Recent shortages in some fresh fruits and vegetables in Europe are a reminder of the strong role nature plays in our food chain and ought to be treated as a short-term issue.
This is the view of Rory Byrne, chief executive at one of the continent’s leading fresh fruit and vegetable suppliers, Irish Stock Exchange-listed Total Produce.
“Obviously there’s a limited sourcing availability during that window given those areas are so established to northern Europe, so it’s been a difficulty but it’s one of those short-term weather issues that’ll rectify itself,” Byrne told PBUK during trade fair Fruit Logistica in Berlin last week.
“I don’t know if there’s any permanent damage or any strategic changes as a result.
“When you get a weather issue of that magnitude that simply wipes out production, there are no systems in place that you’ve got to be able to compensate for that.”
He said in some programmes such as sourcing early season table grapes, if hail occurred in northern South Africa the industry generally had the option to switch more to Chile, for example.
Unfortunately, in the case of many vegetables at the moment there is no other option at a reasonable price.
“At this particular time with the dependence on those particular regions [Spain and Italy], it’s hard to find alternatives at viable prices,” Byrne said.
But what about sourcing from the United States?
“If it persists there are import opportunities, and we can explore other partners that we’ve got to source from different areas but at the moment everybody is working through it in a satisfactory way, albeit with shortages in some of the northern European supermarkets and the U.K.,” he said.
“There’s a lot of noise around it, it has been difficult and it has created shortages, but these things happen in the produce industry from time to time, and I don’t think we should get it out of proportion.
“I think there are substitutions with other vegetables, but in some ways there are actually lost sales because they’re not capable of being substituted very easily. That’s the disappointing aspect of it.”
For Total Produce marketing manager Vincent Dolan, the event may even help raise consumer awareness about the challenges of food production.
“It’s a long time since we’ve not had availability on the shelves,” Dolan said.
“Certainly in Ireland and the U.K. it’s got a lot of coverage, and there actually might be an increased appreciation of what goes into production, that fruits and vegetables don’t come off a production line.”
Onward and upward
Supply has been disrupted, uncertainty remains over the impacts of Brexit and supermarkets are moving away from produce brands, but despite all this there is still much to be positive about at Total Produce.
“I think with the improvements in the economic conditions in Europe, particularly in northern Europe, there’s an opportunity to grow our organic business and we’re working very hard on that,” Byrne said.
“You’re seeing consumers prepared to pay more to support the price differential that’s needed because of the lower yields coming out to produce organic produce.
“I think the other areas you’re seeing growth on are exotic fruit and berries, and they’re two areas and categories we’re strongly focused on.”
As part of its growth in tropicals, Total Produce quietly took a shareholding in Brazilian company Argofruta early last year.
“Hopefully the combination of our distribution outlets together with their sourcing and packing capability in Brazil can enable us to grow together, particularly with some of the Brazilian producers who have mangoes and other crops,” he said.
“They do grapes and other products as well, but it’s very focused on the mango business.”
Byrne said Total Produce was looking at further investment to improve its ripening processes.
“We are at the moment looking at enhancing our ripening capability across the whole range, whether it be mangoes or avocados or other exotics, to try and get more towards the ripe-and-ready concept from a consumer point of view to make it more attractive without any inconsistencies around ripening.
“On the consumer side, in a couple of weeks’ time the first consignment of Top Mangoes are coming in [from Brazil] – they’ve got QR codes to show consumers how to ripen them,” adds Dolan.
Byrne said the group was sourcing mangoes from “all the main production areas” with support from Spanish subsidiary Eurobanan and the brand Isla Bonita.
“Ramon Rey who is well known in the industry leads the way in importing for our Spanish business – we’ve developed a strong brand around that in Isla Bonita, and we may look at even enhancing that for some of our exotic ranges on a wider European basis,” he said.
He said a lot of Total Produce’s branding was business-to-business, in a retail sector where supermarkets continued to push for their own in-house brands.
“It’s very hard to compete with some of the major consumer brands that are out there – we work as you know in a very tight margin industry. Competitiveness has become so tight that it’s become difficult to spend a lot of money on brands.
“There’s also realistically been a lot of opposition to branding in fresh produce in terms of own labels and not wanting individual suppliers to have their own name on the produce.
“That’s one of the biggest hurdles – you have established brands that are taking their labels off the fruit because it’s not being accepted by some customers, and that would be the biggest inhibitor.”
With its head office in Dublin, Total Produce is just 100km away from the potential border between the European Union and the U.K. once Brexit goes ahead, and the multinational has a strong presence in the British market.
“Obviously there is no doubt that Brexit is going to be a pretty complicated process whether we like it or not, so we’ve got to face up to that,” Byrne said.
“If you look at what’s happened since the creation of the Single European Market, all of the world trade agreements that Europe entered into were on a single European market basis.
“Whether it be phytosanitary, the banana regime, import agreements, duties, all those agreements work on a pan-European basis, so there has to be a resolution in one way, shape or form of those agreements.”
Byrne said he was “reasonably comfortable” all of those issues would be resolved.
“We’re in a mature industry and all of those trade flows, perhaps to a lesser extent, existed pre-Single European Market.
“There’s a lot of work to be done for that separation to happen in a smooth way, and I have no doubt there’ll be bumps down the road,” he said, noting the importance of exchange rate fluctuations.
“We would import a lot of product to the U.K. from the Eurozone and from the dollar zone, and obviously there’s a lot of volatility around the exchange rate and that issue in its own right creates a whole range of complications.”
This calls for a great deal of care from traders like Total Produce.
“You need to get your hedging policies in place to be clear on what your cost price is,” he said.