Energy market puts UK tomato growers at cost disadvantage

Key topics at this year's conference included cost savings and production methods. Claire Shaddick reports.

UK tomato growers of the future may have to be as skilled in energy trading as they are in crop production if they are to remain competitive with the Dutch, according to sector specialists.

At this month's Tomato Conference at Coventry - organised by HDC, the Tomato Growers' Association and Warwick HRI - energy specialist Chris Plackett of consultancy FEC Services said there was no difference between how much gas the Dutch and the best UK growers use, or what it costs them. But Dutch growers scored in being able to make their combined heat and power (CHP) installations pay.

"The best in the UK are competing with the Dutch and energy prices in Holland are broadly similar to the UK," said Plackett. "Without doubt, Holland's competitive advantage is CHP."

Wholesale energy market conditions in the UK over the past few years have meant growers have not been able to sell excess electricity from CHP plants at a profit. But Dutch electricity prices have stayed more attractive, which is why 35 per cent of the Dutch greenhouse area has CHP, providing 15 per cent of the whole country's electricity.

"It is effectively subsidising growers' businesses by cutting their energy costs by 70 per cent," he said. "Dutch growers play the energy market whereas in the UK we hand it over to third parties who do the trading on our behalf.

"Dutch growers take a bigger risk and therefore a bigger slice of the margins. That's why they have gone into lighting tomato crops, because it is somewhere to dump electricity when they are not selling it at a high premium.

"If we are going to move forward with CHP, we need to find out more about how the Dutch do it. Successful growers will be those who develop new skills."

Plackett said about a quarter of UK growers use 35 per cent more energy than "best practice", which is costing them an extra £45,000/ha every year. Add to that the 70 per cent that CHP is slicing off Dutch growers' annual energy bill and some growers here are at a £125,000/ha/year disadvantage.

Plackett said Dutch growers benefit from tax breaks and grants for investing in environmentally friendly technology, and more government support for research and development.

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