Presentation on theme: "Forces that Move the Worldwide Market for Berries"— Presentation transcript:
1Forces that Move the Worldwide Market for Berries Charles SafleyDepartment of Agricultural & Resource EconomicsNorth Carolina State University
2Forces that Move the Worldwide Market for Berries Presented at the Fruit Processor Meeting of the Chilean Food Industry Association (Chilealimentos)Linares, ChileJuly, 2007
3Worldwide Production of Strawberries (Metric Tons) Country20002005%Change% of WorldUSA862,8281,053,28022.1%29.1%Spain344,865308,000-10.7%8.5%Russia160,000217,00035.6%6.0%Korea180,501200,00010.8%5.5%Japan205,300-2.6%Poland171,314180,0005.1%5.0%Turkey130,00023.1%4.4%Mexico141,130150,2616.5%4.2%Italy195,661147,049-24.8%4.1%Germany104,276146,50040.5%Chile21,00025,60021.9%0.7%World3,299,2873,615,7239.6%77.1%Source: FAS, USDA
4Frozen Strawberry Production (Metric Tons ) Country01/0202/0303/0404/0505/06% Change(01/02 to 05/06)USA216,908229,209230,950232,048240,000+10.6%China67,50072,00090,72082,500+22.2%*Poland125,80090,000130,50080,00075,000-40.1%Mexico51,00053,20050,32052,00052,200+ 2.4%Spain35,25030,40025,03638,00040,000+13.5%Italy10,0000.0%Canada2,6002,7002,9002,800+ 7.8%Japan8701,100700-19.5%Source: FAS, USDA* China: 02/03 to 05/06
5Frozen Strawberry Exports (Metric Tons) Country01/0202/0303/0404/0505/06% Change(01/02 to 05/06)Poland127,30084,20090,093119,64691,824-27.9%China34,96875,96794,96086,330+146.9%*Mexico40,20443,35740,07643,000+ 7.0%Spain25,27133,12634,89021,99820,600-18.5%USA20,58110,3979,9719,94110,530-48.8%Canada1,095901454657800-26.9%Italy2,3981,513912442300-87.5%Japan0.0%Source: FAS, USDA* China: 02/03 to 05/06
6Strawberry Production, 2007 Canada:Area planted decreased due to low profitabilityIncreased fresh consumption primarily supplied by U.S.Poland:Area planted has decreased due to low profits caused by increased frozen imports from ChinaEffects of this decrease should show up in 2007/08Japan:Big investment in China strawberry industryChina has a big cost advantageDemand for frozen berries is decreasing as China exports more readymade jams
7China 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
8Frozen Strawberry Production and Distribution in China (Metric Tons) 2005Revised2006Estimate2007Forecast% ChangeDeliver to Processors94,40099,300103,0003.7%Beginning Stocks------Production85,00089,30093,0004.1%Imports7,9667,2007,5004.2%Total Supply92,96696,500100,500Exports70,20668,00070,0002.9%Domestic Consumption22,76028,50030,5007.0%Ending StocksTotal DistributionSource: FAS, Annual GAIN Report
9China Frozen Strawberry Industry, 2007 Frozen imports are expected to decreased as domestic production increasesEU anti-dumping tax: 34.2%Potential Impacts:Increase domestic consumptionUse a third country as a “bridge” to the EUIncreased competition in JapanHowever the EU is not enforcing the tax in due to decreased production in Poland
10Frozen Strawberry Production and Distribution in Spain (Metric Tons) 2005Revised2006Estimate2007Forecast% ChangeDeliver to Processors44,48088,50055,600-37.2%Beginning Stocks15,400Production`35,52070,58344,324Imports15,11415,23015,5001.8%Total Supply50,63485,81375,224-12.3%Exports22,86921,87524,0099.8%Domestic Consumption27,76548,53851,2245.5%Ending Stocks------Total DistributionSource: FAS, Annual GAIN Report
11Spain 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 ParkWater level has dropped 50% in recent yearsUse of harmful pesticidesHerbicides and PesticidesMethyl BromideImproper disposal of plastics used to cover tunnels and greenhouses
12Spain 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 regionOne Netherlands supermarket chain is cooperating and encouraging British supermarkets to also cooperate
13Strawberry Demand United Kingdom Demand for strawberries has increased the last two yearsStrawberry sales increased 34%Suppliers struggled to keep up with demandConsumers are beginning to demand berries year-round
14Strawberry Demand Germany Demand for strawberries keeps increasing Includes conventional and organic berriesOrganic food sector is “ripe” for developmentConsumption per household doubled in March 2007 compared to March 2006The domestic industry cannot supply enough berries
15Strawberry Demand China Domestic Consumption increasingIncreasing purchasing power and quality of life, especially among the Middle Class in urban areasMiddle Class consumers are looking for more products on grocery store shelvesUrban consumers are unsure about food safety
16Opportunities for Chile? Frozen StrawberriesChina:Growing middle class consumersFAS, USDA Report (2007): Chile, Morocco and Argentina are expected to seriously threaten US exports to ChinaEurope:UK and Germany?Organics – Organic food sales continue to strengthenEurope has a very large and sophisticated organic marketWhat will happen in China and Spain?
17World Production of Raspberries: (Tons) Country20002004%Change% of WorldRussia130,000170,000+30.8%36.8%Serbia56,05990,000+60.5%19.5%Chile51,25650,000- 2.4%10.8%Poland39,72742,000+ 5.7%9.1%Germany33,70020,500-39.2%4.4%Ukraine19,72320,000+1.4%4.3%Canada16,24713,828-14.9%3.0%Hungary19,80410,000-49.5%2.2%France8,7438,545+ 2.3%1.8%Great Britain9,5008,000+15.8%1.7%Total Production:408,115461,685+13.1%93.6%Source: International Raspberry Association
18U.S. Imported Fresh Raspberries* (US$1000) CountryCalendar YearJanuary – April Comparisons200520062007% ChangeMexico20,46834,86116,48526,20058.9%Chile10,07410,2567,3909,13523.6%Canada1,5331,5215615630.4%Switzerland5------Peru3Total32,07846,64524,43635,90646.9%* Raspberries imported from 9/1 to 6/30 the following year.Source: DOC, US Census Bureau, Trade Statistics
19U.S. Imported Frozen Raspberries (US$1000) CountryCalendar YearJanuary – April Comparisons200520062007% ChangeChile31,03037,43522,64522,161- 2.4%Canada8,7757,3721,1482,00474.6%Mexico1,9712,6068121,00924.3%Serbia510China2,3212,626172436153.5%Argentina13039019839182.3%ROW6,6353,9901,232786- 36.2%Total50,86254,41926,20727,2974.2%Source: DOC, US Census Bureau, Trade Statistics
202007 Raspberry Production Spain Serbia Hungry: Area planted has increased 41.2%Estimated area planted is 1,200 hectares, or 350 hectares more than in 2006SerbiaTotal area planted is around 15,000 hectaresHungry:Production is increasing
212007 Raspberry Production Europe China: Domestic production increasing Supply of berries to the processing industry increased from 2002 to 2004But volume of imports decreasedChina:Domestic production increasingNo domestic market, so production will be exported to Europe
222007 Raspberry Production Oregon and Washington, USA Some growers are switching to fresh market raspberries due to:Increased consumer demand for fresh raspberriesIncreased competition in the processed marketRest of the WorldRelatively stable production
23Raspberry Demand, 2007 United States United Kingdom Raspberry demand increasingRanked as the third most popular fruit behind strawberries and blueberriesUnited KingdomIncreased demand for berries & berry flavors has created a new market for raspberriesRaspberry sales increased 62% in last two years & suppliers struggled to keep up with demandSource: DOC, US Census Bureau, Trade Statistics
24Opportunities for Chile? USContinued growth in fresh consumption and IQFFresh shipments in the off production seasonCaution: Mexico deal is projected to increase( start in October and provide good volume into December)Europe - Organic market Frozen berriesUnited KingdomGermany
25Worldwide Area Planted and Production of Blackberries, 2005 RegionArea Planted(Acres)Production(Tons)Europe19,00747,386North America17,69065,154Central America4,0531,752South America3,9467,031Asia3,83029,038Oceania7344,022Africa247220World Total49,507154,603Source: Bernadine Strik, Dept. of Horticulture, OSU
26Projected Growth in Blackberry Area Planted Potential of 66,797 acres of Blackberries planted worldwide by 2015Potential 35% increase over the levelDoes not include harvested wild plantings
27Countries with the Greatest Projected Increase in Blackberry Area Planted by 2015 CountryPercentage Increase2005 Area Planted(Acres)Projected IncreaseProjected Area in 2015Romania900 %2502,2502,500Poland200 %500750Mexico117 %5,6836,64912,332Chile76 %1,1118441,955Hungry50 %3,9501,9755,925China42 %3,8301,6095,439USA20 %11,9052,38114,286Source: Bernadine Strik, Dept. of Horticulture, OSU
28U.S. Blackberries East Coast Production is primarily for the fresh marketNorth CarolinaSunny Ridge Farms, Inc.Goal is for 600 acresCurrently about 120 acresDole FoodsExpressed interest in blackberriesNot certain if interested in fresh or frozen berries
29Demand for Blackberries United KingdomBlackberry sales broke all sales records inSuppliers struggled to keep up with demandConsumers are beginning to demand berries year-round
30Demand for Blackberries United StatesSome industry experts believe that fresh blackberry consumption could equal or surpass raspberriesIncreased taste for blackberriesGrowing recognition of their healthful benefits
31Opportunities for Chile USContinued growth in fresh consumptionFresh shipments in the off production seasonCaution: Mexico is gaining strength in the U.S. marketNow estimated to have about 10,000 acres plantedCould seriously damage Chile’s fresh market in the U.S.Europe:Organic market Frozen berries?
32Market Trends – Why has Demand Increased? HealthConvenience:Year-round availabilityMore supermarkets carrying berriesGlobalization“Fast” and reliable Refrigerated TransportForgiving Customers?
33Health 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 obeseMajor concern for childrenBerries have profited from better health consciousnessReduce fat and increase vitamin & nutrient intakeLow in calories and high in antioxidants
34Health – Recent Studies Cancer researchBerries 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: 1stStrawberries: 3rdRaspberries: 7thBlueberries: 9th
35Market Trends Convenience Year-round availability No longer a seasonal itemConsumer look for and plan on using themDemand increased in both retail and foodserviceHigh quality, reasonability priced berriesMore supermarkets now carrying berries
36Market Trends Globalization More sources of fruit in the world market Chile, Mexico, ChinaFast and Reliable TransportationImproved infrastructure to maintain the cold chainResult: Firm Berries for the consumerNot soft, runny fruit
37Market 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%.
39U.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 wereSpinach: 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
40Negative 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 GermanySurvey made on behalf of GreenpeaceInterviews in February and April, 2007Highest priority for consumers is no/low pesticide residuesProducts listed as frequently exceeding limits and showing multiple residues:StrawberriesBerries(red/blackberries, raspberries, gooseberries)
41Food 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”
42Food Safety Is it a “potential time bomb”? E. Coli scares have also led to concerns aboutWater QualitySanitationTraceabilityGood Agricultural Practices (GAP) certificationsGood 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)
43Industry Challenges Labor – Concerns about illegal labor in the U.S. Grower have concerns about production and harvestingFresh Del Monte Produce processing plant in Portland, OregonImmigration raid on 12 June 2007170 employees were taken into custodyTransportationIncreased costs of air freight makes it harder to compete with ground transportation - especially in the fresh market
44Increasing Consumption “There’s room for growth!”U.S. Data by CommodityConsumption(% of Consumers trying fruit in last 12 months, 2007)Expenditures(% of Consumer dollar spent of fruit, 2006)Per Capita Consumption(2005)Strawberries69%21.7%1.84Raspberries26%3.8%0.29Blackberries18%<2.0%0.11Source: USDA and The Packer Consumer Surveys
45International 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:Use plain talk about food and healthCite study specificsAffirm scientific research is continual and rarely finalCarefully create meaningful communicationsExamine all the relevant facts – be objective
46Cooperative Market Development in the Red Raspberry Industry A generic Research and Promotion (R&P) ProgramThe intended purpose of the R&P ProgramBalance supply and demandGrow the market in aggregate for all suppliersIncrease the value of processed raspberriesSteps:Analyze existing information and conduct new research on the benefits of raspberriesConvey the message to consumers, food processors, and the food industryIncrease the number of new products and the use of existing products
48Food Processing: 2007 Trends Teens and Baby boomers remain two major consumer groups for specialized marketing effortsTeens: Snack foodsBoomers: Products combining specific needs together with easy-to-handle packagingSnacks are believed to be the most innovative category in the healthy food and drink groupInput prices continue to be a critical issue!
49New Process ProductsNumerous companies are looking for ways to incorporate berries in order to market them as a health platformIce CreamFruit SmoothiesLow-Fat YogurtsBaked ProductsSnack ProductsJuices
50Organic 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.
51Snack FoodsFrito-Lay North America introduces Flat Earth fruit crisps and veggie crispsFrito-Lay’s goal “create convenient, great-tasting snack crisps made with real fruits and vegetables.”
52Kellogg 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."
53Muscadine 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
56Fresh Strawberries Exports (Metric Tons) Country20012006%ChangeSpain225,119207,974-7.6%US58,108103,91078.8%Mexico30,91070,970129.6%Belgium33,68238,78115.1%France18,72534,22082.8%Netherlands16,05729,52583.9%Poland20,94524,07114.9%Italy33,30822,917-31.2%Germany10,08615,96858.3%Turkey2311,319> 1,000%The Top 10 Countries accounted for 96.1% of the world exports in 2004Source: Global Trade Atlas
57Strawberries: Fresh Imports (Metric Tons) Country20012006%ChangeGermany14936790835-39.2 %France8250611721942.1%Canada455148471386.1%US3208169592116.9%UK266674782379.3%Belgium261052877010.2%Italy228303839668.2%Austria2217320354-8.2%Netherlands157102061731.2%Mexico96301899297.2%Top 10 Countries accounted for 85.2% of the world imports in 2004Source: Global Trade Atlas
58Worldwide Area Harvested of Strawberries (Hectares) Country20002005% Change% of WorldPoland61,96753,700-13.3%21.3%Russia22,00036,00063.6%14.3%USA19,28321,1209.5%8.4%Germany9,61912,25427.4%4.9%Turkey9,46510,50010.9%4.2%Serbia8,68610,00015.1%4.0%Ukraine7,5008,0006.7%3.2%Spain11,0557,600-31.3%3.0%Japan7,4507,300-2.0%2.9%Korea7,0907,000-1.3%2.8%Chile7771,02031.3%0.4%World248,321251,7181.4%69.4%Source: FAS, USDA
59Strawberry Production and Distribution in Spain (Metric Tons) 2005Revised2006Estimate2007Forecast% ChangeArea Planted7,6117,4007,1004.0Area HarvestedProduction308,000335,500275,60017.8Imports, Fresh6,0144,7355,0005.6Total Supply314,014338,235280,60017.0Exports, Fresh237,534207,974185,00011.0Fresh Domestic Consumption32,00041,76140,000-4.2Processing44,48088,50055,60037.2Total DistributionSource: FAS, Annual GAIN Report