The last 20 years have shown us that solely low costs aren’t sanctifying. If you want to remain an attractive supplier, you not only have to pick the plant, but also keep the client wishes (brand) in mind. The market became, and remains, demand driven. So, while creating a cultivation plan and choosing vegetable varieties, todays question is whether to choose the plant or the brand.
We have reached a rather dynamic era. In my previous blog I wrote about the impact of COVID (link to last article) on our companies, and how to respond to it. By now we have been overtaken by the consequences of the conflict between Russia and Ukraine. Due to these developments the previously described effects of rising prices in energy and stagnations within logistics, will most likely reinforce. It seems like great markets in fruits and vegetables will become poorly reachable or completely out of reach.
It is a horrific situation, foremost for the involved parties in these countries, who will experience a lot of suffering, uncertainty and unpredictability. I, and probably many people with me, didn’t see this intervention coming, and it is even more difficult to predict how this will end. Which means we are currently engaging in a rather turbulent and uncertain situation. How can we anticipate in an adequate way when it comes to our cultivation plan and choice of breeds? What are the most important matters to consider while making our decisions for the following season?
Costs and availability of petroleum and natural gas
Since the prices of oil and gas are rising rapidly, you can expect the costs of energy, synthetics, pesticides and fertilizers to rise along. Some might even become less available. In this case, I would choose varieties that are more resilient, that are durable and for which I could drop the temperatures or levels of nutrition if need be. A higher resistance to diseases and plagues provides extra certainty to harvest.
The view on the market may soon change or might have already been changed. First of all, surpluses can occur in our local markets, due to a lack of exportation to certain areas. At the same time scarcity can occur due to the rising energy prices and the logistical problems that can lead to fewer import products. Sometimes we will face unexpected and unforeseen advantages as a result.
An example: Over the last two years Dutch Rose-growers have had an unexpectedly good market. Due to COVID the air transportation dropped, which meant there were much less roses available from Africa.
Where one door closes, another often opens. There are places that became unreachable for our products, but due to the rising expenses and difficulties around transportation, I expect that local for local productions will create new opportunities within a smaller operational radius of clients.
Niche or commodity
The current trend is that prices of a lot of firsthand basic needs are rising, based on the current events around the world. Scarcities seem more obvious than surpluses, therefore, taking a good look at the production of basics seems a wise thing to do.
In this case I mean; fresh products that produce a relatively high number of kilos with reliable quality towards manageable costs above the niche products with extraordinary colors and flavors. So practically rather a gross vine tomato then the delicious and excellent cherry tomato.
In times of scarcity, kilos will unfortunately become more valuable than exquisite taste. Faced with a new economic situation, these highly appreciated niche products may one day become too expensive for our consumers. As access to affordable fertilizer becomes limited, be sure to use tools that can help stay efficient such as tomato clips, trellising wires and hooks, and stem arches for your cucumbers when possible.
Keeping sight of opportunities
The current situation in the world is beyond alarming, but unfortunately a reality.
However, there are still positive signs for agricultural entrepreneurs. The fact and necessity that we produce food, will be increasingly appreciated by governments, public opinion and customers. This brings along a great responsibility, for an important part of the welfare in the world and its habitants is upon us. The world needs nourishment and that is an important mission to fulfill in times of scarcity.
To anticipate, you may have to radically and most of all timely, change your direction, which is quite a challenge within 2022. I wish you all a great amount of energy and success to anticipate on changes and keep sight of the opportunities you have.