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Feature Story
Dutch grower finds progress through partnering, processing By Tracy SaylerJos De Regt took a hard look at his farm operation about a decade ago and realized that he might not be able to sustain a living, farming as usual.
There's no way he could have foreseen the changes since: Now while his neighbor plants and tends most of his crops, De Regt focuses more on expanding his multi-national frozen sweet corn business. De Regt grows sweet
corn, grass seed, and sugarbeets on his 193-acre farm near Kapelle, the Netherlands, commonly referred to as Holland. He partners with his neighbor, Jacco Dekker, to produce the beets, which account for about a third of
De Regt's acreage. Dekker, whose farm about a mile away is about the same size as De Regt's, grows wheat, grass seed, onions, and sugarbeets. Overall, sugarbeets are the most profitable crop for
producers. No crop offers a better return to producers in Europe, other than onions and potatoes that garner a higher market price on occasion. The fertile,clay, soil is conducive to crop production. The
land is flat, much like the Red River Valley, and without the elaborate diking systems put in place over the centuries, the country would be prone to flooding. About 40 percent of the country lies below sea level.
Land in Holland is productive, in short supply, and expensive. Last fall, the asking price for prime sugarbeet ground was about 80,000 guilders per hectare (about $15,000 U.S. per acre), compared to 33,000
guilders/hectare (about $6,300 U.S. per acre) for non-beet ground. The cost to rent land in Holland is about 2,000 guilders/hectare or $1,700 an acre. The high price for cropland is a key reason why farms in
Europe average around 100 acres in size. Many farmers in the Netherlands and across Europe do not own sugarbeet lifters or trucks. They custom hire lifting and hauling at harvest, which saves on expensive
equipment overhead costs. The cost of custom harvesting is about 600 guilders/hectare. A new six-row lifter would cost about $300,000 in U.S. dollars. De Regt does own a combine for his sweet corn,
however. Trucking costs are deducted from the beet payment. Other crops are custom hauled to market by transport companies. Since Holland is a small country (about one-fourth the size of North
Dakota) markets are never further than a few miles away. There is little to no on-farm grain storage, although Dutch farmers will sometimes store grain in containers ranging in size from 20 to 40 ft for trucks to
pick up later. Holland has a moderate climate, and crop failures are usually far and few in between, although the Dutch government did make a disaster payment to farmers last year to make up for a wet fall where some
crops couldn't even be harvested. For sugarbeets, the payment was based on average national production and price over the past 10 years (about 60 tons/hectare or 25 tons/acre, and 16 % sugar content).
Average payment per sugarbeet producer was about 7,200 guilders/hectare, or about $1,500/acre. The beet harvest in Holland usually runs from mid to late September to early November. All of Dekker's beets go to the
local sugarbeet cooperative, Suiker Unie. De Regt has sugarbeet production rights through Suiker Unie and CSM, a separate, private processing company. Dutch farmers pay a levy of about 150 guilders/hectare
(about $29 U.S.) for water control and ditch maintenance. There's also a duty for research and outreach that differs by crop: 10 guilders/hectare for wheat (about $2 U.S.) and close to 50 guilders/hectare ($9.50 U.S.)
for sugarbeets. Overall, however, the tax system is friendly to businesses in Holland; that's why companies such as Advanta are based there. Advanta, the fifth largest seed company in the world,
markets sugarbeet seed in the U.S. under the Vanderhave brand name through Interstate Seed of West Fargo, N.D. Progress through partnering, processing
Dekker and De Regt own tractors individually, but share some equipment together such as a mower, a dump wagon and cultivators for operational
efficiencies. They keep track of hours for shared equipment and if one uses something more than the other during the growing season, then one reimburses the other.More Dutch farmers are looking at farming
together like Dekker and De Regt; machinery circles involving groups of farmers that own equipment together are becoming more common, says De Regt. There are tax benefits for farmers to work together as well.
Dekker manages the production of beets for both farms, for which he is compensated by De Regt. This allows De Regt to spend his time managing Farm Pack, a frozen sweet corn business he started 10 years ago to
capture more profit from what he produces. He phased out of wheat shortly before that time, and studied the market for what might offer a better income opportunity. He found his niche in frozen sweet
corn.  "There were so many other competitors for fresh corn, and it has a shorter shelf
life," he says, adding that most other suppliers either aren't equipped or don't bother to offer the just-in-time service that he does, something he has found many supermarkets prefer. "They (the
supermarkets) don't like to have much inventory on hand," he says. Using the ingenuity that seems to come natural for most farmers no matter the continent, De Regt researched the processing and packaging equipment he
needed to start the business—then built it himself in a facility on his farm. A large capacity deep-freeze, which De Regt also built himself, will freeze corn
within an hour. He also rents off-site product storage space. He acquired some of his processing equipment—a corn husker and cutting equipment—along with helpful marketing information, from the United
States. A provincial agribusiness grant helped cover some of his startup costs. De Regt grows about 124 acres of sweet corn and contracts 247 acres
more with other producers to provide sweet corn for his business. In the off season, he imports sweet corn from Portugal and South Africa.
De Regt sells his frozen sweet corn, two cobs in a package, directly to supermarket chains in over six European countries as well as Saudi Arabia.
At one time, he even sold his sweet corn wholesale to the U.S. army in Germany, but that market downsized along with the size of U.S. troops stationed there. He once sold product as far away as Venezuela, but
learned that "it's tough to compete with Americans in traditional frozen food markets." Currently, he's working on penetrating food markets in Spain, Portugal, and South Africa, where he might also establish a second
processing facility in the future. Right after harvest is a vulnerable period for De Regt, when he has labor (two full-time employees and about a dozen seasonal employees) and other
business-related bills to pay while all of his inventory sits in the deep freeze. That makes his lender nervous, he jokes, but shrugs and says financing is
just one of the challenges he has in the food processing business, which he says he is still learning. Even though cash flow is difficult at certain periods of the year, De Regt's
business is growing—impressively, in fact, at an annual rate of 30 %. The average retail price of De Regt's frozen sweet corn in the supermarket is
$1.20 U.S. per package. His gross return is about half of that price. He's currently selling about 2 million packages (or 4 million cobs) of frozen corn
a year. He sells kernels from broken or abnormally-sized cobs that can't be packaged—about 200,000 to 300,000 metric tons annually—to a top European brand that packages and sells kernel corn in jars.
De Regt knows he runs the risk of losing marketshare to larger processing companies that currently aren't in the business he is. Thus, he makes it a point to maintain good service and strong relationships with the
supermarket chains that are his customers. He says his strength is his ability to react quickly to their market needs; reducing the size of the frozen cobs, for example.
Like De Regt, other Dutch farmers are also looking for new sources of revenue. "The EU subsidies are not enough to run a farm," he says.
"Setaside is 1,000 guilders/hectare (about $193 U.S.) and fixed costs are 1,500 guilders ($289 U.S.). So you have to find new ways of income," he
says. Some farmers have off-farm jobs, others are trying new crops such as mushrooms and chicory, or like De Regt, are looking for ways to add
value to what they produce. Managing De Regt's farm helps Dekker's bottom line, says De Regt. Dekker also does custom work for other farmers.
They're all examples of farmers finding ways to make it work; which seems to be a thread for all who are held by the land.
"Farming is a hobby, a lifestyle. We do it because we enjoy it," says De Regt. |
