he European Horticulture Market Opportunities for Sub-Saharan African Exporters AFRSD Department’s Knowledge Network Seminar Washington, 9 January 2007 Ronaldt Thoen – Hans de Vette architects engineers consultants adviesgroep
Dec 13, 2015
The European Horticulture Market
Opportunities for Sub-Saharan African Exporters
AFRSD Department’s Knowledge Network Seminar
Washington, 9 January 2007
Ronaldt Thoen – Hans de Vettearchitects engineers consultants
adviesgroep
Report “The EU Horticulture Market …”
Recent developments
Future business models
Agenda
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The EU MarketIssues
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Value-volume ratio - HIGH
Value-volume ratio - LOW
Perishable
DAYS
Perishable
WEEKS
FHFPs
Storage
Commoditiese.g. banana,
citrus, top fruit, onions
Specialities
Fresh
Commoditiese.g. tomatoes
Fresh VegetablesEU Imports (1.000 t)
0
2.000
4.000
6.000
8.000
10.000
12.000
1992 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004(p)
Extra-EUIntra-EU
SSA 1.1% of total EU-imports
The EU Market
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Fresh FruitsEU Imports (1.000 t)
0
5.000
10.000
15.000
20.000
25.000
1992 1994 1996 1997 1998 1999 2000 2001 2002 2003 2004
Extra-EUIntra-EU
SSA 10.1% of total EU imports
The EU Market
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The EU Market
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FlowersEU Imports ('000 Euro)
-
100.000
200.000
300.000
400.000
500.000
600.000
700.000
800.000
1996 1997 1998 1999 2000 2001 2002
Africa
Non Africa imports
SSA >50% of total EU imports
Consolidation in retail industry shifts power to downstream
links
Chain traction
The EU MarketSupply Chain Dynamics
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Fruits and vegetables became strategic product category
90ties conception
The EU MarketSupply Chain Dynamics
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Food scandals, GMO triggered
Legislative and Public concerns
Legislative and Public thrust
The EU MarketSupply Chain Dynamics
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Fruits and vegetables became potentially suspicious
Y2K conception
The EU MarketSupply Chain Dynamics
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_+
+
__
Usage of chemicals
Usage of water and nutrients
Usage of fossil
energy
The EU MarketSupply Chain Dynamics
Limiting freedom (flowers, fruits,
vegetables)
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_+
+
__
Toxic contamination
Microbial
contamination
Physical contamination
The EU MarketSupply Chain Dynamics
Limiting freedom (fruits, vegetables)
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_+
+
__
Service level
Control on logistics
Product range
- -
The EU MarketSupply Chain Dynamics
Limiting freedom (flowers, fruits,
vegetables)
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Exclusive
markets
Emerging markets
Spot market
Consistency
+ +
_
_
Massive expansion
of production
Product specs
The EU MarketSupply Chain Dynamics
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Mainstream
Discount and loss leaders
Standing order market
Consistency
+ +
_
_
Product specs
Left-over spot
market
“Catch of the day”
Massive pressure
and shake-out
The EU MarketSupply Chain Dynamics
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Traditional market conception
output consistency and traceability
- - - Required investments +++
+ + + + + +
- - - - - -Modern market
conception
Eurep-GAPBRC
Global Food Safety Initiative
MPSFlorimark
Just in TimeJust in Shape
Producer strategies
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Traditional market conception
output consistency and traceability
- - - Required investments +++
+ + + + + +
- - - - - -Modern market
conception
Additional investments
Advanced management
Eurep-GAPBRC
Global Food Safety Initiative
MPSFlorimark
Just in TimeJust in Shape
Producer strategies
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Land Green thumbs Rural coops
Financial resources
Managerial skills
Entrepreneurship
Traditional Farming Concept
Modern Horticultural Concept
Producer Strategies
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• Less saturationbut
• Increase regional production (EU subvention)
• Turkey expected to be major exporter to new member states
Expanding marketEU-27
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• Operational 2nd half 2006, $ 70 million
• Objective: global hub for perishables (flowers AND fruits and vegetables);
• Comparative advantages:• Labor cost• Fuel cost• Free trade zones• Massive increase of flights• Geographical position
New Perishable HubDubai Flower Center
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• Intercontinental sea transport for high perishable products started 10 years ago
• Rotterdam-NY (peppers, tomatoes)
• Operational in flowers since 2 years• Israel-Marseille (Agrexco)• Rotterdam-Boston (FloraHolland)
• Based on new technology • Loading/unloading techniques• Conditioned containers• Preservatives
TransportSea transport
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Consequences for SSA • Substantially lower freight tariffs• Increased sea transportable assortment• New logistic hubs
But also• Increased intercontinental competition
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TransportSea transport
• FloraHolland and VBA announced merger
• turnover 2,0 + 1,7 bln
• Consequences• concentration of 50 % of EU imports in one hand• Subject to NMa (anti trust)
• Possible reactions• Alternative logistic structures: increased direct
sales from SSA to Europe?
Further Chain ConcentrationMerger of Flower Auctions
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New Technology100% conditioned greenhouse
• Strong technology development in EU horticulture driven by:
• Food safety• Consistency• Energy• Labor
• Expected direction• Conditioned greenhouses based on:
• Subterranean heat/cold storage• Combination pad-fan & forced cooling
• Robotizing harvest and post harvest activities
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Heat buffer tank
Boiler
HeatCO2
Gas
Electricity
Water
Bassin
Heat
Pump
Aquifers
Warm Cold
Cold
Heat buffer tank
Heat buffer tank
Boiler
HeatCO2
Gas
Electricity
Water
BassinBassin
Heat
Pump
Aquifers
Warm Cold
Cold
New Technology100% conditioned greenhouse
• Upscaling in EU horticultural industry
• Dramatic decrease of # of EU growers as a result of• Food safety act• Retail consolidation
• Dramatic increase of average horticultural operations
• Family farms replaced by corporate farms• 50% less units than 10 years ago
UpscalingEnd of Family Farm?
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• Key issues in retail industry are food safety and access to sources
• Resulting in long(er) term commitments and direct access to sources (excluding middleman)
• Strategic term procurement between retailers and service providers (… and service providers and producers)
• Mutual investments in logistical infrastructure (retail-service providers and service provider-producer)
• Spot markets loose importance
Strategic alliancesNew Models
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Smallholder
Grower
Entrepreneur
Corporate farm
Integrated Farm Development
Integrated Product Range Development
Future actions Developing horticultural business models
Exportorientation
Domestic marketorientation
Advanced productionstructure
Basic productionstructure
5
4
3
2
1
1 = Subsitance farmers2 = Small scale commercial farms3 = Large scale export farms4 = Professional horticultural farm5 = Multinational agro-enterprise
a
b
c
d
e
Overall development strategies in
horticulture/floriculture
Today's practice: Sher Ethiopia (Turnkey-projects)
• General and production infrastructure• Develop and maintain social infrastructure• Acquire professional growers• Hire purchase facilities to professional growers• Support professional growers
Future actions Integrated Farm Development
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Driven by:• Supply chain management
Focussed on:• Mainstream products
Organized by:• Franchise-like formula
Supported by:• National/local government
Initiated by:• Foreign investors
Future actions Integrated Farm Development
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Existing Investor
Supportive
Government
Professional growers
Future actions Integrated Farm Development
Investments and services
market control ROI
infrastructure
economic development
rent fees
access indust
ry
Driven by:• Need for widening product range
Focussed on:• Small scale specialties
Organized by:• Production cluster
Supported by:• Public sector and World Bank
Initiated by:• Public-Private-Partnership
Future actions Integrated Product Range Development
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Public/Private
investor(s)
Supportive
Government
Smallholder
Future actions Integrated Product Range Development
Investments and services
market development
infrastructure
economic development
rent fees
access marke
t
Exportorientation
Domestic marketorientation
Advanced productionstructure
Basic productionstructure
5
4
3
2
1
1 = Subsitance farmers2 = Small scale commercial farms3 = Large scale export farms4 = Professional horticultural farm5 = Multinational agro-enterprise
a
b
c
d
e
Overall development strategies in
horticulture/floriculturePrivate sector
Public sector
and World Bank