Agricultural sector growth contingent upon innovation

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Agricultural sector growth contingent upon innovation

  • Vegetable supply chain: potential to stand out through healthfulness, sustainability and efficient logistics
  • No milk surplus as a result of the abolition of dairy quotas
  • Increased involvement by agricultural entrepreneurs in the supply chain

Focus on quality to create opportunities for the vegetable supply chain

Prices in the vegetable supply chain underperformed in 2014. Dutch vegetable growers are highly dependent on the export market for their prices. Large harvests in the Netherlands and other countries – and Russia’s food boycott – meant that the market was flooded and returns were under pressure. The early drop in the supply from Southern Europe gives cause for optimism at the start of the 2015 season. This is ABN AMRO’s conclusion in its Vision on Agriculture 2015, published today. It expects that the increases in scale in the sector will continue. Dutch vegetable growers can look to freshness, quality, healthfulness and sustainability as ways to stand out, and create opportunities by looking more closely at and placing greater emphasis on the consumers’ needs.

Abolition of milk quotas not resulting in unchecked growth

The abolition of the milk quotas does not mean that farmers can now milk their cows without restraint, ABN AMRO believes. Growth is only possible if it remains within statutory limitations and has a clear focus on sustainability. These conditions safeguard the connection to the soil. Although dairy output increased in 2014, it slowed down again late in the year when milk prices fell. ABN AMRO expects the price pressure to carry over to 2015; however, the weaker euro means a stronger export position for the dairy supply chain. Looking further ahead, the outlook for price developments is encouraging, with emerging markets expected to consume more dairy products. This will involve a shift in focus to processing untreated milk, as the demand for end products on those markets is not the same as that on existing (i.e. Western) markets.

Cooperation for innovation

Innovation will continue to be important during the coming years if the agricultural sector hopes to retain its strong position. ‘Optimising processes, modifying products and sharing expertise, for example on social media, are ways in which the sector can hold onto its positive image. The increases in scale in the agricultural sector will continue, and operators in the agricultural supply chain will join forces. For fresh products, in particular, they will focus on excellent logistics processes: from the source to the end-user,’ explains Pierre Berntsen, Director of Agricultural Enterprises at ABN AMRO. ‘Besides the quality and healthfulness of products, the production methods and the people behind the products will also become more prominent. A market exists for products that tell a story. More and more operators will look to participate in supply chains that are closed to some extent. We will see a shift from sector-based thinking to supply chain-based thinking.’

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