How to prevent cartels while collaborating

To survive in the competitive world of the fresh produce sector, many businesses decided to join forces in this way. “For many it gives some support. Producers are usually the ‘weakest link’ within the chain. You should not be surprised if the price for consumers is many times higher than it is for retailers. In this respect, it is only logical that producers ask for price stability. 

To influence the price in a legal way, producers can unite as an economic bloc. For example, growers that are a part of a growers association, can decide on a concerted price in agreement with each other. Existing companies could also merge through a fusion or a joint venture, such as happened recently with Ahold and Delhaize,” Eric explains. However, the Authority for Consumers & Markets (ACM) has to approve of the plan first. 

“If the growers association has been recognized by the ACM, then it can pass as a so-called producer organization (PO). Within such a cooperation, the members want to strengthen their position relative to their clients by pooling the sales. This gives them a stronger bargaining position through which they can get a higher price for their products. Besides, they can plan their production and adjust it to the demand on the market. The sales will go through one central office. A well-known example of this is Coforta.”

Producers can distinguish themselves with the production of club varieties. In the upper segment, there are larger margins for producers. Eric: “Kanzi, Tasty Tom, Pink Lady, these are all beautiful examples of products with an international allure. It is amazing that in Germany, where the Dutch tomatoes used to be known as ‘Wasserbombe’, the Dutch tomato has shown resilience and is now known as an exclusive and robust Dutch product.”

Of course, caution is advised. As an economic union, or producer organization, the promotion, supply bundling, sales, and promotion, can be done together. “Is it actually about competitors who close private deals to increase the price? Then it is just a matter of time before the watchdog comes into play,” Eric concludes.