Shortage leads to renegotiation of contracts in Europe

Almeria’s producers had not seen such high prices for their vegetables at auction for fifteen years. The issue is that the cold wave has caught most producing countries in the Mediterranean basin by surprise, including Italy (where the disaster has been of biblical proportions), Greece, Malta and other Balkan countries, leaving Spain quite alone as a supplier, specifically Almeria and Murcia, where the weather is very unstable, with many days of rainfall and lower temperatures that cause considerable delays in the production.

Although the vast majority of growers are happy with the prices, the great shortage and high demand are resulting in heated arguments between large distributors and fruit and vegetable companies devoted to their sale, which are unable to comply with the contracts signed with their clients and can only offer a product with exorbitant prices.

The fact is that distribution chains are not used to product shortages, but rather to oversupplied markets and price wars. Given this situation, companies are having no choice but to renegotiate their contracts with clients in order to reach agreements that benefit both parties.

“In general, the vast majority of supermarket chains have been understanding about the situation, while in other more specific cases, they have flatly refused,” explains Enrique de los Ríos, manager of Unica Group. “The chains that need the product are aware of this situation and know that the value of vegetables depends on the balance between supply and demand,” he points out.

This is not the case, however, for companies that work with weekly prices, as is the case of Ejidomar. “We always sell the products at the price set by the market and not through closed programs, so in years like this, we avoid risks,” explains José Antonio Baños, president of Ejidomar.

This situation affects the majority of horticultural products supplied by Almeria, but is more severe in the case of aubergines, which already stand at an average of 4.20 Euro per kilo at auction, and courgettes, which have reached 3.40 Euro per kilo. Green beans, tomatoes and peppers have also reached high prices. Nevertheless, “despite the incredible prices and the joy amongst growers, very few kilos are being harvested,” stresses José Antonio Baños.

The companies consulted expect this price situation to last until April or May, with the entry into production of large volumes in the Netherlands. Prices will stay at high levels especially in the case of aubergines, peppers and tomatoes, as courgettes can be produced faster.