Retail cannot simply impose a price during contract discussions

Retail cannot simply impose a price during contract discussions
Retail cannot simply impose a price during contract discussions

Archive image of pre-sorting peppers for traffic light packaging. – Photo: Gerard Boonekamp

Contract negotiations with retailers have started for next season. Buyers have become more sensitive to the availability and sustainability of vegetables. What does that do to the price?

Supermarket buyers no longer have a one-sided focus on competitive prices. They should be happy to get enough product. That’s called product availability. Sustainability is also becoming more important, as was evident at the Fresh Congress of the EFMI knowledge institute this week.

A buyer from a Dutch supermarket chain could only anonymously confirm that price comes at the end of the discussions. It is first about availability and sustainability. It is widely felt that availability is a concern, also for products such as cauliflower and broccoli. Even more impressive was the low flow of greenhouse vegetables from Spain earlier this year. Supermarkets will have to adjust their strategy accordingly.

More parties at the conference are noticing a clear change among buyers. At the same time, consultants do comment on this. Reducing prices remains just as important for these purchasing parties.

Harvest House is committed to price increases

At that Fresh Congress, only Jelte van Kammen, director of Harvest House, dared to look at the books. Negotiations for the next greenhouse vegetable season are ongoing. The most important contracts with retail at home and abroad must be signed in January. Harvest House assumes a plus in the contract prices. The cost increase in energy is no longer there, but other production factors such as labor and resources are becoming more expensive.

CRSD Rules

Sustainability is clearly becoming a topic among buyers. European legislation forces purchasing parties to purchase sustainably. Van Kammen mentions CRSD rules that require supermarkets to measure and publish their sustainability efforts. German retail in particular is therefore increasingly looking for sustainable products and at Harvest House, 56 percent of the area is now connected to residual or geothermal heat.

In his contribution to the fresh produce conference, Van Kammen also outlined factors that could cause shrinking production. Another reason for price increases. For example, a CO2 shortage can arise when parties such as Shell store their CO2 in the ground. The loss of pesticides in cultivation will also have an effect on European yields per square meter in the coming years. Van Kammen estimates both of these at 15 percent.

Land prices continue to rise

The fact that product availability is at stake was also evident in other contributions to the EFMI conference. Agrifirm expects land prices in the Netherlands to rise further due to the failure of Southern European production. Here too, it’s all about product availability. In Spain, more and more areas are unsuitable for production due to climate change. This was underlined in the contribution from Commonlands, an organization committed to landscape restoration. Commonlands tries to establish suitable crops such as almonds and olives in parched regions in Spain, among others, with local communities.

The article is in Dutch

Tags: Retail simply impose price contract discussions


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