| | Every year brings its challenges, opportunities and rewards. A few years ago when we did our first greenhouse industry survey, labor costs were pegged at about 34% of the operating costs while heating costs were around 9%. These figures are from the early 1980’s. Now, the reality is that labor costs have escalated to about 42% and heating costs have almost caught up to these costs. I was looking at heat use in one day by a grower operating a 2 acre vegetable range, when the outside temperature was over minus 40C, what I was seeing was as if dollars were being burnt. There is no doubt that government’s natural gas rebate has cushioned these prices and other programs are helping as well, but the bottom line is that we have to compete with imports and our inputs are far higher than those incurred by exporting countries. Here are some Thoughts For Food, or you can call it Food for Thought:
- Market reality is that a wholesaler can cut you off just like that, even if you have a contract in place. Another supplier comes along, and supply produce cheaper than yours, and the wholesaler may use it to get your price reduced, or stop buying from you. The cucumber price from Mexico was around $15/dozen in early January, while it was over $20 last year. So, if you have planned your cash flow at last year prices, you would go into shock first, and then recover from it. Nothing will make sense to a wholesaler, because profit is the main motive. Paying for quality is no more in the market segment. I have been asked this question many times, now that we are HACCIP compliant, we have an On Farm Food Safety Program in place, we follow environmental stewardship practices, we use biological controls and other similar things, but we cannot get a better price from wholesalers. All I can say is, very good question!
- When I talk to wholesalers, I am told that consumers want good quality, but cheaper prices. Consumers tell me that they love to buy more local produce, but price is a factor. There is only a certain percentage of consumers who will pay a better price for quality , and I have wondered many times if some consumers really know what good quality vegetables look like. I think more promotion of quality, locally grown, healthy and nutritious vegetables is required and growers can do that through their cooperatives and associations. I have seen promotions only on special sales. Why not consistently promote quality on a regular basis? When I see cucumber specials for $0.99 for one week, and then the price jumps to $1.99 the next week, consumers undergo price shock syndromes. Better planned advertisement are required to attract consumer’s attention. It should not be just the lower price specials, but should be quality, locally grown and nutritious.
- We have to add value to our produce. Our value is the freshness of the product. I was talking to many growers that can deliver within 1-2 days of harvest. Besides that, we can supply, and are supplying, a diversity of products. There are many types of tomatoes we can market. We can supply five different types of cucumbers that we grow. There are at least 8 different types of tomatoes we can market. We can supply five different types of peppers.
- We have to increase production per sq. m of greenhouse space in all vegetables. If we can produce more per unit area, then we can show more elasticity in handling lower prices, at least for sometime. For example, I have seen cucumber production ranging from 110 to 150 cucs/sq.m per year. If all growers are selling at the same price, then the grower producing 150 cucs will have a better chance of competing in the market place. One must review one’s management practices to see where the gaps are. This review can be done externally or internally. We have good financial reviews in place, why not have production reviews in place to identify the weakest links in the production chain. It may be your irrigation system or it could be proper temperature management or pruning techniques, etc. If your production is below average, then get it reviewed and start improving.
Market place will always have its challenges, and your ability to make adjustments at all fronts, will be required to maintain profitability and sustainability. |
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