16 minute read
An unprecedented scenario that leaves us regretting the worst crises of the last 20 years
The past two years have been very intense for the greenhouse horticulture sector, touching nearly all production sectors, but with a much more marked degree of difficulty if we consider that producing food is closely linked to climate trends..
High-quality food is made from specialized crops, with standards that must meet not only the needs of end consumers, who are increasingly careful to sustainable products and to their own health, but also those of the supply chain, who need continuity in production, quality, and reliable services. Manager Massimo Pavan analysed the trend of both the previous and ongoing Sicilian greenhouse vegetable season.
“2021, just like the previous year, was marked by a number of significant factors, such as the pandemic, the pressure of the ToBRFV virus on tomatoes, and climate change. While we have continued to see a progressive regression of the New Delhi virus on courgettes, we have not seen signs of decline of the Tobamovirus. In both cases, however, improvement was due to diversification in agronomic management and not to genetic changes, but something is happening, especially in the courgette segment. Other greenhouse crops, such as aubergine and peppers, have continued to move in line with 2020, with higher production prices than in the previous year,” said Pavan.
“If the last two and a half years have seemed to have severely tested us, nothing compares with the period from summer 2021 to the present. Temperatures in July were exceptionally high, reaching 48.8 °C in the province of Syracuse in mid-summer, with persistent highs above 40 °C for several days in the rest of the island. In autumn, intense rainfall arrived, with flooding of greenhouses in some areas located in south-eastern Sicily, while frosts halted the growth of vegetation. In the meantime, the ToBRFV has continued, and continues, to mow down the production of tomatoes, especially large berries, with significant losses in yields. Needless to say, the repercussions for Sicilian agriculture have been severe,” said the expert.
While the blockades in the main Asian ports have slowed down logistics around the world since last year, the last few months have been marked by a vertiginous increase in production costs, with price rises for raw materials, fertilizers, agripharmaceuticals, energy, transport and fuel,” continued the manager. “Four days of transport strikes in March have also created enormous difficulties to our supply chain. It is an unexpected scenario, which makes us regret the worst crises of the last 20 years, especially in the light of a war in the middle of Europe, where no business can avoid losses in economic and financial terms.”
“We have been seeing high prices for all vegetable crops for some months now. As an example, on small red tomatoes, with peaks of €3.50 per kg, peppers at €2.60 per kg and eggplants and courgettes even over €2 per kg. These prices have begun declining, unlike those due to speculation (and therefore under review by the Italian government authorities), but they do not compensate for production losses due to climate and plant disease damage and, where there have been higher revenues, these have been wiped out by uncontrolled increases in everything else. The international situation is very fluid and discourages new investments, and the industry’s approach is a wait-and-see attitude, attentive to day-to-day developments.
“However, the energy crisis also opens up new scenarios, the effects of which will have to be verified as the current
Massimo Pavan
season unfolds. It is about the widening of the commercial window for our horticultural crops, due to the strong reduction in glass-heated greenhouse produce from northern Italy and Central Europe. This is a production gap, from March to May approximately, which we will see by whom and how it will be filled. Potentially, this new asset could delay the collapse of producer prices for Sicilian greenhouse vegetables from April/May onwards,” said Pavan.
Our reference markets remain the same, with Germany at the forefront, but with the increase in transport costs we have some difficulty in reaching Northern Europe and the Scandinavian countries, unless sales prices increase. It is clear that the price increase cannot be determined solely by the cost of logistics but must also take into account the higher production costs, and therefore, the wage adjustment to companies. The phenomenon is felt across the board in all those production areas that have to cover long distances to get their goods to their destination. The outlook is not encouraging, given that there will be a sharp drop in production as a whole, especially of tomatoes, in the second half of the campaign, precisely because of higher installation costs, in addition to plant diseases, to which, with the arrival of hot weather, we must add Tuta absoluta and the overlapping of production in northern Italy and the rest of Europe,” concluded Massimo Pavan.
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Christian Müller, Deputy Managing Director of Reichenau-Gemüse eG “Our gardening cooperative is in a generational transition”
The island of Reichenau maintains a decades-old tradition of commercial horticulture. Every year, the small and medium-sized family farms of the cooperative of the same name jointly produce around 15,000 tons of vegetables and salads for the (southern) German food retail trade and for wholesale markets. A significant proportion of these crops now grow and thrive in state-of-the-art greenhouse facilities in Germany’s southernmost vegetable-growing region and are also cultivated in accordance with organic guidelines.
“Nowadays, our organic share is over 40 percent of total sales and we hope to reach the 50 percent mark this year,” reports Christian Müller, deputy managing director of the cooperative. Thanks to the tremendous development of the organic sector, Reichenau-Gemüse eG is currently one of the leading suppliers of domestic organic products in Germany.
As a well-known producer cooperative with a focus on “greenhouse cultivation,” Reichenau-Gemüse also faces the current challenges of protected cultivation, Müller continues. “The rapidly rising energy costs are causing a lot of trouble for our member farms. However, the past, extremely mild winter has played into our hands, as we were able to reduce energy costs as a result. In addition, the energy was pre-purchased last year, before the cost increases. The question that is currently occupying our minds is how today’s situation - in terms of gas supply and price development - will continue to develop against the backdrop of the Ukraine crisis.” This is because the members of Reichenau-Gemüse partly heat their plants with fuels of Russian or Eastern European origin. However, in some cases, especially when producing organically, they are already using existing biogas plants operated by the growers. Furthermore, there are concrete plans for the construction of a bio-heating plant to supply the largest greenhouse facility in the network. The goal is CO2 savings and independence from foreign energy suppliers, in equal measure.
PRICING AT THE POS
The extent to which the cost increases will ultimately affect consumer prices at the point of sale is difficult to judge at the beginning of the season, says Müller. “Everywhere in the press it says unanimously: ‘food is getting more expensive - fresh vegetables in particular’. Due to the rising minimum wage, CO2 taxation and the tense energy situation, production has clearly become more expensive. Looking at today’s quotes for imported lettuce - whether from southern Europe or Belgium - I honestly don’t see much movement in pricing so far. As long as there is enough volume, the mechanism of supply and demand is still working. This has a stronger effect than the cost situation in the facilities. However, this should not obscure the fact that cost increases must be absorbed by the prices. Otherwise, it will no longer be possible for the growers to operate economically. In this respect, 2022 will be a decisive year for everyone.”
Müller also points to the rising inflation rate (currently around 5% in Germa-
Key data of Reichenau Gemüse eG
• Production capacity: 80 ha of open field cultivation, 40 ha of greenhouse cultivation. • Annual production volume: approx. 15,000 tons of vegetables • Organic share: 47 percent • Locations: 4, of which 3 are outside the island (in Beuren, Aach and
Mühlingen)
ny), which could also play a decisive role. “The consumer has now faced two years of austerity, due to the ongoing COVID-19 pandemic. Many have had to do without a new car or other luxury goods for the first time. That’s why I could imagine that people will now increasingly turn to regional products, possibly also organic goods, because they want to do something positive for themselves and their families. In this respect, I think the development will have a rather positive effect on marketing.”
GROWTH POTENTIAL FOR FRUIT VEGETABLES
In recent years, he says, consumer purchasing behaviour has changed noticeably, and so has the demand for individual vegetable crops. Müller: “I still see growth potential in vegetable products that are easy to prepare and come in small portions. We are talking primarily about classic fruit vegetables, such as tomatoes, cucumbers and peppers. In my opinion, this trend toward small-portioned vegetables will continue, especially since the number of single households is growing steadily and the issue of meat consumption is being viewed increasingly critically. The products mentioned are in line with this trend because they are ideal for quick, on-the-go consumption.”
Accordingly, mini-vegetables continue to be in vogue, with taste being the decisive factor, according to Müller, and justifying the extra price. With regard to salads, on the other hand, no trend toward smaller unit weights can be observed; instead, numerous new types of salads have been introduced to the market in recent years. “Salanova” is still produced and marketed, but the big hype seems to be over. Meanwhile, organic wild herb salads are very much in demand at the moment, especially in the catering industry. Other than that, though, I don’t see any significant variety trends concerning salads.”
A GENERATIONAL SHIFT IS UNDERWAY
Apart from all current challenges and the fast-moving day-to-day business in the vegetable trade, a gradual passing of the baton is now taking place at many member farms on the island of Reichenau. Müller: “The idea of innovation is clearly present on the producer side, even in the older companies. People are doing their best to prevent stagnation and to equip their businesses for the future. Our farms are undergoing generational change, because some growers are retiring. Some of the greenhouses are being taken over by younger colleagues who are willing to invest in the latest cultivation technology, such as irrigation and gutter systems. All in all, the number of our member farms will decline noticeably in the coming years. However, the same applies to the outdoor area that our members are cultivating, which - in line with the new demands of the future generation of growers - will increasingly be replaced by greenhouse facilities.”
Ch.mueller@reichenaugemuese.de
Rien Kamman, Paul Grootscholten, and Ernst van Bruggen in one of Agro Care’s greenhouses, which is managed using Source.ag artificial intelligence
Earlier this year, tomato grower, Agro Care, expressed its desire to expand to a 1,000-hectare greenhouse by 2030. This Dutch company, which turns 25 this year, is distinctive in this ambition. Just as is its 261-hectare acreage spread over four countries. Last month, Agro Care took another note-worthy step when, along with some colleagues in the greenhouse industry, they invested in the Dutch agtech start-up Source.ag.
Source.ag, based in Amsterdam, was founded in November 2020. At the helm are two software specialists: Rien Kamman (CEO) and Ernst van Bruggen (CTO). They have extensive experience in other branches, using artificial intelligence for decision support. Businesses, including a steel producer and aviation company, benefited from this. Then, thinking of their children, the men, both fathers, asked themselves where this powerful technology could be put to even better use. Their answer: greenhouse horticulture, which provides the world with food on a large scale. Rien and Ernst quit their jobs and soon found themselves sitting around the table with Kees van Veen, CEO of Agro Care.
TAKING DECISIONS
The two men could not gauge Kees’ impression of them at that first meeting. However, less than 18 months later, the tomato grower had invested in the software company. And he was not alone. The investment firms, Acre Venture Partners, E14, Astanor Ventures, fellow grower Rainbow Growers, cooperative Harvest House, and greenhouse builder Van der Hoeven did too - to the tune of a total of €9 million.
“Maybe it appealed to him that we come from outside the greenhouse industry,” Rien says. “Also, we’d already built software for large companies in other sectors where making important decisions is a daily occurrence. Growers, too, have to turn many knobs when running greenhouses. We think that’s really challenging in this sector. We have mutual respect and share a great curiosity. We and Agro Care fit well together.”
The software developers deliberately chose to listen closely to Kees’ requests from the get-go. He, after all, represents their intelligent software platform’s users. “We didn’t quietly start building something only to involve the user at the last minute,” says Rien. “We quickly went to see what the grower needed,” adds Ernst. Last summer, the first version of the platform, developed by Source.ag, was already running in the tomato grower’s greenhouse. Paul Grootscholten, location director of Agro Care’s 55-hectare site in Middenmeer, the Netherlands, and company co-shareholder, says it took some getting used to. “As is the case with all new ideas, it always takes a while to win everyone
From this Middenmeer location, Agro Care branch manager Paul Grootscholten manages six nine-hectare blocks. Source.ag’s decision support software helped him with that last summer Source.ag’s intelligent software platform provides insight into expected production and cultivation strategy costs for the entire season
over. In the end, however, growers often like innovation.”
OUTSIDE EXPERTISE
Right from the start, the Source.ag developers were looking over the grower’s shoulder. Initially, at one, but gradually at more Agro Care and Rainbow sites. Now, the company already has almost 30 developers to do so. “Those people are from many different sectors, certainly not only greenhouse horticulture, sometimes even specifically not,” says Rien. “They all bring their own specific expertise.” The initial capital, raised in an investment round led by the American company Acre Venture Partners, will make it possible to introduce many more growers to the system. “That’s a definite goal for this year. But, initially, we didn’t want to have too many partners. We’re still a start-up and prefer to focus. However, there’s plenty of interest,” Rien continues.
Sometimes that ‘looking over the shoulder’ was very literal, but often it was from a distance. “That took time and energy, but it’s now paying off in a system for which we already have a lot of use,” says Paul. “I like the challenge of ensuring everything on the system’s dashboard is showing green.” The branch director says everyone in Agro Care has a favourite part of the system. Paul likes to have an expansive overview.
“I manage six nine-hectare greenhouses. If one’s humidity level falls, I know about it. Then I connect with the grower and his team, and we quickly solve the problem.” The growers often have other requirements and favourites. “The system can, if needed, go into great depth,” says Rien, coming up with a nice comparison. “Paul is like the airplane’s pilot. He doesn’t fly the plane by looking out of the window but by making the right decisions based on all the available data.” or an even better, result using less energy. More economical cultivation shouldn’t mean fewer kilos or a lower quality. Growers often still farm on instinct. You hear, ‘it doesn’t feel right in the greenhouse’. But that feeling means nothing. We’ve learned that since Source.ag has been helping us.”
Paul’s new digital colleagues are called Cyprus and Arthur. Cyprus is the artificial intelligence (AI) based planner that optimizes the company’s cultivation strategy under constantly changing conditions. It simulates the balance between plant growth and, for example, water and energy usage. Arthur also uses AI to connect closely with all the systems in the greenhouse. Every day, it executes the cultivation strategy, adapting it to outdoor conditions if necessary.
POPPING THAT PIMPLE
Source.ag’s system introduction coincided with energy prices starting to climb rapidly. Paul: “We’re forced to farm more energy-efficiently. The dashboard supports us in this. In the end, you want the same, “This winter, we limited our pipe temperature to a maximum of 45℃ and have run days at 17℃. A year ago, everyone would have thought we were crazy. We’ve started irrigating more discerningly. That’s especially important since we switched the
lights off more often this winter. Logically, when the lamps are off, there’s less evaporation, but with this dashboard, everyone can now see this quickly and clearly. The Source dashboard is a huge mirror held up to you as a grower,” Paul says expressively and then laughs heartily. “If you see a pimple, squeeze it.”
OPTIMIZING A PROVEN SOLUTION
These days, mentioning AI and software quickly brings automated farming to mind. That much-used term often comes into play in the high-tech greenhouse horticulture and vertical farming sectors. Investors are (also) very interested in the latter, which attracts new parties to food horticulture. Not Source.ag, though. They point out that greenhouse horticulture is a proven solution for large-scale, climate-protected food production. An increasing shortage of growers is hampering it. Nevertheless, Source.ag is not about automated farming.
Ernst: “We help growers optimize their results. And that goes much further than simply maximizing production. Nowadays, you have to deal with many dynamic factors like wildly fluctuating gas prices
Growers receive daily updated feedback on the most important parameters in the greenhouse. If the measured results agree with the optimal strategy, the tile turns green. That way, they know exactly where to make adjustments
and tomato prices. Each decision growers make directly affects that, and that’s evident on the dashboard. Does one degree of extra heating still outweigh the turnover that additional yield achieves? Those grower questions are answered.” Rien adds: “We enclose greenhouses in a layer of intelligence. That allows even slightly less experienced growers to optimize their cultivation. Growers like Agro Care can control their many greenhouses properly and efficiently.” Paul agrees, concluding, “If you want to stay relevant, this is the future.”
press@source.ag info@agrocare.nl
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