Covid-19 after 6 months; Implications and Potential Consequences for European Vegetable and Fruit Supply Chains
by Henry Matthews (Writtle University College, UK)
The impact of Covid-19 has been devastating across different countries and peoples with huge loss of life and is still an ongoing threat to the health and well being of human life worldwide. The challenge of maintaining supplies of food to people has, for the most part, been met in Europe but there have been structural changes in some key supply chains such as that of European fresh produce. The instant closure of the food service sector in many countries caused the redirection of fruit and vegetables into other channels where possible. Supermarkets have had to change their product offer, while online ordering has increased dramatically and consumer food waste reduced significantly. Growers with direct contact to their customers have had the agility and resilience to increase sales through their strong links, but the major concern for many producers has been access to labour. The extent to which these supply chain shifts will persist post Covid-19 is difficult to predict but the virus has exposed flaws that are being addressed. Namely the shortening of supply chains, online demand for fruit and vegetables, changing demand for healthy, storable products, the use of Apps in the food service sector and the need for farmers to provide better living and working conditions to attract workers.
The impact of Covid-19 on all aspects of human life has been profound and devastating. At a fundamental level the need for a secure, affordable, available and safe food supply is the most essential requirement for the heath and well being of people in any community. While Europe does not suffer the same issues surrounding food security as in some parts of the world (such as Sub Saharan Africa) the coronavirus pandemic has brought about a concentration of minds on issues in the supply chains of fresh fruit and vegetables. This is likely to lead to radical alterations to the future of production, distribution, retailing and consumption of these products.
The Virus in Europe
The first case in Europe was reported in France on 24 January 2020. This was followed by cases reported in Germany on 28 January. These were related to travellers arriving from China . On 22 February, the Italian authorities reported clusters of cases in Lombardy and two other regions. Over the following days, cases were reported where transmission occurred locally, including health workers and patients. During the following week, several European countries reported cases of Covid-19 in travellers from the affected areas in Italy, as well as cases without direct links to the country. On 8 March 2020, Italy issued a decree to install strict public health measures, including social distancing starting first in the most affected regions and on 11 March 2020, extending these measures at national level . Italy, Spain, France, UK and many other European countries introduced public health measures restricting the activities of businesses and individuals.
The European Supply Chain of Fruit and Vegetables
Although the provision of vegetables for the population of Europe was identified as being an essential service, the whole supply chain from the farmer and grower through to the consumer has faced severe challenges which will have an effect on the medium and long term future of the sector. The supply of vegetables to the European consumer is based predominantly on 'Just in Time' and making a wide range of products available all the year round at a low cost, irrespective of where it has come from.
As lockdowns were imposed in a number of European countries, the most immediate impact on the supply chains was the instant, complete closure of the food service sector, which includes hotels restaurants, cafes, and schools. In the UK for example, the value of this sector is £77.3 billion, which is similar to in-home food purchases . Wholesalers and suppliers suddenly had stock without an outlet. Of the 80 million tonnes of fruit and vegetables produced in the EU, 25 million is consumed in outlets outside the home and within days this had nowhere to go . The closure of fish and chip shops in the UK meant that an estimated extra 95,00 tonnes of potatoes would be in store by the end of the current season .
Wholesale distributors, which supply the food service sector, found that they had huge quantities of fruit and vegetables to sell, but although the market was still there they did not have the means to shift channels to supply the retail demand, which had significantly increased but had different packaging requirements and didn't have the capacity to switch from bulk to retail scale. The closure of wholesale and retail markets in Italy, Spain and France concentrated consumer footfall further in supermarkets, which became the focus for consumer demand, particularly in urban areas. Some companies moved quickly to adapt to the new situation. Reynolds, one of the largest distributor of fruit and vegetables in the food service sector in the UK lost 95% of its £250m business overnight but has moved quickly to establish a home delivery service . Similarly at the farm level, potato growers have taken to home delivery and farm gate sales to offset the loss of the processing and chipping market.
Supermarkets and Online Sales
The closure of the markets and the lack of opportunity to eat outside the home inevitably meant that supermarkets and some independent shops became the source of fruit and vegetables for European consumers. Those with an established online ordering and home delivery service have done particularly well. Ocado, a UK business built on distributing goods for major supermarkets is now valued at €13 bn and was recently paid €832 million by Marks and Spencer to provide an on line delivery service for their top of the range food items, including fresh produce . Some supermarkets in the UK quickly introduced box schemes that were delivered by third party logistics companies because customers could not get regular online delivery slots. Take up of online purchasing varies across Europe with UK ecommerce responsible for 20% of sales, in Italy and Spain it is 4% and 5 % respectively . It has been estimated that UK online grocery sales will increase this year to €16.8 bn from €12.7bn in 2019, in the UK there has a been an increase in older shoppers ordering on line  The use of this channel is increasing across each country and age group . In Germany a study of 200 fresh produce retailers reports an 80% increase in online sales .
The increase in online sales has been accompanied by a change in shopping frequency and the products bought in European supermarkets. Figure 1 illustrates some of the main shifts in behaviour among UK consumers. Shoppers are visiting the stores less often and buying more to cut down on the number of times they have to buy fruit and vegetables. In the UK for example, consumers have returned to the 'Big Shop' and are going out to buy food a record low number of times per month but the average spend per visit is up 37% on the year to April 2020 . In Germany, two thirds of respondents felt customers in supermarkets would be visiting on a weekly basis rather than more often . This, in turn, has led to a demand for fruit and vegetables with a longer shelf life, boosting sales of potatoes, carrots and apples, but with negative consequences for more exotic choices such as mangoes and avocados.
The health qualities of fruit and vegetables have led to a boost in demand, as the link between health and nutrition is understood. Organic and health food shops have had increased sales as have those providing vegetable boxes direct from farms. Between February and the end of April 2020 sales of vegetable boxes in the UK supplied direct to customers increased by 111% and by the middle of May 82% of schemes had a waiting list . Similarly in France organic food shop sales are up 40% and this 'health halo' effect is expected to continue .
The increase in demand for vegetable boxes is also linked to the desire to shop locally and seasonally. In the UK, convenience store sales have increased by 39% during 2020, partly as a result of the unavailability of public transport,  while 92% of farm shops surveyed by the Farm Retail Association reported a significant increase in customers . While some products will continue to be sourced from long distance, shorter supply chains linked to healthy local seasonal produce are likely to be developed by individuals, wholesalers and retailers.
More time spent in the home by householders through lockdown restrictions and lack of work has had an impact on food preparation, ingredient selection, and menu choice. The trend of buying ready meals and the reduction of time preparing food has been reversed and more fresh ingredients have been purchased and new recipes tried. The consumption of fresh fruit and vegetables has increased as a result. Frozen food once seen as a low quality option has now become more mainstream with households preparing and preserving vegetables and fruit for later consumption.
A major issue along all food supply chains has been waste and loss. In Europe this has been focussed at the consumer level where EU residents ate over 100 kg per capita a year . Household waste makes up 70% of UK food waste, 68%, of which was intended to be consumed and was worth £14 bn in 2018 . In the UK, the lockdown has seen a change in attitude to food and waste. A survey carried out by an environment charity found that 48% are throwing less food away and 51% are planning their meals more carefully . A food-sharing App has reported that neighbouring food share has increased by 30% .
Figure 1. Changes in levels of specific activities during pandemic in the UK. (AHDB/YouGov)
Supply Chain Relationships
Farmers and growers worldwide have a reputation of being distant from their markets and for having a limited understanding of what happens beyond the farm gate. During the pandemic, those that have had close connections with their customers, or the next intermediary in the supply chain have been able to use their relationships to adjust their product and have the necessary agility to continue to sell their product. Those with a close link to their customers have been, in most cases, maintained and thereby improved their sales and profitability through selling directly.
The biggest concern for the fresh produce grower is access to labour. Restrictions on movement across borders and concerns about infection levels in specific areas is likely to lead to shortages of pickers in Europe's fields and greenhouses. The industry relies on migrant workers, whether Poles in Northern Italy, Albanians in Greece, Ukrainians in Poland, Romanians in England or North Africans in Spain. Even before the pandemic there were concerns in this area and in some countries like the UK this is also a political issue. The prospect of unpicked fruit and vegetables left unharvested in fields remains real and the potential for automation is a distant prospect particularly when picking soft fruit such as strawberries and raspberries.
Working and Living Conditions of Workers
To attract migrants and to pass the scrutiny of the retailers the conditions in which these workers live and work will need to be improved in most cases. Exposés across Europe, from the glasshouse workers in Almeria in Spain to the fields of Lincolnshire in England highlight that accommodation has been cramped and unhygienic while pay in many cases has been based on piece work below a living wage. The importance of clean and healthy living conditions will be paramount in the avoidance of Covid-19 as will the provision of Personal Protective Equipment. Two major outbreaks of Covid on UK vegetable farms have suggested that the spread has been due to temperature, airflow, proximity on the line or cramped living conditions. Militating against these factors will add to the costs of production, as will the necessary adaption of pack houses and equipment to allow for social distancing. These increased costs will have to be met somewhere along the supply chain.
The economic consequences of the pandemic brought about the closure of factories and the shutting down of food service and hospitality sectors. It was thought this might facilitate a supply of workers onto UK farms and a campaign 'Pick for Britain' was launched in the media. However only 20% of UK applicants appeared for an interview and less than 1% were employed on farms .
The 'New Normal'
As restrictions are eased across Europe and a 'new normal' emerges, it is difficult to assess the long-term impact of the pandemic on the fruit and vegetable supply chains. Although there are undoubted challenges, there will also be opportunities as the virus has exposed underlying weaknesses and issues which might have been acknowledged but were not addressed.
Food Service Delivery
Many small businesses in the food service sector will not survive the loss of earnings and the restrictions placed on those that do reopen will lose much of the ambience and atmosphere that would have attracted customers initially. The cost of restructuring the premises and the loss of potential customers will mean higher costs and lower revenue. App and delivery companies such as Deliveroo and Just Eat have now taken much of the space in this sector, as customers prefer to eat in their own homes with a choice from a wide range of fast food and some upmarket outlets. Just Eat Takeaway increased its revenue by 44% in the first half of 2020 as more people unable to eat out ordered in meals . Many pubs now offer a takeaway service. This type of disruption is also likely to occur in distribution as both supermarkets and other intermediaries take up delivery apps. For example Uber have joined with New Covent Garden wholesale market to distribute vegetable boxes from the market to consumers .
The Supermarket Offer
For supermarkets the need to provide online ordering and delivery will be crucial for the sustainability of their businesses as by the end of 2020 this channel is predicted to have grown by 25.5% in the 12 month period . There is likely to be less theatre, a reduced range and minimal merchandising in stores as shoppers want to be in and out as fast as possible without browsing. The focus will be on healthy, storable products and the movement against plastic packaging is likely to be reduced as there will be an expectation that fruit and vegetables will have long shelf lives, be safe and hygienic. Qualities which plastic offers.
Consumer trends are difficult to predict as the likely economic down turn for some and a return to more working for others might have an impact on choices they can afford or are able to make. The last economic recession of 2007-8 brought a fall in the demand for organic and healthy produce and reduced the average spend on food in the UK. However, the importance of diet and health and series of initiatives by different European governments means that this is less likely to happen now.
Getting Closer to the Customer
It has to be hoped that farmers and growers now understand the importance of getting close to their customers and consumers. They will develop relationships based on mutual understanding where possible shorten supply chains, enabling the opportunities for adding value and appropriate crop production and development.
Future Labour Practices
Automation and digitalization will reduce the need for labour without replacing it. Even if robots replace the pickers there will still be a requirement for technicians and skilled operators to guide the machines as seen in the arable sector. Until then workers need to be sourced. In April Gs produce in the UK chartered a plane to fly in 150 Romanians to work in the salad fields during the summer . Health and Safety standards will need to be high, wages fair and living and working conditions of good quality. Coronavirus procedures will need to be robust and protocols in place to guarantee the safety and health of the employees.
The importance of the European fruit and vegetable supply chain is significant in that it provides employment and economic opportunities, but most importantly a supply of healthy, safe and nutritious food. The chain has proved to be resilient during a challenging time with few disruptions or blockages. However, some cracks and flaws have been exposed and structural changes will be necessary post pandemic. These include; a new food service model, online delivery and retailing, a continuation of offering sustainable local products with provenance and a new approach to the employment of migrant workers.
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