horticulture reactions to 'Russian pinprick'

"Gas tap closure isn't dramatic, but the clock is ticking"

The Dutch gas trader, GasTerra, refuses to pay in roubles. We have summarized the Dutch government's woes and the direct financial-economic consequences in our now familiar Crisis update. But what does it mean for growers? How much will it affect them? Are half of the horticulturalists already feeling it, as indicated by Glastuinbouw Nederland? We asked some insiders and growers.

No drama; but the clock is ticking
"There are plenty of ideas. There are solutions to be found, but it's a race against time," says Robert-Jan Post van greenhouse consultancy firm, DLVge. Yesterday's day trade didn't open on a too-bad note. It was up a percent. "You might've expected it to be more after the gas tap was shut off, but that scenario was more or less already factored in."

"The many news reports of the past six months are what drove energy prices to their current level. It began with the postponement (and further postponement) of Nordstream 2 and the gas pipe maintenance in Norway. The prices reflect all that. This is just the latest news."

Tuinbouw Nederland had little chance to anticipate this. Robert-Jan does not expect Dutch horticulture to disappear over the next five years. But the clock is ticking. "Solutions lie in the energy and cultivation technology sectors. There's a strategic plan ready," he says.

"In it, geothermal energy, residual heat, electrification (heat pumps), and wind and solar energy play the main roles. It will be a mix of these energy forms. You could combine that with, say, LED light, multiple screen cloths, and other cultivation techniques in, for example, the area of dehumidification. Then, you can save energy and achieve something."

No position, no flowers
Large vegetable growers have reached the point where they simply are not setting plants if some kind of reasonable cost estimate cannot be done. The situation is, however, more uncertain in the flower sector. They are less collective but not necessarily independent. This is true for rose growers, for instance, who see the storm clouds gathering, as do many other flower crop growers. "If you don't have a position, it's going to be a tough winter," says Hans van den Ende, Van den Ende Roses.

It is, of course, impossible to predict exactly what will happen. But under similar conditions, allowing much of their production to lay dormant is not inconceivable. It remains to be seen whether that will prove as dramatic as it seems. "One grower told me he's going to do this every year from now on. But, naturally, that's not the case with everyone," says Hans.

Consultancy agency bQurius, too, is following the news closely. It is yet another event in an already eventful year - but this news is not necessarily, terrible, observes Bart Setz, who specializes in energy advice. "Much has already happened that makes the price high but stable. And this news doesn't, theoretically, mean there will be less gas."

"The two billion cubic meters less coming to the Netherlands is already hedged through another route. What is noticeable is that every time there's news, emotions surge, which affects buying behavior. That drives the price up; the market opened two to three percent higher yesterday."

The limited reactions seem to indicate that replenishing winter gas reserves is not an issue yet. But the war in Ukraine is not over and can keep causing uncertainty regarding gas supplies to Europe. What growers will do this fall depends heavily on their energy profile. "Many are considering the summer. If things don't improve, some will plant less or not even at all. But if it's better than expected, they'll plow full steam ahead," says Bart.

Passing costs along
On the other side of the greenhouse are the vegetable sector's marketing organizations. They are in the throes of closing winter sales deals. That which is not paid for is not set out, traders told us earlier. Gas prices are often a factor in these contracts: if this remains high, sales prices will also be higher. "But growers cannot sustain these high gas prices indefinitely. A year like this is terrible, and the longer it lasts, the more growers will be forced to throw in the towel."

That also applies to ornamental horticulture, a sector that now accounts for about 50% of bQurius' customer base. "Vegetable growers can switch to unlit cultivation a bit more easily and could even benefit from higher electricity prices. That's not possible in ornamental plant cultivation," explains Bart. In terms of gas purchases, these growers play it slighter safer. "And, more energy-saving measures are being put in place everywhere."

"Growers are switching to LED faster than they'd planned. They can then continue to provide lighting throughout the winter at slightly lower costs. When you work it out, it's amazing how quickly you can make up the switch from HPS to LED. Energy costs are still considerably higher than a few years ago, but they'll be even higher if you don't make the switch. LED can be a true lifesaver at this point," Bart concludes.

For more information:
Bart Setz
Tel: +31 (0) 610 932 345
Email: bart.setz@bqurius.nl 

Horti House
3 Violierenweg
2665 MV, Bleiswijk, NL
Website www.dlvge.eu
T +31 (0) 104 623 030

Fa. van den Ende Rozen
5A Waellandweg
2681 LV, Monster, NL
Email: info@vandenenderozen.nl
Website: www.vandenenderozen.nl

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