Ten Years, Ten Lessons Learned: A Look At The European Produce Industry Through The Eyes Of Freshfel’s Philippe Binard
Jim Prevor’s Perishable Pundit, October 25, 2012
As the trade gathers for the PMA Fresh Summit convention in Anaheim, we thought we would look half-way across the world to Belgium, where Freshfel, sort of a PMA and United combined for Europe, is headquartered. It is a young association — just having celebrated its 10th anniversary.
We reached out across the Atlantic and asked Pundit Investigator and Special Projects Editor Mira Slott to ask Philippe Binard, Secretary General of Freshfel Europe, to identify ten lessons learned during the last decade. He was kind enough to accept the challenge:
Q: With the announcement of Freshfel’s 10th anniversary, we thought it would be an excellent time to highlight Freshfel’s role in the industry. As the platform for the piece, we’re hoping you could brainstorm 10 key issues that have transpired in the sector, which most impacted and influenced direction for the industry.
As you consider historical context, what has changed, what surprises you, what insight have you gleaned? To this end, what are 10 lessons learned, and what are Freshfel’s goals and projections looking toward the next 10 years?
A: I’ve reviewed the main topics on our agenda the last 10 years and their evolution; and then what I see behind each and the forecast.
Q: Thank you for your dedication in taking on our request. Your tenure at Freshfel since its founding offers a unique vantage point...
A: Actually, Freshfel is the merger of two trade organizations in Brussels that existed for many years. I’ve been doing this 26 years! My role at Freshfel is general delegate or what you might call managing director, and we have a board of directors.
Our current chairman is Philippe Henre of Creno/UNCGFL in France. Luc Clerx, a wholesaler from Zespri International, is vice president, and Jerome Fabre of Compaignie Fruitiere is treasurer, among recently elected officials for the term 2012 to 2014. (Editor’s note: you can read more about the structure, divisions and committees here).
Q: How would you describe Freshfel’s mission?
A: We are the European fresh produce association, which represents various segments of the fresh fruit and vegetable sector from the grower to retailer. It is based in Brussels because its primary objective is to be a voice for the sector in the European arena and try to influence the various legislative and regulatory actions taken in agriculture, trade, food safety, health safety, environmental protection, customs taxation, and represent members in all these areas.
On the other hand, Freshfel is also a platform for networking to meet common concerns not necessarily regulatory in nature. For example, developing strategies to stimulate consumption and taking essential steps to reverse some of the trends.
Q: By representing such a diverse membership and interests, do you find conflict within your organization, for instance, between the grower/supplier side and buyer/retail side when determining what path to take on regulatory actions? In the U.S., PMA and United Fresh have faced challenges trying to merge, weighing the pros and cons. In the European Union, you also are dealing with 27 different countries, government structures, cultures, etc.
A: On the grower/supplier and buyer/retail side, when talking about fruits and vegetables, 90 percent to 95 percent of issues bring consensual opinions. If you look at commercial relationships, there are tensions on prices and requirements, like any business relations. This isn’t our role; we are here to address issues of common concern. In the past 10 years, we’ve had plenty on our plate to tackle with these concerns.
Q: With that in mind, what are the topics you’ve targeted for our discussion?
A: I would first like to list the 10 issues I’ve considered:
1. Evolution of consumption
2. Development of exports
3. Imports into Europe
4. Development of foodservice and convenience and innovation
5. Food scares
6. Evolution between global and local
9. Communication and promotion, and
10.Children and the consumers of tomorrow, a positive way to conclude.
Q: You’ve hit a broad range of topics. I imagine each could be a novel on its own, yet in many ways these issues tie together. Let’s tackle one at a time, and see where that takes us. How have you assessed the evolution of produce consumption?
A: It’s a worrying trend. I’ve seen consumption not only stagnating but in most cases declining. That doesn’t mean one category isn’t growing, but in the aggregate this is disturbing. In figures, consider the overall decline close to 15 percent in the last 10 years for fresh produce in Europe. For perspective, annual total volume of produce consumption is on the order of 100 million tons, resulting in 15 million tons, which have not been marketed should the consumption go up to where it was 10 years ago. This gap is the main point of concern and a lost opportunity directing the policy in Freshfel.
Q: Do you collect and track data? What research have you conducted?
A: We have a consumption monitor, where we calculate average consumption per capita. Findings from the 2011 ‘Consumption Monitor’ show that in 2010 the total net supply of fruit per capita stands at 235 grams per day, while the vegetable total net supply per capita stands at 223 grams per day. On an aggregate EU-27 basis, this figure is higher than the World Health Organization (WHO) 400 grams per day minimum recommendation, but below that threshold in too many member states.
After a sharp decrease in 2009, the per capita fresh fruit consumption within the EU-27 declined in 2010 again dramatically by 7.8%, which means a decrease of 9.4% in comparison to the average consumption of the previous five years. Fresh vegetable consumption declined also drastically by 7.4% compared to 2009, remaining clearly below the average of the last five years by 10.3%.
Q: How do you arrive at those numbers?
A: Done on a simple basis, we take product plus imports minus exports divided by population per year, which amounts in the aggregate to slightly below 400 grams per day, the minimum recommended. Only a few member states go to that level, but most are much below. Maybe another element also quite important in the U.S. is the issue of waste. We take a waste factor of 20 percent in our calculation, which could be debated.
ISO [International Organization for Standardization] takes a waste factor of some 45 percent for the U.S. and Europe. Twenty percent is what we consider part of the production lost in the chain to consumer. The 45 percent is divided by product not picked in the orchard, waste in storage, retail shops and at the consumer level. When we take the products to calculate, we look at what will go to the fresh market, then take 20 percent off and then do the calculation to determine an aggregate for the European Union as well as for each of the 27 countries. More than half of the member states are below that minimum recommended 400 grams per day level. We must do everything we can to reverse this problem.
Q: The reasons behind the drop in produce consumption as well as the solutions seem to be intertwined within your list of targeted issues…
A: That is certainly the case. We’ve seen that if consumption is declining, it means European producers are looking at new destinations for product. This leads into the issue of exports. If the EU has been a slow export partner, in the last decade things changed by development of neighboring countries such as Russia and Ukraine. Europe exports five million tons, with Russia taking about half the volume.
We remain dependent on Russia and Ukraine, but both have been growing steadily. Europe has been able to take a significant part of growth in this market. In assessing exports, it’s important to look at the shape of Europe, which has changed in 10 years. A decade ago there were only 15 countries in the European Union. Today, there are 27 countries, including Poland, the Baltic States, and Hungary. Also, there are countries that have developed lots of links with fresh produce that have been able to sustain exports.
However, in many instances, sanitary and phytosanitary barriers and trade restrictions exist, which hinder flow. Countries often require a long list of SPS measures and technical barriers that are not only burdensome and costly, but unnecessary.
Q: Could you provide examples?
A: If I want to ship to the U.S., I need to meet APHIS market conditions. Seven EU member states (Belgium, France, Germany, Italy, The Netherlands, Portugal and Spain) are trying to export apples and pears to the U.S. market and there is no progress in this discussion.
Still, there are additional inhibitors to block exports to the U.S., China, India and other countries, which make it extremely difficult and limit export opportunities. We’ve made some progress in efforts to harmonize trade with different countries, but are heavily dependent on exporting to Russia and Ukraine, and all the smaller markets. We’re looking at developing new markets. We need to diversify.
Q: Conversely, what is happening with imports to the EU?
A: The U.S. is always quite open and a leading region in the world. In the past four or five years, we’ve seen Europe is not the primary destination, particularly southern hemisphere countries.
Maybe markets are growing faster or easier in terms of requirements with pesticides in Europe, but it is difficult to convince suppliers. Perhaps the issue is the exchange rate, which is an important consideration. There are some currency values, where it has become more difficult for importers to continue trends they had strongly developed in the 1990’s. Beginning in the year 2000, and then in the last part of the decade, we’ve noted trends going down. It may also be linked to consumption in Europe not being so strong, so demand is going down.
Q: Here is a good segue to your fourth issue on the list: foodservice and convenience and innovation. Does this outlet offer untapped potential to increase produce consumption?
A: The fact consumption is going down in Europe is because consumer lifestyles are changing, just like in the U.S. Fresh vegetables have traditionally been consumed at home. Our industry has failed to take advantage within the foodservice sector. This much diversified sector could include restaurant chains, hospitals, public administration, schools, etc.
We need to be looking at product that is more convenient, and specially directed for this kind of segment through innovation, new ways of packaging, and conservation, products that can be served easily in the kitchen, eaten during public transport, on airlines and trains. It also must rise to a more attractive level.
The main difficulty in the sector is competing with alternatives in foodservice areas that may be cheaper. We need to take into account people are eating 50 percent of meals out of their homes. It is time to drive strategies in the foodservice sector and strengthen distribution systems.
Q: While the U.S. produce industry has confronted devastating food crises, how has Freshfel coped with the enormity of the deadly European E.coli 0104:H4 outbreak? What lessons have you learned?
A: Europe has not experienced as many food scares as you have in the U.S. In the past few years, we have had to cope with food outbreaks. The E. coli 0104:H4 crisis and its magnitude was a new situation for an organization like us. We have had to get prepared with a risk management team and new communication strategies.
In the past, most of these problems were located in a very specific country. Last year, the E. coli crisis in Europe was devastating for the sector, and created a lot of losses for growers, and people in the trade were completely stuck for months. If there is a food outbreak and it is mishandled, it can suddenly become a European crisis fanned by the media, creating havoc and resulting in much more impact.
We have to quickly cooperate with authorities in the analysis and proper steps. Tomatoes and cucumbers were identified as the source of the outbreak, but with our cooperation it was demonstrated our product was not the source and companies were operating properly. This was because of the extensive input we contributed to the European Commission. There are many lessons to be learned from this crisis. We must be aware that the sector is only as strong as its weakest element. We have to supply safer product to consumers and take all necessary steps to minimize the risks of a food outbreak.
Q: Was the source of the E. coli 0104:H4 outbreak ever determined?
A: It was believed to be sprouts; at least that’s the latest finding from the European Food Safety Authority. It’s important to understand that in this crisis around 40 people died, and more then 800 people were on dialysis for kidney failure. This was a very serious issue we had last year. At the moment, there are still critical steps to improve microbiologic control.
Q: In the U.S., locally grown has become a marketing tool. Yet, what defines local, and the benefits of local fuel much debate here. Do issues of local get as much play in Europe?
A: Politics and a number of special interest groups have been at the center of the debate to go local. It sounds strange to me. In Europe, when you look at the data, a very high percentage of product, maybe more vegetables than fruit, grown in the European Union, is grown or processed in that member state.
Roughly speaking, for vegetables, close to 80 percent are grown in the country where the consumer is based; take Belgium where a high percentage of local product is offered to consumers. In fruit, the percentage of local is less than for vegetables, closer to 65 percent. Because of climate, much more fruit is imported. We don’t grow citrus, pineapple, banana, or melons in Belgium.
After having a strong push for globalization looking back 10 years, I think today, there is refocused interest on what is local to support local communities, etc. This debate should not be exaggerated. When you enter any shop, product will remain local. The same debate is going on in Washington, but an important question is, what do you want to achieve? What is the definition of local? Is local directly from the farm, within certain number of miles from the farm; it’s very difficult.
Some say locally grown is in the U.S. or in Europe or grown in France. Does it make sense that Paris is closer to Belgium or Brittany where you grow the tomatoes? Local is used as an instrument of marketing. You see union trucks that say, this is British product. It’s a new debate, contrasting the trends in the late 90’s of globalization.
People trust more in what is coming from next door, but there is confusion. They think it’s organic when it’s not, or cleaner, which is not necessarily the case. Regulatory and non-regulatory requirements must be considered as well.
Q: When you target “image” as an issue for the produce industry, are you referring to consumer perceptions of fresh produce?
A: I choose to talk about image because fresh produce has a positive image in terms of color and diversity with consumers, but we’ve been unable to take advantage of this benefit that it is also healthy and good to eat.
Companies selling yogurt or ice cream use beautiful pictures of fruit on the package, yet when you examine the contents, there is no fruit in the product at all. Our competitors in the processed food sector are using image property and assets of fresh fruits and vegetables to increase their sales. Often they have a lot of marketing capacity compared to our sector, which is very fragmented.
Q: Didn’t Freshfel challenge this practice by trying to change regulations? Whatever happened with this fight?
A: Where is the Fruit is our study looking at packaging and labels of each of these products. Out of the 200 products that we have checked, less then 15 percent had at least 50 percent of fruit. The question of the image is quite important. We are now entering into new legislation, similar as in the U.S. about claims. For example, when drinking orange juice, what health claims can a company make?
The sector needs to be strong and take actions based on the revelations of this study; the competitor’s formula or content could be easy to detail, maybe the manufacturer added more Vitamin C or Vitamin D.
Around the question of image, our sector needs to be aware of what is happening in order to better communicate our asset.
Q: Don’t you find it somewhat ironic that competitors in other food sectors are trying to capitalize on the image of fresh produce in their products because they think consumers will perceive them as better? Isn’t that an encouraging sign for the produce industry that junk food companies want to steal the produce sector’s image? And to that point, what attributes do you think consumers are being drawn to when they see the fresh produce images on those packages?
A: There is a dual responsibility for the produce industry. When looking at the health and nutrition benefits of eating produce, most public health organizations speak to those. I think the role of people in the produce sector is to put more focus on the fun, the convenience, the pleasure to eat produce, and make fresh fruits and vegetables fashionable. We have multiple responsibilities. We are not doctors. It is not up to us to be medical professionals. That is not our primary function. We have to emphasize enjoyment, fun and pleasure.
A: Let’s jump to issue Number 9 since communication is linked to image. We have a deficit of image because our sector is fragmented.
Q: How do handle that?
A: More effort needs to be made in communication with consumers. We are fighting for a greater budget from the European Union, and developing a website, www.enjoyfresh.eu/php/index.php.
We also have another website more specifically targeting children, www.kidsenjoyfresh.eu. We must do everything we can to provide a positive image of fruits and vegetables. Media emphasizes that fruits and vegetables are expensive, full of pesticides, not healthy, and losing nutritional value because of intense farming. NGOs use generic, stereotypical statements when lobbying and misrepresent the facts.
Q: What are some of the biggest misconceptions?
A: When you take the question of price, produce is one of the cheaper choices for consumers. You can eat five portions of fresh fruits and vegetables for less then 2 Euros or 2.6 U.S. dollars, so produce is relatively cheap. If you take the cost of fruits and vegetables by the kilo, yogurt is more and chocolate is even more expensive. It’s a misconception.
Campaigns in Europe are coming out comparing the cost of a pack of cigarettes to buying five pineapples, and one small espresso is the same as one liter of soup. We need to put things in perspective and correct false ideas. Pesticide levels are minimal, yet NGOs want zero pesticides. It’s impossible. They also want to eliminate GMOs but don’t use valid reasoning, only irrational fears.
On a nutritional basis, maybe some products lose nutritional value, but others are specifically designed with increased nutritional value. In the debate of climate change, fresh fruits and vegetables are much better positioned. Communicating that is important.
Q: American-based companies across industries have become compelled to prioritize and drive sustainability initiatives. What is happening on this front in Europe?
A: There are many initiatives taken in the sector, from better agricultural practices to improved pest management and safety, which can be very costly. Protection of the environment has been a benefit given to fresh produce. When it comes back to the question of price, there is a guarantee provided by the sector. When you take the price at the retail sector compared to 10 years ago, produce is cheaper.
A lot of improvements in sustainability have brought the grower closer to the consumer. Companies are developing websites so that consumers can have contact with the grower. Sustainability is a philosophy in which produce companies are more advanced compared to other sectors.
Q: It seems fitting to conclude our interview with an issue so critical to the one that that started the interview: produce consumption and children…
A: There’s no better way to end this review than with an emphasis on the importance of reaching children. Children are the consumers of tomorrow, but they need to be convinced to eat fruits and vegetables. Look at United Fresh in the U.S. pushing the European Fruit School Scheme and to facilitate distribution of fruits and some vegetables to children between the ages of five to eight years old, and to make sure they have access.
The European Fruit Scheme is in place three years, and every year the program has doubled the number of children. It started with two million, grew to four million in year two, now it’s up to eight million. A lot of parents and teachers are not aware such a scheme is available. We need to increase visibility of the fruit scheme at the European level, although visibility is not as bad as in the U.S.
The solution for our sector is having children getting used to the taste and texture of fruits and vegetables in the early years. We also must address the problem of availability. Maybe children are not eating produce because they don’t have access to it. It comes back to point Number 4 — foodservice; children and schools are an interesting element.
Q: Isn’t there also a financial element? How important is funding in advancing your objectives, and how do you secure it?
A: As in the U.S., the European Commission has budgeted support through agriculture policy. For the U.S., more ag money is distributed to support farmers. The interesting point with the budget for the school fruit scheme is the incorporation of a health element. The budget could be used to advance health of the youngest by providing healthier choices of consumption. Evolution of policy analyzes the costs of healthcare and the price of not moving forward.
Q: With the epidemic of childhood obesity and associated health risks, the precedent exists. At the same time, outside of anecdotal evidence, isn’t it challenging to scientifically quantify direct health results from programs like the school fruit scheme?
A: One of the elements people who run the program at the national level need is the evaluation and monitoring of the program, not just that money has been spent. It is not so easy to quantify results.
There is a European platform for diet, physical activity, and health, and we’re a part of this. It was set up in 2005 by the European Commission to address obesity, using both regulatory and non-regulatory options. From a regulatory standpoint, to introduce and pass controversial laws takes time. At the same time, the food industry says let’s go forward with non-regulatory actions showing all we can do in terms of reformulating labeling, advertisements, etc.
In this platform, there have been more than 250 commitments taken by all the parties, including ourselves. Parties are monitored by their commitments. You evaluate what you’ve done, but you don’t evaluate the impact of what you’ve done in terms of reducing obesity or improving children’s health.
One commitment is the consumption monitor. It is important to know if there is an increase or decline in consumption. That’s useful. We will take a calculation of trends in consumption for the 27 member states. But it is not measuring if those trends are contributing to reducing obesity.
If children take the apple from the school fruit program and go to the school yard and play and don’t eat the apple, we need to monitor that. The time of day when the child is given the apple, the alternative choices available, whether the child is hungry, all these factors matter. Produce is delivered to that program once per week. If we want change, we need to be there for the children every day.
Well, the PMA is meeting in Anaheim, home of Disneyland, so it is fitting to note that, if nothing else, this interview proves that it is “a small world after all!”
Issue after issue mirrors what the US has been wrestling with. The question, of course, is if we write a similar list ten years from now, how will it be different? There is opportunity aplenty for those who can figure that out.
Many thanks to Philippe Binard and Freshfel Europe for helping to educate the industry on what ten years has wrought.