How the Commission will support the F&V sector after COVID?

Interview with Joao Onofre Antes-Gonçalves (and Juri Mara), deputy-head of the DG-Agri 3 & 2 for Horticulture, Wine & Spirits

•  €10 million added to promotional budget: applications open until August 27th

1/ Which products have performed well (with increased volumes and prices) during the Covid-19 crisis?

First of all, it’s important to highlight that the European agri-food sector has shown remarkable resilience during the COVID-19 crisis. There have been no serious shortfalls in food security, despite a difficult environment characterised by impaired logistics, a general slow-down, and increasing costs across the whole of the supply chain due to the various restrictions in place in the majority of Member States. This has led to no food shortages for the retail market reported across Europe, despite the ‘panic buying’ attitude displayed by consumers at the start of the outbreak. In terms of demand, the crisis has benefitted products like carrots, courgettes, kiwi, citrus fruit, apples, pears, and garlic as they offer long shelf life, are viewed as staple products, or are considered helpful in the fight against the virus. Ex-packing producers’ prices reported by Member States were in general higher than the average for the season, driven by strong demand.

2/ Conversely, which campaigns and/or products were most affected?

Even though EU Member States had different rules and different lockdown periods, one can reasonably state that due to the COVID-19 crisis, between February/March and May/June 2020, almost 100% of business was lost for the high-value food services sector in a diverse range of areas, including hotels, restaurants and restaurant chains, business and school canteens, transports catering etc. Depending on the Member State, food service accounts for around 25-30% of the total fruit and vegetables market supply, and while supermarkets partially absorbed these volumes. This has created significant market instability for certain commodities demanded more by food service, such as asparagus, cucumbers and strawberries, as well as ‘convenience’ produce (e.g. pre-cut salad) and sprouted seeds (sprouts, shoots and cresses). Difficulties were also reported for potatoes for processing into fries and the flower and live plants markets.

3/ How likely do you consider it is that consumption levels will remain high in the long run as a post-COVID impact?

A spike in consumer demand was observed from the beginning of the crisis up until Easter for pre-packed products and those with a long shelf-life. This trend subsequently continued, albeit with some signs of stabilisation. This resulted in visible increases in consumer prices for vegetables and especially fruits in a context of very low inflation for the months of April and May across the EU. The crisis quickly generated new consumer trends that are likely to remain in the post-COVID environment, such as online sales, a preference for smaller proximity shops, and an increased interest in local and organic products. The outlook for the F&V market going forward seems positive as consumers have become more attentive to their heath and are looking for a healthier lifestyle.

4/ What measures have been taken by the Commission to help the F&V sector and which particular products have benefited from market withdrawals?

The Commission was quick to react and adopted a series of exceptional measures to support the agricultural and food sectors most affected by the Coronavirus crisis. One of these packages was adopted at the end of April 2020, and focused particularly on the F&V sector:

• Flexibility in the implementation of market support programmes, including for fruits and vegetables and the EU’s school scheme.
• Temporary derogations from certain EU competition rules in situations of severe market imbalance. The flower and potatoes sectors are now allowed, for example, to withdraw products from the market.

5/ What new EU consumer campaigns are being prepared for the post-COVID period?

To complement the exceptional market-specific support measures, at the end of June 2020, the Commission put out two calls for proposals for promotional programmes. Fruit, vegetables and potatoes for processing are among the sectors eligible for the promotional support of €10 million (€5 million for multi-programmes and €5 million for simple programmes). They must be implemented in the EU or in any third country and have a duration of one year. This is the first time that the Commission has launched such a call, which is possible only in cases of serious market disturbance and when promotional actions are seen as adequate responses to the situation. The two calls will remain open until 27 August 2020 and we hope some of your readers will participate.