"Procurement problems provide chances for fruit and vegetable trade"

West-European suppliers of fruit and vegetables will have to develop more services or products with added value for their food retail customers or they could lose their position. Rabobank Food and Agribusiness Research and Advisory concludes that there are chances for suppliers of fresh fruits and vegetables to increased profitability and solve increasingly complex problems around procurement.

Cindy van Rijswick, Industry Analyst Fresh Produce for Rabobank, says: "Although more and more food retail players are buying straight from growers, or contemplating doing this, it's the question whether this strategy to skip intermediaries and lower costs will be efficient in the long term.
Suppliers, who can relieve growers, or supply them with unique products, will always be indispensable in the value chain for fresh fruits and vegetables."

In the fruit and vegetable sector scarcity is much less of an issue than with the agri-commodities says Rabobank. Nevertheless the sourcing of fresh fruit and vegetables will become more complex for various reasons. The year round procurement of a number of varieties of fresh vegetables and fruit is becoming even more difficult due to the need for difference and quality, the many demands of the retail, in the area of food safety for instance, the risks in the international trade and shifts in production flows.

When products become harder to source and the share in the turnover increases, they are of more strategic importance for the fruit and vegetable industry. This means that there are chances for suppliers to become strategic partners. This can be by supplying customers with distinctive, innovative products that give a retail customer an advantage or even full exclusivity compared to the competition. Examples of such partnerships can already be found in the convenience segment. Suppliers of freshly cut vegetables and fruit that often have long term relationships with their retail customers have succeeded in raising the turnover of cool fresh fruit and vegetables together with their customers. Developing apple or pear club varieties that are exclusively available at certain detail trade chains also offer interesting possibilities.

Source: Rabobank