Transcript Slide 1
Forces that Move the Worldwide Market for Berries Charles Safley Department of Agricultural & Resource Economics North Carolina State University Forces that Move the Worldwide Market for Berries Presented at the Fruit Processor Meeting of the Chilean Food Industry Association (Chilealimentos) Linares, Chile July, 2007 Worldwide Production of Strawberries (Metric Tons) Country % % of World Change 22.1% 29.1% 2000 2005 USA 862,828 1,053,280 Spain 344,865 308,000 -10.7% 8.5% Russia 160,000 217,000 35.6% 6.0% Korea 180,501 200,000 10.8% 5.5% Japan 205,300 200,000 -2.6% 5.5% Poland 171,314 180,000 5.1% 5.0% Turkey 130,000 160,000 23.1% 4.4% Mexico 141,130 150,261 6.5% 4.2% Italy 195,661 147,049 -24.8% 4.1% Germany 104,276 146,500 40.5% 4.1% 21,000 25,600 21.9% 0.7% 3,299,287 3,615,723 9.6% 77.1% Chile World Source: FAS, USDA Frozen Strawberry Production (Metric Tons ) % Change (01/02 to 05/06) Country 01/02 02/03 03/04 04/05 05/06 USA 216,908 229,209 230,950 232,048 240,000 +10.6% -------- 67,500 72,000 90,720 82,500 +22.2%* Poland 125,800 90,000 130,500 80,000 75,000 -40.1% Mexico 51,000 53,200 50,320 52,000 52,200 + 2.4% Spain 35,250 30,400 25,036 38,000 40,000 +13.5% Italy 10,000 10,000 10,000 10,000 10,000 0.0% 2,600 2,700 2,700 2,900 2,800 + 7.8% 870 1,100 700 700 700 -19.5% China Canada Japan Source: FAS, USDA * China: 02/03 to 05/06 Frozen Strawberry Exports (Metric Tons) Country 01/02 Poland 02/03 03/04 04/05 % Change (01/02 to 05/06) 05/06 127,300 84,200 90,093 119,646 91,824 -------- 34,968 75,967 94,960 86,330 +146.9%* Mexico 40,204 43,357 40,076 43,000 43,000 + 7.0% Spain 25,271 33,126 34,890 21,998 20,600 -18.5% USA 20,581 10,397 9,971 9,941 10,530 -48.8% Canada 1,095 901 454 657 800 -26.9% Italy 2,398 1,513 912 442 300 -87.5% 0 0 0 0 0 0.0% China Japan Source: FAS, USDA * China: 02/03 to 05/06 -27.9% Strawberry Production, 2007 Canada: Area planted decreased due to low profitability Increased fresh consumption primarily supplied by U.S. Poland: Area planted has decreased due to low profits caused by increased frozen imports from China Effects of this decrease should show up in 2007/08 Japan: Big investment in China strawberry industry China has a big cost advantage Demand for frozen berries is decreasing as China exports more readymade jams China Strawberry Production, 2007 Increased acreage in 2007: 70,800 A (+25%) Yields expected to increase due to increase use of labor, fertilizer and water. Industry wants to increase use of summer varieties to fill gaps in July and October Frozen Strawberry Production and Distribution in China (Metric Tons) 2005 Revised Deliver to Processors 2006 Estimate 2007 Forecast % Change 2006-2007 94,400 99,300 103,000 3.7% 0 0 0 ------ 85,000 89,300 93,000 4.1% 7,966 7,200 7,500 4.2% Total Supply 92,966 96,500 100,500 4.1% Exports Domestic Consumption Ending Stocks 70,206 68,000 70,000 2.9% 22,760 28,500 30,500 7.0% 0 0 0 ------ Total Distribution 92,966 96,500 100,500 4.1% Beginning Stocks Production Imports Source: FAS, Annual GAIN Report China Frozen Strawberry Industry, 2007 Frozen imports are expected to decreased as domestic production increases EU anti-dumping tax: 34.2% Potential Impacts: Increase domestic consumption Use a third country as a “bridge” to the EU Increased competition in Japan However the EU is not enforcing the tax in 2007 due to decreased production in Poland Frozen Strawberry Production and Distribution in Spain (Metric Tons) Deliver to Processors Beginning Stocks 2005 2006 2007 % Change Revised Estimate Forecast 2006-2007 44,480 88,500 55,600 -37.2% 0 0 15,400 ------- `35,520 70,583 44,324 -37.2% Imports 15,114 15,230 15,500 1.8% Total Supply 50,634 85,813 75,224 -12.3% Exports 22,869 21,875 24,009 9.8% Domestic Consumption 27,765 48,538 51,224 5.5% 0 15,400 0 50,634 85,813 75,224 Production Ending Stocks Total Distribution Source: FAS, Annual GAIN Report ------12.3% Spain Strawberry Industry, 2007 Environmental Activists claim strawberry growers are: Over using water from Donana Park (marshes harbor migratory birds) 90% of Spain’s domestic production surrounds Donana Park Water level has dropped 50% in recent years Use of harmful pesticides Herbicides and Pesticides Methyl Bromide Improper disposal of plastics used to cover tunnels and greenhouses Spain Strawberry Industry, 2007 Worldwide Wildlife Fund is attempting to use “Economic Persuasion” to get growers to change their practices. Asking Consumers to boycott Spanish strawberries from the Donana Park region One Netherlands supermarket chain is cooperating and encouraging British supermarkets to also cooperate Strawberry Demand United Kingdom Demand for strawberries has increased the last two years Strawberry sales increased 34% Suppliers struggled to keep up with demand Consumers are beginning to demand berries year-round Strawberry Demand Germany Demand for strawberries keeps increasing Includes conventional and organic berries Organic food sector is “ripe” for development Consumption per household doubled in March 2007 compared to March 2006 The domestic industry cannot supply enough berries Strawberry Demand China Domestic Consumption increasing Increasing purchasing power and quality of life, especially among the Middle Class in urban areas Middle Class consumers are looking for more products on grocery store shelves Urban consumers are unsure about food safety Opportunities for Chile? Frozen Strawberries China: Growing middle class consumers FAS, USDA Report (2007): Chile, Morocco and Argentina are expected to seriously threaten US exports to China Europe: UK and Germany? Organics – Organic food sales continue to strengthen Europe has a very large and sophisticated organic market What will happen in China and Spain? World Production of Raspberries: (Tons) % Change % of World 170,000 +30.8% 36.8% 56,059 90,000 +60.5% 19.5% Chile 51,256 50,000 - 2.4% 10.8% Poland 39,727 42,000 + 5.7% 9.1% Germany 33,700 20,500 -39.2% 4.4% Ukraine 19,723 20,000 +1.4% 4.3% Canada 16,247 13,828 -14.9% 3.0% Hungary 19,804 10,000 -49.5% 2.2% France 8,743 8,545 + 2.3% 1.8% Great Britain 9,500 8,000 +15.8% 1.7% 408,115 461,685 +13.1% 93.6% Country 2000 Russia 130,000 Serbia Total Production: 2004 Source: International Raspberry Association U.S. Imported Fresh Raspberries* (US$1000) Country January – April Comparisons Calendar Year 2005 2006 2006 2007 % Change Mexico 20,468 34,861 16,485 26,200 58.9% Chile 10,074 10,256 7,390 9,135 23.6% Canada 1,533 1,521 561 563 Peru 0 0 0 0 0 0 5 3 Total 32,078 Switzerland 46,645 24,436 ----------- 35,906 46.9% * Raspberries imported from 9/1 to 6/30 the following year. Source: DOC, US Census Bureau, Trade Statistics 0.4% U.S. Imported Frozen Raspberries (US$1000) Country Calendar Year January – April Comparisons 2005 2006 2006 31,030 37,435 22,645 22,161 - 2.4% Canada 8,775 7,372 1,148 2,004 74.6% Mexico 1,971 2,606 812 1,009 24.3% Serbia 0 2,321 130 6,635 0 2,626 390 3,990 0 172 198 1,232 50,862 54,419 26,207 Chile China Argentina ROW Total Source: DOC, US Census Bureau, Trade Statistics 2007 % Change 510 ------436 153.5% 391 82.3% 786 - 36.2% 27,297 4.2% 2007 Raspberry Production Spain Area planted has increased 41.2% Estimated area planted is 1,200 hectares, or 350 hectares more than in 2006 Serbia Total area planted is around 15,000 hectares Hungry: Production is increasing 2007 Raspberry Production Europe Supply of berries to the processing industry increased from 2002 to 2004 But volume of imports decreased China: Domestic production increasing No domestic market, so production will be exported to Europe 2007 Raspberry Production Oregon and Washington, USA Some growers are switching to fresh market raspberries due to: Increased consumer demand for fresh raspberries Increased competition in the processed market Rest of the World Relatively stable production Raspberry Demand, 2007 United States Raspberry demand increasing Ranked as the third most popular fruit behind strawberries and blueberries United Kingdom Increased demand for berries & berry flavors has created a new market for raspberries Raspberry sales increased 62% in last two years & suppliers struggled to keep up with demand Source: DOC, US Census Bureau, Trade Statistics Opportunities for Chile? US Continued growth in fresh consumption and IQF Fresh shipments in the off production season Caution: Mexico deal is projected to increase( start in October and provide good volume into December) Europe - Organic market Frozen berries United Kingdom Germany Worldwide Area Planted and Production of Blackberries, 2005 Region Europe North America Central America South America Asia Oceania Africa World Total Area Planted (Acres) 19,007 17,690 4,053 3,946 3,830 734 247 49,507 Source: Bernadine Strik, Dept. of Horticulture, OSU Production (Tons) 47,386 65,154 1,752 7,031 29,038 4,022 220 154,603 Projected Growth in Blackberry Area Planted Potential of 66,797 acres of Blackberries planted worldwide by 2015 Potential 35% increase over the 2005 level Does not include harvested wild plantings Countries with the Greatest Projected Increase in Blackberry Area Planted by 2015 Country Percentage Increase 2005 Area Planted (Acres) Projected Increase (Acres) Projected Area in 2015 (Acres) Romania 900 % 250 2,250 2,500 Poland 200 % 250 500 750 Mexico 117 % 5,683 6,649 12,332 Chile 76 % 1,111 844 1,955 Hungry 50 % 3,950 1,975 5,925 China 42 % 3,830 1,609 5,439 USA 20 % 11,905 2,381 14,286 Source: Bernadine Strik, Dept. of Horticulture, OSU U.S. Blackberries East Coast Production is primarily for the fresh market North Carolina Sunny Ridge Farms, Inc. Goal is for 600 acres Currently about 120 acres Dole Foods Expressed interest in blackberries Not certain if interested in fresh or frozen berries Demand for Blackberries United Kingdom Blackberry sales broke all sales records in 2006. Suppliers struggled to keep up with demand Consumers are beginning to demand berries year-round Demand for Blackberries United States Some industry experts believe that fresh blackberry consumption could equal or surpass raspberries Increased taste for blackberries Growing recognition of their healthful benefits Opportunities for Chile US Continued growth in fresh consumption Fresh shipments in the off production season Caution: Mexico is gaining strength in the U.S. market Now estimated to have about 10,000 acres planted Could seriously damage Chile’s fresh market in the U.S. Europe: Organic market Frozen berries? Market Trends – Why has Demand Increased? 1. Health 2. Convenience: Year-round availability More supermarkets carrying berries 3. Globalization 4. “Fast” and reliable Refrigerated Transport 5. Forgiving Customers? Health Baby Boomers are aging In 2011, the oldest will turn 65, and, on average, can expect to live to 83. Many will continue well into their 90s. Obesity has reached epidemic proportions globally (World Health Organization) Estimated 65.8% of the adult population is obese Major concern for children Berries have profited from better health consciousness Reduce fat and increase vitamin & nutrient intake Low in calories and high in antioxidants Health – Recent Studies Cancer research Berries may help cut risk of pancreatic cancer (American Association for Cancer Research, March 2007) Black raspberries show promise in preventing cancer of the esophagus and colon (American Cancer Society, March 2007 ) 2006: oral, prostrate, breast and colon cancer. Antioxidant content per serving (American Journal of Clinical Nutrition, July 2006) Blackberries: 1st Strawberries: 3rd Raspberries: 7th Blueberries: 9th Market Trends Convenience Year-round availability No longer a seasonal item Consumer look for and plan on using them Demand increased in both retail and foodservice High quality, reasonability priced berries More supermarkets now carrying berries Market Trends Globalization More sources of fruit in the world market Chile, Mexico, China Fast and Reliable Transportation Improved infrastructure to maintain the cold chain Result: Firm Berries for the consumer Not soft, runny fruit Market Trends “A lost in taste does not seem to matter as long as the fruit looks good.” Are the customers really this forgiving? Industry experts: Raspberries There is evidence that consumption is decreasing due to poor, or decreasing, flavor (i.e. low sugar content) relative to blueberries. Blackberries One reason blackberry consumption has been increasing is because the newer varieties are sweeter. In some cases the Brix has increased 50%. Industry Challenges 1. Food Safety 2. Labor 3. Transportation 4. Increasing consumption U.S. Confidence in Food Safety Down Safety concerns prompted 38 percent of consumers to stop purchasing certain foods in previous 12 months, +9% in 2006 survey. The items most often mentioned were Spinach: 71 % Lettuce: 16 % Bagged salad: 9% Survey was conducted in January 2007, when the outbreak linked to spinach was still in the news and illnesses associated with other foods were starting to make headlines. Source: FMI Consumer Trends 2007 Negative Impacts of Pesticides Products in Europe Pesticides in fruit, vegetables and grain is a major concern for European consumers (Cited by 63%of the consumers surveyed.) Survey of consumer opinion on pesticides in Germany Survey made on behalf of Greenpeace Interviews in February and April, 2007 Highest priority for consumers is no/low pesticide residues Products listed as frequently exceeding limits and showing multiple residues: Strawberries Berries(red/blackberries, raspberries, gooseberries) Food Safety: China Reports of Tainted foods Pesticide misuse Lack of inspections “The Growing Dangers of the China Trade” (Time, July 7, 2007) Farmers are using more chemical fertilizers and pesticides to increase quantity, not quality. The government says the worst pesticides are banned, but farmers can actually still buy them and so they use them. “…food contamination problems will likely get worse before getting better as more get-rich-quick entrepreneurs move into food and agricultural products” (NY Times, 6 June 2007) Regulatory philosophy – Its OK “if no one is getting sick or dying” Food Safety Is it a “potential time bomb”? E. Coli scares have also led to concerns about Water Quality Sanitation Traceability Good Agricultural Practices (GAP) certifications Good Manufacture Practices (GMP) Nearly 69% of the U.S. Manufacturers either have or will implement stronger safety practices and are employing superior safety protocols (2007 Annual Food Manufacturing Survey) Industry Challenges Labor – Concerns about illegal labor in the U.S. Grower have concerns about production and harvesting Fresh Del Monte Produce processing plant in Portland, Oregon Immigration raid on 12 June 2007 170 employees were taken into custody Transportation Increased costs of air freight makes it harder to compete with ground transportation - especially in the fresh market Increasing Consumption “There’s room for growth!” U.S. Data by Commodity Consumption Expenditures (% of Consumers trying fruit in last 12 months, 2007) (% of Consumer dollar spent of fruit, 2006) Per Capita Consumption (2005) Strawberries 69% 21.7% 1.84 Raspberries 26% 3.8% 0.29 Blackberries 18% <2.0% 0.11 Source: USDA and The Packer Consumer Surveys International Food Information Council Consumers want to embrace the latest trends related to improving their nutrition .... ,BUT they are inundated with information that falls short of clearing confusion.” Focus on information tailored to boost consumer knowledge and support targeted behavior modification. Suggested tips: 1) Use plain talk about food and health 2) Cite study specifics 3) Affirm scientific research is continual and rarely final 4) Carefully create meaningful communications 5) Examine all the relevant facts – be objective Cooperative Market Development in the Red Raspberry Industry A generic Research and Promotion (R&P) Program The intended purpose of the R&P Program Balance supply and demand Grow the market in aggregate for all suppliers Increase the value of processed raspberries Steps: 1) Analyze existing information and conduct new research on the benefits of raspberries 2) Convey the message to consumers, food processors, and the food industry 3) Increase the number of new products and the use of existing products New Processed Products Food Processing: 2007 Trends Teens and Baby boomers remain two major consumer groups for specialized marketing efforts Teens: Snack foods Boomers: Products combining specific needs together with easy-to-handle packaging Snacks are believed to be the most innovative category in the healthy food and drink group Input prices continue to be a critical issue! New Process Products Numerous companies are looking for ways to incorporate berries in order to market them as a health platform Ice Cream Fruit Smoothies Low-Fat Yogurts Baked Products Snack Products Juices Organic beverages are a hot category Organic beverages continue to make their way into the mainstream as a consumer desire for healthier beverage options fuels double-digit growth for the segment. R&D professionals report that beverage manufacturers increasingly are requesting tropical and so-called "super fruit" flavors in organic form. Snack Foods Frito-Lay North America introduces Flat Earth fruit crisps and veggie crisps Frito-Lay’s goal “create convenient, greattasting snack crisps made with real fruits and vegetables.” Kellogg Co. adds Rice Krispies with Real Strawberries Kellogg’s research shows that “Moms are demanding more real fruit in their children's foods, while today's kids want more taste. So adding real, delicious fruit to a cereal mom has loved since she was a child was a natural fit." Muscadine Grape Products “Thinking Outside the Box” Independent laboratory tests show that Muscadine grape seeds contain the highest levels of natural antioxidants. Muscadine grape seeds and byproducts from juice and wine production are very high in antioxidants. Used to make Dietary Supplements Thank you for your attention! Back-up and Additional Slides Fresh Strawberries Exports (Metric Tons) Country Spain US Mexico Belgium France Netherlands Poland Italy Germany Turkey 2001 2006 225,119 58,108 30,910 33,682 18,725 16,057 20,945 33,308 10,086 23 207,974 103,910 70,970 38,781 34,220 29,525 24,071 22,917 15,968 11,319 Source: Global Trade Atlas % Change -7.6% 78.8% 129.6% 15.1% 82.8% 83.9% 14.9% -31.2% 58.3% > 1,000% The Top 10 Countries accounted for 96.1% of the world exports in 2004 Strawberries: Fresh Imports (Metric Tons) Country Germany 2001 149367 % Change 90835 -39.2 % 2006 France 82506 117219 42.1% Canada 45514 84713 86.1% US 32081 69592 116.9% UK 26667 47823 79.3% Belgium 26105 28770 10.2% Italy 22830 38396 68.2% Austria 22173 20354 -8.2% Netherlands 15710 20617 31.2% 9630 18992 97.2% Mexico Source: Global Trade Atlas Top 10 Countries accounted for 85.2% of the world imports in 2004 Worldwide Area Harvested of Strawberries (Hectares) Country 2000 2005 % Change % of World Poland 61,967 53,700 -13.3% 21.3% Russia 22,000 36,000 63.6% 14.3% USA 19,283 21,120 9.5% 8.4% Germany 9,619 12,254 27.4% 4.9% Turkey 9,465 10,500 10.9% 4.2% Serbia 8,686 10,000 15.1% 4.0% Ukraine 7,500 8,000 6.7% 3.2% Spain 11,055 7,600 -31.3% 3.0% Japan 7,450 7,300 -2.0% 2.9% Korea 7,090 7,000 -1.3% 2.8% Chile 777 1,020 31.3% 0.4% 248,321 251,718 1.4% 69.4% World Source: FAS, USDA Strawberry Production and Distribution in Spain (Metric Tons) Area Planted Area Harvested 2005 2006 2007 % Change Revised Estimate Forecast 2006-2007 7,611 7,400 7,100 4.0 7,611 7,400 7,100 4.0 308,000 335,500 275,600 17.8 6,014 4,735 5,000 5.6 Total Supply 314,014 338,235 280,600 17.0 Exports, Fresh 237,534 207,974 185,000 11.0 Fresh Domestic Consumption 32,000 41,761 40,000 -4.2 Processing 44,480 88,500 55,600 37.2 314,014 338,235 280,600 17.0 Production Imports, Fresh Total Distribution Source: FAS, Annual GAIN Report U.S. Red Raspberry Cold Storage Holdings MONTH 2005-06 2006-07 % August 76,319 78,993 3.5% September 78,147 64,459 -17.5% October 72,809 60,312 -17.2% November 66,007 56,176 -14.9% December 55,801 52,208 -6.4% January 50,820 46,381 -8.7% February March 46,122 39,472 39,593 34,686 -14.2% -12.1% April 34,752 33,569 -3.4% May 30,989 31,323 1.1% Source: USDA Cold Storage Reports U.S. Imported Frozen Berries* (Values in US$1000) Country Chile China Serbia Columbia Canada Denmark ROW Total Calendar Year January – April Comparisons 2005 1,661 1,788 1,269 346 152 0 425 2006 6,035 2,197 812 373 151 0 700 2006 3,970 102 155 120 63 0 198 2007 5,583 312 0 46 45 348 547 % Change 40.6% 205.9% ------ 61.7% - 28.6% -----176.3% 5,641 10,268 4,608 6,881 49.3% * Berries = Blackberries, Mulberries and Loganberries Source: DOC, US Census Bureau, Trade Statistics, 6-Digit Imports U.S. Blackberry Cold Storage Holdings MONTH 2005-06 2006-07 % August September October November December January February March April May 33,669 32,441 31,371 27,874 25,677 25,367 23,097 19,575 18,023 15,825 32,164 31,326 30,528 28,310 26,743 25,604 24,726 22,748 20,937 18,442 -4.5% -3.4% -2.7% 1.6% 4.2% 0.9% 7.1% 16.2% 16.2% 16.5% Source: USDA Cold Storage Reports