Oct 18, 2023

ProducePay: Growers cite pricing, business stability concerns

ProducePay has released its second annual survey that is designed to explore business stability for produce stakeholders, including growers, packers, distributors, integrated suppliers and end buyers in the U.S. and Latin America.

The results spotlight the many challenges — cost of inputs, commodity pricing volatility, weather unpredictability and more — that demonstrate an urgent need to improve predictability for a more efficient, resilient and sustainable produce supply chain, according to a news release from ProducePay.

With growers, producers and packers comprising a majority of survey respondents (55%), the data underscores how increasing volatility and unpredictability limit the fresh produce sector as a vital industry for feeding a growing global population sustainably.

Survey highlights

Commodity pricing volatility

Commodity pricing volatility, a top concern revealed by last year’s survey results, affects the greatest proportion of respondents, with 52% rating it as “extremely significant” to impacting the state of their business, and another 31% rating it as “significant.”

Business stability

A majority of growers (52%), and 30% of respondents overall, rated the stability of their current business climate less positive (5 or lower, on a scale of 1-10), compared to last year.

Business impact

More than half of respondents rated the following concerns as “extremely significant” in affecting their business negatively: cost of inputs (55%), ability to grow and deliver quality produce (53%), commodity pricing volatility (52%), weather unpredictability (52%) and reaching fair pricing terms (50%).

Worsening challenges

These issues were rated worse this year compared to last year: weather unpredictability (54%), cost of inputs (53%), cost or access to labor (46%), commodity pricing volatility (44%) and cost or access to capital (40%).

Concerns about the future

More respondents expect all these challenges to get even worse in the next five years, compared to those who expect things to improve.

Produce waste

Sixty percent of respondents estimate that greater than 10% of their produce is wasted, degraded or damaged due to supply chain inefficiencies.

“The fresh produce industry is critical to feeding a growing world with sustainable and healthy food, and an economic engine for many rural communities across the globe,” Patrick McCullough, ProducePay CEO, said in the news release. “Given the importance of this industry, it’s essential that we support the entire vertical — from grower to retailer — by eliminating the volatility and unpredictability that limits economic growth and investments in sustainable practices, and that results in inefficient forms of waste throughout the supply chain.

“This requires developing tools and new ways of doing business that give growers and buyers greater control of their business by providing unprecedented access to each other, capital, trading, insights and greater supply chain visibility,” he said in the release.

ProducePay’s vision has started to demonstrate impact at scale. Earlier this year, the company collaborated with one of the world’s largest growers and distributors of table grapes, Four Star Fruit, to launch a first-of-its kind, direct-to-retail program that enables a stable supply of high-quality produce to consumers while driving financial sustainability and fostering investments in sustainable agricultural practices.

When Hurricane Hillary damaged nearly 25 million boxes of California table grapes — a recent example of the devastating impact of weather unpredictability — Four Star Fruit and ProducePay took proactive steps to secure table grape supplies from Peru and Chile to bridge the supply gap.

Since its founding, ProducePay has facilitated the trade of more than $4 billion worth of fresh produce across 64 commodities and 17 countries in North America, Central and South America and Europe. In 2023 alone, the company is expected to finance more than $1B in fresh produce transactions alone. For its impact, the company has been added as a member of the World Economic Forum’s Innovator Communities, was named one of Fast Company’s 2023 World’s Most Innovative Companies, placed on Inc. 5000 and Forward Fooding’s FoodTech 500, and has received World Finance magazine’s AgTech Sustainability Award.