How COVID impacted the world and our (greenhouse) business?

2HARVEST | www.2harvest.nl

This month, the international COVID crisis is observing its second birthday. When we look around, we can see that the world has changed considerably within these past two years, and it continues to transform. 

If you consider COVID as a whole, you must ask if it is truly differentiated or if a pressure cooker is operating to make trends, systematic weaknesses, shortages and surpluses more visible and palpable.

There is one thing we can be certain about. The world is rapidly changing and as an entrepreneur, you must remain agile instead of rowing against the tide. It would be a waste of energy with little promise of achieving successful results. 

This raises the question, what changes can we expect for horticultural businesses, and what can we do to anticipate these changes and challenges?

From demand to supply

All around the world, shortages occur. Logistical systems and natural resourses simply cannot keep up with the rapidly rising demand in our growing economy. As a result, natural resources, labor, and production assets such as oil, energy, fertilizers, steel, plastics, glass, computer chips, and greenhouse accessories are becoming scarce and increasingly valuable. Delivery schedules for both consumer goods and new developments are longer than ever before. Instead of operating based on demand, it seems like most markets are returning to an old-fashioned way of working, driven by supply.

Logistics and traceability

Like us, our customers also suffer from the logistical challenges we encounter. COVID and rising political tensions are causing extra procedures and formalities among the international borders, resulting in empty shelves for retail stores and supermarkets. The pandemic drives feelings of uncertainty and a sense of insecurity. A growing concern for hygienic reasons creates extensive demands for traceability and clean prepackaged products.

Lifestyle

Another important trend that is increasing in awareness among customers is the desre to sustain a healthy lifestyle. Consuming cleaner and healthier fruits and vegetables is gaining a higher priority in our modern society. The connection between wholesome food and human health becomes clearer and more prominent every year. Being aware of this logically creates an increased interest for matters like vegan cuisine and organic food. Cleaner, and when possible organic, production is becoming more crucial in building a sustainable future.

The human factor

Our new reality also has a great impact within food production, and at the workplace in general. We must create an increasingly larger budget for labor to fill the voids of shortages due to employee sick leave and quarantine rules. Considering these factors, it is recommended to secure a buffer zone in order to guarantee the continuity of your growing operation. Apart from that, it is best to structure your workplaces in greenhouses, offices, and other areas, in a COVID proof manner. It doesn’t seem to be super necessaryduing these times to attend gatherings and events with large crowds like before. If possible, people prefer working from home. And last but not least, investments and developments in AI technology and automatization are starting to become a lot more feasble.

Finance

The consistent rise of our production and logistical costs becomes clearer every day. Efficiency in raw materials, labor, and the production technologies that we use are increasingly more important to help us define the correct ratio of quality and price. We should make an effort to consider whether or not our prices are accurate and competitive enough for the industry.
Due to the shortages within the fresh produce sector and the rising demands, the price of fruits and vegetables will surely increase. Ensuring sufficient and regular supply of adequate quality and especially reliable products is paramountin this new situation. Certainty in the delivery process will become a top priority while the prices of various products continue to skyrocket.

A comforting Co

Looking at the energy sector, we immediately feel the struggle that a shortages in the market and rising costs is causing. Imagine if a food shortage occurs, such as the current situation in energy. While at home, you can easily lower the temperature of your heater by wearing a warm jacket, but for food - it’s a whole other story. After all, you cannot eat the jacket off your back. This shortage will be felt directly.
With that in mind, it is to be expected that prices within nutritional markets will have a severe reaction to the scarcity. Even more so than our experiences over the past year in energy and other raw materials.

Conclusion

Few matters are like they used to be. Things are changing fundamentally. When I look at what is going on in this world, I expect that our biggest concern will be producing safe and healthy foods in a reliable and sufficient way. By liberating and opening global markets, we can see that logistical flows and markets for raw materials can easily be tossed off balance. This will ultimately have a very large impact on several crucial production processes in our global economy.

What to anticipate for current Events?

We present five tips for your day-to-day operational management.

1. Choose maximum security in your cultivation plan and make sure that the surfaces and products to be cultivated are tailored to the availability of labor and raw materials. It is tempting to take extra acreage into production with the foresight of a growing market demand. However, being confronted with a shortage of labor, pesticides, or nutrients while cultivating can easily deplete the grand share of the necessary revenue.
   2. If possible, select as many basic products as possible within your cultivation plan, with high nutritional values and limited production costs. Gross beefsteak tomatoes produce a higher number of kilos for a lower price than cherry tomatoes and other specialties. The same goes for long English cucumbers versus mini cucumbers. When prices within fresh production are continuously rising, the interest for expensive specialties will naturally drop. Value for money and nutritional value will be leading in this case.
   3. Choose products and clients that help limit the demand for transportation, whenever possible. Products that can be distributed within a limited radius provide lower risks of logistical problems and rising transportation costs. Local for local keeps growing as a topical issue.
   4. Create sufficient stock and buffers in energy, fertilizers, pesticides, greenhouse accessories as tomato and cucumber clips, packaging materials, and all other production assets. Make sure unnecessary shortages don’t endanger your production systems. Recycling various materials is another way to decrease the necessary extra input for the production process. This limits the overall risks and provides a strategy that can outrun rising prices.
   5. Wait as long as you can, when asked for (fixed) prices. Selling prematurely or fixing prices for a whole season can cost a lot of money. Just like the rising prices for fruits and vegetables, unfortunately the production costs will probably increase as well.

Take the best use of these tips and keep your business during this crisis “stupid simple”, and as stable and basic as possible.

Do you have any tips of your own? Write them here and we might publish them on our social media!
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