Netherlands: Dwindling acreage for contract farming
In 2008, this acreage reached the highest level in twelve years. In the three years following, the acreage decreased by over 30%. This was due to an exceptional 2009 harvest, but also to a shift of propagation to foreign countries. Now, insiders expect the amount of contracted hectares to drop even further, especially in the processed vegetable industry. According to the Dutch ABN Amro bank, contract farming is likely to suffer strong competition from grain production caused by high grain prices.
The industrial processing of fresh vegetables has seen a downward trend since 2008. In 2011, a slight recovery led to the processing of 435.2 million kg of fresh vegetables (+0.5%). The remaining stocks had increased sharply in 2008, causing the industry to reduce production. The most important segment in the vegetable processing industry is the canning industry, followed by the frozen food industry. The canned vegetable industry has regained some strength after a sharp decline in 2010, the processing of mushrooms in particular. Production of frozen vegetables however, is down with 17.1%.
The vegetable processing industry operates in a market with strong international competition. ABN Amro thinks that foreign countries will play an increasingly important part as suppliers of raw materials in the coming years. In order to maintain international competitiveness the vegetable processing industry has to maintain adequate raw materials at competitive prices. In addition, the sector would do well to respond to prevailing trends in the consumption of foods such as convenience, health, diversity and sustainability.
Source: Sector Monitor Food, ABN Amro
