"it is a madhouse"

As all components are more expensive, so is your greenhouse

As a result of global madness on the commodity market, the price of greenhouses and greenhouse utilities has increased strongly. "For anything but iron ore, the prices are sky-high," says Annie van der Riet with Dutch horticultural organization AVAG. Greenhouse builders and horticultural technology companies are passing on the increased costs, resulting in higher project costs.

Everything is expensive
The price of aluminium has increased by 50 percent compared to last year. The steel price has doubled and the same goes for sandwich panels and diffused horticultural glass. PVC is hard to come by and also plastic is running out. And those who can still buy material have yet to get their hands on it. The price of container shipping has gone through the roof and container availability is being called "challenging" even by the biggest optimist.

"It's a madhouse," AVAG president Annie van de Riet summarises succinctly. Over seventy companies are united in the trade association for Dutch greenhouse construction and technology companies - and all of them are currently dealing with continuously rising raw material prices. Some report price increases of dozens of percent, Annie says. Exceptional. "Several members told me that in their long careers they have not experienced this in this way before. For anything but iron ore, the prices are sky-high."


Annie van de Riet, president of AVAG

But why?
It was an obstructionist boat in the Suez Canal earlier this spring that really captured the imagination, but the raw material craze has been going on for some time, Annie explains. "The origin lies in the corona crisis. Many sectors experienced a drop in demand as a result and factories responded by scaling back their capacity. Then, last summer, when the market started to pick up again, it turned out that there was too little capacity and this is causing bizarre conditions to this day." Add to that disruption in logistics resulting in container shortages and high prices and the madness is complete.

Vicious circle
Greenhouse construction itself, to which many AVAG members contribute, managed to get going quite well despite corona last year. But now that other sectors are also restarting business, a shortage has arisen. And there is a vicious circle. "Because of the tightness, you see hoarding behavior in the commodity market, which in turn creates tightness, which ultimately results in gigantic price increases."

The question now is when the vicious cycle will be broken. At AVAG, they are taking into account that the effects of the current commodity crisis will continue to be felt next year. In the meantime, greenhouse builders and horticultural technology companies are trying to deal with the special circumstances as best they can.

Passing on price increases
Tenders, for example, are only valid for a short period of time. Companies are currently thinking very carefully before they send out a quotation. Annie: "In the past, companies could sell a greenhouse and then quietly look for raw materials. Now it is completely the other way around and it is important to reserve raw materials first, well in advance, to be sure that you can deliver what you promise."

Naturally, companies are trying to pass on the increased costs throughout the chain. "The steel supplier is dealing with the current situation just as much as the turnkey greenhouse builder," Annie knows from the AVAG members. One in turn supplies the other with again further down the chain the grower. "A greenhouse is more expensive than it was a year ago. That's a fact. But the suppliers, they don't earn on this."

Everyone in the same boat
On the contrary: As the commodity market is a global market, probably all greenhouse builders around the world are in the same boat. Only speculators benefit from this. The suppliers simply cannot do anything about what is going on now. They can only hope that the vicious circle will be broken. And for the storm to blow over", Annie says. 

For greenhouse builders and horticultural technology companies, it remains important that they can continue to deliver. And that they meet the deadline. After all, the grower should not miss a season because the greenhouse is not finished, Annie points out. "It is often easier to supply a standard product than a more specifically tailored one. Special glass that needs more processing is harder to get given the capacity constraints at factories."

Waiting for better times
Whether this results in postponed or less projects, Annie highly doubts. Anyone who thinks that the greenhouse will suddenly be cheaper again in a while could be deceived. "Nobody knows what the market will be like in a few years' time. By then, due to all sorts of unforeseen circumstances, the price may well have shot up again." For example, by shifting demand into the future. "That in turn will cause a price increase. That's how it works. In the end, it's also a matter of acceptance. For everyone. Fortunately, (cost) price is also far from the only factor that makes growers decide to build."

For more information:
AVAG
www.avag.nl 
info@avag.nl 


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