Report Synopsis

Realising the potential of UK apples and pears

James Smith

The UK fresh produce market place is stagnant and burdened by regulation. Moreover, increasing retail space per capita and the subsequent deflation in food prices is putting increasing pressure on UK producers who face rising costs as well as increased risks of climate change, political instability, litigation and bureaucracy.

This study has been undertaken to see how producers elsewhere in the world are rising to these challenges and to see how they view the UK market as historic suppliers to it. From this will come some indication as to how growers in the UK can adapt and meet these challenges. There is no question that there are profitable companies in the UK but it is the smaller growers, who cannot run packhouses or transport companies, that need to adapt in order to prosper.

Typically growers in the UK have enjoyed something of a growers’ charter where they grow what THEY think is best and deliver it to the market to get it sold for a profitable return. This no longer the case and a higher degree of market focus is needed. Many farming companies realise this and drive efficiencies through vertical integration, using scale, and focus on the market through retailer partnerships. Meanwhile a large number of smaller growers are not in a position to do this themselves. Some are small enough to be nimble, close to their consumers and can make it work this way but many fall between the two: too big to be nimble and too small to benefit from scale in order to invest in the supply chain and to face retailers through direct supply models. How do these businesses recreate themselves to adapt to the 21st century UK produce sector?

The success of many other producing countries is driven by multiple markets and the ability to sell the whole crop. In the UK the industry struggles to export any meaningful volumes and thus relies entirely on the domestic market. The UK retailers are world leaders in understanding their consumers and have identified what drives sales of apples and pears. Neat, convenient packs of fruit at a set price appear to sell best as the consumer knows what they are getting; waste levels are low and it is easy to manage promotional activity. The problem for the grower is that apples are not always the same shape, size or colour so getting a one-size-fits-all pack right is very challenging. There’s no question that consumers thrive on convenience and like to know what they’re getting but, for the producer, selling by pack has its challenges as pack weight can vary resulting in varying price per kg back to the farm. Understanding this is vital to the supply chain when negotiating prices.

The grower is the first link of the supply chain, NOT the supplier into it, therefore efficiencies have to start on the farm. The competitive nature of the UK retail sector means that price pressure will not go away and in order to profit from fruit growing, those doing it must understand their cost of production to the last penny. They must commit to forward thinking, dynamic supply chains by being the foundations on which the latter are built. While the climate in the UK is marginal for apple and pear production and yields are limited, lessons can be learned from all around the world as to how one can make the best of what the UK has.

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