Flavorite Hydroponic Tomatoes -

Boom times for covered cropping

I guess it is a matter of how you look at it. If you are a small family business (or even a large one) the advent of large scale tax leveraged corporate investment in greenhouses could be pretty scary. On the other hand the larger retailers will see more players on the production side of horticulture as a big plus - more product to choose from, better quality, more consistent supply, all in all better year round stocking capability. This is an important point for all growers and retailers because inadequate supply creates shortages on the shelves, drives prices up, while varying quality disappoints consumers and disrupts demand.

There is no doubt that greenhouses with better infrastructure will grow better crops of tomatoes, for example and this will continue to drive a category that is already the most exciting category in the world. Up until now investment in the tomato industry has been sporadic and haphazard. Flavorite Tomatoes has led the way in Victoria while the Costa Group and Moraitis have also begun to grow greenhouse tomatoes.

But the point is that in the last 12 months only Flavorite and the group of growers who support this Brand had continued to consistently invest in the industry while droves of small growers have retired or lost interest. A nett loss to supply has occurred over the last 12 months particularly as older growers change to growing capsicums or stop growing tomatoes because their product is no longer suitable for most retail outlets. Existing growers in Sydney for example are finding that the hurdles to reinvesting in the industry are just too difficult to surmount.

Local councils requirements are too onerous and marginalise investments; natural gas is not available. The age of the growers and their inability to adapt to new technology are also limiting factors and this situation is also very prevalent in Virginia South Australia. This area is too starved for capital and financing new projects is a major challenge. But it is certainly not all gloom. The market is growing strongly for greenhouse produce - not only for tomatoes and lettuce. Opportunities exist for many crops - strawberries, eggplant, zucchini, capsicum, cucumbers and many types of flowers and potted plants.

Well run family businesses that take the time to hone their production skills and understand the marketing arena they operate in, will do well. They will do well because they understand what their customers wants and focus their production accordingly. Family businesses can keep their costs tight and achieve extremely low costs of production. This can be very effective against corporate type of investment with layers of management. Smaller growers do have to be wary of being lured into niche markets where pricing can be attractive. Yields are low, markets are extremely thin as niches rarely last long and are quickly over supplied - leave these varieties to the corporates who can afford to play around with the retailers foibles and penchant for new new new products. Focus on the main game - get your production right, at the right price, manage your greenhouse well, build your staff up, get value into your business - get your house running right and do not be too distracted by what is happening around you.

It would not be good business sense to ignore the fact that there will substantially more hydroponic tomatoes around towards the end of 2007. Most of this product will be targeted at the supermarkets BUT there is a strong expanding local fruit sector and more no local interest in export than ever before. The more planning and marketing that is involved in the distribution of the extra fruit the less negative impact there will be on the market place and this will benefit the growers and retailers in achieving their desired margins. There will be challenges. There is a trend to prepacks and the current varieties do not suit the weight regime. The Australian market prefers larger tomatoes, can it be steered to smaller higher value fruit? Many growers lament the way their produce is handled at retail level, can we expect this to change?

On the other hand we do have significant advantages. We have made substantial well considered investments in clever technologies we do have a product and that is greenhouse product in general, but especially tomatoes, that is well received by the retail sector and by consumers as a whole. The market is growing for this product every year and there is room at every level of the supply chain for entrants into the industry who will do the job well and take a measured professional approach to the greenhouse sector. We need propagators and nurserymen with the infrastructure to graft plants, we do need more growers with hi-tech greenhouses, we need more professional marketers. New production equals new opportunities, new markets, new careers which all spell boom times for greenhouse cropping in Australia.

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As you are aware John, Flavorite has made substantial investments in new grafting facilities and staff management. The new automated packing system is now operational and if you are in the area just give me a call and I will show you around - it's amazing!

Flavorite intends to be "ON SHOW" on Saturday October 28th with an 'Open Day' that will include other local producers, with farm tours for the general public as well.

Hear from you soon John,

All the best

Mark Millis

mark.millis@flavorite.com.au