The high prices in the individual markets that are causing a lot of buzz on the Internet tell little about the entire market. It is caused by the effect of new products at the beginning of the season. However, the truth is that the last year will surprise the high prices in the markets. Economists and farmers point to the accumulation of many different drivers of price increases.
Fresh vegetables are always relatively expensive. With the passage of time and the increase in local supply, there will be reductions, but the prices of fruits and vegetables this season will be much higher than last year. In some categories, the price increase may be up to 20%. Jacob Olibra, agricultural market analyst at Credit Agricole admits.
The number one cause of an expensive season is the energy crisis. Record high gas prices translate into fertilizer production costs. These prices have increased so dramatically that some producers in Western Europe announced a temporary reduction in their capacity at the beginning of the year. As a result, there was a shortage of fertilizer in many placesPrices have risen dramatically.
For example, the popular ammonium nitrate costs four times more than last year (its price increased from about PLN 1 to PLN 4 thousand per ton). And although the government launched a fertilizer subsidy, it will cover only part of the costs incurred by farmers – it was expected that you can apply for funds up to PLN 500 per hectare (according to the calculations of the Ministry of Agriculture, 1/3 ton per hectare is used ).
Expensive raw materials also mean more expensive fuel for farmers. – It is good that the government helps, but it slightly reduces the costs incurred. Farmers will have to take over most of them, admits Witold Bogota, president of the National Association of Fruit and Vegetable Producers (KZGPOiW).
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– The costs of horticulture production are at least twice what they were last year. Everything has become more expensive, not just fertilizer and fuel, the prices for packaging have gone up, for example – says Grzegorz Pagacz, owner of a farm spalneowoce.pl from Biawa near Wieluń.
All hands in the fields
Why are fruits and vegetables more expensive than other food categories? It requires large amounts of human labor. In the conditions of the influx of some employees from Ukraine and the growing pressure of wages, one has to take into account that this season it will be difficult to find employees and they will have to pay more, which will also increase the prices of fruits and vegetables – explains Jacob Olebra.
Now farmers are complaining of a shortage of labour. – We estimate that up to 90 percent. Seasonal workers at harvest are from Ukraine. Now they are gone, because they have returned to the country. You can already see a shortage of asparagus, and this may also be the case when picking strawberries – Wetold recognizes Bogotá.
He adds that those fleeing the war will not make up for these shortcomings. – There is no simple translation that one group will replace another. Most of the employees who have left work are men who are here for paid reasons. Now they are war refugees with different motives, and many are dependent on a quick return to the country – says Bogota.
– Men returned from Ukraine to their homeland, and women often had to stay with their children. Labor costs for Polish employees have also increased significantly – adds Grzegorz Pagacz.
The weather can surprise farmers
The expected price reductions along with the development of the season may be delayed due to the weather. The Institute of Meteorology and Water Management on Wednesday reported hydrological droughts in parts of the Lubuske and Greater Poland counties. And while this does not necessarily mean agricultural drought, it is an important warning sign. – There was little rain, this winter there was not much snow, which replenishes the water resources of the earth in the spring. As a result, the risk of dehydration increases, says Jacob Olebra.
– In fact, the fields lack water, which reduces the chances of high productivity. On the other hand, you have to take into account that it may be the opposite locally – temporary storms or heavy rainfall can also hinder field work and damage the crop – adds Witold Boguta.
Corona also raises the prices of imported fruits – incl. The already famous cherry. – The frost we dealt with in April in Spain may have contributed to an increase in the prices of core fruits, including imported cherries – says Marius Dziolsky, agricultural market analyst at PKO BP. He adds that in some cases prices may also rise due to a lack of imports from Ukraine – this is for example with berries.
However, this does not mean that it will stand out in terms of price for a long time. – Come here Cherry has become a big hit on the internetToday, it is difficult to distinguish one or two types of products that will become more expensive. Local differences aside, it won’t be that one category of fruit or vegetable will radically escape trends, and much will depend on the weather — says Credit Agricole expert.
Consumer awareness is crucial
In addition to purely economic factors, psychological issues also play an important role. Nowadays, under conditions of strong inflation growth, it is much easier to pay price increases, even on a larger scale than would be justified by higher costs. Some producers or sellers may try to improve margins in this way. Consumers accept increases more easily and do not ask questions because they see that everything around them is more expensive – admits Jacob Olibra.
See also: A new record for world food prices. All because of the Russian invasion of Ukraine
It is for this reason that farmers are afraid to fall prey to supermarkets, which are also the biggest beneficiaries. – The price at which the consumer will meet on the shelf is largely a matter of trade policy of the largest retailer. On the one hand, they may put pressure on farmers to lower prices, and on the other hand, they use the situation to explain high prices to consumers, says KZGPOiW President.
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