This column first appeared on Jim Prevor’s perishablepundit.com
Over the years, we’ve been pleased to engage in many conversations with the head of the pan-European produce association:
When we spoke with Philippe Binard on the occasion of the 10th anniversary of Freshfel back in 2012, it was interesting to review the Top Ten list of issues:
- Evolution of consumption
- Development of exports
- Imports into Europe
- Development of foodservice and convenience and innovation
- Food scares
- Evolution between global and local
- Communication and promotion, and
- Children and the consumers of tomorrow, a positive way to conclude.
The reference to “food scares” focused on a European E.coli 0104:H4 outbreak, and none of the concerns, in Europe, America or elsewhere dealt with the kinds of concerns the world is going through now.
We thought we would try to get an understanding of what Europe and the European produce industry is experiencing. Pundit Investigator and Special Projects Editor Mira Slott spoke with Binard to get posted:
Q: I hope you and everyone at Freshfel are safe and healthy and holding up OK during this global health crisis. I miss when we were all together in London. We were honored to have Freshfel Europe hold its 2019 Annual Event in connection with The London Produce Show and Conference last June. The event — themed “Building opportunities for fresh produce in an unpredictable business environment” — brought many leading produce industry executives from across the continent of Europe to London. It’s a different world since then.
A: Thank you very much for your well wishes. Yes, we are all well, but we have been confined. This is a very strange situation, and when we go on the business side, we are seeing the sector is difficult to operate and to provide food to the people.
We are concerned what will be after the crisis. A lot of companies completely stopped operating, and their future is uncertain. The way we do business will be completely different. I think there are a lot of questions of how long this will last and what will be the economic and social consequences, once we will be over this virus for this moment…. it also is not certain this virus won’t come back.
Q: The breadth and severity of the COVID-19 outbreak, how long it will last, and the possibilities of a resurgence, a second wave or even third wave … are paramount concerns here too, as the global pandemic blankets the U.S.
When the outbreak began in Europe, Freshfel formed a COVID-19 Response Team to ensure a continuous supply of healthy, safe and high quality fresh fruit and vegetables throughout Europe and beyond over the duration of the outbreak. I understand a liason was formed with Freshfel Europe members and the European Commission and other authorities, such as the Organisation for Economic Co-operation and Development (OECD), working daily in close coordination.
What do you think the biggest impacts and implications will be the European produce industry? Could you provide any information our North American produce executives will need to know?
A: Risks for products to be successfully exported globally are increasing, and importers here in Europe are experiencing high uncertainty in terms of delivery and time required for documentation checks. This increasing burden on the supply chain is set to have considerable ramifications for the long-term stability of the sector.
For me, I think we don’t have to start with the global trade side… we have to start with the production side and the impacts there.
The situation is the same for everyone. Whether you are an exporter or an importer in the U.S., you will be suffering the same kinds of uncertainties… where to get sourcing, how to get to a market that doesn’t have any disturbances. Today, this is a major global crisis.
“On the European example, I can tell you the cost of transportation of fruits and vegetables probably has increased by 25 to 30 percent because of these logistical issues, because of social distancing in the loading and unloading, which means less efficiency.”
If you’re on the supply side, you need to make sure you can find logistics solutions — I don’t know about the trade between U.S., Mexico and Canada, but in Europe there are many changes regarding ground transportation. The essential goods continue to move, but when non-essential goods don’t move — let’s say in a production region — the trucks that arrive with the fruits and vegetables sometimes come back empty, which increases the costs of transportation.
Based on the European example, I can tell you the cost of transportation of fruits and vegetables probably has increased by 25 to 30 percent because of these logistical issues, because of social distancing in the loading and unloading, which means less efficiency. When a truck is locked down longer, sometimes there are premiums of safety, sometimes there are still delays at the borders, all of that is increasing the costs of land transportation.
If you go to long distances, there are other problems. First, to make sure you can get the containers and the vessels. And then actually in the case of the U.S., for example, if you have a lot of product coming from Central America, or going to Central America, it goes by boat, and you don’t necessarily have time for the journey. Maybe the place of destination is asking to wait for the quarantine to be ended, which means 14 days, and if you only have 4 or 5 days for a highly perishable item, you also lose efficiencies waiting for product to be discharged.
Then you have all the questions of availability of the people in the port from the private sector. It’s an important sector, because you need all the mechanization for loading and unloading the vessel. And then, from the public side with the people in customs, you have people unable to get to their office, and difficulty to get the document in time, and to get the company to ship the paper. Sometimes there is no flexibility at the place of destination in meeting the export country’s requirements, and having all of the original documents. So, for international trade, you have a lot of problems.
But then you also have to look at what’s happening with the domestic supply. What are the additional problems caused by all the new rules to be in compliance? In terms of the seasonal worker, can they come, can they not come; where do they have accommodation; is it the same rules or do they need more social distancing? What about transferring the workers from their place of accommodation?
So, there are many additional costs. Will they be compensated by the increased price, or will it go back to the chain? And there are further costs throughout the distribution chain, related to social distancing, expanded safety measures… I think it could work maybe a month or two months, but if all these other costs are permanent, it could cause a lot of difficulty in their chain on financial sustainability.
Q: Your COVID-19 Crisis Management Strategy focuses on three critical action points:
- First, intelligence gathering and exchange, where Freshfel collects and analyzes the immediate short and long-term consequences of COVID-19 and provides members and authorities with daily information updates.
- Second, close engagement with regulators to communicate key sector issues and assist in finding practical solutions for supply chain operations.
- And third, communication and awareness raising through traditional press and social media channels.
- On the first action point, what has your data collection and analyses determined? What are your short and long-term projections of the pandemic impacts on the sector?
A: On the virus, I just know we are asked to provide a lot of help to contain the virus, but I’m not an ideologue… even I don’t know how long I will have to stay confined. I know for the time being in Brussels, Belgium, it’s up to the 3rd of May. I know France has announced it’s at least up to the 11th of May. But then you have some countries that are starting to reactivate some of the non-essential activity.
In Spain and Austria and in Sweden, there are different approaches. In the U.S. also, depending on which state you are in, the approaches are different. But they are not always competent, because these are very difficult elements to calculate and balance the economic activity and the health aspects. I think even the heads of states have a lot of difficulty to know exactly what they should do because it’s a completely unknown territory.
Q: Have you been able to assess what countries and products are best positioned to weather the storm? Supply and demand issues… what products are in most need from North American exporters, what products are in most demand from Europe for North American importers? What items are currently selling and not selling, and why? What are your expectations going forward with harvesting/production schedules, etc.?
A: For Europe, I think the exports from the U.S. are minimal. There are a few grapefruits from Florida; there are few apples from the East Coast; some sweet potatoes, there are a few more products, but there is not a lot of business both ways. I also think most of our products, in any case, are forbidden to be exported to the United States because of APHIS legislation.
“The main problem we have in Europe is to secure the seasonal worker, which is not yet fully settled. But it is improving, and that’s really important.”
There’s not a lot of movement between the U.S. and European countries. Some of the volumes are going through airfreight, which are suspended for the moment, which is one additional difficulty on top of that. The EU was exporting oranges and kiwi fruit to the U.S. market. But I think today, the main problem we have in Europe is to secure the seasonal worker, which is not yet fully settled. But it is improving, and that’s really important.
We are now committed to the season of strawberries and asparagus, and, as there was a lack of resources in the offshore, some of the product has been lost. But we will soon be entering into the field of the vegetable season, which will also require a lot of resources. And then, we’ll be moving into the summer crop, peaches, nectarines and apricots. That will be followed by apples, pears, citrus, grapefruit, kiwi, etc.
So, we need to be sure the seasonal workers are in the places where they need to be, so that we minimize the losses and the shops remain with enough supply.
Don’t forget that today in Europe — I don’t know if this is the same in the U.S. — all that is foodservice in Europe has been stopped.
Q: Yes, in the U.S., with restaurants shut down, the foodservice side has been decimated, and companies are quickly trying to reinvent themselves, forming new partnerships with retailers, etc.
A: Exactly the same has happened in Europe. No more food in transport to restaurants, to canteens, no more food in all these places where there is consumption away from home. That means that supermarkets are almost the only place where you can buy food.
I know, it’s too early to know exactly the figures, but probably in supermarkets there has been an increase in sales of 25 to 30 percent, which could include what some of the countries were doing before foodservice stopped, but in some of the countries, the numbers are much, much more.
There is a loss in the sector, affecting some of the consumers. What works better is probably some of the products that are more mechanized versus those products that require a lot of human factors, but I think for the moment, there is nothing really missing on the shelf.
We certainly have to look for the long term and prepare for the moment to secure the good quality. Over the medium term, we will have to address the impact of the social distancing, the influence on the auction, on the way to the auction, on the packers, on the picking. When you need 1.5 to 2 meters distance between the different people, it’s impacting the efficiency.
“There have been no shortages so far, but that doesn’t mean there’s no complexities behind that; complexities in organization, complexities in the overall management of the companies when you have a lot of people sick, when not as many people can come to work, influencing how the business operates.”
Q: What advice or strategies can you share with North American produce executives. Are there lessons we can learn from what’s happened in countries in Europe that have faced the crisis earlier than us?
A: What is clear is this crisis is unprecedented. When we look at the produce sector, it has been collectively fast in repositioning itself to channel the product to the main supermarket chains. There have been no shortages so far, but that doesn’t mean there’s no complexities behind that; complexities in organization, complexities in the overall management of the companies when you have a lot of people sick, when not as many people can come to work, influencing how the business operates.
We’ve had a major challenge in Europe with transportation, with European labor equality between the different member states of the EU, requiring a quick fix solution on the one hand to be sure you can control the movement of people from Italy to Austria, for instance, or from Spain to France. At the same time, we have to limit the delays at the borders for the goods. That was one of the major first issues.
The second issue was seasonal workers, which is vastly solved but not yet fully. This is a critical point — moving seasonal workers from one place to another and guaranteeing the system’s safety.
This is a global debate that is now going on in the U.S. How do you ensure you have enough equipment and masks if you need those for protection of the seasonal workers? How do you make sure you have enough testing? It is easier to put people back to work if you know they are not infected. Testing is an important element.
On the marketing side, there are completely different ways to consider or not consider making promotions in this particular moment. Campaigns had to be entirely rethought or cancelled. You must have flexibility to change events and points of sale.
Should there be any compensation to businesses, and how do you calculate this indemnity? There are many questions that are coming.
We’ve had some social data on how to make sure consumers are not afraid to buy product. They are concerned about contamination with food. We’ve had to provide documents to explain what is needed in terms of hygiene, in terms of packaging, in terms of consumer choice between packed and unpacked product.
Q: In the U.S., since the coronavirus hit, we’re finding a trend is emerging of consumers buying more packaged produce.
A: There hasn’t really been a tendency there for contamination, but as long as people are following the safety measures to prevent the spread of the virus, it is not an issue. Sometimes it’s important to talk to consumers and explain to them the situation. They may not understand about food safety, and the change in promotions, and the difficulties with logistics and trading conditions, and about contracts that cannot be falling under the same long-term conditions that you had before.
I’m not sure what the rules are in U.S supermarkets about social distancing, but normally in Europe, the rule in the shop is not more than one person per every 1.0 or 1.5 meters. So that is limiting the amount of people who have access to the premises, which means there are people having to wait outside when the weather is problematic.
“There are a number of frequently asked questions on a national level, so we have prepared answers that we have made available to the sector to help in the messaging if questions come up in social media or in other ways.”
Q: Have you been doing new consumer communication campaigns? Are you finding misinformation out there about the coronavirus that needs to be clarified?
A: There are two things: What we have done as an organization is very limited activities, just on social media, to reconfirm when people are at home, the benefits of having a healthy diet and eating fruits and vegetables, and delineating specific benefits of the different fruits and vegetables. But we have to be very careful not to be perceived as making links between eating produce and strengthening immunity against the virus, because there are no links or studies on that.
The second thing: We must make sure information is available from the government authorities. The information must be focused on answering questions from the consumer about the safety of the product, what to buy and what to do with the product. There are a number of frequently asked questions on a national level, so we have prepared answers that we have made available to the sector to help in the messaging if questions come up in social media or in other ways.
From our side, what we have tried to do is have good follow-up on all the day-to-day changes, and different activities taken by the authorities to assist with the sector. There are a lot of decisions being made so we try to monitor and influence the solutions, and to be up to date with the changing environment.
Q: How is Freshfel working with the EU, global health organizations, etc. You talk about the goal of having EU-wide solutions. How complicated is that, since member states have different interests and different problems? What are the best solutions?
A: It is important to have a European-wide approach — in terms of transportation, in terms of making sure you don’t create a distortion. Of course, some of the solution is to create a concrete local level approach. It’s also a matter of our constitution in Europe, where there are a number of matters within the European continent, and then there are matters of health, which are more national.
But it’s not because of the national matters of health that there is no need to have coordination between the countries. With the issue of transport, it is very important to have a European-wide approach. It’s not easy sometimes, but in general there have been a lot of decisions that have been considered, and some of them are in the scope of finding a European environment to deal with the crisis, which is very important.
Q: It’s been an issue in the U.S. where this highly transmittable virus spreads across state borders, and our society is so interconnected… There are reports, for instance here, here and here, of states bidding against each other and the federal government for medical equipment, masks, etc., driving up prices …
A: Seeing things from the outside, it seems your President was slow to take action. I think sometimes it’s very difficult, and also here… this balance between health and the economy, and where do you put the cursor. There are many countries that prefer to continue a certain level of activity, like in Germany or some Scandinavian countries, where in others there’s almost a complete lockdown or closing of activity. Who is right? That will be something we will have to assess.
Q: The approach one takes is dependent in many ways on the country’s circumstances in terms of trying to contain and to mitigate, and what’s acceptable to the culture. When it’s all over and we do a retrospective analysis, we can see how different countries implemented different strategies at different stages of their epidemic, and which ones seemed to work the best…
A: My wish is we could come back as soon as possible because all the measures cost a lot of money, but that is very difficult. I think we are fortunate to be in a relatively good situation because we can still sell.
There was a lot of activity we completely stopped, if you look at the industries and products — the airlines, the restaurant scene, and so on — it’s been problematic, and this is why we need to come back as soon as possible, but it won’t be easy.
It strikes us that it is the very capabilities of technology today that makes this pandemic difficult and gives us so many options. More than 100 years ago, during the 1918 Pandemic (H1N1 virus), we had no vaccines, no antibiotics, and we did not reduce morbidity with isolation, quarantine, disinfectants, personal hygiene and the minimizing of public gatherings.
But people had to work or they would be homeless and starve. In the end, 50 million people around the world died, while a third of the world’s population, about 500 million people, became infected.
Now, our incredibly affluent society, combined our technological advancement, gives us this liberty to decide how to deal with the coronavirus outbreak.
The questions being posed go well beyond medical questions. It is clear that the data points to a condition far more dangerous to older people than younger people. Does this give us, as a society, the right to restrict younger people from going to school, working and looking to make something of themselves in order to protect older people?
Produce trade associations can, of course, help with encouraging governmental regulations that won’t inhibit the growth and distribution of fresh produce. They can also defend those companies within the industry, most obviously foodservice, that have been damaged by government policy approaches. But the fundamental challenges posed by this pandemic are mostly great philosophical issues about who runs society, what right we have to impose burdens on one another and what type of society we hope to become. The produce industry can be just one voice in that very difficult discussion.
Many thanks to Philippe Binard and Freshfel for updating us on the European situation. We wish our friends in Europe health and prosperity.