The percentage of fresh produce operators that are at 'break even' point has reduced since last year, a new study by the The Global Coalition of Fresh Produce has found.
The Coalition's second survey into costs and revenues in the global fruit and vegetable industry was conducted in the spring of 2024.
It indicates that 76% of operators are operating at 'break even' or at a profit, compared to 81% in 2023.
Critical Areas
“What is worrying is that financial strain has affected operators’ ability to invest in critical areas like capital equipment, innovation, and expansion, which are all essential for long-term sustainability,” commented Ron Lemaire, chairman of the coalition and president of the Canadian Produce Marketing Association.
The survey found that despite some moderation of the cost rises experienced during and immediately after the COVID-19 pandemic, the industry continues to grapple with substantial cost increases across various inputs such as construction materials (+56% year-on-year), fertilisers (+33%), fuel (+31%), machinery (+30%), and shipping services (+28%).
Intense Price Competition
A majority of respondents have managed to increase their average selling prices compared to last year.
However, most remain unable to fully offset rising costs for various reasons, citing intense price competition in the fresh produce market, limited consumer purchasing power, and a lack of bargaining power with buyers.
Inflationary Pressures
The coalition believes the outlook remains daunting for the sector, amidst ongoing geopolitical tensions, climate change impacts, and persistent inflationary pressures that are expected to prolong cost escalations.
As a result, a substantial proportion of respondents fear for the future economic viability of their operations, with nearly 70% considering the possibility of closure within the next two to three years.
'Systemic Issues'
“There is optimism within the market, and the industry has shown great resilience in adapting to immediate challenges,” said Lemaire.
“However, the path to sustainable recovery and growth hinges on addressing the systemic issues driving cost increases, and ensuring adequate support for long-term investment and innovation.”
