Severe shortages in fresh produce have refocused attention on the pitfalls of UK supermarkets’ preference for seasonal contracts. Fred Searle travels to Belgium to see how the country’s fruit and vegetable auctions do things differently
In some ways, Belgium’s system for buying and selling fruit and vegetables seems a bit old-fashioned. But the recent scrutiny of British retailers’ fixed seasonal contracts for most fresh produce has made some consider the merits of alternative models – systems which arguably return a fairer price to the grower, more accurately reflect the market, and offer producers greater power in relation to their retail customers.
Belgium has four main growers’ cooperatives: BelOrta, REO Veiling, BFV, and Coöperatie Hoogstraten. They span a wide range of fresh produce, and each runs an auction on set days of the week. Here, buyers from supermarkets, wholesalers and exporters can purchase the co-op’s produce. But rather than buying direct from an individual grower, produce from different producers is grouped together into blocks of the same product and quality, for example Class 1 tomatoes on the vine.
The price is determined by a digital auction clock which spins from the highest price to the lowest, and the buyer hits a button to stop the clock at the price they are willing to pay. Then they tell the auctioneer how many boxes they would like to purchase at that price point. And as soon as this has been confirmed, a message is automatically sent to the warehouse for the produce to be taken out of cold storage and placed at one of the loading bays, ready for collection by the buyer.
The BelOrta clock always runs through its growers’ products in the same order – from cabbage through to loose tomatoes – and given all the different products and quality blocks on offer, the entire auction can last around four hours, from 7am until 11am.
Turning back the clock
This method, first pioneered in Germany and the Netherlands, has been modernised slightly since it first began in Belgium in 1952, but essentially little has changed. The most notable update was replacing individual sales with block sales, as explained above.
Forty years ago, individual growers would physically display their produce to the buyers in the auction hall, whereas now produce is submitted to a quality controller, who decides what quality standard it is and which ‘block’ it should be added to. High-quality produce bears the Flandria brand, but the individual cooperatives also have their own brands such as Fine Fleur, Tomabel, BelOrta Chef and BelOrta Bio for particular types of product.
Dominiek Keersebilck, the commercial director of REO Veiling, which has 806 cooperative members and dates back to 1942, estimates that the co-op sells roughly 70 per cent of its growers’ produce ‘by the clock’, with the remaining 30 per cent sold on contract.
While most auction sales are now made online – to buyers watching the auction clock on their computer screen in the office – it is still not uncommon to see a buyer from Belgium’s biggest retailer Colruyt in one of the auction halls, tapping away. And it’s not just Belgian retailers that use the auctions; Dutch, German and French retailers also buy large volumes, as do the major exporters, for supply to the UK, among other markets in Europe and further afield.
Given the volumes of produce supermarket buyers are likely to purchase, and the sudden impact that a large sale can have on the price of the remaining stock, other buyers watch the big retailers carefully, and know their buying numbers by heart. “If Aldi has a promotion on tomatoes, it will have a very direct impact on the market,” says BelOrta’s sales supervisor Guy Jennes.
These big swings in price are probably the main disadvantage of the auction system, which as Jennes says, “exaggerates in both directions”. “If there is a small oversupply, prices can plummet, and when there is a small shortage, prices can skyrocket,” he explains. “For example, during Covid buyers panicked and bought a lot at the same time and prices shot up. You sometimes see this overreaction to small fluctuations in supply, and prices don’t always accurately reflect the market.”
UK supermarkets would also argue that fixed-price contracts offer producers greater financial certainty, which might give them confidence to invest, as well as insulating consumers from rapid cost rises and the volatility of the market.
Power to the producer
That said, Jennes is a big advocate of the auction system and insists it has major benefits. In many ways, it offers growers fairer prices, more transparency, and a stronger position in relation to their customers, he says. The fact that sales are essentially anonymised, and that growers of a certain quality receive the same price, arguably makes the system fairer since producers don’t have to rely on their ability to negotiate hard with their customers. This leaves growers less open to exploitation and unreasonable contract demands.
Importantly, as climate change takes hold and growing seasons are hit by more extreme and erratic weather, auction sales offer growers a price that is more reflective of the level of supply in the market.
On the other hand, Jennes says many of Belgium’s big buyers have been nervous about the bad weather in Spain this winter, and as climate change becomes a bigger factor, they are keen to agree contracts at a fixed seasonal price, as well as buying on the spot market.
He explains the reasons why Belgium’s fresh produce cooperatives and auctions first started: “In the past, growers would meet customers in a marketplace in a big city and everyone individually would try to sell their produce, but then it’s the principle of divide and rule. The buyers can divide the growers by telling them stories that aren’t necessarily true. And if the buyer says they aren’t interested in buying at a fair price because there is large supply on the market, then it’s very difficult for the grower to defend themselves. They might return home without any money.
“That’s why growers decided to unite and form cooperatives, to sell their produce and speak with one single voice. It’s obvious this makes them stronger in negotiations. ”
Lessons for the UK?
The reasons why Belgium’s auctions were first established are arguably just as relevant today as they ever have been – if not more so in the face of climate change. At the start of March, the UK government’s recently departed food tsar Henry Dimbleby blamed Britain’s “weird supermarket culture” for recent food shortages, calling it a “market failure”.
“The UK food system is, I think, unique – I don’t know another system where the supermarkets have these fixed-price contracts with suppliers. So, basically, you have no effective market,” he told The Guardian. “If there’s bad weather across Europe, because there’s a scarcity, supermarkets put their prices up – but not in the UK. And therefore, at the margin, the suppliers will supply to France, Germany, Ukraine.”
Is it time for a major rethink in the way we buy and sell our fresh produce? That depends on what, and who, your priority is. If the focus is on insulating consumers from price volatility and offering them the lowest price possible, then fixed contracts make sense. But their inflexibility in times of shortage or oversupply is an unavoidable truth. As growing conditions become harder and harder to predict, a more responsive, market-led system would help to avoid empty shelves and return a fairer price to the grower – at a time when the cost pressures and demands on producers have never been greater.
No comments yet