UK retailers looking for longer-term contracts in soft fruit

UK supermarkets are showing a growing appetite for long-term contracts with soft fruit suppliers due to concerns around product availability.

This was the direction of travel highlighted by Vicky Rye, CEO of Chambers, who spoke to FPJ at Fruit Attraction 2023 in Madrid.

Rye said availability challenges in berries in recent years – as a result of labour shortages and adverse weather – are likely to have informed certain retailers’ decision to request longer-term contracts. And she revealed that Chambers was in negotiations with two supermarkets to set up longer-term deals.

Rye welcomed the shift, saying longer contracts give producers the confidence they need to invest in plantings at a time of economic instability and fine margins.

“Especially now that margins are tighter, you can’t really grow speculatively because it’s not viable at all if you have to walk away from significant proportions of crop,” Rye explained.

“In the past, you might have been able to sell speculatively and trade on the spot market, but there’s too much risk now with the level of investment involved.”

The important thing for growers when negotiating these deals is to build in some price flexibility if possible, and Rye pointed to the fact that exchange rate fluctuations and changes to the minimum wage affect growers’ bottom line.

The government announced on 2 October that it would increase the National Living Wage from £10.42 to over £11 from April 2024, an increase of at least 5.6 per cent.