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John Giles: What can we expect in 2024?

At the start of a new year, it is quite common to look back at what has happened in the last 12 months before looking forward to what might still be to come. Sometimes, the longer you look back, the clearer the future can seem.

What is for sure, though, is one thing: if we thought 2023 was a turbulent year, 2024 promises to be no less the case. We have highlighted below just four areas where we expect to see further changes.


Digital Horticulture

There’s an acceleration of the trend towards precision-based production of fruit and vegetable crops around the world. This approach is enabling production to become more sophisticated, controlled, and exact and is now almost impossible to avoid. This is altering the way things are produced and processed.


Supply chains are becoming more sophisticated. In fact, they’re not really chains anymore. They are now increasingly “networks”: complex systems of input suppliers, advisers, farmers, processors, 3rd party logistics, distributors, and retailers. All those involved -contributors and participants - are increasingly bound together by increasing digital connectivity.


Logistics

One of the reasons stated by suppliers in Spain and Morocco last year, when they were unable to supply the UK market, were the issues with the so-called “trade friction” they had been experiencing with the UK. To this was added other factors around physical transport and logistics to the UK. The issue of trade friction might well resurface again in the spring of 2024 if new UK border controls are implemented.


The current situation in the Suez Canal is of huge concern and far more impactful than a more localized problem in the UK. It has taken several years for the world shipping market to recover from COVID, where many ships ended up in the “wrong” place, and the costs of containers skyrocketed.


The current situation in the Suez can be seen as a step backward in this respect. It can take a few days to decide to suspend shipments but much longer to reinstate them. We can expect more disruption to shipping schedules and pressure on costs. This will impact the entire supply chain and is a critical issue for an industry that works on just-in-time delivery principles.


Supply Chain Inflation

Over a now 3-year period, the cost of all key horticultural inputs for growers all around the world has increased significantly. The most significant of these have been seen in the areas of energy and fertilizer and have been fuelled by the situation in Ukraine and, now, the Gulf.


While the increases in these inputs have been lower in 2023 compared to 2022, they are still on an upward trend. Increases in the cost of labour in the UK as an example (at a cumulative 2-year figure of 23%) are also highly significant. Labour typically accounts for c. 40% plus of overall production costs for a horticultural business.


As a result, many producers in key growing areas worldwide have become, over the last 12 - 24 months - and are likely to remain - very risk-averse due to the huge uncertainty they are currently faced with. In many instances, any major growth/investment plans have been put firmly on hold. While it is expected that some growers will return to a degree of profitability this year, the last 2 years have seen significant losses incurred.


Climate Change

There has been much talk about the impact of climate change in the UK and, of course, other parts of the world. The last few years, however, have really brought the message home to growers in the UK and in many other parts of the world and other key industry stakeholders that ignoring the impact of this is just not an option anymore.


We will see that the nature of relationships between retailers and their suppliers will have to change. Such are the scale of the issues faced in areas such as water usage, climate change, carbon reductions, soil management etc., there will be a need to develop genuine partnerships to solve them. Collaborative approaches are required going forward, on a new level, from those seen in the past.


We are already halfway through January. Time goes quickly, and stand by for more disruption and change in international supply chains - and for those who have a good understanding of the likely outcomes and future scenarios – the opportunities that might well exist too.


For more information contact: John Giles

Promar International

Tel.: + 44 7768 553298


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