A Fresh Look at the Produce Industry: Business Landscape, Challenges, Technology and More

Just as every new season brings fresh growth, each passing year sees the produce industry evolve. New market entrants lay down their roots, while some established businesses struggle and others thrive. External challenges arise as the world changes, demanding that companies adapt in order to remain competitive and profitable.

And of course, technology continues its march forward, transforming the way fresh produce organizations conduct their day-to-day activities. Today, software solutions like enterprise resource planning (ERP) are at the heart of nearly every operation, as they’re best for capturing data, managing resources, communicating with trading partners and facilitating transactions—and artificial intelligence (AI) is truly changing the game.

In other words, this is not your father’s fresh produce industry. The farmers, packers and distributors of 50 years ago might recognize some familiar aspects, but enough is different such that they’d need to go back to basics and relearn both best practices and the pressing concerns of the modern world if they wanted to truly understand.

Of course, you as a modern fresh produce professional know your corner of the larger market intimately, but just how in touch are you with the industry as a whole? And wouldn’t it be great to get some indications of where it’s headed? Fortunately, we’ve got a high-level overview of today's fresh produce world and the issues facing it, as well as the key advantages of Aptean’s fresh produce ERP and AI’s applications in the segment, for you.

So dig in and spread your roots to soak up these insights.

Fresh Produce Business Models Around the World

The breakdown of fresh produce businesses in any given region typically reflects the local agricultural landscape, consumer demand and supply chain infrastructure. Here's how these different business models might break down in various regions, along with a look at any new, emerging models.

Growers

• North America - This region is home to a diverse range of growers, from large-scale commercial farms to small family-run operations. In California, for example, large farms dominate, particularly in specialty crops like almonds, grapes and leafy greens. Florida is known for its citrus fruit groves, while states in the Great Plains region are home to many corn, soybean and wheat fields. Meanwhile, urban and vertical farming is emerging in cities like New York and Chicago, aiming to provide fresh produce locally and sustainably.

• Europe - In Europe, growers vary from small family-owned farms—often part of cooperatives—to large agribusinesses. Countries like Spain, Italy and the Netherlands are significant producers, with the Netherlands being a global leader in greenhouse farming and technology-driven agriculture.

• Emerging Models - Urban farming and controlled environment agriculture (CEA) are gaining traction, especially in densely populated areas where land is scarce. These models focus on reducing food miles and providing fresh produce year-round.

Packers and Shippers

• North America - Packers and shippers are often closely integrated with growers, especially in regions like California and Florida, where large-scale operations manage both growing and packing. However, there are also independent packing houses that serve multiple growers, particularly in regions with a high concentration of small farms, such as the Midwest.

• Europe - The packing industry in Europe is as diverse as the region’s growers, with a mix of integrated grower-packer operations and independent packers. Among them, the trend toward sustainable packaging is driving innovation, with many companies of this model investing in biodegradable and recyclable materials.

• Emerging Models - Co-packing and co-shipping businesses (covered in more detail below) are becoming more common, as fresh produce companies that primarily engage in growing and marketing can work with these contractors to outsource the packing and shipping processes. This model allows growers to focus on what they do best while relying on specialized partners for packaging and distribution.

Distributors

• North America - The distribution landscape includes a few large national players, like Sysco and US Foods, as well as many regional and local distributors. The rise of direct-to-consumer (D2C) models, particularly through ecommerce, is changing the distribution game, with companies like Imperfect Foods and Misfits Market gaining popularity by offering subscription services for “ugly” fresh produce.

• Europe - In Europe, distribution is often managed by large, centralized companies. This is particularly true in Western Europe, where logistics networks are highly developed. However, there is also a strong presence of regional distributors, especially in Southern Europe, where local markets and short supply chains are prevalent.

• Emerging Models - D2C and farm-to-table models are growing, particularly in urban areas where consumers are increasingly interested in knowing the source of their food and being able to trace its path on the supply chain. Online grocery delivery services are also expanding rapidly, driven by changing consumer habits.

Trading Companies

• North America - Trading companies in North America often focus on importing exotic and/or off-season produce, leveraging the region's diverse consumer demand. These companies are crucial for ensuring the year-round availability of a wide range of fresh produce.

• Europe - Europe has a well-established network of trading companies, especially in countries like the Netherlands, where the Port of Rotterdam serves as a major hub for importing fruits and vegetables from around the world. These companies play a critical role in balancing supply and demand across the continent.

• Emerging Models - The focus on sustainability is driving some trading companies to specialize in fair trade and/or organic produce to align their offerings with consumer preferences for ethically sourced products.

Service Providers (Co-Packaging, Logistics, Etc.)

• North America - The rise of co-packaging and logistics service providers is a notable trend, and it’s driven by businesses’ desire for flexibility and specialization. These companies offer tailored services that allow growers and distributors to scale operations without massive capital investments.

• Europe - A similar trend is seen in Europe, where companies are increasingly outsourcing non-core activities like packaging and logistics to specialized service providers. This is particularly important in regions with strict regulatory environments, where compliance can be complex and costly. That further incentivizes growers to outsource distribution, as it is the most heavily regulated step in the supply chain.

• Emerging Models - Technology-driven service providers, such as those that offer traceability via blockchain, are emerging as key players in the fresh produce industry. These companies provide added value by enhancing transparency and efficiency of communication across the supply chain.

Top Challenges for Fresh Produce Businesses

The top challenge for fresh produce businesses today is balancing external pressures with profitability, especially amid varying regional regulations and consumer expectations. Those external pressures—in and of themselves challenges—manifest differently across business models and regions.

Sustainability and Regulatory Compliance

• Europe - The European Union's stringent regulations on sustainability and packaging are pushing businesses to adopt eco-friendly practices. Companies must source products responsibly, invest in sustainable packaging materials and ensure compliance with laws like the Regulation (EU) 2023/1115 on deforestation-free products and the Packaging and Packaging Waste Regulation. This adds to production costs and can be particularly challenging for smaller businesses with limited resources.

• North America - While sustainability is important in North America, the regulatory environment is less strict compared to Europe. However, consumer demand for organic and sustainably sourced produce is growing, driving businesses to adopt greener practices even without mandates from regional governments. The challenge there is meeting these consumer expectations while keeping prices competitive.

Traceability and Certification

• Global - Across all regions, traceability has become a critical issue. Retailers and consumers increasingly demand transparency of the supply chain from farm to fork. Certifications like GLOBALG.A.P. are in more demand as a result. And certifications aside, businesses must invest in technology to ensure they can track and document every step of the production process. Just how challenging this is depends on the market’s regulatory demands.

• Specific Markets - In regions like the US, where consumer lawsuits and food safety concerns are prominent, traceability is particularly crucial, as without bi-directional tracking, recalls are even more complex and potentially catastrophic. In contrast, markets with less stringent food safety laws might face fewer immediate pressures but risk losing access to more lucrative, regulated markets if they don’t comply with global standards.

Labor and Workforce Issues

• North America and Europe - Businesses in both of these regions face labor shortages, particularly for seasonal workers who are essential for harvesting. This shortage is exacerbated by immigration restrictions, wage increases and the physical demands of agricultural work. Businesses must invest in automation and other technologies to mitigate these challenges, but the upfront costs can be prohibitive.

• Developing Regions - By contrast, labor availability in developing regions might be less of a challenge, but negative press about unfair labor practices in these regions can affect global competitiveness and reduce appeal to ethically conscious consumers.

Supply Chain Disruptions

• Global - The fresh produce industry is highly susceptible to supply chain disruptions, which can be caused by extreme weather, geopolitical instability, transportation issues or other extenuating circumstances. Businesses must develop contingency plans, including sourcing from alternative providers, to overcome them. Greater supply chain visibility via technology is also crucial.

• Region-Specific - At the moment, some European businesses are facing periodic disruptions due to Brexit-related trade barriers. Meanwhile, companies in the U.S. are increasingly affected by climate-related events like droughts and hurricanes.

Applying Artificial Intelligence in the Fresh Produce Industry

Use of AI is becoming more common in the fresh produce segment, revolutionizing various aspects of the industry from farm to fork. Here's how AI is currently being used and what we can expect in the future.

Precision Agriculture

• Current Applications - AI-driven tools are helping farmers apply the principles of precision agriculture to optimize crop yields. By analyzing data from soil sensors, weather stations and satellite imagery, AI models can predict the best planting times, irrigation needs and optimized fertilizer application, leading to healthier crops and more efficient use of resources. Drones equipped with AI can also monitor crop health; identify pests and diseases; and apply treatments precisely where needed.

• Future Expectations - The adoption of AI as part of the precision agriculture approach is expected to grow, with more farms leveraging AI’s predictive analytics to enhance decision-making. This technology could eventually enable fully autonomous farming, where machines handle everything from planting to harvesting with minimal human intervention.

Supply Chain Optimization

• Current Applications - AI is being used to optimize fresh produce supply chain logistics, in part by calculating ideal conditions and monitoring that they’re maintained during transit so that products arrive at their destination at peak freshness and in good condition. AI algorithms can also predict demand, optimize routing for transportation and reduce waste by allocating inventory more effectively. Furthermore, AI-powered systems are improving traceability by facilitating the bi-directional tracking of produce from farm to table, helping to prevent foodborne illnesses and ensuring compliance with safety standards.

• Future Expectations - As AI adoption increases, we can expect more integrated and automated supply chains, with AI-powered real-time data analysis providing insights that help reduce food waste, lower costs and improve food safety. AI might also enable more personalized delivery services, where produce is tailored to individual consumer preferences and delivered at the individual customer’s preferred cadences.

Quality Control and Sorting

• Current Applications - AI image analysis is changing the way fresh produce is sorted and graded—using smart imaging and machine learning to assess the size, color, shape and quality of fruits and vegetables faster and more accurately than humans. This helps ensure consistent quality, increases efficiency and reduces the likelihood of substandard produce reaching consumers.

• Future Expectation - AI-driven quality control systems are likely to become more sophisticated as time goes by, with the ability to detect even the smallest imperfections or potential spoilage becoming possible. This will enhance product consistency and help reroute waste for repurposing, as only the best produce will make it to market, and the rest can be used as ingredients in other products.

Demand Forecasting and Pricing

• Current Applications - AI is helping fresh produce businesses better understand and prepare for market demand. By analyzing historical sales data, current market trends and external factors like weather conditions and/or economic indicators, AI can predict the market’s appetite with greater accuracy, allowing businesses to adjust their production and pricing strategies accordingly.

• Future Expectations - AI-driven demand forecasting will become even more precise in the future, and the real-time nature of its analysis will allow businesses to respond to market changes immediately. Dynamic pricing models powered by AI could adjust prices based on demand, shelf life and competition, maximizing profitability while reducing the chances that products will go unsold and wasted.

Consumer Engagement and Retail

• Current Applications - In retail, AI is being used to enhance the shopping experience. AI-driven recommendation engines suggest produce based on consumer preferences, past purchases and health goals. Virtual assistants and smart image analysis powered by AI are also helping consumers find the freshest produce and learn more about its origins, nutritional value and best uses.

• Future Expectations - AI's facilitating role in consumer engagement is expected to expand, with more personalized offerings and experiences, such as tailored meal kits and subscription boxes based on individual dietary preferences.

Automation

• Current Applications - AI is playing a critical role in addressing labor shortages in the fresh produce industry by automating manual processes. For example, automated harvesters powered by AI can pick fruits and vegetables with precision, reducing the need for manual labor. Robots equipped with AI are also being used in packing and sorting facilities, increasing efficiency and reducing costs. Other tasks that traditionally require human intervention can also be automated by AI. The list includes order processing, customer service, data analysis, inventory allocation and more.

• Future Expectations - We’ll likely see an increase in autonomous farming operations down the road, with more instances of AI-driven robots handling all aspects of production, from planting to packaging. This could significantly reduce labor costs and increase efficiency, especially in regions where labor shortages are a major concern.

The Advantages of Aptean Fresh Produce ERP

The adoption of emergent technologies—such as precision agriculture for greater efficiency, blockchain for traceability and robotics for harvesting and packaging—can be a significant competitive advantage. But before your business can move forward with any of those measures, it’s important to have a solid digital foundation built around an ERP platform that offers both a “single source of truth” and purpose-built functionalities.

Our suite of innovative apps for Aptean Food & Beverage ERP is designed to empower fresh produce businesses by enhancing precision, efficiency and profitability across your supply chain.

Our Advanced Attribute app allows you to precisely define and categorize items and receipts, enabling superior quality control, dynamic pricing based on attribute values and comprehensive reporting. This functionality also facilitates procurement planning of raw goods for upcoming harvests, ensuring optimal readiness for the season.

For streamlined harvest planning, our Commodity Harvesting app is an ideal solution. It supports detailed scheduling at the farm and/or greenhouse level, allowing growers to plan harvest activities on a seasonal, weekly or even daily basis with ease.

Efficiency in your receiving process can be enhanced by our Weighbridge app, which seamlessly integrates with our core ERP system to capture data directly from your weighbridge during bulk deliveries. This integration boosts accuracy and speed in managing inbound produce.

In the production arena, two of our apps work in tandem to simplify complex processes. The Families app standardizes production workflows, making operations smoother, while our Production Cost Apportionment app accurately tracks costs in grade-out scenarios, helping you tune your pricing strategy for both competitiveness and profitability.

To enhance your sales process, we offer tools like the Profiles and Trading Board apps that guide you to the optimal products for your customers, ensuring the right match every time. Additionally, our Producer Certification app guarantees that every sales order is accompanied by the correct certificates, as they are seamlessly tracked and maintained throughout the entire supply chain.

Finally, our robust Grower Return app simplifies the calculation of prices for account sales, pooling and grade-out/pack-out scenarios, helping to ensure profitability for your fresh produce business.

Grow Your Fresh Produce Business With Aptean

Having caught up with the state of the fresh produce industry and learned about both Aptean’s fresh produce solutions and AI’s developing role, you’re likely eager to leverage your knowledge to give your company a leg up on the competition. If you’re thinking that your next step is exploring the technologies we’ve covered, you’re right—but it’s critical that you select the right partner for your needs.

Aptean’s cloud-based fresh produce ERP is built on the Microsoft Business Central platform and offers a complete suite of features purpose-built for handling both the day-to-day processes and larger operational considerations you face. What’s more, it comes with built-in AI capabilities that boost productivity, enhance accuracy and facilitate smarter decision-making.

Beyond the product itself, we strive to act as a long-term partner for every customer, providing expert advice from initial assessment and implementation through to go-live and ongoing support. We’re committed to helping you achieve maximum return on investment as quickly as possible, and there’s a reason Frost and Sullivan named us the North American Food and Beverage ERP Customer Value Leader—we care and are dedicated to mutual success.

All you need to do to move forward is contact us. If you have questions, don’t hesitate to ask. And feel free to request a personalized demo or pricing for more specifics.