State of the Fruit and Veg Industry: Challenges and Chances for Growth - Q3 2022
I wouldn’t be the first to say that this year has been tough, but as with any challenge, there are opportunities for growth. Our fruit and veg industry has been wounded by the war in Ukraine. We are still adapting to the Brexit legislature and all sectors are rehabilitating from Covid’s waning impact. The key focuses for me are reducing food waste, network expansion and integrating the supply chain.
The fruit and veg industry is set to keep expanding. According to research, we predict the global fresh fruits market will expand at a compound annual growth rate (CAGR) of 3.6% from 2022 to 2028. The growing food industry and increasing spending on fresh fruit and veg are expected to promote market growth over the forecast period.
That’s good news, but small businesses will struggle with the quick pivots required to meet changing needs. This is due to limited alternative options for suppliers and buyers. Therefore, accessing a wide and dependable network will be key for the success of both big and small businesses.
So, how does the Ukraine crisis affect the fruit and veg industry?
How does war affect agriculture?
· The war affects the entire supply chain for countries directly at war, leading to huge amounts of food waste due to disrupted operations by embargoes and blockades.
· Depending on allied relations, politics and trade networks, the knock-on effects are hugely damaging to many other countries.
· In the face of operational issues in trade routes, supply becomes more difficult, but demand remains. Price rises result as a result.
· The affected countries face economic challenges; their growth is slowing, and all interdependent players are also affected.
How will the war in Ukraine continue to affect food production?
I agree with Peter Vanden Houte at ING who recently said, “it looks as if the war in Ukraine and the sanctions against Russia will worsen supply chain problems with an additional negative impact on growth.” Ukraine has been the worst hit from a production standpoint and operational restrictions mean that food will continue to go to waste.
Further, Russia is a significant exporter of potash which is actively used for fertiliser. This has led to a global crisis that is, in part, responsible for rising costs in food production. With restrictions remaining, the necessity for a diverse network could not be clearer.
Relying on a single supplier for essentials like natural gas and minerals highlights the issue of being overly dependent on single players.
In relation to the fresh produce supply chain, we have seen year after year that there is a heavy dependence on fixed trade relations and an unwillingness to pivot to new networks. This is combined with a lack of networking opportunities for many players, big and small, in the fresh produce supply chain.
How is the war in Ukraine affecting food prices?
Back in March we heard from experts, Freshfel, that the crisis has “raised concerns related to indoor production due to energy prices, transport issues, seasonal workers, changing production practices (planting schemes), increased risk for food fraud and security, among other concerns.” This is in part responsible for the food crisis in the UK.
As we stated in our previous article on consumer trends, the demand for local produce is rising in the UK and is likely to increase with this continental crisis. If the fresh produce supply chain wants to leverage this, it will need more access to local traders and a wider network so that dependence on fixed trade relations is reduced.
Connect to a wide network
It has been forecast that smaller players in the fresh produce supply chain will be hit worse by the Brexit, post-covid and Ukraine crises. This is because they have fewer buyers and supplier alternatives and cannot survive at a loss for as long as bigger companies. FruPro ensures that smaller companies get the visibility and network they need to ride out this tough time. Connecting with a range of buyers and suppliers is simple and easy using FruPro.Connect now
Brexit and Fruit and Veg Industry
Brexit has settled as a reality at this point and the fresh produce sector is expected to adapt to the new system. But, as anyone in fruit and veg industry can probably tell you, adapting is easier said than done.
Currently, Brexit fresh food import rules haven’t changed since august 2021. In 2021, the government announced that from July 2022, imports from the EU (including the Republic of Ireland) would be subject to more checks at the GB border. Also, they would be required to meet the same requirements as imports from non-EU countries.
This has been pushed back to January 2024. Therefore, import legislation should not change too dramatically, but importers are currently waiting longer for customs checks on fruit and veg goods than pre-Brexit. Expect further updates from the UK government in the autumn of this year regarding Brexit fresh produce.
Growers are still facing labour shortage issues and “despite a new seasonal workers scheme, farmers’ costs are expected to rise which will also increase purchase costs”.
The Financial Times spoke to Tom Bradshaw, vice-president of the National Farmers’ Union who said that “many of these [fresh produce] businesses have expanded over the years — we are now talking about a potential contraction.” Since EU labour is now harder to get, wages have also gone up to incentive UK nationals to work. An issue is that this has led to increased production costs and, seasonal workers leaving before the end of the season because they’ve made enough money.
Further, when Brexit expanded its seasonal worker’s scheme last year, Ukraine was the most popular source country in Europe for workers. The Ukraine crisis has had negative impacts on this labour import due to large volumes of people being displaced and others, unable to work.
The response from the Home Office has been for growers to invest more in ‘the UK domestic workforce and automation technology.’ For more on how agriculture can benefit from automated technology, have a look at our Agri trends article.
Fruit and Veg Industry After Covid
Covid marked quite a sudden reality check for all of us, but particularly the fruit and veg industry. As stated by the BBC “The pandemic highlighted how fragile our food chain – from field to fork – really is.” The European fruit and vegetable market’s dependence on international trade was made starkly obvious. A demand for a more local economy seemed to echo around business meetings and dinner tables alike.
Local Fruit and Veg Economy
The UK depends on around 75,000 temporary agriculture workers, and the majority of these are from Europe. The story is similar for other European countries like Spain, France and Germany. Overall, the pandemic led to a shortfall of around a million seasonal agriculture workers in Europe.
Making a quick pivot from international to local suppliers was tricky, particularly when meeting new clients relied on events that were restricted during Covid. What we have seen is that the demand for local has continued past the pandemic but connecting with a local network remains difficult for many players in the supply chain
Reach to local fruit and veg businesses
FruPro provides location information for all our traders and gives our users easy access to new local trading connections. We do security checks on all our users to make sure trading is safe and simple. We are proud to be connecting a local supply chain at a time when demand for it is high and the need is clear. Consider expanding your local network with our platform.Join the platform
Food waste in fruit and veg industry
Labour shortages were evident, but Covid fruit and veg waste often missed the headlines. A major cause of food waste was logistics issues and frozen supply chains. What companies needed was the option to redistribute these goods and prevent millions of tonnes of food from going to waste.
Work alongside FruPro and make an impact
Having seen such excessive waste in the fresh produce supply chain, one of FruPro’s core values is to fight this problem. Our platform allows users to donate any produce that may go to waste. The best part is that you click the ‘donate’ button and we take care of the rest.
Working with FruPro means working towards sustainable solutions and joining the impact business movement. Being part of these solutions is vital and may lead to greater impact for your business and more attention from sustainable investors
There are a few consistent themes for the supply chain during this difficult period:
- Players in the fresh produce industry need access to wide and dependable networks. This includes both local and international trade.
- In the UK, the government is advising an increase in automated farming and non-migrant workers to manage the labour shortages from Brexit.
- Food waste must go down as the number of food insecure in the UK is rising and the events of the pandemic only highlighted this issue further.
My work in co-founding FruPro comes from industry insight and heritage in fresh produce. But we are at the point where things drastically need to change. Based on the current state of the industry, our platform can help the fresh produce supply chain to leverage this difficult situation and prepare for the future.