"The balance is completely off"

The current economic situation is unique. In the past 40 years, we have not experienced such an accumulation of crises. First, growers felt the effects. Now companies with starting materials are also adapting by necessity. Thijs Hermans (Plantenkwekerij P. van Geest), Frank Coenders (Frank Coenders Kwekerijen), and Leo Hoogendoorn (Florensis) shed light on the current situation in Buitenstebinnen, a biannual publication by Naktuinbouw.

First, raw materials became scarcer and more expensive. That came on top of the challenge of recruiting enough (temporary) staff. Then energy prices rose. These then exploded due to the war in Ukraine. As a result, sales markets also fell. Skyrocketing inflation is the fifth building block of the current difficult situation.

This makes everything shift. It is very difficult to look into the future. And yet, every company has to try to respond to the changing circumstances.

On the face of it, the changes in the greenhouse sector are the biggest right now. Companies are hardly even turning on the grow lights. "In vegetables, the extremely high energy price is the biggest reason," says Thijs Hermans, director of plant nursery P. van Geest and member of Naktuinbouw's Vegetable Crops Sector Council. "Growers are shifting their growing season because they cannot produce at these energy costs. They hardly plant anymore in autumn for cultivation under light. And even skip December for traditional cultivation, planting instead in February or March. Some grower associations still supply year-round in small quantities and then bear the winter costs together."

Puzzling with planning
This has huge implications for plant growers. In fact, there is a six-month gap in their production this year. Also, they now all have to raise the young plants in the period that requires the most energy, while the greenhouse space was not designed for that. That shift is already causing major planning problems. Besides, most vegetable plant growers do not leave their greenhouses empty when there are no vegetable plants. They then grow or propagate ornamental crops, often for other companies. This has to lapse because it cannot all be done together, and it requires a lot of figuring out. Hermans: "It is always a case of calculating and planning. Yesterday's plan can often be binned in the morning. The trick is to think ahead early."

In early October, Plantise, the largest plant breeder, announced that it was stopping all Dutch breeding. Besides high energy costs, financing costs play a role.

Shrinking product range
So plant sales are shifting over time, but Hermans does not yet see a decline in volumes. That also means that seed sellers are not yet noticing any effects. "But how will it continue? Until now, there was always enough gas at the right time for a low price. Cheap won't be cheap anymore," he says. A 'new normal' is coming, he believes. He sees no movement yet in the prices paid by retail to growers. "But they are also going to notice an effect. We have spent 20 years building a wide range, for example in tomatoes and peppers. That balance is getting upset. You can expect a reduction in this."

Meanwhile, tomato companies in Spain, Morocco, and Tunisia are poised to take over the winter market. "2023 will be a very unsettled year. We are balancing on a thin line: if you grow too cold, you get quality problems, and Phytophthora and Fusarium come back."

Another concern: "We require a lot of flexibility from our people. But, of course, we are not machines. Developing crisis after crisis puts a lot of pressure."

Good Covid years
Floriculture had two good years: an unexpected consequence of the COVID-19 pandemic. People stayed at home more and started brightening up their homes and gardens. And that included new plants.

"After the first good year, as a reaction in arboriculture, you saw a scale-up in basic material. The line just kept rising. Pre-sales for 2022 were still super-good. But when sales to Central and Eastern Europe collapsed, prices collapsed. Buyers such as DIY stores and supermarkets did not honor their agreements. Backorders dried up," Frank Coenders outlines the situation. He is owner of Frank Coenders Nurseries and a member of the Tree Nursery Crops Sector Council.

In arboriculture, the main challenge is the uncertainty about sales in the coming delivery season. It often involves colder crops. In addition, high energy prices make things more difficult. Coenders sees that growers are still sticking to agreements among themselves, but there are no more agreements to be made with retail. "There is complete panic there. That says something about how those companies work. Completely data-driven and not very in touch with the market. They think that next year everything will simply be available again. But the production of starting material is always behind. That is going to cause tension. The volumes that retail is counting on are going to be disappointing. They are buying cautiously now, but at some point, there might be too few plants. That could also affect market development," he analyses.

It is difficult for both growers of starting material and growers of crops to pass on the increased cost price. "The balance is completely off. Good greenhouse businesses are lying empty because of energy prices. This also affects the labor supply. If there is no work for a long time, employees go to other sectors, such as order picking. And migrant workers may return to their home countries. If it picks up again in spring, will the permanent club of people still be available? On the other hand, if you can offer a lot of winter work, the balance will be just right."

Warm flowers and plants
Among potted plants and cut flowers, the collapse of Phalaenopsis and Lisianthus production attracts attention. A few companies have even gone bankrupt. Yet Leo Hoogendoorn, director of Florensis and member of the Floristry Crops Sector Council, warns against pessimism.

"In the Floricultural Crops Sector Council, we are positive about the sector if there is a new balance. Vegetable cultivation rides heavily on cheap gas, and ornamental cultivation is more flexible. With the cultivation companies, how much time they have to adjust depends heavily on their energy contracts. That is, grow the produce at lower energy levels. As far as the very hot crops are concerned, you can wonder how sustainable such a product is in winter," he says.

Hoogendoorn, therefore, expects a shift in the range with a return of old varieties. Varieties that need less heat and light. Such shifts do require a lot of flexibility from plant breeders and seed houses. "You see changes on a daily basis. Orders that do not go through, followed by other orders or adjustment of them," he says.

His own company and its colleagues mainly puzzle with creative use of space to save energy. Filling the greenhouses fuller, merging at one location, and temporarily closing other locations in the Netherlands, Europe, or Africa. Moving plants closer together, putting crops with similar temperature demands together instead of in separate departments. "And keeping more stocks, for example, in fertilizers. This has been necessary for some time due to disruption in the supply of raw materials," he says.

Hoogendoorn: "I think eventually everything will blow over, including the war and international tensions. The important thing now is to get through the winter. And what definitely has to happen is that sensitivity has to reduce. That is sometimes difficult as our own experiences with supplying waste heat shows that it can take a long time. We do not expect much shift in production and propagation in the long term compared to now. The Netherlands' position in ornamental plant cultivation is unique. However, we will grow differently, and there will be less room for highly energy-intensive products. There are plenty of other choices for that."

Consequences for Naktuinbouw
The three sector council members do not expect the amount of work for Naktuinbouw to decrease. On the contrary, a variety of research will continue. The number of inspections and laboratory tests will not decrease either. However, the batches of plants may become smaller. There are some concerns about quality if everyone has to produce at minimum cost. More flexibility is needed, but Brexit has already been a good learning experience for that.

The above article was taken from Buitenstebinnen, issue 19, a production of Naktuinbouw. The entire magazine can be viewed here.

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