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Forces that Move the Worldwide Market for Berries

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Presentation on theme: "Forces that Move the Worldwide Market for Berries"— Presentation transcript:

1 Forces that Move the Worldwide Market for Berries
Charles Safley Department of Agricultural & Resource Economics North Carolina State University

2 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

3 Worldwide Production of Strawberries (Metric Tons)
Country 2000 2005 % Change % of World USA 862,828 1,053,280 22.1% 29.1% 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 -2.6% Poland 171,314 180,000 5.1% 5.0% Turkey 130,000 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% Chile 21,000 25,600 21.9% 0.7% World 3,299,287 3,615,723 9.6% 77.1% Source: FAS, USDA

4 Frozen Strawberry Production (Metric Tons )
Country 01/02 02/03 03/04 04/05 05/06 % Change (01/02 to 05/06) USA 216,908 229,209 230,950 232,048 240,000 +10.6% China 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 0.0% Canada 2,600 2,700 2,900 2,800 + 7.8% Japan 870 1,100 700 -19.5% Source: FAS, USDA * China: 02/03 to 05/06

5 Frozen Strawberry Exports (Metric Tons)
Country 01/02 02/03 03/04 04/05 05/06 % Change (01/02 to 05/06) Poland 127,300 84,200 90,093 119,646 91,824 -27.9% China 34,968 75,967 94,960 86,330 +146.9%* Mexico 40,204 43,357 40,076 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% Japan 0.0% Source: FAS, USDA * China: 02/03 to 05/06

6 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

7 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

8 Frozen Strawberry Production and Distribution in China (Metric Tons)
2005 Revised 2006 Estimate 2007 Forecast % Change Deliver to Processors 94,400 99,300 103,000 3.7% Beginning Stocks ------ Production 85,000 89,300 93,000 4.1% Imports 7,966 7,200 7,500 4.2% Total Supply 92,966 96,500 100,500 Exports 70,206 68,000 70,000 2.9% Domestic Consumption 22,760 28,500 30,500 7.0% Ending Stocks Total Distribution Source: FAS, Annual GAIN Report

9 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 due to decreased production in Poland

10 Frozen Strawberry Production and Distribution in Spain (Metric Tons)
2005 Revised 2006 Estimate 2007 Forecast % Change Deliver to Processors 44,480 88,500 55,600 -37.2% Beginning Stocks 15,400 Production `35,520 70,583 44,324 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% Ending Stocks ------ Total Distribution Source: FAS, Annual GAIN Report

11 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

12 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

13 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

14 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

15 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

16 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?

17 World Production of Raspberries: (Tons)
Country 2000 2004 % Change % of World Russia 130,000 170,000 +30.8% 36.8% Serbia 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% Total Production: 408,115 461,685 +13.1% 93.6% Source: International Raspberry Association

18 U.S. Imported Fresh Raspberries* (US$1000)
Country Calendar Year January – April Comparisons 2005 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 0.4% Switzerland 5 ------ Peru 3 Total 32,078 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

19 U.S. Imported Frozen Raspberries (US$1000)
Country Calendar Year January – April Comparisons 2005 2006 2007 % Change Chile 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 510 China 2,321 2,626 172 436 153.5% Argentina 130 390 198 391 82.3% ROW 6,635 3,990 1,232 786 - 36.2% Total 50,862 54,419 26,207 27,297 4.2% Source: DOC, US Census Bureau, Trade Statistics

20 2007 Raspberry Production Spain Serbia Hungry:
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

21 2007 Raspberry Production Europe China: Domestic production increasing
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

22 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

23 Raspberry Demand, 2007 United States United Kingdom
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

24 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

25 Worldwide Area Planted and Production of Blackberries, 2005
Region Area Planted (Acres) Production (Tons) Europe 19,007 47,386 North America 17,690 65,154 Central America 4,053 1,752 South America 3,946 7,031 Asia 3,830 29,038 Oceania 734 4,022 Africa 247 220 World Total 49,507 154,603 Source: Bernadine Strik, Dept. of Horticulture, OSU

26 Projected Growth in Blackberry Area Planted
Potential of 66,797 acres of Blackberries planted worldwide by 2015 Potential 35% increase over the level Does not include harvested wild plantings

27 Countries with the Greatest Projected Increase in Blackberry Area Planted by 2015
Country Percentage Increase 2005 Area Planted (Acres) Projected Increase Projected Area in 2015 Romania 900 % 250 2,250 2,500 Poland 200 % 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

28 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

29 Demand for Blackberries
United Kingdom Blackberry sales broke all sales records in Suppliers struggled to keep up with demand Consumers are beginning to demand berries year-round

30 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

31 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?

32 Market Trends – Why has Demand Increased?
Health Convenience: Year-round availability More supermarkets carrying berries Globalization “Fast” and reliable Refrigerated Transport Forgiving Customers?

33 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

34 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

35 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

36 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

37 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%.

38 Industry Challenges Food Safety Labor Transportation
Increasing consumption

39 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

40 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)

41 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”

42 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)

43 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

44 Increasing Consumption
“There’s room for growth!” U.S. Data by Commodity Consumption (% of Consumers trying fruit in last 12 months, 2007) Expenditures (% 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

45 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: Use plain talk about food and health Cite study specifics Affirm scientific research is continual and rarely final Carefully create meaningful communications Examine all the relevant facts – be objective

46 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: Analyze existing information and conduct new research on the benefits of raspberries Convey the message to consumers, food processors, and the food industry Increase the number of new products and the use of existing products

47 New Processed Products

48 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!

49 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

50 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.

51 Snack Foods Frito-Lay North America introduces Flat Earth fruit crisps and veggie crisps Frito-Lay’s goal “create convenient, great-tasting snack crisps made with real fruits and vegetables.”

52 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."

53 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

54 Thank you for your attention!

55 Back-up and Additional Slides

56 Fresh Strawberries Exports (Metric Tons)
Country 2001 2006 % Change Spain 225,119 207,974 -7.6% US 58,108 103,910 78.8% Mexico 30,910 70,970 129.6% Belgium 33,682 38,781 15.1% France 18,725 34,220 82.8% Netherlands 16,057 29,525 83.9% Poland 20,945 24,071 14.9% Italy 33,308 22,917 -31.2% Germany 10,086 15,968 58.3% Turkey 23 11,319 > 1,000% The Top 10 Countries accounted for 96.1% of the world exports in 2004 Source: Global Trade Atlas

57 Strawberries: Fresh Imports (Metric Tons)
Country 2001 2006 % Change Germany 149367 90835 -39.2 % 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% Mexico 9630 18992 97.2% Top 10 Countries accounted for 85.2% of the world imports in 2004 Source: Global Trade Atlas

58 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% World 248,321 251,718 1.4% 69.4% Source: FAS, USDA

59 Strawberry Production and Distribution in Spain (Metric Tons)
2005 Revised 2006 Estimate 2007 Forecast % Change Area Planted 7,611 7,400 7,100 4.0 Area Harvested Production 308,000 335,500 275,600 17.8 Imports, Fresh 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 Total Distribution Source: FAS, Annual GAIN Report

60 U.S. Red Raspberry Cold Storage Holdings
MONTH % 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 46,122 39,593 -14.2% March 39,472 34,686 -12.1% April 34,752 33,569 -3.4% May 30,989 31,323 1.1% Source: USDA Cold Storage Reports

61 U.S. Imported Frozen Berries* (Values in US$1000)
Country Calendar Year January – April Comparisons 2005 2006 2007 % Change Chile 1,661 6,035 3,970 5,583 40.6% China 1,788 2,197 102 312 205.9% Serbia 1,269 812 155 ------ Columbia 346 373 120 46 - 61.7% Canada 152 151 63 45 - 28.6% Denmark 348 ROW 425 700 198 547 176.3% Total 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

62 U.S. Blackberry Cold Storage Holdings
MONTH % August 33,669 32,164 -4.5% September 32,441 31,326 -3.4% October 31,371 30,528 -2.7% November 27,874 28,310 1.6% December 25,677 26,743 4.2% January 25,367 25,604 0.9% February 23,097 24,726 7.1% March 19,575 22,748 16.2% April 18,023 20,937 May 15,825 18,442 16.5% Source: USDA Cold Storage Reports


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