Quality focus could pull Dutch industry through rough times, says ABN AMRO
Dutch bank ABN AMRO agri-food economist Frank Rijkers has written a report assessing the potential impact the Russian boycott will have on the fresh produce sector of the Netherlands, entitled 'Russian import restrictions cause headaches'. Here, www.freshfruitportal.com summarizes its main findings.
Analyzing exactly what the Russian import ban will mean for the Dutch fresh produce sector is difficult this early into the embargo, but repercussions will inevitability be felt, according to Rijkers.
Last year, 4.5% of the Netherland’s agricultural produce - mainly pears, tomatoes and onions - were exported to Russia and the first five months of 2014 demonstrated an upturn in the amount of fruit, vegetable and agricultural exports compared with a general decline in exports outside of the fresh produce category.
"Surprisingly, even in the first five months of 2014 there was a contraction with exports 12% behind compared to the same period last year. And a negative difference of 7% compared to the five-year average (+ 5%) over the period from January to May," the report says.
"The main reason for the decline in exports in the first five months was because of the weak position of the ruble. Products were too expensive and exports continued behind expectations.
"Potatoes, vegetables and fruits (AGF) are a positive outlier in exports. In the first five months of this year there were more vegetables exported to Russia. In total, the AGF export volume to Russia increased by 47%."
Breaking down the increases, Rijkers says onion exports went up by 134%, greenhouse vegetables increased by 99% and pears by 160%.
Rijkers says that following this export boom, tensions between Ukraine and Russia heightened and with the onset of economic sanctions on Russia from the EU and the U.S - coupled with the dramatic events of the MH17 Malaysia Airline incident - 2014's initial period of growth stopped.
Focus on quality
One of the key ways Dutch exporters can avoid financial strain caused by the Russian ban is to find alternative markets, focus on quality and take full advantage of the ability for year-round supply.
"Those companies with a portion of business dependent on exports to Russia need to find new or modified marketing strategies. These must be sought in other emerging economies, particularly outside Europe.
"Within Europe, Dutch producers and suppliers of agricultural [goods] and food must distinguish through high quality.
"The Netherlands is capable of delivering this quality all year round and this should be anticipated."
Price pressure across Europe
Another of the key points Rijkers makes is how the European market will become flooded with excess fruit and vegetables, which in turn will lead to a fall in prices generally.
"It remains, of course, speculative on what the final consequences will be for the export of agricultural food products to Russia. This is, among other things, dependent on how fast trade can shift and what the actual production and thus supply will be within Europe.
"Nevertheless, it is with reasonable certainty to determine the price pressure will ensure the supply side of agricultural and food products."
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