Global fresh produce coalition calls for change in supply chain and cost crisis

The global fresh produce industries unite in a call to national and regional public authorities and multilateral bodies, such as WTO, FAO, UNCTAD, OECD, and others, to respond urgently to the current significant hikes in costs and an overall shortage of labor which is jeopardizing the economic viability of the fresh produce industry globally.

While the sector demonstrated its resilience during the past two years of the COVID pandemic, the current global supply chain challenges have led to cascading negative effects for all parts of the industry. The sector has experienced increased costs in multiple areas, including 150 – 400 percent in container prices, 20 percent in truck transportation, up to 80 percent in airfreight, up to 100 percent in fertilizer costs, and up to 100 percent in wood pallets prices.

Additionally:

  • Southern Hemisphere producers estimate an increase in costs by 3.8 billion USD through the increase of container prices by about 150 percent 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 (domestic, intra-EU, export, import)
  • The North American fresh produce industry reports that container prices have been climbing up as high as 25,000 USD, a massive increase over pre-pandemic costs of around 3,000 USD.
  • More than 86 percent of ColeACP members are concerned that their economic viability is impacted by the current logistic disruptions, and more than 70 percent are considering the implementation of business changes.

The Global Coalition for Fresh Produce urges key stakeholders and public authorities to undertake urgent solutions to stabilize the sector in a period of crisis. We have identified potential mechanisms to preserve the short-term economic viability, including the following proposals:

  • Increase attention and recognition of fruits and vegetables as a “strategic good” that significantly contributes to the planet's long-term sustainability and public health policies.
  • Create stabilization mechanisms to improve the accessibility of fresh produce.
  • 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.
  • Introduce transport subsidies for fruit/vegetable growers and exporters aimed at alleviating the immediate impact of inflated price distortions in sea freight.
  • Promote a global zero-VAT strategy for fruits and vegetables that would benefit producers, exporters, and consumers.
  • "Facilitate greater access to key export markets by way of varying mechanisms that do not lead to unfair market distortions including reduction of import tariffs and quotas."
  • Avoid aggressive promotional price discounts made available to end consumers.
  • Strengthen public promotional investment aimed at increasing the recognition of fresh fruits/vegetables during the Southern Hemisphere counter season.

For more information:
Micken Kokonya
Canadian Produce Marketing Association
Tel: +1 (613) 226-4187 x225
mkokonya@cpma.ca  
https://cpma.ca/  


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