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