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Depressing Israeli capsicum market let growers try new things

Very low capsicum prices for several years in a row have many Israeli growers abandoning the business or leaving fields fallow. But some growers are investing in new businesses in the hopes that different commodities can bring the returns absent from the pepper market.

“We had a bad year with capsicum last season and we didn't see a place for ourselves in the market, so we looked for alternatives,” said Ronen Schlachet of Sunny Dan. “The government was offering assistance to growers who did something other than peppers, so I decided to go with strawberries.” Ronen already had several advantages that helped him transition into another crop. His extensive contacts in the industry helped him to quickly secure expertise and materials. He also already had temperature-controlled greenhouses where he could grow strawberries in weather that isn't very conducive to growing strawberries. But endeavoring into a new commodity has been a struggle, nonetheless.
“We had to start from almost zero,” said Ronen. “The water is very salty here, so I had to put in a machine to treat the water. Then we decide on fertilizer and what kind of turf to use to grow the berries. We modeled our operation on tunnels used in Holland, and I don't think we're that far off from the Dutch way with strawberries.” All of the upgrades and materials have not been cheap. Production costs are near 1.2 million shekels per hectare, but there are market segments Ronen believes he can exploit to get good returns.

Greenhouse in Ein Yahav where the strawberries are grown
“In Israel, they will spend money if you give them a good product,” he explained. “We're selling at high prices compared to other strawberries from Israel.” He hopes domestic customers will appreciate the quality and spend accordingly. Abroad, prolonged availability that comes with temperature-controlled growing is a big advantage.

“The open field harvest starts in two or three weeks and finishes in April,” said Ronen. “I started at the beginning of November, so the idea is to come in early when the prices are high because you don't have a chance to earn money when the open field is working.” There's also competition from Dutch growers in the export market, though connections in Russia can pay off, especially if the current ban on European goods stays in place.

Ronen Schlachet with the extensive purification system required to grow produce in the Arava
“You export when there's a gap because, otherwise, you can't compete with Dutch prices because of their lower transportation costs,” said Ronen. “Our advantage in Russia is that there are a lot of Russians that come to Israel and then go back to Russia. We can even do business in Hebrew while in Russia.” But that market is also unstable, with currency issues and a depressed economy hampering sales. So even though there are glimmers of hope with the new enterprise, it's still a very tough thing. While there is support from the government, Ronen believes government policies up to this point have put him and many other growers in this situation to begin with.
“We're really in a bad situation. The government hasn't had a policy with respect to Israeli agriculture,” said Ronen. “In the past, we made money with exports despite government policies. But now that things have gotten tougher, many businesses have closed down. I have made enough money in the past that I can afford to stay around even after losing money last year, but I can't take another year of losses.” The domestic market doesn't offer much promise because local production costs are so high that it's often cheaper for retailers to buy and sell imported goods. Ronen believes it will take government intervention to open new markets so that growers and exporters can get better returns abroad. In the meantime, he and other growers will have to continue to take chances in order to make it through another year.

Ein Yahav moshav has 500 hectares of greenhouses
“To start this completely fresh, it would take 2.5 million shekels per hectare to start growing greenhouse strawberries,” he explained. “I already had the greenhouse and other things, but without that it's too much. It's a big gamble because it's so much money, but we have to try.”
For more information:
Ronen Schlachet
Sunny Dan
[email protected]