greenhouse vegetables
European season 2018: cautious optimism despite weak start
Bottom price
Nevertheless, expectations for the remainder of the 2018 season are actually positive, despite the weak start. The abundant supply from the south does not necessarily have to be negative according to Philip. "Often a low point in the greenhouse vegetable prices is needed in order to stop the supply from the south. We have to reach a bottom limit from which prices can slowly rise again. We will reach a point when prices in the Netherlands become so low that it's no longer profitable for Spanish growers to export here. The southern supply then ends automatically and the supply surplus diminishes. Also the greenhouse vegetable season in Spain slowly comes to an end. At that point supply and demand in the Netherlands will regain balance, resulting in a price increase for Dutch greenhouse vegetables."
A Vergro warehouse with Dutch tomatoes
The oversupply from the south was not the only culprit, however. It turns out that when the cold winter temperatures last longer, people tend to eat winter vegetables for a longer period of time, according to Dominiek Noppe from Vergro, exporter of AGF fruit and vegetables, mainly from Belgium. The demand for tomatoes and peppers was lower because of this, which also had a detrimental impact on prices.
An additional challenge on the demand side, according to Dominiek, is the absence of exports to Russia because of the US-led political boycott. "In the past, April and May were top months in terms of demand from Russia, but that's gone now."
Individual contracts
Traditionally April and May are favorable months in terms of pricing, according to Philip. "The weeks through week 21, at the end of May, are normally the 'high-price weeks'. After that, due to increasing temperatures, business goes down a bit, only to pick up again in autumn. Often a 'nice' autumn is possible."
Quality Queen and Vergro products usually purchase directly from growers. "We grow what the customer requests," says Marco. This is different from companies like Van Geest International and Gemex who mainly source their products through auctions and trading houses.
Vergro, which celebrates its 50th anniversary this year, is increasingly focusing on individual contracts with growers. Vergro sources 80 to 90 percent of its products from Belgium. Tomatoes and, since 2018, aubergines have already been delivered to Vergro via one-to-one contracts, with Vergro selling 80 to 100 percent of each grower's products. Additionally, Vergro updates growers with market trends and demands.
Specialties
In addition to the traditional tomatoes and red bell peppers, there is an increasing demand for specialty varieties in recent years. Sven Jordens from Gemex, which mainly exports to Germany, sees a growing demand for sweet pointed peppers and specialty tomatoes. Philip also sees the trend and not only in the Netherlands, as demand for specialties is also increasing across the border. "The introduction of specialties takes a little longer there, and getting people used to higher prices takes time."
Supply and demand is of even greater importance for specialty varieties, according to Dominiek. "There were more specialties planted for 2018 than in 2017, but specialties also show greater price fluctuations." If the range of specialties increases too sharply in one go, there is a high risk that the demand for a relatively unknown product will not immediately follow. "Then there's an oversupply and it will be more difficult to achieve a profit margin for the grower." Specialties have lower margins and that is why it is important, from a price point of view, that the supply doesn't rise too quickly." Philip: "By bringing large numbers to market at once, you bring down the price and it's actually possible to undermine an interesting new product."
Van Geest's trucks will again transport many kilograms of vegetables in 2018
Looking ahead
Although the imports from Spain subside at the end of April and there's no increase expected from Belgium this year - meaning that the supply in that respect remains the same as in 2017 - it remains difficult to give a seasonal forecast, according to Dominiek. Much depends on the weather and production in the rest of Europe. "Only on the basis of supply and demand can you really say something about the prices." Nevertheless, all the exporters expect a good year, because a bad start of the season does not decide everything. "For the time being, however, it's still anyone's guess, so call me at the end of 2018. It's much easier with 20/20 hindsight," Marco concludes.
The original of this Dutch article appeared earlier in edition 4, 32nd volume of Primeur. See www.agfprimeur.nl.
For more information:
Gemex
www.gemex.be
Sven Jordens
gemex@gemex.be
Quality Queen
www.qualityqueen.nl
Marco Persoon
marco@qualityqueen.nl
Van Geest International
www.vgibv.nl
Philip van Geest
pvg@vgibv.nl
Vergro
www.vergro.com
Dominiek Noppe
dominiek.noppe@vergro.com