Oliver Huesmann has been working in the fruit and vegetable industry for 30 years, advising various companies worldwide. At the beginning of December, FreshPlaza already published a press release from Eurofreshproduce, stating that the German market is becoming increasingly uninteresting for Spanish producers. Huesmann spoke with us about the exact circumstances behind this assumption and why the Asian market is the future for European producers.
Five big players
"Supply and demand in Germany are basically captured by five big customers, which together have a market share of about 70%," Huesmann says. "The small as well as medium-sized farms can no longer communicate with the big companies on the same level as they used to. Producers with up to 100,000 kg of produce are no longer a point of contact for the German food retailer, which sometimes demands 50 truckloads per week of one product. The lack of communication between producers and German retailers means that prices are dominated by purchasing."
Prices rather than certificates decisive for producers
"Certificates designed according to German standards suggest global sustainability that doesn't exist in this form." Huesmann points out that those certificates also come with costs that producers from poorer and/or structurally weaker countries can hardly afford. These certificates are also subject to stricter laws in Germany than, for example, in countries like Spain: "It would therefore be better if certificates were accompanied by on-site verification, which would ensure regular monitoring," says Huesmann. Moreover, the decisive factor for Spanish producers is not compliance with certificates, but commodity prices, he adds. "Producers would also have to benefit from price increases. After all, if retailers earn 30% more, they should also be able to pass on some percentages to producers, so that these can produce sustainably and fairly."
According to Huesmann, in light of these challenges, Spanish producers are now faced with the question whether remaining in the agricultural sector, especially for the German market, is profitable at all. "There are hardly any opportunities for farmers to get in touch with retailers directly. As a producer with just 100,000 kg of produce, one would now be a more likely partner in a niche market in Asia."
Standard goods for retail, premium goods with other suppliers
Nowadays, special premium goods can only be found at retailers that do not belong to large chains. However, no major growth is to be expected in this area anymore, as it is primarily a displacement market, he said. "In turn, food retailers want standard products that focus on mass delivery reliability and stable prices. Most other suppliers at wholesale markets are basically buyers of the unsold or overproduced goods. One of the reasons the wholesale market still functions is that it resells leftover grocery inventory to foodservice operations, etc."
Family farms that have existed for generations have made the leap to selling to retail, but end consumers continue to believe in certificates, which are mostly non-existent in this form, Huesmann said. "The German market is now facing a situation where it could lose Spain as the most important fruit and vegetable producer," he said. Due to goods from Mexico, Peru, Morocco, Egypt, Turkey, etc., Spanish products are increasingly being squeezed out of the market. Spain has already lost about 30% of its tomato market share," Huesmann concluded.