New lease on life for Dutch greenhouse vegetable sector
'Cooperation' is the keyword
While the cucumbers, bell peppers and tomatoes it produces are as fresh and wholesome as ever, the Dutch greenhouse vegetable sector's own health has been hanging by a thread. A partnership of growers’ associations, the Dutch government and Rabobank will turn things around for the sector. This will lead to new opportunities for growers determined to survive and thrive. 'Supporting these businesses is our top priority'.
'Our sector is seeking to position itself in the long term as the leading specialist in fruiting vegetables in Europe and across the world. That means using the highest-quality technologies, gaining a leading position in all the key markets and maintaining a strong focus on high-value-added products'. This is the solemn aspiration expressed by the coalition for the development and restructuring of the Dutch greenhouse vegetable sector in September 2015. The partners: five Dutch growers' associations, the Dutch government and Rabobank.
There is an urgent need for action. 'The sector has been languishing for a while. Although some businesses do still turn a profit, many others are hurting and operating at a loss. The Netherlands may be amongst the very best in the world when it comes to technology, but our market share is slipping. It's all related to the fact that producers sell their products across a wide range of channels and the current lack of market focus', says Ruud Huirne, Director of Food & Agri Netherlands at Rabobank. The bank is the largest financial backer in the Dutch greenhouse vegetable sector, with nearly 3 billion euros in loans outstanding to cucumber, bell pepper and tomato growers.
Businesses lack investment funds
The low returns in the market have a number of major consequences: 'Customers being unable to meet their obligations to the bank is one part of it, but most businesses also lack the resources to fund their development and growth. We are starting to see the impact of that development: the countryside is littered with areas that have not seen any investment for years', says Hans de Leeuw, Chairman of the Board of Directors of Rabobank Westland, the local Rabobank with the largest horticulture portfolio.
'Customers being unable to meet their obligations to the bank is one part of it, but most businesses also lack the resources to fund their development and growth.'
Focus on five initiatives
The coalition foresees that a number of years are needed to nurse the sector back to health. The coalition focuses on five key initiatives: strengthening the market position of horticulturists, improving the infrastructure (that is, the roads and energy supply) and agricultural logistics (transport streams all the way up to ports and airports), improving the alignment with government policies and restructuring the sector (viable businesses will get the opportunity to develop and ailing ones will cease to operate). Huirne: 'Individually, these initiatives would not make much of an impact at all, but combined, they are sure to pack a punch.'
Financial support to growers
Rabobank will be chiefly responsible for the restructuring process. The bank is determined to support greenhouse vegetable growers who are willing and able to keep their business running. 'Supporting those businesses is our top priority', says Hans de Leeuw. For growers with bleaker futures, local Rabobanks will present a plan for careful business termination. Rabobank’s Rob van den Ende will be in charge of the restructuring process for greenhouse horticulture, serving as a project director. Cees Veerman, a former Minister of Agriculture, will become chairman of the coalition.
Joint action between growers' associations
'Cooperation' is the keyword. The five growers' associations involved in the initiative – which collectively represent 70 percent of the sector – are acting in joint enterprise so as to improve market returns. They may achieve this by entering lucrative new markets, launching new products or improving quality levels.
Concentration in several areas
The partnership also extends across geographical boundaries – specifically, by bringing the partners physically closer together. Greenhouse horticulture in the Netherlands has traditionally been concentrated in a handful of areas, including the Westland region (near Rotterdam and The Hague) and Venlo in Limburg province. With existing areas already saturated, new ones have sprung up over the years, with individual growers scattered around the region. The coalition seeks to bring an end to this fragmentation. The objective of all initiatives is to strengthen current concentration areas. Improved returns for growers will also benefit other supply chain partners, ranging from seed suppliers to vegetable exporters.
First results in spring 2016
Although things are finally moving in the right direction, it will take more than a few months for the sector to find its way back to growth. 'There are some changes you can make right away, but some of the other work takes more time, such as strengthening the market position and reallocating businesses', Huirne says. De Leeuw: 'We will definitely see new opportunities emerge for these businesses. We are all eager to get started, but a restructuring operation like this inevitably takes time. Still, I expect we will be seeing the first results in spring 2016.'