Impact of the Covid-19 on the European Produce Supply Chain

Originally printed in the June 2020 issue of Produce Business.

On March 1, no one imagined that a few days later border closures, travel movement limitations and a severe disruption of the single market would become the new trading reality for the fresh fruit and vegetable industry. Since then, the European fruit and vegetable industry has been in a constant state of emergency, moving from an initial crisis stage into a new adapted reality.

Freshfel Europe has supported its members from day one of the COVID-19 pandemic to ensure continued and sustainable operations throughout the entire chain. Annually, the EU produces 80 million tons of fresh fruits and vegetables of which roughly 50 million tons are destined for local consumption and foodservices. However, 30 million tons are destined to intra-European trade and 5 million tons for exports.

Europe is an intertwined network of business relations and border-crossing supply chains and is dependent on sustained production regions to ensure year-round supply. Therefore, the pandemic has caused economic challenges not only due to the closure of foodservice and increased at-home consumption, but to a manifold number of other factors. During the first stage of the crisis, heavy measures were taken for border crossings and movement, including medical checks at each border, up to 40 hours waiting times for intra-EU border crossings, over two-week quarantine provisions for returning drivers, empty truck returns and reduced staff availability, all of which increased transport costs significantly.

The European Commission has endeavored to coordinate Member States’ actions; however the lack of a common European pandemic response has impeded these efforts, as initial Member State panic reactions had to be corrected. Currently, the EU is slowly returning to a well-managed coordinated response, but many of the immediate well-meant ad-hoc measures have already created economic damage. As the pandemic evolves, the industry continues to suffer from limited operations and simultaneous pressure to sustain operations at all levels of the chain.

Freshfel Europe has supported its members from day one of the COVID-19 pandemic to ensure continued and sustainable operations throughout the entire chain.

Since the beginning of the COVID-19 pandemic, Freshfel Europe, with the help of its members, has collected intelligence on implications for the entire fresh fruit and vegetable supply chain, from production to wholesale, intra-EU trade, exports, imports and retail. Freshfel Europe has now compiled this market intelligence, along with practical policy recommendations, in a highly detailed 88-page COVID-19 Impact Assessment (available at the www.freshfel.org), which outlines short and long-term implications for the sector at the European level.

Throughout our intelligence gathering, we observed that there are several key challenges being experienced across the entire supply chain. First and also very likely a global problem, workforce availability and protection is a huge stumbling block for smooth operations. Travel bans for seasonal workers, social distancing provisions and a lack of protective equipment are currently slowing down production operations and will continue to do so in the upcoming months. This not only has a significant impact on harvesting but also on new planting operations. Consequently, there is great concern that we are moving into a new season with a shortage of fresh produce supply.

Secondly, logistics has become a central bottle-neck for supply chain disruptions. While securing the EU internal supply chain has been a priority over the past few weeks, attention is now being moved towards the situation for importing countries where the season is just starting. These two predominant challenges have had a strong impact on market performance, which is currently characterized by an overall slow-down, not only in the EU, but also globally. Further, they have resulted in a disrupted demand behavior, which favors mechanized goods and supply chain security and leaves foodservice-oriented categories in a price jeopardy.

These developments have left the sector with substantial additional costs, which will continue to accumulate as the COVID-19 pandemic progresses into the second half of 2020. In our Impact Assessment, we have estimated that for production and intra-EU trade alone, the first two months of the pandemic have cost the sector at least 1 billion in damages. Consequently, we have also provided recommendations to policy-makers in our Impact Assessment, which are relevant both in EU and globally: 1) a strong need for common holistic solutions to reflect the complexity of supply chains; 2) better recognition of the essential role of fruit and vegetable workers; 3) the need for financial assistance to secure sustainable operations post-2020; and 4) increased need for international cooperation to secure fruit and vegetable trade globally.

This crisis has taught us that the fruit and vegetable supply chain in Europe and globally is fragile. Nevertheless, the industry now has an opportunity to learn how to better anticipate and prepare operations for upcoming crises, as it is evident that to enable continuous supply of fresh and nutritious products to consumers is more essential than ever.

Nelli Hajdu is director of trade policy and business development at Freshfel Europe and part of Freshfel Europe’s COVID-19 Response Team. Freshfel Europe is based in Brussels, Belgium. The Freshfel Europe’s impact assessment is publicly available at www.freshfel.org.