Inflation, lower purchasing power, and unprecedented drought. After a particularly complicated summer for the professionals in the sector, Interfel alerted the French government and general public about the urgency of the situation during a special press briefing on September 22nd. The exceptional increase in energy costs has a direct, and sometimes unknown, impact on most professions of the fruit and vegetable sector, putting companies that are essential to feed the entire population at risk. This is why Interfel has formulated and measured responsible proposals addressed to the French government. Amidst the great plan for sovereignty, our food autonomy is actually at stake!
In spite of the worrisome economic and geopolitical situation (war in Ukraine, rising cost of raw materials) and the high global inflation during the summer (+5.8% in August 2022 compared to 2021), the inflation on fruit and vegetables remains below 2%. The fresh fruit and vegetable sector is essential for the diet of the French population.
After being cultivated, the products must be prepared. Sometimes they are preserved, packed, shipped, and controlled before being distributed to the consumer. They are kept at well-defined and precisely controlled temperatures in order to guarantee freshness and quality.
Some fruit and vegetables are kept in cold storage (short or medium term), so the products can be available at the end of winter or spring until the summer harvest arrives. The fruit and vegetables are also kept in cold storage for sanitary reasons (no break in the cold chain through the whole marketing and distribution circuit). For some other crops like the endives, mushrooms, or greenhouse produce, a minimum of heating is necessary for growth and ripening.
Impact on the companies: it is urgent to intervene!
For all companies in the sector, these exceptional increases in energy costs represent an additional cost. Those whose contracts with the energy supplies must be renegotiated in the coming months may have to file for bankruptcy in the short term.
The apple sector has reported electricity prices that are 3 to 12 times higher than what they have already renegotiated in their contracts.
The endive producers (4,000 direct jobs) whose companies are currently renewing their contracts have seen their bills multiply by 10, going from € 80,000 in 2021 to € 800,000 to produce 3,000 tons.
Nearly 1 out of 4 companies must renegotiate their contracts by the end of the year, so it is necessary to intervene now!
Although legitimate, this principle of “energy sobriety” could have serious consequences
The operators are already working to reduce their energy dependency as much as possible. But due to technical constraints, it is sometimes impossible for companies to reduce their energy consumption. If rationing and cuts are implemented, the supply to the market can be disrupted. For example, if power were to be cut for more than 4 hours in a banana ripening plant, all the volume would be lost. As a reminder, the banana is the 2nd most consumed fruit in France and one of the most accessible in terms of price, thus particularly appreciated by the more modest families.
Interfel’s proposals to the government
Interfel has clearly identified the risks for all the professions and products of the sector, and it has formulated feasible proposals based on actual figures:
- Excluding the sectors of fresh fruit, vegetables, and bananas from the energy rationing plan set up by the French government in order to avoid any impact on the supply and marketing of the products.
- Lowering the 3% threshold of the company’s revenue allocated to energy for the payment of aid as it does not reflect all situations.
- Establishing a cover of at least 70% of the additional costs for energy when companies are faced with a minimum doubling of the price of energy offered by their suppliers.
- Extending beyond the 31st of December 2022, the aid measure was introduced by the French government in order to take into account the campaigns that extend into 2023 and to integrate the increases that will take effect on January 1st, 2023, with the new contracts.
- Implementing incentive mechanisms for the development of alternative energies (methanization, photovoltaic, biomass, energy efficiency of the infrastructures) adapted to each sector.
The priority now is to maintain a sufficient supply of fresh fruit and vegetables everywhere in France. 25% to 30% of the companies, depending on the sector, could be severely impacted by these increases and even disappear in 2023 if nothing is done! In the midst of the discussion on the fruit and vegetable sovereignty plan, we must get ourselves in gear to get through this energy crisis and tackle the energy and ecological transition together.
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Photo: © Maxppp - Gaëtan Bally