Many fresh produce businesses are forced to sell their output below cost just to maintain their place in the market, according to a report from business and financial consultancy Grant Thornton.
The report shows that despite overall turnover increasing by £1 billion operating profit decreased by more than 40 per cent between 2001 and 2002.
Guy Markham, agricultural partner at Grant Thornton, said: “Fresh produce businesses tend to be associated with low profit margins in the region of three to four per cent, which is considerably lower than many other sectors.”
Dr Andrew Fearne believes that supermarkets seek assured and consistently high quality produce at competitive prices, which has led them to become increasingly dependent on fewer and larger sophisticated suppliers.
“In order to survive, fresh businesses need constantly to challenge the status quo, within their businesses and with their suppliers and customers, in order to exploit every opportunity to increase efficiency, responsiveness and effectiveness,” he said.
Fearne also believes that not enough time and energy is spent on staff and that it is a difficult industry to attract good people into. He said: “To promote innovation there needs to be more investment to ensure that staff understand the drivers for change and embrace the supply-chain philosophy ñ collaborate to communicate.”
