As one of Germany's leading marketing organizations and producer cooperatives, Landgard can draw on some 3,000 farms and thus cover almost the entire German fruit and vegetable market. Landgard CEO Robert Sauer shared with us how the organization, based in Straelen-Herongen, is dealing with current problems such as skyrocketing costs, what trends they are observing and what projects Landgard will be devoting itself to.
Organic: more than just a trend
In the organic sector, the company can currently report double-digit percentage growth rates. The COVID-19 pandemic in particular has led to a change in consumer behaviour, he said. "We are trying to take the positive effects in the perception of consumers* into the current year as far as possible. To achieve this, the value and sustainability of fruit and vegetable products in general, and organic products in particular, must be further anchored in consumers' minds. Among organic products, bananas, apples, pumpkin, ginger, and herbs currently play a particularly important role. There is also a regional focus on zucchini, salads, rhubarb, and root vegetables," says Sauer.
"Our goal here is always to be as close as possible to the producing farms. This is also in line with the trade's expectation of us as a grower cooperative. In addition, we are continuously trying to both attract more organic farms to become members of Landgard and to inspire conventional Landgard farms to convert to organic production. The duration of the conversion of three years is of course a challenge for the farms. In the medium term, our goal is to achieve a comparable product range in the organic sector as in conventional farming."
Added value of cooperatives
"Cooperatives like Landgard, and cooperative marketing in particular, are based on a fundamental idea that is as relevant today as it was 100 years ago. The marketing organization offers members sales security and services, and customers central access to varied and high-quality assortments in large quantities and with great delivery security. This idea inspires more than 3,000 farms at Landgard regionally, nationally, and internationally and creates recognizable added value for all those involved in the process chain - now and in the future," says Sauer.
Landgard also sees itself as a ‘link between the trade and producers’. The producers' cooperative is committed to improving both communication and understanding between the trade and production. Sauer believes that although there will be fewer farms on the market in the long term, these will expand all the more: "To this end, we support the farms in their development, e.g. through targeted cultivation planning or product and range expansion. We supplement this membership base at strategic points through targeted procurement of goods, for instance in Eastern Europe and overseas. This broad base enables us to meet retailers' demands for complete annual programs covering the entire product range."
Plans for 2022
There are also plans for contractual cooperation with other growers or their associations in Germany and abroad. Landgard currently has access to a production area of around 10,000 hectares in the open and in protected cultivation. "As part of its future national and international development strategy, Landgard is aiming to double this area."
Sauer also emphasizes that Landgard wants to further develop open-field cultivation and is therefore currently planning projects in North Rhine-Westphalia, Rhineland-Palatinate, and Lower Saxony. "The strong expansion in protected cultivation of recent years will be somewhat weakened due to rising energy costs, but will continue steadily. Landgard will continue to develop protected cultivation as well as outdoor cultivation. But we are also focusing on the eastern states to ensure a year-round supply of goods to grocery retailers and discount stores."
Offsetting costs with a reasonable flow of goods
According to Sauer, Landgard also knows how to deal with the extremely high energy, gas, and other costs that the entire industry has to contend with: "As a producer cooperative, we have set ourselves the challenge of becoming more efficient and leaner, in order to compensate for the increased costs in the market as best as possible for us and our producer companies and thus become even more sustainable together. The flow of goods is the decisive keyword for us here. It encompasses the central points at Landgard Obst & Gemüse: sourcing, distribution, services, and logistics. This could also be a good opportunity to avoid having to pass on price increases in full to the consumer."
Solution approaches demanded from new government
Sauer also sees a need for further improvements for member companies under the new government, and in this regard addresses, among other things, measures to protect against carbon leakage in the course of CO2 pricing in horticulture. "What is missing here is a focus on small and medium-sized enterprises, which are typical in horticulture. The climate adaptation measures also leave out the special concerns of horticultural and agricultural production. Therefore, there is definitely the fear that issues important to the industry could receive little attention from the new government, for example the shortage of harvest workers and the exploding production costs," Sauer expresses concern.
Such problems would be exacerbated by the increase in the minimum wage and rising energy costs to such an extent that this would hardly be feasible vis-à-vis retailers and consumers. Sauer: "In the worst case scenario, there is a threat of businesses closing down. Solutions are needed here to further support domestic production so that it remains competitive in terms of pricing in the future."
Biggest challenges for the industry
"For the industry as a whole, the biggest challenge in 2022 will certainly be to ensure the supply of goods to retailers so that consumers* can choose reliably, completely and extensively from a year-round range of fresh products," Sauer says. Existing difficulties along the value chain - from logistics and packaging services to packaging services to staff recruitment - must also be kept in mind. "New market entrants and cost increases in operations will also continue to cause movement. In addition, other important issues - despite the difficult business environment - will be the conservation of natural resources and sustainable or organic production."