As the global supply chain crisis continues to affect farmers around the world, the Global Coalition of Fresh Produce Industries has called on world authorities to declare fruits and vegetables as “strategic goods”. They hope the measures they propose would ease the financial pressures that food producers around the world are feeling right now.
In a declaration published earlier this month, the coalition asked public authorities and multilateral bodies such as the World Trade Organisation and Food and Agriculture Organisation of the United Nations to respond urgently to crises in the industry. These include significant cost hikes in logistics, inputs such as fertilisers, packaging materials and energy, and an overall shortage of labour which is “jeopardising the economic viability of the fresh produce industry globally”.
The coalition estimates that about half of the 1.6 billion tonnes its members produce worldwide every year is consumed locally while the rest is shipped around the world.
Global trade of fruits and vegetables amounted to a market value of 220 billion US dollar in 2020 with more than 200 origins and 200 destinations and including farmers of all scales.
“While the sector demonstrated its resilience during the Covid-19 pandemic, the current global supply chain challenges have been leading to cascading negative effects for all parts of the industry,” the coalition says in its declaration.
The sector has experienced increased costs in multiple areas, including 150% to 400% in container prices, 20% in truck transportation, up to 80% in airfreight, up to 100% in fertiliser costs and up to 100% in wood pallet prices.
Regional impacts
The coalition summarises the regional impact as follows:
- Southern hemisphere producers estimate an increase of costs by $3.8 billion through the increase of container prices by round about 150% for 2022.
- European growers and traders estimate a total increase of costs by €10 billion for 2022, cumulated by all challenges along the supply chain plus €4 billion for additional logistical costs.
- The North American fresh produce industry reports that container prices have been climbing up as high as $25 000, a massive increase over pre-pandemic costs of around $3 000.
- More than 86% of the members of the Europe-Africa-Caribbean-Pacific Liaison Committee (COLEACP) are concerned that their economic viability is impacted by the current logistic disruptions and more than 70% are considering the implementation of business changes.
“Considering the above, the Global Coalition for Fresh Produce urges key stakeholders and public authorities to undertake urgent solutions to stabilise the sector in a period of crisis.”
Possible solutions
In its declaration, the coalition proposes potential mechanisms to preserve the short-term economic viability and sustainability of the sector.
- Increase attention and recognition of fruits and vegetables as a “strategic good” that have a significant contribution to long-term sustainability of the planet and public health policies.
- Create stabilisation mechanisms to improve accessibility of fresh produce, to ensure that fruits and vegetables can be continued to be available to everyone.
- Balance the distorted sea freight environment that has seen significant changes, with carriers setting record rates and profits through the vertical integration of major shipping lines which have strengthened their control of existing supply chains.
- Introduce transport subsidies for fruit and vegetable growers and exporters aimed at alleviating the immediate impact of inflated price distortions in the sea freight market.
- Promote a global zero-VAT strategy for fruits and vegetables that would directly benefit producers, exporters, and consumers.
- Facilitate improved access to key export markets without undermining the existing mechanisms in place to protect developing country exports.
- Avoid aggressive promotional price discounts made available to end consumers that undermine the value of fresh produce and ultimately reduce already stretched margins for growers and exporters.
- Strengthen public promotional investment aimed at increasing the recognition and ultimately consumption of fresh fruits and vegetables during the southern hemisphere counter season.
“The Global Coalition of Fresh Produce is committed to continuing work on sector-based solutions – both together as well as in its respective regional contexts,” the declaration reads. “However, these complex issues with their dramatic consequences can only be tackled by public-private collaboration, in which we are aiming to be a constructive and proactive partner.”
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