EU 27 Apples and Grapes - USDA FAS

EU 27 Apples and Grapes - USDA FAS

EU-27 commercial apple production for MY 2009/10 is estimated down 2 percent and non-commercial production down 20 percent compared to MY 2008/09. However, large stocks of apples and concentrated apple juice (CAJ) have put strong downward pressure on producer prices both for processing apples and table apples.

As a result of the ample domestic supply, EU-27 imports are forecast to decline by four percent. EU-27 apple exports are expected to decline by nine percent, largely because of projected lower Polish exports to Russia. These cannot easily be compensated by higher exports from other MS, as some MS are facing phytosanitary certification issues when exporting to Russia. Commercial pear harvest is estimated 12 percent higher than in the previous MY. As a result pear imports are expected to decline in MY 2009/10. Pear exports may recover almost to the level of MY 2007/08, provided that there are no additional problems with phytosanitary certification for export to Russia. MY 2009/10 CAJ production (occurring from September through November) is forecast to substantially decline as a result of high stocks and low prices, this leaves room for higher CAJ imports in the latter half of the MY. EU-27 table grape production for MY 2009/10 is estimated 2 percent below MY2008/09 because of lower production in Italy.

Apples – Production Apples - Commercial Production The EU-27 is one of the leading producers and consumers of apples in the world. Poland, Italy, France, Germany, and Spain are the top five producing member states (MS) and together account for almost 75 percent of the total EU commercial apple production. Some 25 varieties are produced in the EU commercial apple sector in volumes exceeding 10,000 MT. Among these, Golden Delicious, Gala types, and Jonagold are the dominant varieties. However, production patterns vary from MS to MS. While Golden Delicious is the variety with the largest production in Italy, France, and Spain, Elstar plays this role in Germany and the Netherlands; Idared and Jonathan are the number one varieties in Poland and Hungary, respectively. Commercial apple production in MY 2009/10 is estimated at 10.9 MMT. The decrease of 2 percent compared to the previous MY 2008/09 is largely a result of reductions in Poland (lower acreage) and Spain (problems during pollination). Fruit quality seems to be good for the most part, with the exception of some local damage by hail and scab. Fruit diameter is larger than usual because of earlier pollination and good growing conditions in the last weeks prior to harvest.


Apples – Market Situation Currently (October 2009) the situation on the table apple market looks rather bleak. Apple stocks on June 1, 2009 were 48% higher than in the year before. In addition, high stocks of concentrated apple juice (CAJ) have reduced demand from the processing industry, which normally absorbs lower quality table apples. These two factors have put substantial pressure on producer prices. Industry sources hope that the situation will improve in the second half of the marketing year when lower quality apples have disappeared. Stocks According to WAPA EU stocks of apples amounted to 644,742 MT on June 1, 2009, compared to 436,840 MT at the same time in 2008. Reporting of stocks varies by MS. In some MS the stock number comprised apples stored at producer organizations (POs), in some MS stocks at POs and wholesalers. More important that the actual number is the year-on-year-change of stocks, as end of MY stocks can have a detrimental effect on the prices for the new harvest. Stocks are included in the “fresh domestic consumption” line in the PSD. Apples – Consumption Consumer preferences Apples are the most popular fruit in all MS, followed by bananas and citrus. However, a closer look within the apple segment does show differences in consumer preferences between MS. For information on variety and size preferences by MS please refer to page 9 of E48163. The movement to buy local and seasonal produce has gained a lot of traction in some MS such as the UK. To the British, apples are iconic local produce that conjure up nostalgia for traditional harvest time and days gone by. UK consumers are starting to question why apples and pears are imported during the British season, and the market is also responding to policy drivers on food security, climate change, and health. The demand for organic apples, which is highest in Germany, is expected to suffer in MY 2009/10 from the economic crisis. Consumers who buy organic only occasionally may revert to buying cheaper non-organic apples in order to save money.


Apples – Trade The majority of trade occurs within the EU-27 countries. Over the past five years, on average about 2.2 million MT of apples were traded between EU member states, while roughly 800,000 MT were imported from outside the EU-27. In recent years imports from outside the EU contributed between 6 and 8 percent to the total apple supply on the EU market. EU-27 external trade Imports The decrease of imports in MY 2008/09 compared to MY 2007/08 is largely a result of lower imports of apples for processing. For MY2009/10, imports are forecast to slightly decline further by 4 percent, because of high stocks and abundant domestic supply in the first half of the MY. More than 75 percent of EU-27 apple imports originate from the top five suppliers, all of which are located in the southern hemisphere and export mostly during the European off-season. The main importers of apples are The U.K. and the Netherlands, who together account for more than half of the EU-27 imports. However, much of the volume entering the Netherlands will not be consumed there but eventually be transshipped to other MS. U.S. apple exports to the EU-27 occur year-round, however the majority arrives between November and April. U.S. apples compete with domestically produced apples and with competitively-priced imports from China. For example, the average import price for U.S. apples in MY 2008/09 was 1455 USD per MT, while Chinese apples were imported at 1011 USD per MT (source: GTA). The main importers of U.S. apples are the U.K., Finland, the Netherlands, Ireland, and Sweden.


Exports The increase in total EU-27 apple exports from MY 2007/08 to MY 2008/09 was largely a result of recovering Polish exports to Russia and the Ukraine, which more than compensated for lower exports from other MS such as Germany and the Netherlands. Other MS faced diminishing exports to Russia in MY 2008/09 as a result of newly imposed phytosanitary requirements. According to Dutch and German industry contacts, Russian maximum residue levels (MRLs) are among the strictest and lowest in the world, this pertains especially to the definition of the minimum detection level. If more than five shipments of apples per quarter from a given country are found to exceed these strict MRLs, until further notice every following shipment of this country needs to be accompanied by a “safety certificate” (SC) indicating the residue levels as determined by an authorized laboratory. This requirement is currently in place for apples and pears shipped from the Netherlands, Greece, Lithuania, and Italy, as well as apples from Germany and pears from Belgium. It also pertains to re-exports from those countries, for example U.S. apples shipped to Russia via the Netherlands. As a result, U.S. exporter should carefully examine phytosanitary requirements if they ship produce to Russia via the EU. Shipments with SCs are also being tested again upon arrival in Russia. For MY 2009/10 exports are expected to decrease by about 9 percent. This is a result of a lower Polish harvest as well as lower demand from international markets in response to the financial crisis and associated problems of obtaining credit guarantees. The continuing problems of some MS with phytosanitary requirements when exporting to Russia in combination with lower Polish production could bring opportunities for U.S. exporters on the Russian market. The top destinations for EU-27 apples are Russia, Ukraine, and Algeria. The largest EU exporters are Poland (mostly to Russia and Ukraine), France (mainly to Algeria, Russia, U.A.E., and Saudi Arabia), and Italy (to Russia, Norway, and Libya). The largest EU competitors on important markets for U.S. exporters include:


Apples – Withdrawal from Market The reform of the EU common market organization for fruits and vegetables (see policy section) brought about a change in the intervention system (also called “withdrawal from market”). Previously, a producer organization was allowed to dispose up to 8.5 percent of its marketed volume of apples through intervention programs. However, unlike with other commodities, these volumes were not allowed to re-enter the market at a later stage. Instead, they had to be permanently “withdrawn from the market”, for example by donation to charity or be destroyed. As of 2008, “withdrawal from market” is no longer available as a separate measure but will have to be included as an emergency measure in the producer organizations’ operational program (OP). This means, the system moves from being financed entirely by EU funds to a co-financing system where producer organizations have to bear 50 percent of the costs. As a consequence, since MY 2008/09 member states authorities administer “withdrawals from market” programs only indirectly via approval of the OP. Thus numbers about volumes are no longer available. Also, some member states (for example Germany) have opted to do away with intervention for fruits and vegetables altogether.



Table Grapes - Production The European Union is one of the leading producers and at the same time importer of table grapes for fresh usage. Most of its production is concentrated in just three member states: Italy, Spain, and Greece. These three together on average account for 90 percent of the total EU-27 production. After a dramatic drop in the past decade, EU table grape area continues to decline albeit at a slower pace. The persistent market problems, including reduced profitability, increasing production costs, as well as the strong competition from other suppliers on the leading export markets, are the main factors behind this development. Nonetheless, the EU remains a leading producer of table grapes.

Total EU-27 table grape production in MY 2009/10 is estimated slightly lower than in the previous year. Increases in some regions are not high enough to compensate for the decline in production in Italy, where about two thirds of the total production is concentrated. In Italy, adverse weather in spring (excess of rains and relatively low temperatures) in the leading producing areas not only affected yields, but also caused a delay of about three weeks of the actual start of the marketing season. Excessive rains and unusually cold temperatures in mid-October led to quality problems (mould and rotten grapes). Although table grapes in Italy are usually produced using a plastic film cover, in order to control sunlight and temperature, the excess of humidity or cold temperatures made it necessary for the farmers to apply bunch cleaning, in order to remove the affected grapes. The leading table grape variety in Italy continues to be Italia (about two thirds of the total), followed by other seeded varieties (Victoria, Regina, and Red Globe). In contrast, production of seedless grapes continues to be marginal, due to their lower profitability, particularly in terms of yields, although their prices are substantially higher than those of the seeded grapes. Overall Spanish production is estimated some 8-percent larger than in 2008, thanks to generally favorable weather conditions. In Spain, over 50 varieties of grapes are produced and marketed, but the most important are still the popular traditional varieties, including Aledo, Ideal, Muscatel, Domingo and Napoleon. However the share of seedless grapes continues to increase, and has reached about 30 percent of the total. In Murcia, in particular, production of seedless grapes now represents more than half of the total, and the large majority of that is shipped to the UK market. In Greece, table grape production for fresh consumption is estimated to have recovered in MY 2009/10 after the drop in MY 2008/09. This is despite intensive rains in Spring, delaying ripening, and in September, shortening the harvesting period. Quality is reported to be good for the seedless varieties and average for the seeded grapes which represent about two-thirds of total table grape production. Greek grapes (both seedless and seeded) are mainly marketed in Europe during late July through the end of September.

Table Grapes - Consumption Total EU-27 fresh grape consumption has been rather stable in the most recent years at about 2.3/2.4 MMT, although still fluctuating in function of the domestic production trend. Imports from third countries, normally coming in the first half of the calendar year from the southern hemisphere, represent approximately 25 percent of total consumption. Starting in June and throughout the end of the year, EU grape consumption mostly consists of the domestic crops, along with minor quantities coming from Turkey and Morocco. Italy is not only the main table grape producer but also the main consumer in the EU, with almost one-third of the total consumption, still predominantly the traditional seeded varieties. Following behind Italy, the main consumers of table grapes are Germany, the UK, and France. In MY 2008/09, both German and French consumers showed a strong preference for the Italian seeded grapes, although imports of seedless grapes continue to grow. In contrast, in the U.K., consumption is almost exclusively concentrated on seedless grapes, coming from both other EU countries and outside the EU. For MY 2009/10, a decline in consumption is expected as a result of the international economic crisis. The current unfavorable market trend affects the whole horticultural sector, but is particularly difficult for the table grape industry. Unlike apples for instance, table grapes need to be marketed soon after the harvest. Quality concerns, caused by the adverse weather, as pointed out above, are also affecting consumption, further reducing the volume actually eaten by the Europeans.

The EU is the second largest importer of table grapes in the world, after the United States. In addition, the EU is a net importer of table grapes with imports exceeding exports more than four times by volume. The import value has continued to increase in the past years, reaching 1.5 billion dollars in 2008, while the export value has also grown, but remained well below the 300 million dollars. Imports into the EU for MY 2009/10 are likely to be reduced, as a consequence of the economic crisis. The major suppliers into the European market come from the southern hemisphere, where production is counter-seasonal to the EU, with South Africa and Chile in a leading position. Other important suppliers are Turkey and Egypt, which take advantage of their climate and have their crops available earlier than the EU producing countries. Imports from the U.S. have grown, and are mainly directed to the U.K. market. The largest EU importing countries are Germany, the U.K., and the Netherlands, but while the first two countries are also the largest consumers (after Italy) the Netherlands mainly serve as a trans-shipping point. Table grape exports outside the EU grew significantly in MY 2008/09 (+19 percent), but are expected to decrease again in MY 2009/10, due to the reduced demand again caused by the global recession. Major destinations are other European countries outside of the EU.

As can be seen growers’ prices of Italia (the leading table grape variety) during the current marketing year have decreased dramatically, averaging some 21 percent less in October 2009 than in October 2008 and 31 percent lower than two years ago. This is a result of the limited demand from both domestic and export markets. Greece has been experiencing a partially similar situation, with producer prices averaging well below last year’s levels. An additional factor in Greece and for seedless table grapes in Spain is the strong Euro exchange rate, compared to the British pound and other currencies. This has reduced demand for instance from the UK.


Policy Coordinated by Tania DeBelder/USEU Brussels Common Market Organization for Fruits and Vegetables

The EU Common Market Organization for Fruits and Vegetables (CMO) was last reformed in 2007 with Council Regulation 1182/2007. The reform aims to bring the F&V sector in line with other agricultural sectors that have already been reformed under the Common Agricultural Policy (CAP). The old-style production-linked payments are to be replaced by decoupled payments. The shift from production support to direct aid to producers is designed to improve the competitiveness, market orientation and sustainability of the sector. The new CMO entered into force January 1, 2008. Commission Regulation 1580/2007 (last amended by Regulation 441/2009) lays down rules for the implementation of the reform. Fruit School Scheme

A key objective of the reform of the Fruit and Vegetable regime was to reverse the declining consumption of fruit and vegetables. The consumption of fruit and vegetables has been falling in the EU, especially among children. The World Health Organization recommends 400g a day of fruit and vegetables, but children's intake is falling below this. The lack of available produce is apparently one of the factors responsible for the low consumption of fruit and vegetables. This, some state, is resulting in increasing weight problems and obesity in the EU especially among young children. The European School Fruit Scheme (SFS) is one measure to combat child obesity. Commission Regulation 288/2009 is laying down the rules for applying Council Regulation 1234/2007 as regards Community aid for supplying fruit and vegetables, processed fruit and vegetables and banana products to children in educational establishments, in the framework of a School Fruit Scheme. All schemes would consequently include three elements: free distribution of fruit (and/or vegetables) in schools, a series of accompanying measures (for example information campaigns on healthy eating habits), and monitoring and evaluation. The definitive allocation of Community aid per Member State participating in the School Fruit Scheme was established for the period from 1 August 2009 to 31 July 2010 in the Annex to Commission Decision C(2009) 5514. European funds worth €90 million every year will pay for the purchase and distribution of fresh fruit and vegetables to schools and the system will be reviewed after 3 years. The scheme began at the start of the 2009/2010 school year. Information and documents on the School Fruit Scheme are available on internet at: http://ec.europa.eu/agriculture/markets/fruitveg/sfs/index_en.htm .

Import Licenses To ensure a timely transmission of statistical data on EU apple imports, particularly for imports originating from the Southern Hemisphere, the EU requires imported apples to have an import license. For details on the system please refer to report E36009, which can be accessed at: http://www.fas.usda.gov/gainfiles/200601/146176623.pdf .

Maximum Residue Levels for Fruits Maximum Residue Levels (MRLs) for pesticide have been harmonized throughout the EU, and new legislation on the approval of pesticides has been approved and will be implemented by the end of 2010. For detailed up-to-date information please visit: http://www.fas.usda.gov/posthome/useu/pesticides.html. As a marketing tool, some retail chains in the EU exceed the EU regulations and require their suppliers to adhere to stricter company policies that limit the maximum residues to 30, 50 or 70 % of the respective EU MRL (or so-called private standards).

Certification of Fruit Shipments Unlike animal products, certification of plants and plant products is not harmonized in the EU. Phytosanitary certificates, issued by an APHIS inspector, are required to accompany U.S. shipments. APHIS issues phytosanitary certificates in accordance with the international regulations set down by the International Plant Protection Convention of the Food and Agriculture Organization of the United Nations. This standard-setting body coordinates cooperation between nations to control plant and plant product pests and to prevent their spread. An overview of EU mandatory and voluntary certificates can be found at: http://www.fas.usda.gov/posthome/useu/certificates-overview.html.

Council Directive 2000/29/EC contains provisions concerning compulsory plant health checks. The checks consist of documentary, identity and physical plant health checks to verify compliance with EU import requirements. More information can be accessed on DG Health & Consumer Protection's website http://ec.europa.eu/food/plant/organisms/imports/inspection_en.htm . Commission Regulation 1756/2004 provides for plant health checks to be carried out at reduced frequency where this can be justified (list of products recommended for plant health checks at reduced levels updated June 26, 2009). Starting September 1, 2005, EU member states are authorized to reduce the frequency of inspections on imports of U.S. apples (see GAIN report E35173).

Tariffs Imports of fresh fruit and vegetables are subject to the Entry Price System (EPS) which has been in place in its current form since the Uruguay Round. It is a complex tariff system that provides a high level of protection to EU producers. In this system fruits and vegetables imported at or above an established entry price are charged an ad valorem duty only. Produce valued below the entry price are charged a tariff equivalent in addition to the ad valorem duty. The tariff equivalent is graduated for products valued between 92 and 100 percent of the entry price. The ad valorem duty and the full tariff equivalent are levied on imports valued at less than 92 percent of the entry price. Financed by the Commission of the European Union and carried out by a consultancy, a study assessing the impact of changing the EPS was conducted in April 2008. The report concluded that the EPS can be considered as a way of signaling market disturbances rather than as a relevant trade restriction. The entire report can be found at: http://ec.europa.eu/agriculture/eval/reports/fruitveg/index_en.htm .

Whether or not the EU will maintain the EPS will be discussed in the context of the Doha Round trade talks. The EPS is not necessarily discriminatory for U.S. exporters. The U.S. tends to sell high quality products, which are usually relatively high priced and do not face any additional duty. Replacing the EPS with fixed tariffs could result in higher ad valorem duties. Tariff levels for 2010 are published in EU Regulation 948/2009. For details please refer to: http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2009:287:SOM:EN:HTML Apples see pages 87 and 688-690 Pears see pages 88 and 690-692 CAJ see pages 156/157 and 873 Grapes see pages 87 and 687 Marketing Coordinated by Sabine Lieberz/FAS Berlin Information on marketing standards and industry certification has not changed from our 2008 report but is repeated below for year convenience.


Marketing standards In order to facilitate fruit and vegetable trade, the EU has marketing standards in place for a variety of products. While specific marketing standards for 26 types of fruits have been repealed effective July 1, 2009, those for apples, pears, and grapes remain in place. The marketing standards also regulate the labeling of produce. The labeling must be at least in the language of the country where the produce will be put on the market. Multi-language labels are permitted. Each package must bear the following particulars in letters grouped on the same side, legibly and indelibly marked, and visible from the outside: A. Identification - Packer and/or dispatcher: Name and address or officially issued or accepted code mark. However, where a code (symbol) is used, the words "packer and/or dispatcher" (or an equivalent abbreviation) must appear close to this code (symbol). B. Nature of produce - “Apples”/”Pears”/"Table Grapes", if the contents are not visible from the outside; - Name of the variety or, where applicable, varieties. C. Origin of produce - Country (or, where applicable, countries) of origin and, optionally, district where grown, or national, regional or local place name. D. Commercial specifications - Class. E. Official control mark (optional) Consolidated versions of the EU standards can be accessed at: Apples: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004R0085:20080531:EN:PDF Pears: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004R0086:20040520:EN:PDF Table grapes: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1999R2789:20050106:EN:PDF

Industry Certification The number of food scandals that have occurred in Europe in recent years involving various commodities - including fresh produce - has prompted the food industry to come up with various programs to ensure the safety of the traded food. While these programs are voluntary, the majority of retail chains in the UK and Germany require certification of good agricultural practice. For fruits and vegetables the most common program throughout the EU-27 is the GlobalGap certification (formerly EurepGap). In Germany, some retailers prefer the Q+S system. While Q+S is a three-tier system that involves everyone who handles the produce from producers, to wholesalers, and the retail chains, GlobalGap mainly focuses on the producer level and is often supplemented by the IFS (International Food Standard) on the wholesalers level. A major component of both systems is the extensive documentation requirement for all stages of the production process. Both systems/standards are open to international producers provided that they comply with the system and obtain a certification. Also a simultaneous certification for Q+S and GlobalGap is possible at the producer level. For more information please visit: www.globalgap.org http://www.q-s.de/en/