It needs to pass on the increase in its costs to remain viable
Drafting Lands / Interempresas07/04/2022
FEPEX, CGC and Spanish Agro-Food Cooperatives warn that the situation with the war in Ukraine has worsened because the sanctions against Russia and the depreciation of the ruble have led to the diversion of production from Morocco, Egypt or Turkey to the point of saturating the food market. EU.
The costs of all the inputs of the fruit and vegetable handling industry – light, diesel, wood, cardboard or plastics for packaging and even wages, due to the labor reform and rises in the SMI – have skyrocketed in the last year. Its growth has, in fact, accelerated since the beginning of 2022, months before the Ukraine war.
Furthermore, the war has aggravated this dynamic of successive increases in costs, it has already generated a situation of oversupply and has finished sinking prices in the EU. Although there are expenditure items that accumulate three-digit increases, such as energy -by more than 150%- the average rise in the last year for clothing stores is estimated to be greater than 30%.
The Spanish Federation of Associations of Producers and Exporters of Fruit and Vegetables (FEPEX), the Citrus Management Committee (CGC) and Agro-food Cooperatives of Spain, agree on the diagnosis: the sector suffers from a serious problem of competitiveness because it is not capable to transfer minimally to their prices, neither in Spain nor in the EU, this unprecedented escalation in their costs.
Insufficient price increases
Indeed, in the latest CPI data for February, fresh fruits (including citrus fruits) and legumes and vegetables were items that were at the lowest part of the increases, with annual increases of 6.2 and 5.2% , respectively. These crops had a behavior similar to that of the rest of unprocessed foods, but at a certain distance from others such as coffee/cocoa (7.6%), milk (8.8%) and, above all, oils and fats ( 28.1%). In fact, while the average index of unprocessed food stood at 5%, that of industrial goods shot up to 15.9%, that of fuels and fuels did so by 26.9% and that of industrial goods. of energy products reached 44.3%.
In February it was the energy crisis that triggered the CPI to 7.6%, not food and even less fruit and vegetables. The leading indicator for March, which registered a historic annual rise of 9.8%, was also due to the crazy rises in electricity, fuel and, to a lesser extent, in food and non-alcoholic beverages. The three organizations attribute this latest rise to failures in supply and serious alterations in the chain caused by the long stoppage of transport, which affected supply.
In the foreign market, things have not gone better. According to the latest data available, in the first month of the year the tonnage of fruit (including citrus) and vegetables exported rose by 1% (1.2 million tons) and 3% in value (1,530 million euros). The quotient between both parameters shows a price 2% higher than in January 2021. Figures that, already in January, were insufficient to cover costs due to their spectacular increase.
And the situation, both in the domestic market and even more so in Europe, has worsened with the outbreak of the war in Ukraine. The sanctions applied by the West to the Russian regime, the veto of banking entities and the cancellation of the Swift payment system for some of them have caused a runaway depreciation of the ruble, a situation that calls into question any transaction with the Asian giant.
Thus, since the beginning of March there has been an increasingly evident oversupply in the EU. Fruits and vegetables and citrus fruits that were destined for the Russian market, given the collection difficulties and the obvious logistical complications, for example, in the Black Sea, are being redirected en masse towards Europe. Russia imported 1.7 million tons of citrus in 2021 and another 3.9 million bananas, apples, stone fruit, table grapes. A good part of that tonnage, exported to that destination mainly by Turkey, Egypt, Morocco, Greece or Israel could end up, is ending now, in the old continent.
It is evident that neither the Spanish nor the European large distribution companies are applying to their prices the historic increase in costs suffered by the fruit, vegetable and citrus fruit, vegetable and citrus handling and marketing sector. We are your largest and safest suppliers, the ones that guarantee the best service, the most adjusted, not just to European regulation but to the private certifications of those big chains, so in a situation as complicated as this, we only ask for greater sensitivity. A few cents of a euro more in the PVP of fruit, vegetables or citrus will not trigger inflation and will serve to save thousands of jobs, both the director of FEPEX, José María Pozancos and the president of the CGC, Inmaculada, agree. Sanfeliu and the president of the fruit and vegetable sector of the Spanish Agro-Food Cooperatives, José Antonio González.
Related companies or entities
Agrifood Cooperatives of Spain
Spanish Federation of Associations of Exporting Producers of Fruit, Vegetables, Flowers and Live Plants