19 Feb 2022

Crisis ahead for German berry growers

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The indirect consequences of the pandemic are also becoming increasingly evident for European fruit and vegetable production and the fruit trade. Shortages of raw materials and materials, as well as energy prices and transport costs that have exploded in recent months, are not only having anincreasing impact on business: the livelihoods of many companies are under serious threat. In production, we can already see how many producers have switched from tomatoes to cucumbers to avoid the high cost pressure. But what are the prospects for the berry sector, which is known to be particularly expensive?

Especially in Germany, where production is already expensive, a further increase of the minimum wage risks to put a heavy burden on the cost structure - in addition to the many pre-existing cost factors. This is currently the main concern of many German enterprises and companies, who are anxiously waiting for how the coalition agreement of the new government will be implemented. In any case, one thing is certain: in the almost two years of the pandemic, security of supply was often discussed. 

With extraordinary efforts, as is well known, it was also possible to provide the population with high-quality fresh produce, including berries, which were very popular in greenhouses and posed a challenge due to the difficult climatic conditions only last year. But the huge increase in costs due to the pandemic, even just for implementing safety measures in the fields and farms, cannot be ignored or explained away.

Many things are taken for granted, but in reality the balance sheets of many companies, even the good ones, are heavily burdened .

The political framework conditions - not least the consequences of the farm-to-fork strategy - as well as the different demands of the economy make economically viable production in Germany increasingly questionable.

Probably nowhere more so than in the berries sector. Markus Schneider, Managing Director of Frutania, also has his thoughts, as berries are among the products with the highest care requirements and therefore also the highest costs.

MANPOWER

Despite increasingly efficient sorting and packing lines, most of the work is still done by hand, especially during harvesting. "With strawberries, to give just one example, labour costs account for about half of the total production costs. If you add another one or two euros to the already high costs, it's easy to imagine what it means at the end of the day. Not only for our own companies or those of our competitors, but for Germany as a production location as a whole". 

The situation is aggravated by the fact that it is enormously difficult to find staff. Last but not least, the uncertainties surrounding Covid-19 vaccinations make realistic planning almost impossible. "No one knows what regulations will soon be in place regarding the vaccination status of seasonal workers and how all this will be monitored and controlled if necessary. But we absolutely need to know for the planning of the season," says Markus Schneider.

PACKAGING

A huge issue to be addressed is also packaging. You can do without packaging for many products, but not for berries. And this will not change in the future, despite 'plastic bans' like in France - where, significantly, an exception is made for berries. But not only plastics or other materials, the advantages and disadvantages of which are open to debate. 

Cost increases are clearly being felt everywhere. "I estimate that costs in the packaging sector will rise by an average of 25 % this year due to the tense situation on the raw materials markets and the explosion in energy costs," says Benno Friebe, head of packaging at Frutania.

It should also not be forgotten that manufacturers already have to use a huge amount of different packaging in the fields. Meanwhile, almost every food retailer has its own tray/pot design.

It is immediately obvious that this cannot be economical, especially in the current situation. But concerns could also be raised from an ecological point of view.

What will the future hold for German production of berries? Will there be a gradual shift to "cheaper" foreign countries or are there still prospects? For Markus Schneider, who is clearly committed to Germany as a production location, the risks facing the berries sector are particularly worrying. "Germany as a production location is at the heart of our business and an issue close to our hearts. We are committed to this and certainly do not bury our heads in the sand. But we simply have to realise market prices with which producers can live and with which the production of high-quality berries will still be economically viable in Germany in five years' time."

Source: Fruchthandel, part of the NCX Media network

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