November/December – 2005
Author: Steven Carruthers
International Conference & Exhibition on Soilless Culture 2005
Fort Canning Gallery, Singapore, 5-10 September
Identifying the challenges faced by the hydroponics industry worldwide is like forecasting the future and requires some ‘strategic thinking’. In the business world, strategic thinking is a process whereby you learn how to make your business vision a reality by developing your abilities in team work, problem solving, and critical thinking. It is a tool used to help you confront change, plan for and make transitions, and envision new possibilities and opportunities. By engaging in some strategic thinking, I hope I can point to some of the challenges ahead for the hydroponics industry.
The sustainable development of the planet and the way we feed and clothe the population are major issues confronting the world today. As a global community, we need to advance our expertise in plant production, food technology, sustainable management of natural resources, as well as how we use the natural environment for recreational activities.
Agriculture and horticulture specialists will face some of the greatest challenges in the 21st century. They will need to assist in the supply of food and fibre products for a growing population that is expected to number 8.9 billion people by 2050 (USAID, 2004). The main challenge will be to supply safe products that are needed for a quality of life while maintaining a healthy planet.
Hydroponic and greenhouse technology, aquaculture and aquaponics, organic and urban farming technologies are intensive plant production systems that are all well placed to meet the challenges ahead. However, the growing systems of tomorrow will be vastly different to those used today. The present day systems, while a step in the right direction, are unsustainable and in the future it will be necessary to develop alternative production systems that are more efficient in terms of water, energy and labour use. Driving the challenges ahead are consumer and government pressures to produce safe, nutritious food in a way that is sustainable and does not harm the environment.
The new global economy and the advent of free trade agreements pose significant challenges for the hydroponics industry worldwide. Cheap products flooding international markets take away livelihoods, threaten the stability of existing fresh food markets, and increase the risk of exotic new pests and diseases establishing in countries where they previously didn’t exist, with serious impacts on important commercial crops and natural ecosystems.
The world is littered with accidental and inadvertent pest and disease introductions owing to bad grower practices, dubious Import Risk Assessments, inadequate management protocols and quarantine inspection failures. For example, the recent arrival of potato spindle virus in Western Australia had the potential to cripple the Australian greenhouse industry had it found its way into the green waste.
Fortunately, it was discovered early and eradicated. Other countries have not been so lucky. Pepino Mosaic Virus (PepMV), which was detected in greenhouse tomatoes in Europe a decade ago, has now appeared in North American greenhouse tomatoes. Other tomato diseases galloping across the globe that threaten commercial greenhouse industries include Tomato Yellow Leaf Curl Virus (TYLCV), which has jumped from Cuba to Florida, and now Morocco, and Tomato Infectious Chlorosis Virus (TICV), which was discovered in tomatoes in California, and has now turned up in Italy.
Closer to home, back in the early 1990’s, western flower thrips found its way into Australia and is now widespread and creating havoc, while more recently lettuce aphid originating from northern Europe, has found its way to New Zealand and brought that country’s lettuce industry to its knees. The lettuce aphid has since made its way to Tasmania, and was recently detected on the mainland, threatening Australia’s lettuce industry.
Quarantine issues will be major obstacles for free trade agreements in fresh food commodities between countries such as Australia and New Zealand that have strict import and food safety regulations. There will be increasing pressure on exporting countries for growers to meet the same exacting standards as Australian and New Zealand growers to ensure the food chain remains ‘clean and green’.
Operators of farming enterprises can no longer see their contribution as a ‘way of life’. They must operate their enterprises as a business, becoming aware of competition, and adapt accordingly. Globalisation is important as producers look to other parts of the world to export their products. As countries develop and more people become educated, the attentions of those people are turned towards ‘quality of life’ issues, which include the quality of the food they eat.
With the rising power of supermarket chains in developing countries replacing the traditional markets for fresh fruit and vegetables, demands are increasing for ‘clean and green’ produce. Consumers demand to know what pesticides and other chemicals have been used to produce their food. In the future, crops will need to be grown without the use of pesticides and fungicides.
Scientists and educators worldwide have responded to this challenge by developing alternative ways of managing pests and diseases in agricultural and horticultural products, such as Integrated Pest Management (IPM) and gene technology, also known as biotechnology.
A major challenge ahead for industry will be to grow crops with a minimal use of safe pesticides. This means developing more disease-resistant plant varieties, discovering a wider range of beneficial insects and other biological control agents, and developing management protocols to control pest and disease problems. Most countries still have a long way to go, including Australia. For example, while there are greater than 30 biological control agents routinely used against about 20 key pests by commercial greenhouse growers in Europe and North America, Australia has less than 10 against the same number of major pests. Strict import regulations means that Australian biocontrol researchers need to identify beneficial insects from within their own environment, and to rear them in commercial quantities at an economical price, a process that can take a decade or more once a prospective beneficial insect has been discovered as the industry can best be described as fledgling. Australia is making progress with the recent discovery of two native thrips predators, which are currently being commercialised for the Australian hydroponic and greenhouse industry. These beneficial insects may also have benefits for other horticultural sectors, especially where western flower thrips is a problem.
Biotechnology will play an important role in developing disease-resistant plant varieties. Gene technology is also being increasingly used to develop fresh food products high in beneficial nutrients that slow or prevent disease. For example, tomatoes are rich in lycopene, which is known to slow aging, prevent heart disease and reduce the risk of prostate cancer. Specialised tomatoes high in lycopene are now available in North America supermarkets. Biotechnology will be used to develop other food crops loaded with beneficial nutrients that promote good human health.
Although recent surveys show consumer sentiment against GM foods is moderating, the debate for and against genetically modified plants is still emotive. Genetically modified foods both attract and terrify us, but the reality is we have been genetically modifying food since two weed species were brought together to produce wheat. The Dutch currently use GM technologies to check the make-up of genes, which lets them advance their breeding selections that would otherwise take many years. GM technology makes plant breeding easier and quicker.
In the 21st century, biotechnology will play an increasing role to produce what is known as ‘functional’ foods. Genetically modified foods may also carry other useful components such as genes to vaccinate consumers against important diseases.
The quantity and quality of water available for farming and, for that matter, urban populations throughout the world, is an important issue. In Australia, water is a scarce resource – the continent is one of the driest in the world. Management of our water resources is paramount to the success of agricultural and horticultural enterprises. Australia can play an important part in determining the most efficient ways of using this resource. Issues such as salinity and water reuse are being confronted, and cooperation from users to policy-makers is being sought.
Hydroponic and greenhouse production systems are water-efficient. Comparative analyses of water consumption show that it takes 160,000 litres of water to produce AU$100 of cotton, compared to 600 litres (best practice) of water to produce AU$100 worth of hydroponically grown produce.
Table 1: Water use efficiencies
Agriculture Sector Litres of water per $100 of output
Rice – 470,000
Cotton – 160,000
Dairy Milk – 147,000
Sugar – 123,900
Beef Cattle – 81,200
Vegetables & Fruit – 37,900
Wheat & Grain – 24,500
Hydroponic Crops – 600
There is also a significant reduction in fertiliser wastage. Using closed systems that recycle more than 95% of the water used, the hydroponics and greenhouse industry has a recognised track record for low water use compared to other agricultural and horticultural sectors. Unfortunately, less than one-third of hydroponic production systems worldwide are closed with most growers still running to waste to minimise disease problems. The challenge for these growers is to modify their systems to recycling technology, and to adopt better practices to manage their crops. Of course, this will also increase the cost of capitalisation, but consumers have shown they are willing to pay a higher price for high quality, safe products.
The export of fresh fruits and vegetables throughout the world is increasing. The concern in Australia is that cheap imports don’t meet the same rigorous standards that Australian growers are required to meet. There is clear evidence some imported produce coming in has traces of dieldrin, DDT and cancer-causing organochlorides. There is also a concern about untreated organic waste such as night soil and pig waste being used as fertilisers on vegetables grown in countries such as China for export to Australia.
Industries and governments worldwide are highly concerned about food safety and the harmonisation of agricultural production systems with the environment, and production of future food in enclosed hydroponic production systems seems to offer many advantages. However, recognition and support by governments, or should I say the lack of recognition and support by governments, is a major impediment to the industry’s growth in many developed and developing countries.
Strategic thinking tells us we must look to the Netherlands as the best industry model in order to identify the challenges ahead for hydroponics worldwide. Holland has the most developed hydroponic and greenhouse industry in the world. However, the changing market environment has brought with it many challenges. Until 10 years ago, Dutch growers and their grower organisations under-estimated the dynamic power of the Spanish vegetable industry when it joined the European Community (EC). From 1992 to 1999, Spanish vegetable exports jumped 10% or more per annum. At the same time, the market was changing from a producer-orientated market, where the produce was presented by the producer, to a demand-orientated market in response to the rising power of supermarkets. It has taken a difficult decade for Dutch growers to fight their way back to market dominance.
Under the Dutch auction system, Dutch growers were unable to meet the new market demands until around the mid 1990’s. The Dutch auction system meant supermarkets could only buy uniform products in uniform packaging for a daily changing price that was about the same for every buyer. Spanish producers/exporters were much more flexible, had better packing facilities, and had more direct contact with their clients.
There are many similarities between Spain and Mexico as the cheap producing countries for their northern markets. US and Canadian growers have had to deal with the fast-growing imports from Mexico. In the Asia-Pacific region, Australia is under siege from cheap imported vegetables from China.
The smashing Spanish success of the 1990’s had its origin in good climate conditions, growing long-life tomatoes to acceptable quality using cheap growing techniques in plastic greenhouses and cheap labour. The growing season was also longer. The much lower cost of production compared to Holland, combined with large EU subsidies and the constant devaluation of the Spanish peseta, also made for cheaper Spanish exports.
In 1996, most vegetable auctions in Holland united under Greenery International with the objective of changing the traditional auction system to one where growers are able to influence the selling policy and prices. Those that didn’t join Greenery formed grower associations that sold their own products under specific marketing brands of tomatoes, peppers, cucumbers and eggplant. These groups were the first to introduce ‘tracing and tracking’ and are still the most active in the market.
A third group of Dutch growers made delivery arrangements with large exporters on a yearly basis. Some of these exporters also formed grower associations to take advantage of EU subsidies for marketing activities.
As a consequence of the European over-production, Dutch growers and exporters searched for new products and far away markets. Rather than focusing on long-shelf life, they started breeding for taste, which led to the development of ‘truss’ or ‘cluster’ tomatoes and coloured peppers now present in North American and Japanese markets. The improved ‘clean and green’ image of Dutch products using Integrated Pest Management strategies has put pressure on Spanish imports, which are now seen to be not so careful with Ag chemicals.
Since 1996, Dutch growers and exporters have developed fixed relationships with clients. By decreasing the number of links in the chain, costs have been reduced. Production costs have also been reduced by enlarging the scale of greenhouse production with improvements in energy consumption. Canada, the US, Australia and New Zealand have followed the European trend to enlarge greenhouse operations to supply high quality truss tomatoes to supermarkets all year-round. In Australia, the major growers and wholesalers have formed strategic alliances to spread production over a wide climatic zone to guarantee reliable supply to the important east-coast markets all year-round.
Today, many independent grower associations and groups in the Netherlands have since joined Greenery International. While Dutch growers are more divided than before, they still co-operate in exchanging information and experience. Research is no longer supported by government, but funded by grower groups. The Dutch financing infrastructure is good, and specialised banks understand the vegetable sector and stimulate growth with investments. Dutch growers are now able to meet the requirements of the most demanding European supermarkets. They are also more flexible with year-round and last minute delivery, high quality standards, safe food, certification and ‘tracing and tracking’.
However, there are still many challenges ahead for the Dutch industry. Cost price is still high and productivity increases only by high investments. Dutch growers are also hindered by many rules and regulations imposed on them by the Dutch government and the EU. And of course, with a shortage of locations to build new greenhouses, there is a need to re-organise older greenhouses.
After a decade of reorganisation and redirections, the Dutch greenhouse vegetable industry is on its way back to the top. While Spain still has lower production costs, growers now need to invest in better technology and knowledge to meet the increasing market requirements demanded by supermarkets. This will drive their production costs upward as they feel the threat of cheaper imports from Morocco and Turkey once they have free access to the EU markets. Turkey and Morocco have similar climate conditions to Spain, they have significant low-tech greenhouse industries, and are working hard to meet the requirements to enter the EU. Like the Dutch a decade earlier, it’s now up to Spain to change its direction. Unless Spanish growers change, they will not be able to distinguish their product from the cheaper imports from Morocco or Turkey.
As a global industry, countries with developed hydroponic and greenhouse industries need to share aspects of their technology with less developed countries to produce safe fruits and vegetables in sustainable growing systems. Investments in high technology greenhouses in Spain by Dutch organisations, and similar investments in the Mexican greenhouse industry by Canadian and US growers to fill seasonal gaps in high quality tomato products, points the way for investment opportunities for Australian and New Zealand industry stakeholders to share their technology with less developed industries in Asia.
So, the challenge ahead for hydroponic growers worldwide is to develop water-efficient, sustainable growing systems to supply high quality, safe products that are needed for a quality of life while maintaining a healthy planet. To achieve this goal, the hydroponics industry worldwide needs to:
– adopt recycling technology which offsets the need for soil, water and energy to produce crops and dramatically reduce natural resource use;
– develop new sustainable pest and disease control practices, without pesticides and fungicides;
– invest in food technology research, including biotechnology;
– develop more efficient production systems with smaller footprints and demands on natural resources;
– develop better greenhouse designs and construction materials that optimise climate control;
– invest in renewable energy resources, such as the development of cheaper plastic solar cells;
– encourage industry recognition and support by governments; share technology with less developed hydroponic and greenhouse industries, and.
– develop market access for ‘clean and green’ products.
Challenging times for vegetable growers
Australian Vegetable Review 2005, AUSVEG.
Emerging Hothouse Industry Poses Challenges for California’s Fresh Tomato Industry
Giannini Foundation of Agricultural Economics, University of California, Davis.
Dr Mike Nichols,
Greenhouse Designs and Function in the Future
8th Biennial Conference of the Australian Hydroponic & Greenhouse Association (AHGA), Bundaberg, 2005.
Dr Mike Nichols,
Genetically Modified Foods
Practical Hydroponics & Greenhouses, January/February 2005, Issue 80.
Horticulture and Sustainable Food Systems
Dept. of Land, Air and Water Resources, University of California, Davis, 2004.
Hydroponic Hurrah: Popularity is growing for produce grown without soil
Vegetable Production and Marketing News, Texas
Agricultural Extension Service
The Texas A&M University System, College Station, Texas, 2005.
Dr Ian Porter,
Impact of global market drivers on the future role of hydroponics in world food production
Hydroponics Farmers Federation Conference, Bendigo, Victoria, July 2004.
Dan Cantliffe and John Vansickle,
Mexican Competition: Now from the Greenhouse
Food and Resource Economics, University of Florida, Gainesville, 2004.
Science tackles problems for the greenhouse industry
Australian Vegetable Review 2005, AUSVEG 2005
Significant changes in the European greenhouse vegetable industry
Boonekamp (Editor Weekblad Groenten & Fruit),
Canadian Greenhouse Conference, Toronto, Canada, 9 October 2004.
US Agency for International Development (USAID).
About the author
Steven Carruthers is the Managing Editor of Practical Hydroponics & Greenhouses, a bi-monthly magazine published in Sydney, Australia, and Vice-President of the Australian Hydroponics & Greenhouse Association (AHGA), Australia’s peak industry body. Steven is the recipient of the Australian Business and Specialist Publishers Association (ABSP) Bell Award for ‘Best Small Publisher of the Year’ in 1998, 2000 and 2001 and was highly commended in 1999. Practical Hydroponics & Greenhouses is the recipient of the ABSP’s Bell Award for ‘Best Specialist Magazine of the Year’ in 2000 and 2001. Steven is also an affiliated member of the International Federation of the Periodical Press and author of several books including the bestseller, Hydroponic Gardening published by Lothian Press.