Greenhouses A Blue Ocean Case Economist Agricultural Business Summit - PowerPoint PPT Presentation

Embassy of the Kingdom of the Netherlands in Greece Market Opportunities in the Greek Sector of Fresh Vegetables & State-of-the-Art Greenhouses A Blue Ocean Case Economist Agricultural Business Summit Thessaloniki, 8 December 2015 Embassy of the Kingdom of the Netherlands in Greece

Local supply deficit cannot fully meet the increased levels of domestic consumption, creating thus a market gap historically serviced by imports Average Annual Total Vegetable Supply* per Country 1 Key Points (in kg/capita) 252.46 • During the summer months “Greek salad” becomes *Total Vegetable Supply = (open-air + greenhouse) production + Imports - Exports 103.89 the salad of choice for the tourists that visit Greece, (41.15%) which increases consumption and creates the urge 163.49 150.68 125.99 for further vegetable supply. 54.89 49.82 26.28 (33.57%) 90.31 89.52 • The peak of demand coincides with the peak of (33.06%) (20.86%) 12.89 16.50 tourist arrivals and domestic demand peak for 148.57 (14.27%) (18.43%) “Greek Salad” . 108.60 100.86 99.71 77.42 73.02 • Open-air or Local style greenhouse production fails to satisfy the increased demand. Greece Italy Spain Belgium Netherlands Germany • Average vegetable supply is a good indicator of the Avg. Rest Vegetables Supply Avg. Tomato Supply average vegetable consumption per capita (this method does not diversify processed from fresh vegetables). 2 Double cultivation of Tomatoes over the year 2 Tomato cultivation Year-1 Year-0 period over the year Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Tomatoes trade balance (‘000 tons) 40 Open-air OR Growing Harvesting Growing Harvesting 30 Local-style Greenhouse** period period period period – Double Cultivation 20 10 Idle period 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -10 Peak of demand -20 ** Open-air cultivation and local-style cultivation are grouped since both ways are tightly bound to the climate Exports Imports Trade Balance -30 condition, even though the one is considered greenhouse cultivation and the other is not. KANTOR Embassy of the Kingdom of 1 FAO 2 Interviews with sector expert 1 Management Consultants the Netherlands in Greece 3 Greek Statistical Office

Favorable climatic conditions, lead to superior quality of local products, and demand less energy requirements for greenhouse type of cultivation Optimal growing temperature for tomato cultivation – average monthly temperature 1 30 25 Key Points 20 15 • Tomatoes and cucumbers are vegetables 10 that require high temperatures and extended sunshine. 5 • For the case of tomato, optimal 0 temperatures coupled with extended Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan sunlight contribute to the improved Avg. Monthly Temperature in Greece Avg. Monthly Temperature in northern European countries development of crop characteristics such as Growing period for Greece red color, firmness of the exterior and more Optimal growing temperature for cucumber cultivation – average “intense” taste; characteristics that signal monthly temperature 1 higher quality 2 . 30 • In Greece, It is possible to grow tomatoes in 25 the field 2 periods within a year. 20 • For the case of cucumber optimal climate 15 conditions contribute to the size of the crop, 10 taste and growing time 3 . 5 1 Hellenic National Meteorological Service 0 2 “Tomato Plant culture in the Field, Greenhouse and Home Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Garden”, Jones, 1999. 3 Agricultural ministry of Cyprus Avg. Monthly Temperature in Greece Avg. Monthly Temperature in northern European countries Process of reaching optimal temperatures through technical means (e.g. greenhouses) KANTOR Embassy of the Kingdom of 2 Management Consultants the Netherlands in Greece

The attractiveness of the sector as determined by labor, energy costs and capital needs is improving Progress of Minimum Wage for the period 2011-2015 1 Range of Investment for State of the Art Greenhouses 2 (‘000 EUR/hectare) (in EUR/month) -22.00% 877 863 Minimum wage 684 684 684 1,200 2,000 2011 2012 2013 2014 2015 0 500 1,000 1,500 2,000 Comparison of Prices for Natural Gas Consumption 1 Key Points (in EUR/kWh) CAGR of Greece • 0,045 Minimum wage has been significantly reduced since -7,3% 2012 and remains at this level still. 0,040 • Natural gas energy costs have exhibited considerable 0,035 0,032 decline over the past period, converging to the other 0,029 southern Eurozone countries’ value. 0,030 0,027 0,025 • The total capital expenses are determined not only by 0,020 the size of the construction, but also by the level of desired segmentation* within the greenhouse. 0,000 2013S1 2013S2 2014S1 2014S2 2015S1 *Segmentation is defined as the area within the greenhouse that offers total climate control. A segmentation process is followed in cases of cultivation of Greece Turkey Romania Italy Spain different crops, radical changes in the greenhouse’s climate, etc. KANTOR Embassy of the Kingdom of 1 Eurostat 3 Management Consultants the Netherlands in Greece 2 Interviews with sector experts

The attractiveness of the sector is enhanced due to the low degree of penetration of State of the Art investments Total cultivated fields of Greece 1 Key Points (in hectares) • Total Greek cultivated area has 3,722,200 3,708,030 * 2014 numbers are been more or less steady. 4,937 3,697,600 State of the Art estimates 5,137 (0.13%) 3,676,610 5,032 Greenhouses (0.14%) • Fields 5,075 that are cultivated with (0.14%) 3,649,453 106,958 1% (0.14%) 105,359 vegetables (e.g., tomato, cucumber, 5,177 (2.87%) 105,197 (2.84%) 93,502 (0.14%) eggplant, etc.) account for around (2.85%) (2.54%) 89,380 3% of the total cultivated fields in (2.45%) Greece. 3,610,305 3,587,370 3,597,534 3,578,033 99% • Greenhouse 3,554,896 vegetable fields Rest Greenhouses represent a small percentage of the 2006 2008 2010 2012 2014 total vegetable cultivated areas Other cultivated fields Vegetable cultivated fields Greenhouse vegetable cultivated fields ( 4.5% of the total vegetable cultivated area). Timeline of major State of the Art greenhouse investments 2 (in hectares) • State of the Art greenhouses 50.9 represent a tiny fraction ( 1% ) of the 45.9 5.0 1.0 total greenhouse cultivated area 10.1 ( i.e., 50.9 hectares ). 2.3 1.5 0.0 • This type of investments took place 11.0 on 2007 and afterwards, due to the liberation of energy production on 10.0 10.0 2006 2 . *Investments noted as Others refer to 2 investments with unknown date of start of operations as State of the Art greenhouses. 2007 2008 2009 2010 2011 2012 2013 2014 Sum Other* KANTOR Embassy of the Kingdom of 1 Greek Statistical Office 4 Management Consultants the Netherlands in Greece 2 Interviews with sector experts

State of the Art Greenhouse investments are driven by entrepreneurial spirit, extensive know-how and holistic enterprise management 1 Entrepreneurship • Entrepreneurs who have participated in State of the Art greenhouse investments are often professionals with experience in different sectors than the agricultural, let alone greenhouse, one. Name of Investment CAPEX Starting Name of Investment CAPEX Starting (in m. EUR) Year (in m. EUR) Year 1 Agritex 32 m. 2007 5 Elastron Agrotiki & Spata 1.9 m. & N/A 2014 AGAN – Greek Tomato 2 Wonderplant 22 m. 2008 6 2 m. 2013 Drama Greenhouses – Greek Peppers 3 20 m. 2009 7 Tsahalos S.A. N/A N/A 4 Thrace Greenhouses 2.3 m. 2014 8 Tampakis S.A. N/A N/A Tommaccini – Greek Greenhouses 5 Savvidis Greenhouses N/A 2013 10 2 m. 2011 3 Holistic Management 2 Know-how • The complexity of a State of the Art greenhouse exceeds the level of technology applied, to the total management of • Technical support in the operation of the highly the crop. sophisticated technological systems that State of the • Issues such as crop cultivation, packaging, labelling and Art greenhouses employ is considered vital for its distribution are part of an integrated management process, optimal production. which is not restricted simply to technological know-how. • Both international and local companies can offer some • Both international and local companies assist greenhouses assistance to that end ensuring production with the in their operations for 2-3 years and disseminate the minimum possible disturbance. knowledge to the management of the operation. Embassy of the Kingdom of KANTOR 5 the Netherlands in Greece Management Consultants