Coping with today’s market realities

The fresh produce industry with fresh herbs in particular is currently undergoing major changes of an unspeakable magnitude. “Everything we have been accustomed to did not prepare us for this, the Supply Chain Crisis alongside disastrous consequences of 2.5 years into a pandemic resulted in a DNA alteration of which extent we have yet to realize”, stated by Omer Kamp of ERP.

The Dutch based company, Europe Retail Packaging B.V of Poeldijk goes on by stating that obstacles expected ahead are unstable, hard to predict and perplexing . As a matter of fact and according to Raymond Van Der Burgh of ERP, these newly created difficulties include logistical limitations from both Africa and the Middle East, Souring Inflation Rates, price increments for raw materials, substantial rise in energy costs, wobbly weather conditions, covid restrictions and the omnicron mutation which has already begun creating havoc with international flights.

“To place matters into perspective, we need to realize that current inflation rate stands at 4.4 % with prediction of reaching 6.6 % by the end of 2022. Prior to the pandemic, in 2020, inflation rate was set at 0.68%. This alone is over 5% increase in price without even taking into consideration other aspects such as energy costs which have gone up dramatically and cargo flight costs that were once more reasonable and today are proportionally much higher,” strongly stated by ERP.

Farmers are scrambling to keep up with production but with everything crumbling around them, it is both safe to assume and wise to predict that prices will continue to climb far more frequently. “Reality has changed and no longer will the fresh herb industry be able to provide seasonal prices,” states Joella Steenbergen.

Despite these grim complications and pessimistic forecast of what the future might bring, there is a light at the end of the tunnel. According to Wessel Prins, fresh herbs are inelastic by nature or in other words, they are less sensitive to reacting to price movements. “Herbs have become an essential ingredient to our daily consumption and are no longer considered a privilege, consumers will continue using fresh herbs even if prices reach new levels,” concluded by Mr. Prins.

That being said, it is imperative to bear in mind that the most disturbing obstacle of them all is that of air-capacities. “Already now we are witnessing how cargo planes are being diverted away from perishables to haul other commodities of higher value. This entails, with a 100% certainty, that during the month of December there will be offloads, delays and most definitely, unsuitable space allocations,” states Omer Kamp.

Nonetheless and if we take chives as an example, which happens to be the number one herb selling line, both supply from Jordan River’s Ethiopia and logistical allocations via ET Airlines are promising and encouraging. “Without any doubt in mind, supply for chives this year has been exceptional and steady and this is due to much gratitude for the farm’s, Jordan River of Ethiopia, ability to adjust itself in due time and provide the much needed solutions for these hectic days,” stated by Raymond van Der Burgh.

To better serve the market and offer wider contingencies to cope with price increments, the farm in Ethiopia has decided to include, alongside its renowned premium quality chives, a line of industrial / processing chives to be used for specific purposes at a lower, more economical price.

All in all, the coming period will present before the fresh herbs industry challenges of extreme consequences. There are no margins for mistakes or miscalculations. Sitting idle on the fence is no longer an option and we must all, as an industry, make the needed adjustments.

For more information:
Omer Kamp
Europe Retail Packing B.V.
Tel: +31 174 282 510
Tel: +972 54-6512199 
Email: Omer@erpnl.nl 
www.erpnl.nl 


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