Circumstances have not conspired to make life easy for Dutch salads suppliers over the last two years. A key source for the UK market, Dutch producers have had to contend with issues ranging from poor returns due to a surplus of product in the market to low light levels delaying crops. Last year might have represented an improvement on 2009, but growers still say 2011 is crucial for the industry.
One thing that is clear is that the prognosis varies widely from crop to crop, with far more tangible optimism for tomatoes, for instance, than for peppers. Much of that stems from the relative resurgence of the two products last year.
“Tomatoes had a reasonable 2010, with growers making money and able to invest,” explains Arnold Reijers, commercial director at FresQ. “Pepper growers had an abnormal season because of the dark conditions. It’s dark again this year, so we’re not expecting the first volumes until week 12, which is very late.”
Reijers says that while 2011 should be another decent year for tomatoes, it will be “a little” better for peppers and not a hugely profitable year. “It’s been two very difficult years, especially for growers, with nobody earning a penny,” adds Frank van der Windt, who manages international partnerships at Van Rijn. “But in general the mood is turning positive again after two years.”
Similarly Eric Egberts, chief executive of €100 million supplier Terra Natura International, says the last quarter has been a “marvellous” period for growers producing tomatoes under lights, with lower yields but good prices. “That gives us a feeling that will continue,” he explains. “So many things can influence the market, such as the weather, but we all came back from Fruit Logistica feeling very optimistic. Growers want to invest again.”
But for peppers it is a very different picture, he warns. “They had a very bad 2009 and 2010 wasn’t that good either. Has much changed? I’ve not seen it. There’s nothing to make this a special season. So we are more nervous there.”
Cost price inflation
Marcel Paul, managing director of Quality Produce International (QPI), agrees that the mood is much more upbeat but warns that UK customers need to be prepared for the higher prices that come with international cost price inflation in transport and packing in particular. “When Gerard van Herwerden and myself started with QPI back in 1998, the UK was the highest paying market and had the highest demands,” he continues. “The market still has all those demands on packaging, quality standards and so on but at the moment it is not willing to pay more than any other European market.”
While the UK remains a crucial market, Dutch suppliers are starting to see a wealth of other attractive destination countries in eastern Europe and beyond opening up. “The supermarkets must realise that they have to pay more but they might also be under pressure from the government. The prices are too low for both UK and overseas growers. If the supermarkets don’t pay for it and then UK growers go bankrupt, they will come to the Dutch and we will say ‘this is the price’.”
Overall, Paul is “quite positive” about the upcoming salad season, with supply and demand looking in good balance and only a bit more sunlight high on producers’ agendas.
With Dutch involvement in the Thanet Earth project, it is little surprise that many in the industry are adopting a “thinking global and acting local” mentality. According to Frank van der Windt, project manager at Van Rijn, it is vital that fresh produce operators distinguish themselves in the current market and have expertise in each of the markets they operate in. “We are trying to expand our network not by acquisition but by looking for specific partners dedicated to this kind of vision,” he explains. “We used to be a traditional import/export company, but now you have to grow or have partners in growing to be attractive to retailers.”
Van Rijn involves itself in as much of the chain as possible, van der Windt says, and owns its own coldstorage companies, packagers and even some greenhouses.
This sort of transition in company structure in symptomatic of the efforts being made by Dutch operators to secure their place in the chain in the face of supermarkets’ direct sourcing strategies.
It’s the same story in logistics. Niels Sneek, managing director of DailyFresh Logistics, says the company has positioned itself as an “end to end logistics provider and organiser” by operating not just trucks but also seafreight and reefers. “The value chain will always need a trading function, but we want to be more directly involved in retail operations,” he says. “We are positioned to serve the needs of both the grower and the retailer. We must be as flexible as possible.”
Recession stifles NPD
There is little doubt that the focus at present is all about maintaining and improving quality rather than developing new varieties. Indeed, there has been precious little to report in terms of exciting up-and-coming varieties of tomatoes, though that may in part be due to the glut of new options that came through over the last decade and are still only just establishing their share of the market.
“There have been so many new varieties entering the market in the last 10 years,” says Reijers. “Suppliers realised they must stick with it for a number of years [to achieve market success]. We do look at new material but the threshold to get in is higher and higher.”
Egberts adds that growers have taken a step back and are now more conservative in introducing new varieties because the risks are so high. But he points out that one interesting development that taps into supermarkets’ desire to have more control over the supply chain is through closer collaboration on varietal selection, with TNI involved in a project with one particular retailer. “We said to the retailer they can do the breeding and selection at the source, together with the breeder,” Egberts explains. “The entire supply chain was involved. It was a major project over a number of years and helped establish good relationships with the grower and the retailer.”
It’s a similar story in the foodservice segment, according to QPI’s md Marcel Paul. “Customers always want to be first with new items but there’s a cost that comes with it,” he says. It can be a hard sell to persuade a sandwich manufacturer to switch to a more premium tomato, for instance, when the cost of the sandwich is calculated to the nearest half penny. “It all comes back to the pressure from the supermarkets.”
The developments that have been made in the past year have mainly come in smaller tomatoes, where it is arguably easier to produce new flavourful varieties. Improving the taste on larger tomatoes is now the focus of attention, according to Reijers.
Rijk Zwaan has developed a cucumber with resistance to mosaic virus, named 24-185 RZ, which is being marketed under the BonDefense label. Indeed, improving quality and durability of produce is a key aim for breeders. “Rijk Zwaan has and always will develop varieties that can bring different benefits to the grower and the consumer, by introducing disease resistance and field standing abilities for growers, for the consumer and grower making varieties more appealing in shape and colour, make them last longer in the fridge and more tasty,” says a spokesman for the company.
Egberts adds that marketing could be improved to help boost sales of peppers in particular, a sector where it is very difficult to move beyond the ‘traffic light’ packs and excite consumers, despite the high health qualities and versatility of the products.
Pepper quality challenge
There are other challenges facing the Dutch pepper sector in particular. Reijers says the industry needs to work on improving pepper quality to enable growers to get a better price, though he concedes it is difficult to do that when financial returns are tight.
“It is a good sign that customers are willing to pay a higher price for better quality,” he says. “That situation has eased a bit and is good for the long term.” Quality improvement could come through techniques such as reducing the light intensity on the plants in summer, which may bring down productivity but will produce a higher quality crop. Egberts, meanwhile, suggests the industry could do more in terms of generic marketing to help boost pepper sales generally.
All in all, a mood of cautious optimism prevails in the Dutch salad industry. A year of well-balanced supply and favourable weather conditions should continue the resurgence of the tomato sector, while pepper growers are hoping to break even as a bare minimum. The sector overall looks in good health, and with a growing focus on quality should have every opportunity to progress and reinvest for the future.
THE GREENERY TARGETS SUSTAINABLE GROWTH
Last year there was a slight growth in the Dutch export of salad products. 2010 saw a rise in the export of tomatoes, cucumbers and peppers to the UK from the Netherlands, writes Hans Verwegen, market researcher at The Greenery. Especially in the second half of the season, when British production was hampered by bad weather, the demand for Dutch products grew.
The fall in British production was not the only factor; the increase in salad consumption also contributed to the growth of Dutch exports. Plenty of opportunities still remain for cucumbers. Consumer data shows that fewer cucumbers are consumed in the UK than in other European countries. By contrast, Dutch bell pepper exports hardly rose at all in 2010. This has been consistent for several years now, averaging around 60 million kilos. Results were variable in 2010 for Dutch and Greenery growers. While tomato prices recovered slightly in most sectors, there was no such recovery for the bell pepper sector. In 2010, growers often only just managed to break even at cost price, or not even that.
Expectations for 2011 are understandably tense. The production of Dutch salads will remain at approximately the same level this year. The bell pepper production area in the Netherlands has fallen by three per cent, while the tomato production area remains the same. Recent developments in Germany and Mexico have already altered expectations for the coming season. The decision of German retailers to be more reluctant in sourcing Spanish peppers and the ruined harvests in Mexico, which have spurred the US to increase its sourcing efforts from Israel and Europe, are already influencing availability. The crisis and continually low prices of the past years have had an impact: both banks and growers are restrained with regard to financing possible expansion. The production expansion we have seen in recent years is stagnating.
By contrast, The Greenery and its growers have invested in shorter supply chains, new packaging, sustainability and growth optimisation. The Greenery recently announced the closure of one of its distribution centres. This is in line with the logistics concept aimed at realising the shortest possible chain between producer and consumer. By making use of the grower locations where possible, the production organisation is responding to consumer demand for fresher products and greater transparency.
With regard to sustainability, two new tomato growers have received the Nature Counts logo. Nature Counts is The Greenery’s sustainability label that rewards leaders in the sphere of sustainability. At the beginning of 2010, the Van den Bosch family business, which grows beefsteak tomatoes using geothermal energy, was awarded the label. At the end of 2010, the label was also awarded to two new growers. These companies apply the principle of natural resistance cultivation. This means that special attention is paid to the plant roots during growth. Benign fungi are added to the growth medium in which the plant roots grow, which improves the health and vitality of the plant. Moreover, this form of production does not ‘drain’ every last strength from the tomato plant, which is hence healthier and more resilient. The use of plant protection products has consequently been reduced to nothing. At the end of March, The Greenery will announce several more growers that will receive the Nature Counts label. The objective of encouraging more growers in the sector to adopt more sustainable practices is another step closer to being achieved.
Little will change in the range of salads marketed in 2011. One notable trend is the rising popularity of salads as “snacks”. Offering snack tomatoes, cucumbers and mini-bell peppers in handy packs, such as shakers, has created a new consumption opportunity. Retailers presenting these snack products favourably will increase impulse purchases by consumers. The choice of the right quality of varieties for snack products is essential. Together with international breeding stations, The Greenery will continue to research new flavourful varieties, with snack concepts rising in popularity for all ages.
QUALITY AND EFFICIENCY IN NEW PROJECT
Quality improvement and energy saving in paprika cultivation are the aims of a new research project by Dutch companies GreenQ Horticultural Expertise Group and Sweet Pepper Consultancy. The study is expected to kick off a period of closer collaboration between the two sides.
The new project is based on an initiative of the Improvement Centre, Wageningen, which looked at applying sustainable technologies in horticulture. The project uses solar reflection and energy screens.
A research room features two heating systems that can be individually controlled, allowing better energy input at precisely the right place in the crop, according to the researchers, and allows energy saving without losing speed.
The study is also examining variations in stem density and all aspects of plant and labour costs.
No comments yet