For Mardi de Graaf of Hagranop it’s clear: the future is local and organic. He was one of the first to become dedicated to this. With Hagranop he built cold stores in the Netherlands, Belgium and Germany, and he started local production locations. Additionally, he started his own production in Spain, and he was an early adopter of switching to organic production.
“Right now, 30 per cent of turnover within Hagranop is organic, but we’re dedicated to continued growth, and we promoted our organic range during the Fruit Logistica. “The growth in sales of conventional carrots is minimal, and it’s been a difficult market regarding pricing for years; growers with stocks in storage can barely make a profit. The organic market is different, it’s still growing although the speed with which it’s growing varies per country. Hagranop has seen growth levelling off and stabilising in Germany, as is the case with the Scandinavian market. France, Poland and the Netherlands are still countries of growth, Poland being the most interesting regarding consumer numbers.
Opportunities in Poland
The organic market in Poland particularly offers opportunities for Hagranop, which has had ‘roots’ there for six years now. However, the market has one clear condition. “The Polish primarily want Polish organic products. The organic share is still small in Poland at the moment, about 0.5 per cent, but when that grows to five per cent, a lot of organic products will be needed.” Eastern Europe is an important growth market for Hagranop. Trade to Eastern European countries is done from both the Netherlands and Poland. In Poland, sister company Fresh Future is active. Organic carrots can be grown in Poland in 2019. “In 2019 we’ll get our first organic plot certified. In the following years we’ll be able to quickly expand. We’ll start with 55 hectares and will then expand that to 200 hectares of connected organic area over the following five years.”
The knowledge for growing conventional carrots is widespread. The production of organic carrots, on the other hand, is still a challenge. Because Hagranop was a pioneer of switching to organic, they have years of experience from various European locations. “Not everyone appreciates it if you share and spread knowledge, but that is the trend. More and more retailers demand local products. Germany started that, and other countries soon followed. Poland even takes it one step further: only when you supply organic products from Poland are you also allowed to supply organic Dutch products.”
Storing organic carrots is the next point of attention. “Organic carrot cannot be stored as long as conventional carrot. Due to Spanish production, we can still supply practically year-round. The organic harvest from the Netherlands lasts from July to October. After that we can supply organic carrot from cold store from October to mid-March. We start harvesting from Spain from 1 March until about mid-June. The German production starts somewhere around mid-June, so we can fill out the year with that. We can import from Israel when there are shortages.”
Expanding organic range
Switching to organic production is very favourable, because the trade offers better pricing. “You can hardly make a profit with conventional production. Prices are the same as 20 years ago. Requirements from retail, however, have become much stricter, so that paid kilograms per crate are lower. While the average paid profit was 900 kilograms per crate in the past, that average is now 600 kilograms. Due to mechanisation, we managed to bring cost price down, but it’s been optimised to such an extent that no profit can be made anymore.”
If consumer prices were to increase by 5 to 10 cent per kilogram, it wouldn’t be a problem, according to Mardi. “Supermarkets view things too much as processes. They view the supply chain as a production factory that can supply products according to specifications. A batch can be rejected for 0.7 per cent mice damages. No matter how hard you work, carrots don’t grow in a factory, and you can’t control circumstances. It will always be a natural product.”
Although Hagranop has always focused on the production of carrots, the company is now expanding its range. Retailers require a more extensive range, so you have to supply a broader organic assortment to be considered for sales. Hagranop’s organic range has therefore been expanded with root parsley, parsnip, beetroot, celeriac and chicory. Hagranop has also seen coloured carrots gaining popularity, but is not planning to become completely dedicated to that yet. “We can supply coloured carrots, but it’s not yet a stable production. Focus is firstly on properly setting up organic production and storage. We can’t do everything at the same time. In the past, we were proper front runners. Now I’d rather start something a year later, and do it well.”
More information:
Hagranop
Mardi de Graaf