Spanish citrus growers face a real threat as the current citrus season progresses, and it is not drought or small calibres, or any other weather-induced issues, but a price war by large retailers started by the German chain Lidl, which Spanish supermarket chains Mercadona and Alcampo have joined, as reported to FreshPlaza.
Up to this point in the season, clementine prices are still very reasonable due to the relative scarcity which has been caused, in part, by the delay in of ripening as a result of the heat. Come November, the situation is changing, because in addition to the arrival of the first oranges, the volumes of mandarin and clementine have been considerably increasing.
Low prices in a Mercadona supermarket, in Valencia
Given this situation, last week the German supermarket chain Lidl introduced attractive offers in the Netherlands, selling clementines for 0.69 Euro per kilo, which has been denounced both by the Unió de Llauradors (Growers' Union) and the Valencian Growers' Association (AVA-ASAJA), which revealed that purchasing a kilo of fruit from the growers in Valencia and Andalusia and bringing it to Dutch supermarket shelves costs around 1.08 Euro; therefore, it is a price that stands 23% below cost, which is illegal in countries like Germany.
In a few days, we have seen a response in the shelves of Valencia's supermarket chain Mercadona, which has a growingly popular "Lowering of prices" action made effective from a certain time in the afternoon, allowing us to see prices of 0.19 and 0.20 Euro per kilo of oranges and 0.65 Euro per kilo of mandarins at different supermarkets in Valencia and Castellon, in the Region of Valencia.
According to Mercadona's strategy, citric fruits must be sold within three days of being placed on the shelves, disposing of the product if not sold by then.
Low prices on the shelves of a Mercadona supermarket in Castellon
Depending on the variety, the cost to produce a kilo of oranges and mandarins in Spain, according to data accessed at the Valencian Institute of Agrarian Research (IVIA), ranges between 0.19 and 0.24 Euro, so again, they are selling at big losses.
Furthermore, this strategy from Mercadona of lowering prices late in the afternoon could be a double-edged sword, since according to many industry experts "it may change the buying habits of consumers, who would prefer to shop at this hour and at those prices."
According to AVA-ASAJA, "the fact that Mercadona and Alcampo are joining this price war to attract more customers using Spanish citrus as bait will only lead to a market collapse."
"What Lidl started is causing a domino effect, affecting the entire chain, and forcing the final link, the producer, to give the fruit away for free."