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Production increase, but turnover decline recorded by greenhouse vegetables in Flanders

The global production of Flemish greenhouse vegetables grew by 9.5% in the first 8 months of 2023 compared to 2022. This increase was mainly due to production increases for cucumbers (+34%). The production fell slightly for both loose tomatoes and on-the-vine tomatoes. This is all revealed by the Boerenbond (Farmers' Union) in its annual late summer estimate of the annual results.

Greenhouse vegetable prices fell by an average of 14.6%, mainly due to price decreases for cucumbers (- 33%) and on the vine tomatoes (- 16%). On the other hand, prices increased for eggplants (+ 26%), lettuce (+ 26%), and peppers (+ 14%). Global sales of greenhouse vegetables decreased by 6.6% compared to 2022.

The drop in greenhouse vegetable prices, and also in strawberry crops, contrasts with the behavior of most open-ground vegetables, whose prices have risen.

The Boerenbond has estimated the turnover of Flemish agriculture and horticulture in 2023 at 7.7 billion euros. This is 24.7% higher than the average of the past five years (2018-2022) and 5% higher than in 2022. The overall turnover of Flemish farms is subject to very considerable variations, depending on the sector. The differences between individual farms are also significant.

The increase in the sector's overall turnover is the result of both yield and price increases, each accounting for 50% of the increase. This has been driven by an increase in sales in the vegetable sector (+ 15%) and in the ornamentals sector (+ 3.6%). In the frozen vegetable sector, there has been a recovery in the yields after a very dry 2022. At the same time, contract prices have also increased considerably.

Cost decreases for energy and fertilizers
The Flemish agriculture and horticulture sector relies heavily on a number of inputs, such as fertilizers, hired labor, seeds, and energy. In 2023, overall operating costs fell by 6.7% after having risen by as much as 24% in 2022. The greatest decreases were recorded in energy costs (- 43%) and fertilizer costs (- 21%). Still, the cost of crop protection products, as well as the cost of materials and miscellaneous services, rose because of the sharp increase in labor costs (+ 10%). In other words, with a few exceptions, the decrease in operating costs is part of the reason for the higher margins.

Profitability barometer down due to poor cucumber year
The profitability barometer for greenhouse vegetables fell below the five-year average in the 2nd and 3rd quarters of 2023 due to poor cucumber prices. The barometer data is based on a number of products, namely tomatoes, greenhouse lettuce, bell peppers, and cucumbers. It also depends on auction data and average monthly and quarterly prices for these vegetables. The direct costs for these vegetables are taken from Boerenbond's Focus accounts.

Profitability barometer for greenhouse vegetables (reference period 2018 - 2022 = 100).

In the 3rd and 4th quarters of 2022, the index experienced a significant decline due to the drops in tomato and greenhouse lettuce prices. In the 1st quarter of 2023, the index recovered, driven by price improvements for tomatoes and greenhouse lettuce. In the 2nd quarter of 2023, there was another sharp decline in the index caused by a sudden and sharp drop in cucumber prices (-54% compared to the 2nd quarter of 2022). In the 3rd quarter of 2023, cucumber prices improved again, but they still remained 25% below the level of the 3rd quarter of 2022.

Strawberry profitability barometer (reference period 2018 - 2022 = 100).

Profitability of strawberries
For strawberries, 2023 was a very volatile year in terms of profitability. In the 1st quarter, the index fell sharply below the average for the years 2018 to 2022, mostly due to a particularly wet spring, which reduced production by more than half compared to the 1st quarter of 2022. At the same time, prices were also down by about 25% compared to the same period in 2022.

In the 2nd half of 2023, prices rose considerably, and the profitability index exceeded the five-year average, even though another decline was observed in the 3rd quarter of 2023, caused by a decline in production. It is worth noting that the increase in labor costs (+10% due to index adjustments) is also having a notable impact on this sector.

Source: Boerenbond

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