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Market Report – May 2016

Summary:  Following a difficult winter, vegetable growers have had a difficult spring, struggling to sow crops and the subsequent poor growth due to wet and cool conditions. Protected crop salad growers have also had a late start to the year due to the weather. Current farm gate prices only cover the costs of production if yield and quality are perfect however; they make no allowances for the normal vagaries of vegetable production. This is very evident in relation to scallions where we are now down to two growers remaining.

 Reports for root crop, brassica sectors: 

 Root crops:

  • Very difficult harvesting conditions which resulted in 30% losses, worse in the south west.
  • Carrots in particular suffered from disease due to wet and mild conditions and the Irish supply was restricted.
  • Retailers reluctant to increase farm gate prices despite labour cost increase etc.
  • Irish losing out due to continued promotions which are being topped up with imports.
  • Complete disconnect between Irish availability and promotions.

Brassicas:

  • High disease levels due to conditions and no opportunity to spray.
  • Demand good due to reduced acreages.
  • Brassicas in very short supply due to wet cold spring.
  • Many acres of cauliflowers and Brussel sprouts ploughed in with one grower ceasing business.
  • Despite higher prices abroad there is a blanket refusal to increase farm gate prices and many growers debating their future.

 Protected crops and salads

  • Very poor start to season, similar to last year due to cold and wet. Iceberg lettuce and scallions badly affected.
  • More produce imported as a result.
  • Tomatoes, cucumber off to a slow start.

Wholesale Market Prices Dublin (Year on Year monthly Comparisons)

 

Dec14 Dec15 Jan15 Jan16 Feb15 Feb16 Mar15 Mar16 Apr15 Apr16 May15 May16
Carrots €/10kg 4.00 5.00 4.00 5.50 4.00 5.50 4.00 5.50 5.00 6.00  5.50 6.00
Parsnip €/ 5kg 6.00 6.50 6.00 6.50 5.75 7.00 5.50 6.50 5.75 6.50 5.75 6..50
Cabbage York €/10’s 5.00 5.50 5.00 5.50 5.00 5.00 5.00 5.00 5.50 7.00 5.50 6.00
 Cauliflower €/8’s 9.00 6.00 9.50 7.00 9.00 7.00 7.00 16.00 6.50 8.50 6.00 9.00
Leeks €/5kg 4.00 5.00 5.00 5.50 4.75 5..00 4.50 5.50 4.50 5.50 5.00 5.50
Swedes €/10’s 6.00 5.50 6.00 5.50 5.75 5.75 5.75 6.00 5.75 5.50 5.50 5.75
Butthd Lettuce €/12 4.50 5.00 4.75 5.00 4.75 5.00 4.75 5.00 4.75 5.00 4.75 5.00

Wholesale Markets

  • Higher prices year on year.
  • Reduced area domestically and international.
  • Cold wet spring across Europe.
  • Euro vs sterling has ranged from 74p to 81p since Christmas now at 78p. Brexit debate having an influence.

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Supermarket Support for Irish lines

Percentage availability of 20 Irish Lines from Jan 2016 – May 2016

  • hort4Lidl still lagging the other supermarkets on stocking Irish.
  • Lidl continue to be a bigger player in fresh produce which is affecting margins.
  • Some lines such as those outside the 20 lines above like onions and peppers only stocked by the main three.
  • Growers not specifically growing for Lidl on some lines only supplying surpluses.

Negative impact of promotions on Irish fresh produce industry

The five main retailers continue to dominate the market place in Ireland with the discounters having a disproportionate effect on the fresh produce sector. Despite the brief reprieve for wholesalers this Christmas with little extreme price discounting the trend appears to be continuing. Eurospar resorted again to extreme discounting on some lines but of course even selling products at 39 and 49c as the major multiples continue to do is in many cases below cost selling.

The increase in below cost promotions such as the Super Six by all supermarkets is a major threat to the sustainability of the industry. The following details the negative effects of promotions:

  • With the number of specials/promotions increasing each season, the reduced farm gate price received for promotions is becoming the grower’s average price for the season.
  • Growers are being forced to do specials when it is not suitable leading to financial losses.
  • On some lines, it’s not possible to supply all Irish produce within the timeframe of the special which leads to supplementation with imported produce.
  • Essentially we are increasingly selling first class product but at lower farm gate prices which leaves fewer outlets and alternatives for lower grade product.
  • Growers sell small volumes of product outside these promotions which creates troughs and peaks in demand which leaves the management of labour and associated costs impossible and leads to increased expense because of unsocial hours.

Traditionally promotions and specials were agreed between suppliers and supermarkets in times of product gluts and therefore in the best interests of the grower and retailer. In recent years this has changed where retailers programme promotions months in advance and therefore is not aligned to periods of oversupply or whether sufficient amounts of Irish product in those particular lines are available.

In recent days we have seen a typical example of this where carrots have been on promotion in three different retailers at the one time. Due to the current waterlogged soils and disease levels, Irish growers would do well to supply at normal levels instead of being asked to do the impossible in atrocious conditions. To compound the issue the growers will be very quiet in the weeks following the specials therefore making efficient use of labour and resources almost impossible.

Summary: After a late start, growers have had a reasonable season. The combination of cold spring weather followed by extreme heat reduced production levels of fresh produce across Europe. The strength of sterling has also helped to reduce the level of imports increasing the competitiveness of Irish produce. Plantings of many lines were also reduced across the continent due to the continued impact of the Russian ban and the low prices of the previous season. However some sectors have fared better than others with early salad crops hit hard due to the cool and wet April/May and the poor July/August period hitting sales of tomatoes etc. Unfortunately the overriding issue continues to be deflation with increases in volume of the top selling lines being negated by average price declines.

 Reports for root crop, brassica and salad sectors 

Root crops: Due to the cold wet spring, crops were slow to establish resulting in crops of carrots and parsnips running up to two weeks late. Some of the early planted crops suffered yield reductions, however quality was excellent and yields returned to normal as the season progressed. Yields were also reduced in the UK and Europe due to weather conditions and this in tandem with euro weakness led to increased demand and prices in both the wholesale and processing sectors. As usual, it has been difficult to secure price increases in the major retailers due to agreed pre-season pricing, however at least it has proved difficult for facilitators to profiteer in this environment. According to Kantar figures, carrots and parsnips have experienced good volume growth over the past 52 weeks.

Brassicas: Stability in demand and prices has continued throughout the year for cabbage with consumption increasing over the past twelve months; however this may be due to increased promotion of the vegetable. Due to the drop in farmgate price, there is little margin in the product, which has contributed to acreage reduction also.

Cauliflower has had a rollercoaster of a year with gluts and shortages being commonplace. As with Brussel sprouts the recent mild weather has caused problems with the crop maturing early. This has also created surpluses elsewhere which have arrived on the market from the UK.

Cauliflower has experienced a reduction in retail sales again this year which may be attributed to its preclusion from promotions as much as anything else.

Irish broccoli was very late arriving on the market this year due to the weather conditions mentioned above. The warm temperatures in June really affected the UK crop which created major shortages at times. Sales of the product continue to shoe exponential growth in the supermarkets

Salad Crops: Growers of scallions and iceberg lettuce got off to a disastrous start due to the weather in April and May with showers of hailstones causing particular damage to crops and poor yields ensuing also. Both crops are at a crossroads in this country with literally a handful of growers left.

For tomato growers, dull conditions during July and August led to both reduced yield and consumption. However the incessant promotions at below production costs by retailers over the summer months had a greater impact on the Irish market.

Wholesale Market Prices Dublin (Year on Year monthly Comparisons)

 

 July 14

July-15

Aug 14

Aug 15

Sept 14

Sept 15

Oct-14

Oct 15

Nov 14

Nov-15

Carrots €/10kg 5.50 6.50 4.50 7.00 4.50 6.50 4.25 5.00 4.00 5.00
Parsnip €/ 5kg 8.50 10.00 8.00 8.50 6.50 7.00 6.00 6.50 6.00 7.00
Cabbage York €/10’s 5.50 6.00 5.00 5.50 5.50 5.50 5.00 5.50 5.00 5.50
 Cauliflower €/8’s 8.00 7.00 6.50 7.00 8.50 6.50 5.50 9.50 7.00 6.50
Leeks €/5kg 5.50 6.25 4.00 5..50 4.50 5.50 4.00 5.50 4.25 5.50
Swedes €/10’s 7.00 7.00 6.00 6.00 6.00 5.50 6.00 5.50 6.00 5.50
Butthd Lettuce €/12 4.50 5.00 4.50 5.00 4.50 5.00 5.00 5.00 4.50 5.00

The wholesale market generally shows an increase in price for most lines compared to last year reflecting the impact of reduced area, weather, and currency fluctuations. However growers dependent on this market are finding it difficult to survive due to declining market share and use of imports even in cases where Irish is available at a similar price. Cauliflower again shows greatest fluctuation due to the nature of the product.

Supermarket Support for Irish lines

Percentage availability of 20 Irish Lines from Jan 2014 – Jun 2014

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Percentage availability of 20 Irish Lines from July 2014 – Dec 2014

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Percentage availability 20 of Irish Lines from Jan 2015 – Jun 2015

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