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When harvest time is approaching but the warehouse is still fully stocked
Our Dutch wholesale subsidiary is sitting on 175 tonnes of dried mangos. This alone should be reason enough to worry. But on top of that, the new mango season has already begun and production in Burkina Faso is powering up.
The profitable growth period in the organic market came to an abrupt halt in 2022. Sales declined for the first time in two decades and the industry as a whole shifted into crisis mode. Our wholesale subsidiary in the Netherlands, gebana B.V., has certainly felt the impact of this crisis.
All our products from the gebanas in the South and from our key partners pass through the Netherlands. It is the main hub of our import operations. gebana B.V. literally buys tonnes of produce from them, including mangos, cashews, dates, Brazil nuts, cocoa and much more. When all goes well, it resells these products by the container.
This way of doing business is important for us because it's the only way to build successful subsidiaries. We'd never be able to sell enough products to keep the gebanas in the South profitable through our online shop alone.
From record sales to record stock levels
In 2021, the wholesale market grew at a record pace, and we sold 738 tonnes of dried mangos. Like so many other players in the industry, we thought that things were just getting started, so we purchased 925 tonnes of dried mangos from gebana Burkina Faso the following season.
Today, having sold only around 410 tonnes of mangos in 2022, this bold purchasing decision stands in stark contrast to our sobering sales figures. The team in Amersfoort managed to sell more at the start of 2023, but by March we still had around 375 tonnes remaining and no idea what to do with all the mangos.
200 tonnes are technically already sold and our wholesale customers should still be taking these off our hands. But they're in the same boat as we are. They are still fully stocked and as a result, they're hesitant.
The team in Amersfoort is urgently trying to find buyers for the remaining 175 tonnes. Meanwhile, the crops in Burkina Faso are ripening, and we're starting to feel the pressure.
At this point, a lot of market players would simply shrug their shoulders. To them, the solution is simple. As Michael Stamm, Head of Purchase & Trade at gebana, puts it: "They simply don't buy any of the new harvest. Problem solved." Or, more accurately, the problem is just passed on to the family farmers. Because at the end of the day, they can't sell their fruit.
An entire industry depends on these mangos
For gebana, this isn't an option. Instead, we'll do what we always do and take a risk that no one else dares to take. After all, an entire industry depends on these mangos. In addition to the family farmers, there are the numerous decentralised drying operations and the people who work there. Then there are the people who work with the mangos at gebana Burkina Faso. That's thousands of people.
If we let our fear of taking a risk stop us from buying these mangos or if we only purchase a small amount, we'd be letting all these people down. And it would almost certainly mean the end of gebana Burkina Faso.
That's why we're once again aiming to purchase the entire harvest from the family farmers this year. This means that we'll have 650 tonnes of dried mangoes for the coming season.
A tower of mangos taller than Zurich's Grossmünster
If we add the residual stock from 2022, it means that we have to sell 825 tonnes of mangos this year. That's a lot of mangos. If we packed them all into 40-foot containers and stacked those containers on top of each other, the resulting tower would be nearly 30 metres taller than Zurich's Grossmünster, or almost as tall as the Frankfurt Cathedral.
How can we move this much volume in time? Well, it's not going to be easy. We'll need to extend the shelf life of the mangos and preserve their quality, which we can achieve by freezing them. This will buy us time and reduce the pressure to sell them.
But it will also increase the financial pressure. Not only is a lot of capital tied up in the mangos during this time but storing them also costs us twice as much as it would if they were in dry storage. In fact, it costs around €5.45 per pallet, per day, or around €2,000 per week. "While this won't ruin us, it could ruin our year," says gebana's CEO, Christophe Schmidt.
By doing this, we hope to be able to bide our time until market demand picks up again. And it will. At Biofach, the largest organic trade fair in Europe, which took place in Nuremberg in mid-February, the mood was cautiously optimistic.
Every kilo counts
Of course, it's impossible to say how long it will actually take before demand increases again. So, we're lending our colleagues in Amersfoort a helping hand and selling as many mangos as possible through our online shop. In the end, every kilo will help shrink our mango tower.
Fair trade is easy during times of growth. When the market takes a turn for the worse, we need the courage to take risks and to persevere. And we take comfort in knowing that we can rely on you, our loyal customers, in tough times. Let's make it happen!