More fruit and veggies to be dished up

Posted by Daniel Palmer on 23rd January 2009

In line with growing health awareness and changing demographics, demand for fruits and vegetables is expected to increase in the long term, according to Rabobank’s recently published ‘North American Food & Agribusiness Outlook.’

With consumers increasingly preparing meals at home, overall produce sales are on the rise, according to Rabobank analyst Marieke de Rijke. “In the short term much of the growth will depend on the economy, which may temporarily drop demand for fresh-cut fruits and vegetables in favor of cheaper alternatives, such as canned and frozen produce.”

While there are a number of elements driving increased demand of fruits and vegetables, there is also competition from low-cost producing countries eating away at market share; significant cost increases pressuring margins; and new requirements for tracing individual fruits and vegetables.

Import competition
Labor-intensive industries are increasingly facing competition from countries with low productions costs. As a result, for some processed fruit and vegetable varieties, the US (and Australia) has seen an increase in imports. “Over the past decade, imports of frozen vegetables have increased more than 90 per cent,” Ms de Rijke noted in the Outlook chapter focusing on US processed fruits and vegetables.

Locally grown
“In order to be competitive, the processed fruit and vegetable segment could focus on niche markets and market its products as (locally produced), which also fits with increased consumer interest for local products,” Ms de Rijke advised.

Traceability as a marketing tool
One other area, where American fruit and vegetable producers face increased costs is for traceability, which has stemmed from several recent outbreaks. However, de Rijke believes this could prove an opportunity, rather than a threat, for the sector. “Traceability systems could be an opportunity for the US produce sector since a nationwide traceability system could be used as a marketing tool and may result in consumer preference for US produce rather than imported produce,” she concluded.