In October, the news was full of reports about high gas prices, which particularly affect Dutch horticulture. Gardeners in our country set up plants in the winter to supply tomatoes, cucumbers and peppers in the spring and summer to large parts of north-western Europe, but also to the south of France, Austria, Poland and Italy. This week the gas price tapped more than double the level compared to the prices in October.
While in January 2020 gas prices are just above 20 cents per cubic meter moved, they shot through the 80 cents in October. Last week the level of €1.80 was broken. Prices are so high that horticulturists can no longer produce profitably and will therefore leave their greenhouses empty. The production loss cannot be compensated for anywhere, so that the supply of fruiting vegetables will decrease and consumers will only be able to buy their most preferred vegetables at unheard of prices.
Gas in the EU is so expensive because of the cold winter of 2020, the catching-up demand from the market, the cessation of gas extraction in Groningen, the removal of more polluting fossil fuels from production, deactivated nuclear reactors in France (so that the Netherlands has to supply gas-generated electricity to Belgium, which normally imports nuclear-generated electricity from France) and a stock policy that does not anticipate the consequences of this. High prices were brought down by deliveries from Russia. Due to mounting tensions about the sphere of influence in which Ukraine falls (Russia or the Nati countries), this correction has become uncertain. This development resulted in an almost tenfold increase in gas prices compared to the winter of 2019/2020.
The gas crisis has now reached the point where there is no longer any question of security of supply. A cold winter, such as it has already made itself felt this week, can with the current stocks (42% of the capacity) will force gas rationing. According to Greenhouse Horticulture Netherlands, that is a matter what the government should have paid more attention to. In the corridors it seems that there are already talks about restarting gas extraction in Groningen in order to temporarily push the high prices down. Yesterday, De Telegraaf reported that a Armada of liquefied gas tankers is on its way to the Netherlands to take advantage of the high prices in the EU. Prices fell to €1.33 per cubic meter in response to the news about the incoming ships. For now, that is a price that is six times higher than in the winter before the corona crisis, which is one of the main causes of the market and price disruptions that hit the economy. Greenhouses will also be phased out at this level.
ABN Amro pointed out last week that the gas crisis shows how dependent the Dutch horticulture is on gas, despite all the sustainability talk about energy-producing greenhouses that has been coming from the sector for a decade. It can therefore be expected that this gas crisis will permanently change the face of the sector. How depends on whether the Netherlands can produce enough sustainable energy and to which sectors the politicians want to allocate it.
Next summer, horticulturists with a fixed gas contract at ‘old price levels’ will earn twice as much from the scarcity of fruit vegetables. It is expected that they will look for greenhouses that they can now take over from stoppers at attractive prices, so that the gas crisis will also ensure further scaling up of the companies. Banks will try to dampen the opportunism of high earners by providing bridging loans for idle greenhouses.
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Tomatoes will become incredibly expensive next summer – Gas prices drop briefly due to ‘Armada’ – Foodlog