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Almost 1 in 7 farmers and horticulturalists supply products to consumers along a short supply chain

25/06/2021

The number of agricultural businesses that sell their products along a short supply chain increased by more than a quarter from 2017 to 2020. That’s according to the Wageningen University & Research Short Supply Chains Monitor, commissioned by the Ministry of Agriculture, Nature and Food Quality and based on data up to 1 April 2020.

In April 2020, 7,234 primary agricultural businesses in the Netherlands were using short supply chains to sell some or all of the food and floriculture products they had produced or processed. Total revenues for agricultural sales through short supply chains were worth at least 1.36 billion euros over the period April 2019 till March 2020 While there are considerable differences between provinces, there is growth across the board.

Businesses selling along short supply chains (referred to hereafter as 'short-chain businesses') represent 13.7% of all primary agricultural businesses. Of those, 3,401 business only sell directly to consumers, while 2,107 sell only to a single intermediary, and 1,726 sell both directly and via a single intermediary. This research defines a short supply chain as selling either directly to the consumer or through a single intermediary. The monitor covers the period up to April 2020, so it does not include the full impact of Covid-19.

Most short supply chains are in horticulture, dairy farms and grazing livestock farms
Fruit cultivation, greenhouse horticulture and ‘other horticulture’ are the groups with the highest proportion of short-chain businesses relative to the total number of businesses. Dairy farming accounts for the largest number of short-chain businesses.
Relatively high numbers of short-chain businesses are found in sectors where there is minimal or no need for processing before the product in question can be sold to end consumers. This is particularly the case for eggs and fruit, but also for a variety of vegetables, plants and flowers.

Developments 2017-2020

The number of short-chain businesses has increased by 1,510 (+26%) in recent years: from 5,735 businesses in 2017 to 7,234 businesses in 2020 (up to 1 April 2020). The proportionate growth was even stronger: from 10.5% in 2017 to 13.7% in 2020. Proportion growth was highest in the provinces of Drenthe, Limburg, North Holland and South Holland. Nationally, greenhouse horticulture and 'other horticulture' were the sectors that showed the strongest proportionate growth.

Short supply chains growing among small businesses and very large ones
The largest increase in the number of short-chain businesses in 2017-2019 was found within the 'very small businesses' category (+47%). For small businesses and very large businesses there was also a large increase, of around one third. About one in five very large businesses now use short supply chains for some of their sales.

Age of the boss plays a part
Businesses led by a young director (<40 years old) are the group with the relatively greatest number of short-chain businesses (17%). However, one in 10 businesses led by someone aged over 65 also sell through short supply chains. For businesses led by someone over the age 51, it makes little difference whether or not they have a potential successor: in both cases, the proportion of businesses selling through short supply chains is a little below the national average.

Short supply chains and multifunctional activities
There’s a strong correlation between selling products through short supply chains and multifunctional activities. For example, 30% of businesses working in agritourism and more than a third of social care farms also sell products through short supply chains. Businesses offering educational activities score the highest (43%).

Organic farmers more likely to work with short supply chains
The proportion of short-chain businesses within organic agriculture is clearly higher (39%) than for businesses with mainstream production systems (13%). The percentage of organic businesses selling along short supply chains in the provinces ranges from 23% in Flevoland to 49% in North Brabant.

North Brabant has the most short-chain businesses
In absolute terms, the greatest number of short-chain businesses are located in the province of North Brabant, followed by Gelderland and South Holland. Percentage-wise, Limburg scores highest with 20% of all agricultural businesses selling through small supply chains, followed by North and South Holland (19%). The percentage is growing in the provinces of Groningen, Friesland and Overijssel, but is still below 10%.

South Holland has the highest turnover attributed to short supply chains
Total revenues for agricultural sales through short supply chains are estimated to be at least 1.36 billion euros over the period of April 2019 till March 2020. South Holland has the highest turnover attributable to short supply chains, at 356 million euros. Greenhouse horticulture accounts for 80% of this. Second and third by some distance are the provinces of North Brabant (212 million euros) and North Holland (177 million euros).

Nationally, greenhouse horticulture accounts for the largest share of turnover
At the national level, greenhouse horticulture provides by far the largest contribution to turnover through short supply chains, at 595 million euros. Second by some distance is the ‘other horticulture’ group (212 million euros), which includes field vegetable businesses, tree nurseries, mushroom producers and flower bulb producers. Dairy farming businesses come in at a strong third place with a turnover of 196 million euros. Laying hen farming and other cultivation sectors (fruit, wine orchards) come in at 79 million euros and 60 million euros respectively, reflecting the relatively low number of businesses operating in this way.

Further development of short supply chains
The further development of short supply chains faces some key challenges, such as more efficient logistics, access to subsidies, knowledge development and the creation of added value. Farmers/horticulturalists, governments and supply chain partners will need to take joint responsibility for these. These are the key outcomes of provincial-level sessions as part of this research into the production side of short supply chains. The development on the demand side is also important to future growth, as explored earlier this year in WUR’s publication on "Distance from farm to fork".

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