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Dutch greenhouses remain empty because of high gas price

"We cannot grow for this"

“We cannot grow for this,” Dutch growers warn as they suffer under the rising gas prices. Yesterday, the Dutch price of gas crossed the unprecedented €1/m3 mark. According to Alexander Formsma with Dutch industry body Glastuinbouw Nederland, greenhouses will remain empty, and growers do not know when they will be planting again. “We are in an energy crisis and nothing is happening,” he says. Glastuinbouw Nederland is forming a crisis team this week with the greenhouse horticulture sector to look for possible solutions. “The sector is being hit hard and it can only get worse. The Netherlands is facing unprecedented challenges and the government remains silent.” They want the government to substantially reduce gas prices.

In Dutch newspaper Telegraaf grower Leo van der Lans reveals he adjusted his growing plans, using less gas because of the high gas prices. Like most greenhouse growers, Van der Lans uses gas in his CHP to generate electricity to heat and light his tomatoes under glass. "Gas is about 25% of my total costs," Van der Lans calculates. "This time last year, a cubic metre of gas cost between 15 to 20 cents, and now the daily price is well over a euro. At that price, you lose money; you can't grow for that. I have bought 60 to 70% of my gas at a fixed price. I am only going to use that part, which means less lighting. The expectation is that we will then also achieve about 70% of normal production."

The exact extent of the cost increase due to the gas price differs from company to company. Companies with fixed supply contracts are better off than companies that have to pay the daily price. Last year, the daily price for natural gas dropped to an extremely low level of 5 cents per cubic metre. Many growers chose to stick with the daily price at the time; after all, the fixed price was higher, at around 15 cents. However, growers now have to spend much more money on energy also, because electricity and oil prices are rising too.

This week, Glastuinbouw Nederland is setting up a ‘greenhouse crisis team’. The composition of a crisis council is similar to the approach of the Covid pandemic in March 2020. This crisis team will follow the impact of high energy prices on companies extensively, and monitor which actions can be taken. In addition to organizations in the greenhouse horticulture sector, parties with expertise in the fields of energy, cultivation technology, and finance may also be involved in the consultation.

To ensure the crisis is given enough attention, they are currently matching growers with regional newspapers to share what is going on, for example in the Dutch Financial Times, where rose grower Bram Termeulen explains his dilemma. If he leaves his greenhouses in the horticultural area around Almere Buiten empty, he might lose customers, but if he starts a new crop, he will grow at a loss. He cannot possibly charge his customers extra because of the sky-high gas prices.

He is not the only grower with this dilemma. “Because supermarkets want Dutch products on the shelves, we have invested a lot in growing cucumbers all year round in recent years," says cucumber grower Jan Biemans. "But if we do that now, it becomes €2 more expensive per m2 per week than last year in the winter months. Moreover, some supermarkets have already indicated that they might bring cucumbers back from Spain if they become too expensive here."

"Working with a high grow price and a low selling price is not practicable for long. After all, if an entrepreneur cannot make a profit, they have no financial surety and security,” says Cees Ruhe, chairman of the industry body for Drenthe and Groningen. He explains how the higher gas price will lead to higher prices for fruits, vegetables and flowers, yet growers who raise the prices of their products could run the risk of supermarkets choosing not to buy flowers or cucumbers locally anymore, but to buy them from, for example, Spain. However, he does not think it will go that far. "It is possible, but then the products must also be available in Spain," he nuances. Ruhé thinks that the effects will only be felt when the gas price is high for a longer period of time. "That's when things start to move.”

According to Alexander Formsma, the high energy prices make it clear once again that energy transition is the only real solution in the long run. "But for the short term, the current energy prices don't offer a way out. This winter is going to hurt, unfortunately, and that's not going to help anyone. Dutch growers are already well on their way to transitioning to a sustainable energy supply. However, because of the extra energy costs, they have nothing left to spend on sustainable alternatives to gas this year.”

This week Agriculture Minister Carola Schouten said on national television that the gas price is very high for everyone and she cannot make an exception for greenhouse growers. "We must ensure that the switch to electricity pays off. And that's what we're doing now." 

She is referring to the €125 million set aside in the national budget to support sectors affected by alternated government subsidy ODE (a subsidy for sustainable energy), specifically for disproportionately affected sectors such as the horticultural industry. In an earlier reaction, the Netherlands Greenhouse Horticulture Association said it was pleased about this, but that it would like to critically examine how it is implemented. Alexander added that any solution to the ODE issue would not alleviate the current difficult situation. "That offers opportunities for the longer term, but with the crisis team we have to work on solutions for the very short term."