Why Are There Fruit & Veg Shortages & Why Are Fruit And Vegetables So Expensive? It’s More Than Just Raw Material Price Increases. It’s Also About Supply and Demand. Learn More Below.
Fruit & Veg Shortages are in the news again. Not only are shortages predicted this summer, with higher prices on the cards, some supermarkets are already rationing customers to 2-3 of certain items.
But why is this? Why are Fruit & Veg Shortages predicted and why are some products already in short supply?
My Commercial Grower Perspective
I spent over a decade as the owner of a market garden growing salads and veg on a five acre holding with half an acre of glasshouses and half an acre of tunnels. During that time I sold my crops via fruit and veg cooperatives, in the commission markets (Covent Garden, Western International etc), direct to retailers and via wholesalers. But though they all sound quite different the actual prices came back to supply and demand. And it’s not changed much since those days.
If the weather was fine, with a hot summer, people eat plenty of salads. It’s relatively easy to sell it and prices are steady. But if the weather suddenly turns cold and wet, as it often does in the UK, we would have plentiful crops but no one wanting to buy them!
At other times, when supply was limited a sudden demand hike, perhaps caused by a sudden warm weather change, would see prices rise.
It’s all about supply and demand. And we’ve seen how fragile and uncertain energy prices nave been this last year so all have some experience of the situation.
The difference is that it’s possible to stockpile oil and gas. To buy it when demand is low and stockpile it until demand and price goes up. You cant stockpile lettuce! They have a very short shelf life.
But Don’t Supermarkets Contract Buy In Advance?
Yes and no. Supermarkets often have contracts for cooperatives and very large growers to supply them for a season. But they prefer long season contracts and don’t want to deal with small scale growers.
So they have a call down contract where they can tell a grower they want, say, a lorry load of lettuce delivered to their warehouse later today. They will then distribute the crop to their many branches and you can buy it the following day.
The price will be based on the prevailing market price on the day. That’s the average price in a given commission market that day. That sound fair in one sense but it isn’t necessarily so. The supermarkets demand the best quality and growers supply it. The growers them send their surpluses to the commission markets. It’s good stuff but not as good as what the supermarkets cream off first! So the price is then based on a crop that meets the legal requirements but is slightly inferior to the cream of the crop the supermarkets demand!
And the supermarkets can decide not to buy any crop at all on any given day. Even though the grower has top quality produce ready for sale. And if the supermarkets receive a “substandard” crop they can reject it at the warehouse. They’ll send it back to the grower, at the growers expense. But by the time it gets back it’s too late to sell it elsewhere.
Growers often complain that when the weather is good no crops ever get rejected as substandard but lots seems to get sent back when the weather suddenly turns cold or wet. Often the failure is considered quite trivial by growers. I’ve seen perfectly good lettuce returned because a single box in a consignment had a smear of mud on the outside of the otherwise spotless white box. The crop in the box was fine but the consignment was considered “substandard”.
The Cost Of Growing Crops
My example here is a crop I’m well acquainted with. Tomatoes.
I grew 10,000 tom plants a year under glass for many years. That means picking several ton a day at peak. In my case we planted in “cold” greenhouses in early April and started pickling in volume in July. It’s a relatively short season and requires little heat except for propagation of the plants. 10,000 tomato plants need a lot of space and heat even when small as we needed to start them 5-6/weeks esrlier.
Growers that grew crops that were being harvested before my July commencing harvest had to plant much earlier and use huge amounts of heat to get a crop. Many would plant in December or January and be picking very early in the year. These crops had to compete against crops imported from warmer climes and there is always a balance between airfreighting tons of tomatoes in to the UK or using lots of heat to grow them here.
Crops grown in the south of Spain or Portugal could of course be sent by lorry. But in many cases the growers in this countries prefer to auction their crop to the highest bidder. The biggest auctions of tomatoes (and other fruit, veg and flowers) are actually in Holland. So often the crop is sent there, auctioned and then sent on to the UK, Scandinavia, Germany or elsewhere.
The auction is a clock auction. It starts high and drops down unto someone bids at that price. Clock auctions tend to boost prices as the buyers fear is they will get nothing unless they jump in. A lorry load of toms can be auctioned in a 20-30 seconds by this method. It is extremely rapid and buyers have to remain alert. Many buy via the phone and could be anywhere in the world bidding from crops grown elsewhere and being sent to a distant country. Many supermarkets use Dutch auctions to balance the flow of produce on to their shelves. So the reality is that the prices they pay UK growers are a combination of UK commission market prices and Dutch auctions.
So here we have international auctions dictating the prices paid to growers. Growers can’t set a price, its is dictated to them. And to cap it all they have no control over their costs. Energy prices are also supply and demand, as are the price of fertilisers, pesticides etc to a certain extent.
What other business would operate with no control of input or sales prices? Perhaps you can now see why I’m no longer a commercial grower and eventually took a totally different career path. Commercial growing is not an easy life.
It’s been suggested to me that growers can reduce energy prices by buying in advance, using combined heat and energy sources or even growing their own fuel. It’s a great theory but doesn’t really work very well.
There are growers using surplus heat from power stations. Its sounds good and does use the surplus heat. But the price of that heat is dictated by the energy market and it’s not easy to just decide to use another source of heat when you have a long term contract. You can’t just move a nursery.
Some grow their own fuel. They own woodland and use the trees as woodchip to heat glasshouses. In some cases the woodland is on another continent and is shipped in the UK at great cost. It reduces the local carbon footprint by increasing it elsewhere! It’s not a great answer.
What about Brexit?
This is a non political website so I will not make political comments. But what I can say is that freight companies both sides of the channel say that paperwork and long queues at channel ports have increased freight charges. Many don’t even want to cross the channel. And retailers fear produce perishing on lorries stuck in ports. It was inevitable!
I read that cold weather in the U.K. has caused crop shortages … as if we’ve never had bad weather before! However cold weather in Spain, Portugal and Morocco has limited crops. It’s been unseasonably cold and crops such as tomatoes don’t ripen when it’s not warm. And growth is much slower. Shortages force prices up.
The Solution To Expensive & Absent Fruit & Veg
Simple … well nearly simple. Grow your own. Though that’s easier said than done.
However, politicians suggesting we should eat turnips is very Baldrick!