“It’s almost like there was never a crisis to begin with”

This week, the new CAP Regulation has been published. This means that the producer organizations can get to work with their operational programs and their multi-annual plans. Last year, they managed to receive nearly 40 million euros. This year, this will be considerably less: Van Nature, Auction Zaltbommel and Coforta decided not to apply for the subsidy this year because of the complicated and unclear regulations.

Even with a subsidy of 40 million euros, the Netherlands makes only limited use of the potential of the CAP subsidy, according to Ruud van der Vliet, director companies at Rabobank Westland.

"A fund of 120 million euros has been made available. The margin in fruit and vegetables is only a few percent. With this fund you can collect just over 4 percent of your turnover - which is often the margin of a horticultural company. And yet we hardly or not at all make use the CAP money." 

'Don’t be fooled', a number of growers will think. There is still a claim of several millions hanging over the sector. CAP has become an infectious word and anyone who starts talking about it at parties will soon be left alone. In addition, there is a lot of complaining about the rules that are becoming more complicated and troublesome. "I understand that," says Ruud. "It really is troublesome. But to get SDE subsidy, you'll also have to meet all kinds of requirements - and yet for geothermal projects we're using it extensively. It's time to wake up in the grownups world. To move away from such an amount of money is just a pity. It is about financial space that as a sector, we can use very well. Moreover, if you see that growers in Spain and Belgium do use it, you create inequality in the market."

Why can it be done in Belgium and Spain? According to Ruud, this is because of the market structure. "In the end, we all use almost the same European rules. In Belgium and Spain there is one large, cooperative structure that represents the growers. The organization is independent on consumers." But growers just should focus more on the consumer, at the end customer? The one does not have to exclude the other, according to Ruud. "If you organize this, you do have to comply with the rules. I can imagine a board that is related to the production companies and a working structure with dedicated marketing and sales people."

Furthermore, cooperation is not only a requirement for CAP subsidy but also an important part of the future of horticulture, according to Ruud. "On average, all producers are SME companies. The biggest sales organization in the Netherlands does not reach a billion euros in turnover, and sales are increasingly moving to retail. To companies with tens of billions of turnover. And looking at Amazon's acquisition - by scaling-up and clustering this kind of companies only get bigger," Ruud points out. "Everyone knows that the highest margin on fresh produce is being realized in retail. Horticulture cannot make an impact against this kind of companies. We are getting cornered and not achieving the margin we need for the sector. And if you remain small on the production side, the unbalanced market position remains."

In some areas, the Netherlands certainly is dominant, Ruud sees. "As one of the few countries we can year round supply quality large truss tomatoes to the retail sector - something that others can do only partly. We have companies that are performing very well. We supply superior products, but we are not dominant in the sector. The greenhouse vegetable market is a European market. The Netherlands produces less than 10 percent of the total of Europe, let’s act in accordance."

Despite these figures, the willingness for cooperation seems to be lacking. "During the crisis, the willingness to work together was much greater. The need was felt to create Coalition HOT, for example. Now the pain is less felt and the need to cooperate and to utilize CAP better is disappearing. The cooperation is going far too slow, it seems like there never has been a crisis. But without working together, in the long run you will not have a future – certainly not as a small company in bulk production. There the biggest problems will occur. " Ruud predicts. "Specialties are only achievable for some companies. In bulk you have to work together and realize the lowest cost level. For that you need to use tools like CAP subsidies," Ruud says. "Looking at the capital intensity of greenhouse horticulture, the profitability of the sector continues to be low despite two good years. CAP subsidies is money that is available, that we have contributed ourselves as taxes and that we can use very well to make the sector healthier. But that does not happen. We are not doing ourselves a service."