Israeli growers wary of pricing herbs out of market

With production costs rising for Israeli growers, prices for herbs have been high. But while growers need to recoup their expenses, they're conscious of the need to be careful not to set prices so high that consumers don't buy and growers don't grow.

“Prices are high on the local market, but that's just one piece of the puzzle,” said Bezalel Madmon of Agriver Agricultural Markeing Company. Agriver handles herbs and exotic produce in Israel, and Madmon noted that they, along with many other growers, are feeling the effects of rising costs.

“Labor costs, water costs and other input costs for herbs are increasing,” he said. Growing more herbs outside of Israel, in Kenya, for example, can help mitigate some of those things, but the complicated nature of the business means that moving growing areas is not a panacea for rising costs.

“We also have to fit our product to European standards and regulations ,” said Madmon. “That means less permitted pesticide, “new trouble makers such as peronospora in basil , and that affects the life circle of our products.” By curtailing the amount and kinds of pesticides they use, growers have to contend with more pests and replant more frequently; and that has an effect on their bottom lines.

“Yields go down because we can't harvest as much, and prices go up because our costs go up,” he said. “So yields decrease and prices increase.” That one-two punch results in even higher prices, but the industry needs to be careful not to set prices too high, even in the face of rising production costs.

“We have to be careful not to have a situation like we had with tarragon last winter,” warned Madmon. That was a situation where the rising growing costs of tarragon kept pushed up market prices. The exploding costs and the resulting drop in consumption caused many growers to question whether growing the herb was worth the trouble.

“Growers had to make a decision to either stop planting tarragon or reduce production.” said Madmon. “In that situation it becomes very easy to have zero supply.”

Given the situation, the market for herbs could implode, but Madmon noted that they're heeding the lessons of the past and being careful not to overprice their product.

“It's cheaper to grow in Kenya and Ethiopia, so we help with costs by growing more there,” he said. “We just have to be very careful to make sure that what happened with tarragon doesn't happen with other lines.”

For more information:
Bezalel Madmon
Agriver
bezalel@agriver.co.il
www.agriver.co.il