According to Cor Hendriks, Rabobank
Crisis in Dutch horticulture far from over
"Historically high prices for Dutch greenhouse vegetable growers." Only a few months ago, these lines topped our newsletter. The effects seem clear: construction projects have started everywhere. This year alone, 50 hectares of tomatoes and 60 hectares of peppers will rise. Compared to data from the last few years this seems quite a recovery - but Cor Hendriks, Rabobank's horticultural manager, looks at it from a different perspective. Looking at the overall Dutch area with fruit vegetable crops, 3,600 hectares, and the life span of a greenhouse, 15-20 years, a minimum of 200 hectares of greenhouses should be built annually in order to maintain modernity of the horticultural sector in general. "The construction figures seem to be considerable, but innovation is necessary. The criteria haven't been met since 2009," says Hendriks. “Moreover, the current construction activities relate to expansion of acreage. Who wants more volume in today's market?"
Pressure
It might be clear: despite the positive notes, Dutch producers are still under a lot of pressure. "Investments are being made by companies who managed to make a return on investment during the bad years. They are on the forefront. The middle group is much bigger. The loss they made in recent years, has a big financial impact on them. The value of the companies decreased likewise and thus their capital. Those companies need a few good years to ensure a replenishment of the buffers."
Does Hendriks expect this to occur? "Amongst other things, that will depend on the collaboration within the industry."
Spain
Last year's campaign was mostly succesful for the Dutch because of the Spanish weather conditions, says Hendriks. "In terms of the volumes and the quality to which this gave rise. In the past period you see that the prices came under renewed pressure due to the high production in Spain. The tomato and cucumber prices are under pressure, and only the pepper prices were an exception right from the start of the Dutch campaign. Spain is the vegetable garden of Europe, the country which accounts for the largest share of production and thereby they remain the big competitor for the Dutch."
Furthermore, in Spain steps have been taken in collaboration and sales, Hendriks refers to the mergers of large Spanish greenhouse vegetable parties. "In doing so, they have direct lines with European retail. Those are positive developments in marketing structures." Also in Eastern European countries, horticulture is developing. "Those countries are in a favorable position towards, for example, the German export market."
"On the other hand, " Hendriks continues, "despite the international market competition, the Netherlands still dominate the German and British market. Even when Spain and Morocco are in season, Dutch produce is preferred in Germany and Britain. Dutch products are set apart as different and worth paying for. The Dutch industry can do more with this."
Dutch problems
A significant obstacle to capitalize on opportunities is the Netherlands itself. "The Netherlands is competing with itself. Nobody dares to say no and there is hardly any collaboration within the supply chain. The power is in the hands of retail, with the discounters. The Dutch producers of tomatoes, peppers, eggplants and cucumber have inadequate control. The fragmentation of the sales, by producers and trade, poses a threat to the Netherlands."
But still – adds Hendriks – there are opportunities on the German and British market. "While the Dutch products are priced higher, it shows that there’s more going on than only money. You could tell that last year, when the grower prices were on a higher level. Consumers did not eat less when the products cost more than a few dimes extra. Another opportunity the producers are skipping. We as Rabobank are convinced that they can get more out of it."
Coalition HOT
That is why, right from the start, Rabobank is involved in the Coalition HOT, the collaboration between the Dutch horticultural sector and the Dutch government to strengthen the horticultural greenhouse sector. Part of which is setting up the Federation of Fruit Vegetable Organizations to take control over the produce chain. "The Federation has been formed and unites 80-85% of the Dutch fruit vegetable acreage. You'll always have independent parties on the market – but with coordination on 80% of the production volume, you can become the coordinator in the chain. Even more so if the next link in the chain will be involved in the collaboration."
The organization is now collecting and exchanging data and information about existing and new markets. "The next step should be finding a common strategy. Returning to fewer sales parties is a goal. The result in question is if you can share a common interest in the market instead of fighting with each other for your position."
Difficult situation
Hendriks shares his expectations for the next years in the industry. "The investments will not reach the high level of the last decade in the coming years," predicts Hendriks. "The recent level of 400-500 hectares new greenhouses - we do not see that happening in the coming years." What is and is not realistic? "This will depend on the changes in 2016 and the next few years. Will the sector succeed in taking control and earning money, or will they stay dependent on the weather circumstances in Spain? The Dutch have good entrepreneurs and a modern sector - with perfect lines on the German and British market. They have something to offer! But every investment the HOT collaboration wants to make – renewal, infrastructure, spatial planning – is a wasted effort when there's no money being made. The industry needs to take control over the sales."