Will it ever be business as usual again?

The fresh produce business is important, but talking about the fresh produce business seems a lot less important, especially right now. I certainly chose an interesting moment to start a LinkedIn newsletter about the industry I have written about for the past twenty years. There is no avoiding the fact that what is happening right now in Ukraine is a human tragedy that most of us can never fully comprehend. For many of the people affected, fresh produce traders among them, ‘business as usual’ is simply impossible. Ukraine’s produce exports had really begun to flourish, but obviously that is the least of their many concerns. I want to keep doing my job, which is why I have published the analysis below, but I also want to show compassion. I don't want to plough on without recognising the awfulness of the situation. I want those people in our industry who have been directly affected to know that, for whatever it's worth, they have my heartfelt sympathy.

SAFETY NET LOSS

“Payment is ok. It is organised by them, by the Russians. Without Swift. We are working without insurance.” That’s a remarkable admission from one of several fruit exporters I spoke to about the Ukraine crisis and its impact over the past few days. Transporting fresh fruit halfway around the globe is a Herculean task at the best of times, but now, with the industry already shellshocked by the pandemic, the response to Vladimir Putin’s invasion has made that kind of trade all the more difficult. Many of the logistical and financial systems that normally make international trade a well-oiled machine have been switched off. So, if you depend on Russia for a large part of your export earnings, as Serbia, South Africa, Ecuador, Turkey, Argentina and several more of the world’s fruit producers do, then the coming days will involve frantic sequences of phone calls, messages, and emails to stop the gears from grinding. Without the usual safety net of credit insurance, now there is no real guarantee you will be paid. Or indeed that your customer, however willing they are to pay, can do so.

THE COLDER SHOULDER

Given the dramatic breakdown in relations between Nato countries and Moscow, you might hazard a guess that Russia will now turn even further from the west when it comes to its food supply. Countries like Poland have already found out the hard way that an over-reliance on Russia is bad for your economic health, and others may learn the same hard lesson in the near future. Will sanctions mean Russian consumers can no longer afford products from further afield? In the short term at least, that seems likely – bad news for citrus from Argentina, bananas from Ecuador, or pears from South Africa. Either way, a geopolitical pivot to the east is now more than likely, and this could see Russia source even more fruit and veg from Asia. After all, the Belarus back door which allowed exporters to circumvent Putin's 2014 ban on EU produce was hammered shut in January. Plus, analysts expect Russia to continue recent investments aimed at greater self-reliance. Andriy Yarmak, a highly knowledgeable economist at the UN FAO and a proud Ukrainian known to many of us, makes this important point in a recent report: “Russia has introduced its import substitution policy and the market is oversupplied with local produce. Domestic prices were very high, so the government has provided a lot of subsidies to boost production. Countries in eastern Europe, even those who still have access to Russia, are therefore looking at alternatives.”

THE DIGEST

Other Fruitnet stories I think you should read…

Wholesale on hold—Amsterdam-based trader Levarht has sourced and supplied fruit and veg since 1933, but this week its own shelf-life has come under scrutiny. Can one of the Dutch masters be saved and restored?

The heat is on—For owners of huge glasshouses who want to save money on their energy bills, it’s not as simple as turning down the thermostat and putting on a warm coat. Gas prices are rising, and something has to give.

That’s a wrap—Sustainability charity WRAP has called on major retailers to sell uncut fresh produce loose, after its 18-month study found that plastic packaging doesn’t always make the product last longer.

Groundhog day—Record Covid cases, panic buying in the supermarkets, and an impending lockdown. For Hong Kong, the pandemic appears far from over.

Split decision—In terms of its price per kilo, the lowest-hanging fruit must surely be the banana. This week, both Del Monte and SanLucar have attempted to wrestle back some value.

Annual leaves—You heard it here first: Germans really adore cabbage. Oh, and more than half of them appear to want home-grown vegetables all year round.

THE BEST OF THE REST

Interesting stories from elsewhere on the web…

Green gold diggers—Mexico supplies the US with 99 per cent of its imported avocados, but in February that trade was blocked for eight days by the USDA. Why? The industry’s unwanted and unfortunate problem with criminal gangs has not gone away.

Plucking marvellous—Carrefour’s newest Dubai store has an indoor hydroponic farm that allows you to harvest your own leafy greens.

Pitch invasion—Another big-money move for vertical farming. On an area the size of just two football pitches, PlantLab says it can supply 100,000 people with 200g of fresh veg per day. Back of the net!

Rapid recall—To a middle-aged hack like me, the names of rapid grocery delivery apps Getir, Jokr, Gopuff etc are like rappers my son might watch on YouTube. To lawmakers in New York, they seem all too much like companies that mistreat workers and the communities they serve.

Novelty acts—Fruit Logistica has published its annual list of Innovation Award nominees. Have a look and see if you can predict the winner.

GET IN TOUCH

Drop me a line here on LinkedIn, or via email to [email protected].

And if you can, please make a donation to help people in Ukraine.