‘Every day is a horror story’: Tomato producers battling with rising energy prices

It feels like just another humid afternoon in Rush’s greenhouse-filled countryside, but co-director at Kilbush Nurseries Matt Foley is in his office reluctantly scanning his eyes over the latest energy prices. As one of the country’s leading tomato producers alongside his brother John, he opens up on the challenging situation currently facing the horticulture sector.

“The gas prices are different every day, but every day is a horror story. I haven’t even opened today’s because I’m almost scared to. In 2020, we were paying around £0.31 per unit and we certainly paid over £4 in March this year,” Foley told The Irish Times.

Total input costs on natural gas were up 49 per cent in March compared with 2021, according to a Teagasc inflation report in April. The brothers’ vine tomato operation on 3 hectares (7.4 acres) of greenhouses is reliant on energy in order to create a controlled temperature and a shortage of supply has come with great difficulty for them.

A Teagasc input cost report in April stated that the average cost of electricity has risen by 131 per cent. Foley commented on the importance energy has an input to his business, saying: “Energy is a huge input for us. Energy is everywhere. Energy for heat, to run the lighting, for the pumps, for the fertiliser.”

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[ Glasshouse fruit and vegetable growers cut back on production as prices rise ]

Fertiliser is another important input for Kilbush Nurseries and is also tied to energy inflation. The input cost report said that average costs in March have tripled since last year and that specialty fertilisers are selling at €1,100 per tonne.

“There’s not anything with fertiliser that hasn’t doubled, and you can take that as a given. Some of it has even trebled in price. On some lines that I was paying €20 a bag for, I’m now paying €60,” said Foley.

“A lot of our fertiliser is very specialised and it’s very difficult to source. We had Brexit where it was difficult to source fertiliser and now, we have this war making it even harder.”

The Government on June 3rd introduced the Horticulture Exceptional Payment Scheme, set up as a temporary support for the sector. A total of €2.8 million will be available and the Department of Agriculture has stated that it has received 149 applications, with 11 of those coming from glasshouse growers.

“It will be a big help but there is still going to be a shortfall. We’re looking at a situation where the prices are going to be even higher next year and at the moment you can’t see a resolve.”

Foley looked back to wintertime, where his tomatoes are grown and prepared for harvest in March. Gas prices increased as much as 170 per cent in the last few months of 2021, according to Teagasc, and this was felt to full effect at Kilbush.

“Winter was horrendous and coming into the new year we had no forward gas bought and then the war made things harder. The Germans gave Gazprom rights to their gas stocks, but the Russians didn’t fill the stocks so now there’s very little possibility of gas being stored in Germany and that’s one of the biggest markets,” said Foley.

“Last winter, I stopped looking at the prices of energy because it was just frightening,” he said. “There’s a lot of talk about energy rationing this winter but I think in our industry it might not even matter because people won’t be able to afford to use energy anyway.”

In 2022, Foley has had to look at things differently and he stressed that the most difficult part has been the uncertainty surrounding the prices: “The problem is you just never know where the price is going to be.

“We could buy for July today at £1.85 and then it could drop to £0.50, and we’d get fried. It could work out for us in the end to buy that but it’s so expensive that we can’t take the risk.”

Horticulture research adviser at Teagasc Michael Gaffney supported this, saying there is an added risk now for growers, who have to consider what market prices might be in 2023 while they prepare to order their plants over the next few months. “They are having to process a lot because of the rising prices and it will make it harder for them to make decisions. These are family businesses, it’s very different to other industries,” said Gaffney.

Taking over the farm from their father, Matthew snr, Matt and John have continued to run a successful tomato-growing operation and have won numerous awards for protected crops from Bord Bia. However, the challenges of 2022 have called for some restricted measures in the running of the farm, particularly relating to energy.

“We’ve tried to save heat wherever we can but it’s having a knock-on effect on production. Using less energy means less growth and that means less production, which means our season is getting shorter.”

Many growers are expected to adopt the method of cutting down production in the shoulders of the year and Foley is already considering this but pointed out that this means a tighter window for production and risks oversupply.

“We’re already looking at cutting down production in the shoulders. Normally we would grow our crop into September but we’re thinking August this year.”

Gaffney elicited that while growers will continue to face the prospect of scaling down production going forward, imports may not be reliable to make up the difference. “I’m not sure imports can be relied on because growers in other countries are facing similar challenges and similar decisions. Rising input costs aren’t an Ireland-specific issue.”

Labour has been the source of another increase in input costs for the sector and the Teagasc input cost report for 2021 found that labour accounted for almost 40 per cent of input costs for most sectors.

Foley spoke about the problem he has with labour this year saying most of his staff are students and that this could leave him tight in the shoulders. Although as various staff members of different cultures filtered into his office to clock out, he firmly uttered: “I would be nowhere without the staff I have.”

While looking to the future, the co-director addressed a need for a change in perspective from the country. He indicated that supermarkets’ below-cost selling policies have created a false perception that food can be grown for such a cheap price.

“Supermarkets have a policy of below-cost selling, for example 49p for a kilo of carrots, but nobody can grow for that. We have to realise that food is what we put into our mouth and is so important. It’s your input, it what drives you and it costs money to produce,” said Foley.

In March, the Irish Farmers’ Association launched a report commissioned by economist Jim Power, Retail Price Compression Threatens the Viability of Irish Horticulture, which calls for Government to move quickly to restore the ban on below-cost selling of food. Gaffney said that retailers will need to increase prices of produce if input costs remain where they are, warning that “you can’t grow crops at a loss”.

Foley was adamant on the importance of food security in Ireland, saying that with the war, and supply lines being cut, it is “crucial” that we can rely on Irish produce. He further stressed the need to source reliable energy and worried about the current reliance on the United Kingdom.

“We get about half of our gas supply from the UK so we’re relying on Boris Johnson to supply us.” He turned swiftly and rhetorically asked, “Do you for one second think that we’re going to get any sort of priority if there’s a shortage of gas”?

Despite eliciting many bleak realties of the horticulture sector, this didn’t take away from Foley’s air of contradicting calmness. When asked does he worry for the future of the sector, he chuckled and replied: “I’ve seen this all before, the only thing I worry about these days is my putting.”