Current soaring price of vegetables likely to reverse from late summer

Fruit and vegetables.
Fruit and vegetables. Source: Priit Mürk/ERR

While the price per kilo of onions, carrots and other vegetables has risen dramatically on the supermarket shelves compared with the situation a year ago, according to one producer from Võrumaa, in the broader context of the general ongoing inflation, prices are not especially high even now, while as the summer comes to an end, a price fall is likely to follow.

Meanwhile a purchasing manager at supermarket chain Rimi, says vegetable prices have already started to take a downward direction.

Whereas in July last year, a kilo of carrots cost on average of €1.07 at store, by the middle of summer this year, that price had risen to €1.75. Cabbages and potatoes are also considerably costlier than a year ago, and the price of onions has saw a particularly major jump.

Rimi Estonia purchasing manager Talis Raag told ERR, however, that it cannot be stated unequivocally that vegetables have become more expensive, as a rule.

Raag said: "Price fluctuations have been very varied, across different products. Put simply, for example, the switchover from last year's harvest to early this year's plays a strong role in initial pricing. However, we now see how the prices of various products have started to fall – including carrots, cabbages and onions."

Tarmo Timmi of Jaagumäe farm, Võru County, which grows vegetables, potatoes, cereals and rapeseed, said that the price of the first of these is largely connected with the harvest situation.  Carrots, for instance, were simply fewer in number this spring.

"There was not enough. Last year's drought, the biggest of the century left its mark and was experienced all over Europe. The entire market picture was such that there was fewer produce, while during a good year, there will be far more, so the price drops with a thud. It all depends very much on yields," Timmi went on.

Meanwhile the Estonian Institute of Economic Research (Konjunktuuriinstituut) found that a kilo of cabbage cost €1.18 on Estonian store shelves in July, yet the Jaagumäe farm is currently selling at a sale price of €0.44, while adding even a few cents to this will break the market, according to Timmi.

"A lot can still be missed commercially. If one trade price makes a dent in the counter, there's no point in letting it fall further, it will remain there. So this is the reason for the final consumer price. Noone will dash to another store to buy this one cheaper head of cabbage," he said.

Market price does not truly reflect current situation

While carrots with a price of up to four euros per kilo can still be found on the market stalls, according to the farmer, these prices cannot be compared with store prices. At the market, the a retailer sells a few kilos of goods in the space of an hour, but has to pay taxes themselves and also pay themselves their hourly wage.

Timmi sadi: "The market price doesn't paint a clear picture of the situation these days. This is almost like craft store selling expensive goods."

According to the Jaagumäe farm owner, onions have not been grown extensively in Estonia, the reason being that as a very small country, the registration of some required plant protection products is a very expensive process, one which must be done separately in each country.

Furthermore, onions are very weather-sensitive, he said, and grow slowly. The climate here is rainy, meaning onions must be dried out using a separate tech and a ventilated container. All these factors together mean that the price of onions is too low to warrant all this effort.

While of course private growers and gardeners raise onions, those "growing on the shores of Peispi järv are just for TV, but you wouldn't want to call that growing, it's handicrafts," Timmi said.

As for vegetable prices more broadly, according to Timmi, general inflation should be taken into account, and in this light, vegetables are not particularly expensive, even now, relative to present-day earnings.

For example, that during the Eesti Kroon era (Estonia's currency 1992-2010-ed.), a kilo of vegetables cost three and a half or four and a half Kroons per kilogram. 

However, price rises relating to economic growth and inflation in the intervening years has been such that the daily wage figure in euros is almost the same as it was in the time of the Kroon (one euro equates to a little more than 15 Kroons-ed.).

"The stronger guys took in 50-100 Kroons a day at that time. Currently, the figure is around the same in euros, but if you examine at the prices of vegetables, no single item costs €3.50; we are surely talking in terms of cents," he said. "Even taking in all the pain of inflation, our prices now are ten times lower, so things are certainly very cheap after all; it is the rest of life has been cut short."

Estonians continue to buy local

Despite the higher prices, the country of origin of a product is seen very important for Estonian vegetable buyers, and those buying refrigerated meat also, Talis Raak of Rimi said.

Purchase preferences still incline towards domestic production.

"At the same time, we can't forget the price-sensitive customer, so that's why we always try to offer a range of options," the Rimi spokesperson added.

According to Timmi, the price of domestic Estonian products is determined by what is going on in the rest of Europe, nowhere more so than in Latvia, which sets up the playing field on which Estonian growers can operate. 

Jaagumäe farm has more success with vegetables with vegetables which don't perish quickly; this is more difficult with perishable plants, such as cauliflower or broccoli, while the farm had to ditch cultivating leeks altogether, for this reason.

The subject of herbicides and pesticides is also major concern in itself he added, stating that there is a lot of ignorance around the topic – to the extent that passersby have even on occasion called the police on seeing chemicals being sprayed on vegetable crops.

There could be more trust in the farmer, Timmi added.

Whereas in the past, the majority of people worked in agriculture and only a handful were engaged in some other area, now the situation is the reverse of that.

This means that in order to be able to farm without herbicides, pesticides and the like, this relationship should also return to its former state, i.e. people should once again go to the fields with hoes in hand and start weeding.

"I'm not opposed to restrictions on crop spraying and protection, but in other countries you can them, they're the same, so doing so would mean that products sprayed with things that are forbidden would arrive from abroad anyway. We would have a banned substance, but goods grown elsewhere using them could be sold here, which would be an unequal situation – as with the climate difference in any case."

Prices go down in summer

Farmers live by the rhythm of weekly sales; every week a new sales offer is made to the buyer for the following week, while Timmi said that even a one-cent price drop can make the difference between making a sale the next week, and someone else scooping it up.

"Perhaps, for instance, we can sell potatoes this week, but we can't sell them the next; we can't find a way in. It becomes like a competition to see who can do that. None of this is noticeable in-store, it's just happening at the pinnacle of the pyramid, so the supermarket is like an eagle in the sky, looking out for itself," he went on.

"Should one week go awry, we try again the next -week there are various different chains," Timmi added.

"It all works like construction; every week has its own price. Is it not the case that this gets fixed more towards winter? In summer, the price drops continuously, while the crops are coming up. Currently, no price is rising, we're certainly seeing a fall, but it is also as the case with [district] heating, that the volume remains the same anyway. At some point, maybe a change will occur, whereby things become very noticeable," Timmi said.

As for the difference between the prices in the store and with the manufacturer, Timmi pointed out a rule whereby if he goes to the store and divides the asking price by two, he will then obtain the amount he wants from his co-buyer, and everything will be fine. If the difference is larger than that, the store price is already too high.


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Editor: Andrew Whyte

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