapdragon (Antirrhinum) |
1,555 |
5,018 |
1.701 |
1,316 |
1,572 |
Tulip |
14,749 |
11,963 |
15,745 |
17,102 |
21,217 |
Other |
5,537 |
7,159 |
6,116 |
14,976 |
8,281 |
*
Source: Statistics Canada,
Catalogue 22-202
There is a large diversity in cut flower production, which is
shown by the large numbers of cuts that fall into the
"other" category. Some important crops not shown on the
table are:
-
Greenhouse production - Anemone, lisianthus, matthiola (stocks),
orchids.
-
Field production - Astilbes, dahlias, delphiniums, gladiolus,
liatrus, phlox.
Markets
The market has changed significantly over the past 40 years. In the
early 1960's, several large wholesalers dominated the market. In
response to the almost "monopoly" powers of the
wholesalers, a grower owned and operated co-operative, United Flower
Growers' Co-operative Association (UFG) was formed in 1963. Over the
years, the UFG has gradually become a key part of floriculture
production and sales. The importance of corner stores in selling
floral product grew along with the UFG. Corner stores developed and
capitalized on the spontaneous cash-and-carry market. The next
change in the market place was the chain grocery stores selling
floral products. Their aim was to make flowers and plants a part of
the weekly grocery basket. The most recent change is the role in
floral sales by the mass-market retail stores like Wal-Mart and Home
Depot. These changes in the floral market have resulted in a
significant shift in the market share away from more traditional
florists.
Table 7. Ornamental Flower and Plant Sales in BC, 2002*
|
Sales ($ 000)
|
Percent of Total
|
|
Retail Florists
|
33,928
|
11%
|
Domestic Wholesalers
|
76,561
|
25%
|
Mass Market Chain Stores
|
80,011
|
26%
|
Other Greenhouses 1
|
7,914
|
6%
|
Exported
|
25,462
|
8%
|
Direct to Public
|
27,205
|
9%
|
Other Channels
|
51,212
|
16%
|
Total Sales
|
312,293
|
*Source: Statistics Canada, Catalogue 22-202
Table 7 shows the breakdown of sales in 2002. Wholesalers'
long-time position as the main BC floral marketplace has recently
been surpassed by mass market chain stores, including grocery stores
and mass market retailers. Sales through the UFG are captured within
other channels and accounted for approximately 20% of the product
sold in the province. Traditional florists hold 11% of the market.
Grocery stores and corner stores account for a large proportion of
impulse purchases, while florists continue to dominate the more
traditional markets like weddings and funerals. Exports vary with
fluctuations in the Canadian dollar. Most exports go to the
northwest region of United States.
United Flower Growers' Co-operative Association
The United Flower Growers, or the Auction, plays a significant role
in the marketing of BC floral products. It was the first auction
established outside of Europe. The next closest auctions are located
in Toronto and San Diego. In 2002, it had sales of $55.5 million or
about 18% of the market. The UFG has never had a drop in sales since
its first year of operation when it had sales of $75,000.
An elected Board of Directors runs the UFG. Currently, it has
almost 200 grower members and close to 1,000 customers. It operates
out of a 1.8-hectare facility in south Burnaby. Growers pay a sales
commission to sell their product through the auction, but they have
reduced marketing and promotional costs. A major benefit of selling
through the auction is that the UFG pays growers twice a month
directly into growers' bank accounts. It eliminates the necessity
for growers to grant extended credit to customers and, more
importantly, it reduces the risk of bad debts.
Auction sales are done via three electronic, reverse style Dutch
clocks. Prices start above the expected selling price and fall as
the clock runs until the first buyer using an electronic keypad
stops the clock. Unlike traditional auctions, it is the first bidder
who gets the product. It is a fast, efficient selling method, with
several thousand sales transactions per hour. Prices vary daily
depending upon supply and demand. Selling product is a daily gamble
since there aren't any guaranteed prices.
For more information on the UFG, log onto their web site at:
http://www.ufgca.com
Mass-Market Chains
The three main groups of mass-marketers are supermarkets, department
stores, and home renovation stores. These large chains attract
thousands of customers every day and they have large floral
departments. They capture a sizeable proportion of the holiday
flowering plant and bedding plant markets. While these stores expose
more people to floral materials, the downside is that they often use
floral product, especially bedding plants, as loss leaders.
Supermarkets and corner grocery stores compete for market share
once held exclusively by florists. Most grocery stores have a floral
department prominently displayed within the store where they
encourage consumers to make flowers a part of their weekly grocery
purchases.
Mass-merchandise stores such as Wal-Mart and Home Depot are
quickly gaining market share. The large stores deal in large product
volumes, so they usually purchase product from larger growers. In
addition, they often require growers' product to have the
appropriate universal product codes (UPC). The large volumes and the
UPC requirements mean that smaller growers are often not able to
fill orders. Another factor is that these large mass-merchandisers
operate on forward contact prices with their suppliers. They are not
set-up to operate on the spot market such as the UFG. The UFG has
responded to this change in the marketplace by creating a Direct
Sales Desk that brokers forward contracts between its growers and
customers.
Retail Greenhouse Sales
Many cut flower and smaller growers choose to sell the majority of
their product through the UFG. It eliminates the need for individual
marketing and promotion and allows growers to concentrate on growing
a high quality product. However, most large growers and bedding
plant growers treat the UFG as a customer, and although they a large
proportion of their production to the UFG, they also sell directly
to wholesalers, florists, mass-merchandisers, and garden centers.
Another option is to sell directly to the public via farm stands or
on-farm nurseries. Smaller bedding plant growers often sell direct
to the public. It allows these growers to eliminate the middlemen
and capture retail prices; however, it involves the extra expense of
staffing and running the retail operation. Location plays an
important role in the success of on-farm merchandising.
Industry Dynamics
Advantages
Expertise
By having the UFG doing most of the marketing, growers are able to
concentrate on growing. Most growers have strong ties to Europe and
keep in close touch with research information and production
techniques and for variety updates. The high degree of expertise
that is needed presents a challenge to new growers, whom not only
need a large amount of capital, but also need the skills and
knowledge of operating a greenhouse and growing the crops.
Modern facilities
Lower light levels and high input costs make it essential for
growers to have the most up-to-date greenhouses to remain
competitive. Growers who don't build or retrofit every ten years
lose their competitive edge.
Pacific Rim Trade
BC's close proximity to and the many direct flights to several Asian
countries should make them our natural trading partners. In reality,
they are difficult markets to penetrate due to volume and quality
demands.
Co-operation
Growers frequently meet at the UFG to discuss prices, problems and
new crops. Most growers realize that the higher the over-all
standards of the industry, the better it is for everyone.
Specialization
By bringing many buyers and growers together at the UFG, growers are
able to specialize rather than growing a wide range of crops in an
attempt to supply the needs of every customer in the local market.
Specialization allows for improved quality and decreased costs of
production.
Weather
The Fraser Valley has some of the mildest weather in Canada,
allowing lower heating costs and an earlier start to the bedding
plant and outdoor cut flower seasons.
Disadvantages
Fewer pest controls
The United States and Europe have several new effective pesticides
that are not registered in Canada. Canada is a small market and
floriculture crops are often high-value. Consequently, large
pesticide companies are hesitant to spend the extra time and money
needed for Canadian registration. Often these new pesticides are
less harmful to the environment and to other biological controls.
The decreasing effectiveness and reduced number of registered
pesticides places more emphasis on integrated pest management (IPM)
practices.
High costs
Most input costs are rising steadily each year, while floricultural
product prices remain the same or decline. Capital costs can run
anywhere from $80 to $400 per square metre. Gas and electricity
accounts for between one fifth and one tenth of gross sales,
however, erratic natural gas prices have seen this ratio fluctuate
dramatically during recent years. Labour can also be one third of
gross sales. BC land costs are some of the highest in Canada; land
can cost up to $40,000 per hectare.
Skilled labour shortage
The industry has a shortage of middle management, but it is hoped
that educational programs such as the Kwantlen University College's
Horticulture program will help to alleviate the shortage. Growers
also look to the Netherlands for trained managers.
Lack of local research
Research has traditionally focused on food crops rather than
ornamentals. The UFG research fund and the Cecil Delworth
Foundation, the research arm of Flowers Canada, are in place to
stimulate local research.
Weather
Low light levels during the winter require that high quality crops
need supplemental lighting.
ISSUES/CONCERNS
Environment
Environmental concerns are becoming a major issue for growers. Some
of the main areas of concern in production are the re-use of
irrigation water, reduced pesticide and fertilizer use, and reduced
greenhouse run-off.
Decreasing margins
Most input costs have risen steadily over the past five years and
product prices have not kept up. To remain profitable growers have
had to become more efficient in production and management. Growers
are forced to adopt changes in technology and new plant varieties or
risk falling behind, becoming less efficient and eventually being
forced out of the market.
Pest control
Concerns over pesticide use by the public and growers alike, along
with pressures from pests, loss of approved pesticides, the high
cost of pesticides, and pest resistance have caused growers to be
increasingly receptive to alternative pest control methods.
Integrated pest management (IPM) is playing a larger role in
greenhouse pest control. Many growers are now using biological or
bio-rational control methods to supplement or replace existing
pesticides.
Labour
Labour is an important element in production. Bedding plant and cut
flower growers face labour costs of up to one third of gross sales.
Unionization is a reality. Growers look to increased mechanization
as a solution to their high labour requirements.
Rural-urban conflicts
Rural-urban conflicts are a fact of life for most of agriculture in
the Province. Some municipalities look upon floriculture as more of
a factory production industry than agriculture. Growers need to take
steps to reduce complaints over lights, noise, greenhouse run-off,
pesticide use, and greenhouse appearances to avoid complaints from
neighbors.
Regulations
Most municipalities have regulations concerning zoning, noise,
lighting and the maximum coverage and set-back limits for
greenhouses. There are also numerous environmental and safety
requirements at provincial and federal levels that apply to the
greenhouse industry in British Columbia.
Capital costs
Top of the line greenhouse operations can cost in excess of $350 per
square meter. This presents a barrier to entry for many potential
growers. Field cut flowers and bedding plant production have much
lower capital costs, so they are often entry level crops.
TO THE FUTURE
The future of the BC floriculture industry continues to be
optimistic. The "green industries" of floriculture and
nursery are the fastest growing sectors of horticulture. Gardening
is the number one leisure activity in North America and it has
helped to expand bedding plant sales. The demand for floricultural
products continues to rise as people realize the importance of
plants and flowers in their daily lives.
Similar to other sectors of
agriculture, there is a trend towards big, highly mechanized
operations. The number of medium sized growers is expected to
decline, as large growers become bigger in a move towards providing
a more complete range of products for sale to large chain stores or
other markets; at the same time, the numbers of smaller growers
producing a more specialized product will likely increase.
Related Areas:
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