For more than 30 years, Dr. Hans-Christoph Behr has worked in the fruit and vegetable industry as an expert and consultant. He is a long-time employee of Agrarmarkt Informations-Gesellschaft mbH (AMI). Among other things, Behr spoke with us about the consequences of the current rising costs for the industry, the development of greenhouse production in Germany, and other trends he is observing.
Greenhouse vegetables in Germany
In view of the climate crisis and other weather- as well as climate-related circumstances, the need for protected cultivation is growing in Germany. According to Behr, it is primarily fruit vegetables that are still grown in greenhouses. "The fruit vegetables mainly concern cucumbers, tomatoes, and peppers. There is certainly still a lot of room for improvement in this area. But there is definitely a lot of interest on the part of food retailers to buy regional greenhouse produce because there are only small quantities of these."
With regard to the prices for tomatoes, there is also a higher price difference between the local product and the supply from abroad because more is currently paid for the product from Germany. However, this is not the case for cucumbers and peppers, he said. "Sales figures will certainly still increase, but not so much that they displace imports. That's why we haven't seen a drop in imports, because greenhouse shares are still relatively low. In the case of peppers, the proportion produced in Germany is around 3-4%, rising to a maximum of 6-7%. Those are huge growth rates then, but still low by overall comparison."
Although the greenhouse share would not overtake the outdoor share in the vegetable sector, he said, a higher trend toward greenhouse cultivation is already emerging for individual crops such as soft fruits. "Especially with products such as raspberries or strawberries, I definitely see a larger potential. This is partly because it is difficult to harvest these products without rain protection, especially during the summer rains. If a strawberry, raspberry, or blackberry gets wet, there will be difficulties regarding its shelf life. That is why growers shift to protected cultivation. Regarding raspberries, a larger amount already comes from tunnels. For strawberries, the number is already over 20%. But for lettuce or cauliflower, I don't see any protected cultivation coming up. It's too easy to get these products from Brittany or Spain."
Consequences of rising costs
According to Behr, rising freight, fuel, energy, and other costs are not yet reflected in the fruit and vegetable sector. "If we look at, say, the first quarter of 2022, taking into account consumer prices in particular, we see that fruit has not necessarily become more expensive, but in some cases even cheaper than in the previous year. It's true that cost increases can definitely be seen, but these are long-term consequences that do not yet affect the current season," Behr says.
Availability, not cost, is the decisive factor
For example, he says, the apples that were sold most recently were financed with the costs for tree care, plant protection, and harvesting, in other words, the wages and costs from the previous year. "Wages should certainly have already increased, but not immeasurably. Ultimately, it's also a question of how much produce is available. After all, this year's European apple harvest has been plentiful, particularly in Poland. As a result, we can see that the apple market is currently under a lot of pressure. In the long term, it is therefore not enough just to point out the rising costs, but above all to pay attention to the available quantities," Behr states.
No significant new sales markets
Behr does not currently see any 'revolutions' in the sales markets for fruits and vegetables. "Certainly, the online fruit and vegetable trade has high relative growth rates overall," says Behr. But the market share of online fresh fruit and vegetable retailing is still small, he says. "If someone has their entire purchase brought to them, there is bound to be some fresh produce among it. But you have to distinguish between full delivery services such as a Rewe delivery service or Picnic and genuine delivery services with immediate delivery of items. The former is simply structured differently and follows certain routes that make more sense for them logistically."
Profitability of online service providers
For example, companies like Getir, Gorillas, and Picnic would have a lot of money on hand, but not necessarily in the black. "In the long run, that can't work, especially when you factor in labor costs. Such models can run very well in countries with extremely low wages, but if each batch is to be delivered individually to the customer, this economic model simply cannot work. Unless the company charges a corresponding surcharge, in which case the clientele could disappear again. In this area, I don't see the current growth continuing indefinitely." Still, service providers who can solve this problem of the so-called 'last mile' could see a healthy growth.
"The other service providers may also see good growth rates. But as long as losses continue to be maximized without anyone countering, the model will continue." At the same time, however, Behr is observing a countermovement: "There are investors who no longer want to bear this form of financing and instead want to see profitable figures again. Then, of course, it's immediately over for these companies."
Rising growth rates in the organic sector
Behr assumes that the organic industry will also see further growth rates. "If we have severe economic downturns, in other words, if economic growth tends to go negative and there is a mood of crisis, then it will be more difficult for organic. But I think we are still a long way from that. When the going gets really tough, then the market share for discounters will grow more, the climate discussion will fade into the background, and even the 'fight for survival' will prevail. But we are not there yet. As long as we are still reasonably well off, and I assume that it will stay that way, the organic share will continue to grow because it is also perceived as a solution to the crisis. For example, for the climate crisis, general environmental crisis, etc."
30% target by 2030 not realistic
Meanwhile, Behr does not think it is realistic to assume the organic share will grow to 30% by 2030. "The question is, of course, how that would even be implemented. You can set a lot of goals. There are, after all, a lot of discussions right now about the exemplary character of, for example, public institutions like public canteens, etc., where people are demanding a 'compulsory proportion' of organic goods. Although this can, in turn, lead to opposition, at the moment, I see good growth opportunities for organic, as this is seen as a crisis solution."
For more information:
Dr. Hans-Christoph Behr
Agrarmarkt Informations-Gesellschaft mbH
Tel. +49 228 33805-0
Fax +49 228 33805-592