The global fruit and vegetable industry is undergoing one of the most significant structural transformations of recent decades. Growing climate volatility is rapidly reshaping competitiveness, capital allocation and the long-term profitability of the global fresh produce sector.
The data already illustrate the scale of the challenge. According to the latest report by the Food and Agriculture Organization of the United Nations (FAO), natural disasters caused cumulative losses of USD 3.26 trillion to global agriculture between 1991 and 2023. Over the same period, the fruit and vegetable sector lost 2.8 billion tonnes of production, EastFruit reports, citing Agricultura.it.
This analysis was provided by Kateryna Zvierieva, an international agribusiness analyst and head of the International EastFruit fruit and vegetable platform, commenting on FAO’s latest assessment of the damage caused by natural disasters.
“Climate shocks are becoming a structural factor influencing investment decisions throughout the entire value chain. In the fruit and vegetable sector, this directly affects profitability, investment attractiveness and long-term competitiveness,” Zvierieva said.
The pressure is particularly acute in Europe. According to the latest analysis by the European Investment Bank, extreme weather events currently cost European Union agriculture approximately EUR 28 billion annually, equivalent to around 6% of the total value of crop and livestock production. Under the most severe climate scenarios, annual losses could increase by a further 66% by 2050.
“The fruit and vegetable sector is significantly more exposed than many other agricultural industries,” Zvierieva continued. “Unlike cereals or oilseeds, fruit and vegetable businesses operate within very narrow harvesting windows, require substantial labour inputs, must comply with strict appearance and quality standards, and depend heavily on fast and efficient logistics. Even a short-lived weather shock can cause immediate economic losses.”
Margin erosion is becoming a greater threat than production losses
Many producers still assess climate risk primarily in terms of potential yield losses. This approach is becoming outdated. Increasingly, the more serious threat is the erosion of profit margins.
Even when harvested volumes remain relatively stable, profitability can deteriorate rapidly because of rising adaptation costs, including irrigation, anti-hail systems, insurance premiums, cold storage infrastructure, labour-management inefficiencies and post-harvest losses.
This trend is becoming increasingly evident in Southern Europe.
“In Italy, Spain and Greece, recurring heatwaves and water scarcity are driving production costs higher across numerous fruit and vegetable categories, particularly berries, citrus fruit, stone fruit and vegetables. Cherries are a clear example. After a difficult season, a grower may still harvest commercially acceptable volumes. However, a hailstorm shortly before harvest, combined with higher irrigation costs and lower fruit quality, can drastically undermine the financial result,” Zvierieva explained.
“For a cherry, berry or citrus producer, stable yields no longer guarantee stable profits. A single hailstorm before harvest can transform a business with an EBITDA margin of 15–18% into an operation with a margin of only 3–5% within a matter of days,” she added.
This is changing the way the strongest fruit and vegetable companies assess risk. Yield remains important, but the resilience of profit margins is becoming even more critical.
Water is becoming the most strategic resource in fruit and vegetable production
Perhaps the most important structural transformation affecting the global fruit and vegetable industry concerns water.
According to the latest assessment by the European Environment Agency, drought accounts for 54% of agricultural losses in Europe and is therefore the sector’s largest climate-related risk. Heavy rainfall accounts for 21% of losses, frost for 16% and hail for 9%.
At the global level, pressure from drought continues to intensify. According to data from the Organisation for Economic Co-operation and Development (OECD), the share of land affected by drought has doubled since 1900. In 2025 alone, almost 30% of the world’s land area was affected by drought conditions.
The consequences for fruit and vegetable production are direct. The sector remains heavily dependent on reliable water availability, particularly in major producing countries such as Spain, Italy, Morocco, Egypt, Türkiye and Uzbekistan.
In these markets, access to water increasingly determines:
- the economic viability of orchards and other production systems;
- crop selection;
- production costs;
- long-term profitability.
Referring to the latest data from the European Environment Agency, Kateryna Zvierieva argues that water is becoming the central strategic resource for the sector.
“If drought already accounts for 54% of agricultural losses in Europe, water inevitably becomes one of the most strategically important resources in fruit and vegetable production,” she said.
According to the expert, this trend is set to intensify.
“By 2030, access to reliable irrigation systems could influence competitiveness more strongly than the availability of agricultural land itself. The market is moving towards a new hierarchy in which producers with secure access to water will be able to benefit from greater pricing power and stronger long-term stability.”
Climate volatility is redrawing the global map of fruit and vegetable production
Climate volatility does not affect all producers in the same way. On the contrary, it is accelerating a structural redistribution of competitiveness across the global fruit and vegetable industry.
Some regions are strengthening their market positions. Others are becoming increasingly vulnerable because of water stress, rising production costs and growing exposure to climate-related risks.
The potential winners: regions combining resilience, infrastructure and cost efficiency
While Southern Europe faces increasing pressure from drought, water scarcity and rising production costs, several other regions are consolidating their positions.
The potential winners are countries capable of combining three fundamental factors:
- stronger climate adaptation capacity;
- competitive production costs;
- export-oriented infrastructure.
Morocco and Egypt represent two of the most significant examples.
Based on her experience working on agricultural projects implemented by FAO and the European Bank for Reconstruction and Development (EBRD) across the Middle East and North Africa, Europe and Central Asia, Kateryna Zvierieva notes that this shift has become particularly visible over the past five years.
“Over the last five years, Morocco and Egypt have significantly strengthened their positions. These countries are no longer competing solely on cost. They are also competing on efficiency, infrastructure and export strategy,” she said.
According to Zvierieva, capital is increasingly moving towards regions capable of delivering both high production efficiency and greater resilience to climate pressure.
Morocco
Morocco continues to strengthen its position in: berries; tomatoes; citrus fruit.
Its principal competitive advantages include: proximity to European Union markets; competitive labour costs; a strong export orientation; growing investment in irrigation and protected cultivation.
Zvierieva considers Morocco one of the most important fruit and vegetable growth stories in the Mediterranean region.
“Moroccan exports of fresh produce to Europe continue to increase, particularly in the tomato and blueberry sectors. Morocco has built one of the most efficient export-oriented fruit and vegetable models in the Mediterranean. Strategic investments in irrigation, protected cultivation and logistics are already translating into stronger market positions,” she said.
In the long term, however, the country’s competitiveness will increasingly depend on water-use efficiency.
“Even strong exporters such as Morocco face growing pressure on water resources. The long-term winners will be those capable of improving water productivity faster than the market as a whole.”
Egypt
Egypt continues to gain market share across several categories, including: citrus fruit; onions; sweet potatoes; frozen vegetables.
Its principal advantages remain: large-scale production; a strong export orientation; competitive production costs. Egypt has become one of the world’s leading citrus exporters and continues to consolidate its position across numerous fresh fruit and vegetable categories.
Uzbekistan
Uzbekistan is emerging as one of the most dynamic fruit and vegetable markets in Central Asia.
The country continues to strengthen its position in: cherries; table grapes; stone fruit; vegetables.
Its main competitive advantages include: competitive labour costs; substantial production potential; growing investment in logistics and storage facilities.
“Uzbekistan is becoming increasingly competitive in export-oriented fruit and vegetable production. Investments in cold-chain infrastructure, warehouses and logistics are improving market access and export potential,” Zvierieva explained.
High-risk regions: rising costs and growing climate pressure
At the same time, several major fruit and vegetable producing regions are facing increasing structural pressure.The principal challenge is not necessarily a lack of production capacity. Instead, it is the weakening of cost efficiency in an environment of growing climate volatility.
Southern Spain
Spain remains one of Europe’s leading producers of fruit and vegetables. However, recurring droughts and irrigation restrictions are placing growing pressure on several sectors, including: citrus fruit; vegetables; berries. Production levels remain high, but profit margins are increasingly under pressure.
Southern Italy
Southern Italy faces similar challenges. Heatwaves, drought and climate instability are increasing production costs across several categories, including: citrus fruit; vegetables; stone fruit.In many categories, production volumes remain relatively stable, but economic efficiency is gradually weakening.
Greece
Greek fruit and vegetable production is increasingly exposed to drought, high temperatures and a highly fragmented production structure.
Small-scale producers with limited access to capital are the most vulnerable. Kateryna Zvierieva believes that Southern Europe is entering a much more difficult competitive cycle. “Southern Europe is losing cost efficiency. Water scarcity, rising insurance premiums and climate volatility are increasing production costs and putting substantial pressure on margins,” she said.
The market is splitting into two business models
“Climate volatility is creating two profoundly different business realities,” Kateryna Zvierieva emphasised.
Model 1: resilient producers
These companies generally have: secure access to irrigation; anti-hail systems; protected cultivation; storage facilities; strong post-harvest infrastructure; diversified export channels. They are better positioned to absorb shocks and protect their margins.
Model 2: vulnerable producers
These businesses often operate with: insufficient irrigation systems; limited infrastructure; poor access to finance; weakly diversified sales channels.
This business model is becoming increasingly fragile. A single particularly difficult season can seriously undermine the profitability and financial stability of the company.
Kateryna Zvierieva also notes that capital is increasingly flowing towards technologies capable of delivering measurable returns on investment in terms of climate resilience.
The most significant areas of investment currently include: precision irrigation; protected cultivation; artificial intelligence-based crop forecasting systems; robotics; intelligent sorting and grading; post-harvest technologies.
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