The Global Coalition of Fresh Produce has issued a detailed report examining the complexities of international fruit and vegetable supply chains and their impact on pricing.
The comprehensive briefing investigates multiple influencing factors, including rising input costs, sustainability concerns, logistical challenges, compliance expenses, and evolving trade policies.
Of particular concern is the economic stability of the fresh produce sector, with the Coalition describing the current market environment as severely affected by geopolitical conflicts, climate change, and persistent inflationary pressures.
Alarmingly, the survey accompanying the report found that around 70 per cent of industry participants are contemplating leaving the sector within the next two to three years. This potential exodus is primarily attributed to escalating production costs, inadequate selling prices, and increased labour expenses.
The report highlighted that, despite most respondents experiencing higher average selling prices in 2024 compared to the previous year, these price rises largely failed to compensate for the growing operational costs. Consequently, a worrying 25 per cent of global operators reported losses in 2024, while 36 per cent broke even, marking an increase from the previous year's figure of 19 per cent operating at a loss.
Consumer prices for fruits and vegetables have risen globally, especially during and immediately after the Covid-19 pandemic, although this increase has moderated recently. Notably, fresh produce prices have climbed at a slower rate than other food categories, maintaining its competitive position as a cost-effective consumer choice.
However, growers have not necessarily benefited from these higher retail prices. In the United States, for instance, consumers are projected to pay slightly more (between 0.6 and 0.9 per cent) for fresh produce in 2024. In stark contrast, farm-gate prices show a decline for fruits by approximately 1.9 per cent and only marginal growth of 0.5 per cent for vegetables, contributing to an expected 6.3 per cent reduction in net farm income.
The Coalition emphasises that fresh produce pricing is significantly influenced by various factors often not fully appreciated, including extensive production investments and the perishable nature of the products, making them particularly vulnerable to disruptions from weather and logistical issues.
Looking ahead, the report forecasts continued inflationary pressures on the industry due to higher input costs, extreme weather events driven by climate change, logistical difficulties, and ongoing geopolitical tensions. These challenges, combined with rising expenses in essential inputs such as fertilisers, fuel, machinery, and shipping, show no signs of easing.
Additionally, compliance with increasingly rigorous standards for social and environmental sustainability imposes significant financial burdens on growers. For instance, in South Africa, compliance costs are estimated to consume around 10 per cent of growers' gross income.
Volatile global trade policies further compound uncertainty within the industry, with past events illustrating how sudden tariff changes can profoundly disrupt international trade patterns, potentially triggering prolonged inflationary effects, increased costs, and elevated consumer prices.
In conclusion, the Coalition’s report paints a challenging picture of the fresh produce industry’s economic landscape, urging concerted action to stabilise supply chains, manage escalating costs, and ensure continued access to affordable fresh produce for consumers worldwide.
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