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Why fruit and vegetable prices will remain unpredictable in 2023

If you want to satisfy the hunger of your loved ones in a reasonable way, you should have the current prices for fruit and vegetables in your head as precisely as possible.

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Why fruit and vegetable prices will remain unpredictable in 2023

If you want to satisfy the hunger of your loved ones in a reasonable way, you should have the current prices for fruit and vegetables in your head as precisely as possible. Balance on the plate and in the household budget can best be combined if you keep an overview.

But that could be an unexpected challenge in the coming months. Extreme weather and political crises had already shaken up the markets last year. In the meantime, the turbulence has escalated to such an extent that even experienced observers are astonished. "Seldom have forecasts been as difficult as they are today," says Michael Koch, who, as a horticultural analyst for Bonn's Agrarmarkt-Informationsgesellschaft (AMI), has been keeping an eye on the markets for years.

Fluctuations are normal. Sometimes beetroot is cheaper, sometimes carrots are cheap, sometimes sweet cherries cost more - supply and demand level off at any time via the price, especially for fresh food that cannot be stored. This works just before the end of the week on the weekly market as well as on the international commodity exchanges. However, the imponderables are currently growing on an exceptional scale, both in terms of production and on the demand side. One consequence: end consumer prices could fluctuate more than ever before.

This is primarily due to turbulence in upstream markets, from fuel to labour. Koch is currently watching with excitement the development of greenhouse cultivation in Germany and Benelux. According to his observation, the growth of tomatoes, peppers, lettuce and cucumbers in the greenhouses does not start as early as usual, but mostly only at the end of March or April.

For breeders, this is a bet on the near future. It is likely that they will no longer be able to achieve such high prices for their goods as is usually the case at the beginning of the season. However, this will be more than compensated for by the reduction in energy costs in the spring – if the bet works out.

The Federal Association of Fruit and Vegetables (BVEO) also confirms that the production periods in greenhouse cultivation have been shortened this year. Even more: "In view of the high production costs, the horticultural companies will check exactly which crops can be produced profitably," says the industry association in general. Because since the beginning of the war in Ukraine, the costs for resources such as fertilizer, fuel and wages have risen sharply in almost all sectors.

Some growers even consider giving up after that. "The decision to continue producing fruit or vegetables is difficult given the general conditions," said a BVEO representative at the Fruit Logistica trade fair in Berlin.

At the same time, a cold spell in southern Europe caused the horticulturists there to suffer considerable harvest losses. Spain, with around 1.4 million tons of fruit and vegetables annually, is also suffering from the freak weather conditions. It is Germany's second most important supplier of fruit and vegetables after the Netherlands.

Nevertheless, market experts agree that there is no fear of supply bottlenecks for cabbage, peppers or apples and berries in Germany in the foreseeable future, while this scenario is already a reality in Great Britain. There, consumers sometimes stand in front of empty store shelves. A few days ago, a supermarket chain (Asda) even rationed the sale of cucumbers, broccoli, cauliflower and other types of vegetables to private buyers.

Brexit has largely strangled the previously brisk trade in agricultural goods between the island and the North Sea countries on the continent. According to AMI expert Koch, potential exporters in nearby France, Germany or in the Benelux countries often prefer to forego this export transaction before they risk delays on the delivery route and the loss of their perishable goods. The British are now covering a large proportion of their needs in southern Europe and northern Africa – in other words, exactly where the cold spell is still causing problems for producers.

The Germans are also largely dependent on imports for healthy vitamin suppliers. According to the German Fruit Trade Association (DFHV), only a fifth of the fruit consumed here and a third of the vegetables come from within Germany.

However, the local vegetable farmers have continuously expanded their acreage, most recently to almost 132,000 hectares (2021) according to the latest data. This corresponds to an increase of eight percent within five years.

Her business hasn't gotten any easier in recent years. In addition to the cost increases, there is a growing shortage of staff. "We simply don't have enough people in Germany who are willing to work in the harvest - not even for the increased minimum wage," says DFHV Managing Director Andreas Brügger. There is hardly anyone among the Germans who is willing to do the hard work on the strawberry or asparagus fields.

Switching to seasonal workers from Eastern Europe, with which the farmers have been able to save themselves for many years, is also reaching its limits. Three years ago, corona measures slowed down the pickers at the borders, but in view of the widespread shortage of workers, many potential harvest helpers have had more attractive employment opportunities for months.

Added to this are new uncertainties in terms of sales. Consumers are proving to be so fickle in their preferences that farmer's rules about optimal sales times and numbers that have worked for years no longer seem to apply.

Example of asparagus: The 2022 season initially seemed to get off to a good start. Recent experience seemed to prove the optimists right. In the previous year, the noble vegetable was still very popular with connoisseurs. Many consumers put the money they couldn't squander on vacation because of the corona restrictions into domestic pleasures such as fine dining. The white rods were obviously part of it.

The 2022 season also got off to a promising start in April. There were signs of good harvest quantities, and gastronomy, as an important sales channel for asparagus, picked up speed again after the long corona-related hardship. Nevertheless, to the surprise of market experts, sales did not get off the ground.

All over the country, regional producer associations reported a drop in sales of ten to 20 percent. Even after the price per kilo for the best local goods dropped from an average of EUR 12.80 at the beginning to EUR 4.35 by mid-May, customers stayed away.

“Where is the demand?” was the title of a market analysis by AMI at the time, and it also provided the explanation: the shock of the Ukraine war had spoiled the joy of eating asparagus. The image of the light sticks as a noble vegetable with the promise of joy and enjoyment at high prices simply no longer suited the times. And the asparagus farmers were left with their goods. In the end, sales collapsed by more than a third.

If consumers are more interested in asparagus this year, they may find that the range is very limited. Because after the bitter experiences of the past year, the cultivated areas are likely to have shrunk.

The strawberry market developed in a similarly desolate manner. "All in all, the season could have been so good," complained the network of asparagus and strawberry associations soon afterwards. But she wasn't. As recently as May, many German producers believed they could pass on their high production costs to customers.

The experiment resulted in prices of five to six euros for the 500 gram bowl – around a quarter more than a year earlier. Consumers didn't play along, and retailers often placed cheaper imported goods alongside local products. Regionality, long proclaimed to be a megatrend, suddenly took on a secondary role.

In Westphalia, frustrated farmers then plowed under fields with ripe strawberries. On the one hand as a protest, on the other hand to plant corn on the areas that have become unprofitable and thus at least be able to achieve a certain yield.

There is no sign of the turbulent markets calming down for the time being. The war in Ukraine is keeping costs high, many consumers are deeply unsettled, and the weather forecasts do not promise that the longing for calmer times will be fulfilled in the near future. "The starting position for fruit-growing companies will remain difficult in 2023," stated the industry association BVEO soberly.

Incidentally, the bowl of strawberries is often available in the supermarket at the moment for 3.49 euros, sometimes significantly cheaper.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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