From farmer to plate is a slogan many growers can bring into practice, but figures from Statistics Netherlands show that only a small percentage of growers take care of their own sales. Dutch bank ABN AMRO recently analysed that home sales or local-to-local offers good options to growers. Research shows that consumers are interested in the origin of their food, and are therefore looking for local products. A favourable development for growers, according to ABN AMRO, because they strengthen their market position due to own sales. They can decide their own prices and it provides a wealth of information about your final customer. Yet these direct sales aren’t exactly flourishing, says the ABN AMRO. Figures from Statistics Netherlands show that in 2016, seven per cent of 7,389 horticultural companies had income from direct home sales. In 2013, that was eight per cent.
According to ABN AMRO, the percentage of companies with home sales is higher on average in the EU than in the Netherlands. Fifteen per cent of companies gets 50 per cent or more of their income from direct sales,this mostly concerns sustainably or organically grown fruit and vegetables. That seems more than it is, it’s only two per cent of the total market without interference from third parties. The largest part of the products produced in Europe ends up in the retail channel. In Portugal, three retailers are in control of 90 per cent of the market. In the Netherlands, retail sells about 55 per cent of the food range, and this is bought by five purchasing organisations, according to ABN AMRO.
In the Netherlands, many growers enter into cooperations to take care of sales through producer organisations (POs). The European Union encourages these kinds of associations through GMO subsidies. Acknowledged POs are the only ones entitled to that. The distribution is bound by strict rules, including rules regarding own sales. The fact is that members are obligated to sell their complete production through the PO. This can only be deviated from if the member received permission in advance through an exemption for Local-for-Local, home sales or sales via a different PO to be appointed by their own PO, explains Ton van Dalen, manager of Best of Four.
When growers have permission for their own sales, it remains limited to a maximum of 25 per cent of total volume or total value of the tradable production (product amount), and that all exemptions combined can never have a value higher than 25 per cent of volume or 25 per cent of value of the PO. “In most cases, this offers sufficient room for growers to do business in,” Ton says. “Home sales are sales directly to the consumer, and Local-for-Local is sales of regional products to restaurants, catering services, greengrocers and/or supermarkets in a radius of 25 kilometres around the cultivation company. Growers can decide their own prices. However, it should be higher than guidelines from the PO. For Local-for-Local, the billing should be done in its entirety via the PO. Each year, the PO inspects the obligation to deliver including the exemptions.” These strict rules are in place to prevent a member, by trading a considerable part of their production outside of the PO, from harming the required concentration of supply and demand strived for by the GMO regulations.
Ton: “Most growers from Best of Four have an exemption for home sales and/or Local-for-Local. The procedure isn’t difficult. At the start of the season, the member requests exemption. This is judged and in most cases approved by the management. It’s important that everyone stays within 25 per cent, which we inspect by means of a sales statement and by visiting relationship managers.”
Stoker Holland is a free sales organisation for organic and organic dynamically grown fruit, and has no acknowledgement. He would prefer growers don’t take care of their own sales. No rules have been agreed upon to that end, and it doesn’t cause problems either. Wim Stoker: “I sort, pack and trade for about 10,11 growers. I know some of them also do home sales on the side. We have not made concrete rules about that, just verbal ones. We work together in good faith. When a third party calls a grower, they refer them to me. Otherwise it would become too convoluted. Growers tell me what they want to sell. I keep that in mind,” Wim Stoker says. For that matter, most growers are not equipped for home sales. “You have to make investments for that as well, and plenty of people have to come by,” he says. “Moreover, you have to make time for it.”
Best of Four
Ton van Dalen