The European record-harvest year 2014 was a difficult season – also for the South Tyrolean apple marketing. Despite fighting for quantity and a price decline, the local fruit associations have overcome it fairly well. VOG director Gerhard Dichgans explains in the interview what the future of South Tyrolean apple cultivation will look like, and why. VOG director Gerhard Dichgans
Gerhard Dichgans, what are your conclusions about the last season?
The challenge was to break down the large harvest quantities in a scheduled manner, and at the same time defend a price level that was being systematically undercut for months by many cultivation areas that were in even greater trouble,. In this we could rely on our strengths: diverse sales markets, a network of loyal customers that has been around for years, and a broadly diversified assortment. These three factors as well as the good quality of the stored fruit have enabled us to clear out all warehouses in a timely manner. However, for our fruit growers the bitter memory remains that not all species and qualities have achieved cost-covering payout prices.
How have the different sales markets that are operated by VOG developed?
Including organic products, last year ca. 60,000 trucks of table products were marketed, that is 13,000 trucks more than last year. Because Golden is still the primary variety in Italy, the price pressure from our competitors could be felt for all 12 months, especially in the supplying of Italian chain businesses. We have even managed to expand our market share in the traditional track of wholesale market customers. The most prominent workhorses in this were Fuji, Gala and Granny, but also Pink Lady. It was clear that the export to Germany was difficult, because the German fruit growers also had a record harvest, and there was a lack of bulk-bins and storage space in Altes Land. We managed to catch up in the second half of the season, and in total we had loaded quantities similar to last year. We have grown in Scandinavia, England, and - perhaps surprising and despite the record harvest in Poland - in Eastern Europe. However, we had the largest growth rate in the Middle East, Egypt and North Africa, and this even though the political and economic situation is very precarious due to dropping oil and gas prices, and the foreign currencies for the export of foodstuffs are lacking. Our classical assortment of Golden, Gala and Red Delicious is especially in demand. Finally, the weak exchange rate of the American dollar to Euro has also helped us to stand our ground against apples from the United States, who have dominated this market for many years.
The main problem last year was quantity. Southern Tyrol needs to produce a lot to keep up, and at the same time maintain its high standards and quality. Can this be permanently maintained?
A big challenge for our South Tyrolean fruit cultivation comes from the new cultivation areas in Eastern Europe. Over the last 10 years, large and modern fruit facilities have arisen, with production costs with which we certainly cannot keep up. We need to take this new competition into account in the coming years, especially regarding the classical species and the low-price segment. That is why our high productivity fruit cultivation needs to be the basis for existing in the face of global competition. Perhaps we need to focus on our strengths even more: quality, production standards, service. And of course innovation of species, to tie our customers to us with uniquely flavored apples. This is not in opposition to a high yield per hectare.
How to the optimizations concretely look?
The strategic question is: how can we stand out from our competition and tie customers to us in the long run. Therefore we cannot be satisfied with "mediocrity". We need to deliver top quality and top service, if we want to belong to the small circle of top suppliers. And it is very important to us to accelerate the conversion to the modern clones in the red and dual-colored assortment, with which we can deliver the standards demanded by the market, and keep up with the competition. There will only be a satisfactory yield per hectare in the future, when a higher pack-out of the demanded color standards and quality is achieved.
Other cultivation areas can follow suit and copy this way...
...but it comes down to the speed with which we move in the market environment. The demand for organic apples is growing further: in England, Scandinavia and Germany. But we are happy that Italy has finally also discovered the trend towards organic products, so that the domestic market becomes ever more important. With the fruit association Bio Südtirol we have a member company that has specialized exclusively in the marketing of organic products, and which in terms of size belongs to the market leaders of Europe, especially in the offered assortment palette. The association takes in new members every year, so that we can coutn on a harvest volume of over 30,000 tons in the coming years.