Cornell professor dives deep, discusses global implications of produce, Brexit on UK

Cornell professor dives deep, discusses global implications of produce, Brexit on UK

Carol Bareuther
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Everyone sees the world differently. Miguel Gomez, an associate professor at the Charles H. Dyson School of Applied Economics and Management at Cornell University, in Ithaca, NY, has a view that spans from local to global.

This isn’t the first time Gomez has crossed the pond to present at The London Produce Show and Conference, which is 6-8 June at Grosvenor House, Park Lane. In his debut appearance at the 2015 Show, Gomez spoke about the ‘Renaissance of the Wholesale Sector – Why Those Who Support ‘Locally Grown’ Should Support Investment in Market Intermediaries’. This was followed in 2016 by the Columbian-born professor’s move to a more international topic: ‘How New Trade Agreements May Set the Stage for A Produce Industry Boom, But Will the People & The Politicians Let It Happen?’ 

This year, Gomez goes truly global with the topic: ‘The Global Produce Industry – Implications for the United Kingdom’. Deep dives are something Gomez enjoys both professionally and personally, be it about data or a destination. Literally. In fact, his favorite post-Show activity is riding the London Underground. “I have been everywhere on the Tube,” says Gomez. “London is such a beautiful and diverse city that it’s hard to pick a favorite place to visit.”

Here is some insight into Gomez’s presentation at the 2018 LPS:

1. Why is the global nature of produce such a hot topic, especially for individual countries such as the UK? 

Countries are trading more in general and more specifically as it relates to fresh fruits and vegetables. We have seen global trade grow dramatically over the past five years, in both importing and exporting. International trade implies certain complexities. That is, it’s driven by consumer demand. People everywhere now are demanding fruits and vegetables that are of good quality and available year-round. We see this as a population becomes wealthier. They want and demand better-quality products and, in particular, better produce. In addition, because health concerns related to poor diets are escalating, so is interest in increasing the availability of fresh produce to everyone everywhere.

2. Do worldwide events, such as those of a political nature, influence the produce industry?

Yes definitely. One of these is Brexit. The UK’s break from the European Union may mean a loss of trade agreements with neighboring European countries, such as those that affect fruits and vegetables. That’s one, and the other is recent trade events between the U.S. and China. Trade disputes can lead to a trade war and may create both prospects and threats to other countries in addition to those directly impacted.

3. How so? Could you offer an example?

Say China is a big importer of cherries from the U.S. Then, trade sanctions are placed by China against the U.S., meaning that U.S. cherry growers have a reduced ability to export as much fruit as they did in the past. This means that there will be cherries left in the U.S. that will need to find another market. As a result, cherries may flow through the UK for export to the rest of Europe or to the Middle East. Therefore, even though the UK is not involved directly in a trade war, it may be affected. 

To take this example one step further: If there are lots of cherries looking for markets, then supply could exceed demand, prices will drop and consumers in many places,  including the UK, will be able to afford to buy more cherries. At the same time, because cherries are cheap, consumers will buy less of, and consume less of, other products. This could be apples, for example, or whatever fruit consumers would have purchased instead of cherries. In essence, since there are so many produce products in the global supply chain, a specific change in policy or flow of products in one country can have ripple effects throughout many other countries.

4. The UK is usually thought of as an importer of fruits and vegetables. Does this make the UK even more vulnerable to ripples in this international industry?

Interestingly, the UK only has to import about half of its vegetables. This has to do with the types of vegetables consumed, such as potatoes and onions, which grow well in the country’s temperate climate. Beyond this, there is growth in controlled atmosphere agriculture in the UK. More products such as leaf lettuces and tomatoes, for example, are being grown in controlled conditions and this provides more volume and variety domestically. On the other hand, the UK imports more than 90 percent of its fruits. 

5. Thinking first of UK retailers, what are challenges and opportunities presented by the global nature of the produce industry?

The first challenge is that UK retailers depend a lot on imports. These imports are sometimes for domestic consumption and other times for re-export, so there is a lot of value-added in the UK. With Brexit, the challenge for retailers may be a restriction on free trade, ensuring tariffs and increased costs that may result in higher prices for consumers. Retailers will have to deal with this.

An opportunity for UK retailers is that 46 percent of vegetables consumed domestically are supplied domestically. The UK consumer, perhaps more so than in other countries, is more thoughtful about locally produced foods and the local movement. This means opportunities exist for retailers to develop domestic supply chains, particularly for field- and controlled-atmosphere grown vegetables. I think this opportunity is huge.

In terms of fruit, I think the UK is going to continue to be a net importer because of its geographic location. Brexit could make this a challenge or an opportunity. On the opportunity side, the UK has historically been very active in signing free trade agreements. I think the ability to continue this with different partners may be good for the industry, in particular with the African continent, which has experienced a growth rate higher than in Asia. The UK has had links with Africa for many years. This creates an opportunity for the UK to export Northern latitude-produced products such as apples to Africa and for African countries, East Africa in particular such as Tanzania, Kenya and Ethiopia, to export tropicals to the UK. 

5. On the other side, what opportunities and challenges does the global produce industry pose for UK grower/packer/shippers?

One is that if imported fruits and vegetables are more expensive, then growers can supply more domestic products to supermarkets and restaurants through their domestic wholesalers. Another is to take advantage of high demand in other places like the Middle East and Asia. This means figuring out what products these consumers want and how to deliver them efficiently. 

The challenge is that all countries are increasing their supply chain efficiencies. This has everything to do with meeting the demand of retailers, restaurants and the consumer and being highly competitive on quality, price and year-round supply.

6. Finally, I understand you’ll post two quiz questions to attendees at the beginning of your presentation. Other than being able to answer both correctly, what else would you like LPS attendees to learn from your talk? 

I want them to leave the conference with a better understanding of just how global and interrelated the produce industry is. We cannot think about the industry working in isolation in one country. Rather, whatever happens anywhere in the world will affect the domestic market and business performance of those in this market in the end. 

The second message I want to convey is how important it is for the produce industry to have free trade in order to continue to grow. Consumers no longer want to eat a vegetable or a fruit. They want to have a wide selection of high-quality produce at a good price from which to choose. This can only be achieved when the produce industry is globalised.


 

Miguel Gomez will be speaking as part of the Educational Seminar Programme at The London Produce Show and Conference 2018 (LPS18).

Join Miguel’s seminar on Stage 2, The Buckingham Suite, at 10.00 on Thursday 7 June. 

Register your place at the LPS18 here

Explore the agenda for the event here.


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