Executive summary
The fresh produce sector in New Zealand produces some of the world’s greatest fruit and vegetables. There is a complex all-encompassing machine that connects the farms these products are grown on to the final consumer. This machine is the Fresh Produce Supply Chain (FPSC).
New Zealanders enjoy an excellent range of fresh fruit and vegetables that can be purchased through a variety of sales channels. The most dominant and effective channel is through supermarkets which have access to supply via fresh produce marketers and growers directly. These suppliers provide
fresh produce of good quality, at scale consistently and at a reasonable price throughout the year to meet the tastes and preferences of consumers.
This project has been completed to further understand the FPSC and seek efficiencies that can be made that reduce volatility in supply, reduce food waste and reduce the margin between what the consumer pays, and grower receives.
We aim to answer three key questions being: what are the challenges for the current fresh produce supply chain from the farm gate in New Zealand? What technology and supply chains exist today outside of fresh produce? And does a different, more efficient system fit in today’s fresh produce supply chain and would this be accepted by industry stakeholders?
The key findings were growers in NZ are aligning themselves with retailers and marketers in partnership style relationships. Growers with smaller scale struggle to compete in fragmented industries where information is less available and less direct from the consumer.
Over time there has been a shift in the paradigm from growing for the market floor auctions, to growing for consumer demand based on high information sharing from retailers and marketers. This has resulted in a more deliberate crop rotation and sustainable growing system, reducing wasted product and improving price stability.
Technology in FPSC has huge potential however supply chain participants are cautious and considerate on technology they invest in. Blockchain technology can support efficiencies by reducing reliance on trust on intermediaries. The internet of things can provide an interface between supply chain practice and software systems. This can log important information which can give retailers and consumers confidence in quality of product and appropriate handling.
Consolidation of fragmented industries will support greater efficiencies as grower scale increases and vertically integrate to control more downstream practices. We also see intermediaries investing in upstream practices such as farms and greenhouses.
Recommendations are summarised as follows:
- Encourage vertical integration where supply chains are owned or controlled between grower and retailer. For growers that have the scale and access to capital they should build partnerships with retail entities and invest in infrastructure to reduce reliance on other supply chain participants.
- Cooperate within sector to vertically integrate if scale is not achievable. This can be done by the establishment of regional cooperative organisations to allow smaller scale growers to pool resources, invest in infrastructure and supply direct to retailers.
- Increase communication between FPSC participants with accurate data in fragmented product categories to share accurate crop details.
- Drive increased consumer awareness of imported vs local produce with signage andbranding that clearly differentiates products.
- Encourage investment in internet of things and Blockchain technology for import product to reduce volume of poor-quality import product brought to NZ consumers.
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