UK Supermarket Chain Profiles 2009 - USDA FAS

UK Supermarket Chain Profiles

Tesco is the number one supermarket in the UK and number three globally with stores in other European countries such as: the Czech and Slovak Republics, Hungary, Poland, and the Republic of Ireland. Tesco also trades in Turkey, Malaysia, Taiwan, Japan, South Korea, China, and Thailand. In 2007, Tesco opened stores in the United States under the name Fresh & Easy. Tesco has been a market leader in the UK grocery sector for the last 25 years. It introduced the first loyalty card in the UK, which has become a highly efficient and targeted marketing system and now has over 14 million active members. Tesco was also the first UK supermarket to develop an on-line shopping service and is at present the most successful. Tesco?s progress in the UK in the last five years has been noteworthy. Tesco group sales were £59.4 billion ($95.1 billion) in 2008 which was an 11.1% increase on the previous year. They employ 287,000 people in the UK.

Asda/Wal-Mart Asda Stores Ltd.
Asda House,
Southbank Great Wilson Street Leeds,
West Yorkshire LS11 5AD
Tel: +44 113 243 5435
Website: www.asda.co.uk

Asda is the UK‟s number two supermarket chain with 17.2 percent market share. Wal-Mart bought Asda in July 1999. However, Asda has retained a very British feel in-store and a distinct identity separate from its parent company. Asda‟s strap-line is „Every day low price‟. This motto, together with Wal-Mart‟s global buying power, has contributed to the success of the UK business. Asda is driven by store expansion, non-food growth and price competitiveness. Asda has focused on large stores. However, suitable space for larger stores is hard to find in the UK and this is hampering its expansion possibilities. Unlike Tesco & Sainsbury‟s, Asda does not have a convenience store format. Instead it focuses on stand-alone, non-food formats. George Clothing stores and Asda Living Homestores were launched in 2003 and 2004 respectively. Asda currently owns 343 stores, predominately based in the North and South-East of England. The majority of Asda stores are in town centers or in suburban areas. Food is displayed in separate areas from clothing and non-food ranges. Asda employ 160,000 staff in the UK. Asda generally has three store formats. Smaller stores (up to 22,000 sq ft) are found in small town and suburban areas. This format has proven successful in recent years bringing Asda to locations that were once inaccessible to them. Superstores (up to 60,000 sq ft) is the typical Asda format, representing ninety percent of its UK stores. These offer a wide range of food and non-food products. Supercentres are over 100,000 sq ft in size. At present, there are 24 stores in the UK and they bring together the best of Wal-Mart and full food ranges. Around half of the space is dedicated to non-food. Asda is pitched at the lower-end of the mass market. It competes largely on price. Asda and Tesco are continually head-to-head in a price war, both hoping to be crowned the lowest-priced supermarket. They generally price match very effectively. A typical Asda supermarket carries about 30,000 product lines, 60 percent of which are food and beverage items. As well as branded products, Asda has a strong in-store label portfolio, with sub-brands such as: Smartprice (price led products); Asda (everyday food and non-food items); Good For You (fat, salt, sugar and calorie controlled products); and Extra Special (premium food).

Unlike Tesco and Sainsbury‟s, Asda does not have a loyalty card system. This may affect its ability to market to customers in the future. However, it reportedly prefers to invest the money that would be required to set up the scheme into driving prices down for customers. Despite slower growth in the last year, Asda is a strong business and a powerful player in the food and beverage market.


Sainsbury’s
Sainsbury Plc. 33
Holborn London, EC1N 2HT
Tel: +44 207 695 6000
Consumer website: www.sainsburys.co.uk
Corporate website: www.j-sainsbury.co.uk

Until the mid 1990‟s, Sainsbury‟s was the number one supermarket chain in the UK, but it has gradually lost ground to its main competitors - Tesco and Asda/Wal-Mart. Sainsbury‟s is currently number 3 with 15.7 percent market share. In 2007, Sainsbury‟s identified five main areas for growth. These were: “great food at great prices”, increasing number of complimentary food ranges, reaching more customers through additional channels, eg. home delivery, growing supermarket space and active property management. These initiatives have helped Sainsbury‟s keep its number three position. In 2009, Sainsbury‟s had 792 stores including 502 supermarkets and 290 convenience stores. Sainsbury‟s has annual sales of £20,383 million ($32,613 million) and an operating profit of £616 million ($986 million). Sainsbury‟s has two types of stores: traditional supermarkets and convenience stores. Sainsbury‟s 290 convenience stores are on average 4,000 sq ft in size. They have limited product ranges focusing on convenience products such as sandwiches and ready meals. The stores aim for high sales turnover of a limited range of products. As well as branded products, Sainsbury‟s has private label ranges: Taste the difference (premium foods); Blue Parrot Café (children‟s healthy food); Be Good to Yourself (low fat foods); Organics (organic lines) and Basics (price led food). Sainsbury‟s has tended to focus on food and beverages with a smaller store footprint than Tesco and Asda.

Morrison’s
Morrison‟s Supermarkets
Hilmore House, Thornton Road
Bradford, West Yorkshire BD8 9AX
Tel: +44 1274 494 166
Website: www.morrisons.co.uk

Morrison‟s is the 4th largest UK supermarket with 403 stores. Every week, 9 million customers shop in the stores. Morrison‟s employs 124,000 staff. With stores located throughout the UK, a typical Morrison‟s store is aimed at the mid-lower end consumer and stocks about 24,000 product lines. The company‟s strategy focuses on offering unbeatable customer service and a pleasant shopping environment; however, it competes primarily on price, special offers and multi-save promotions. Morrison‟s trys to stock local fresh products where possible. Approximately 55 percent of sales come from private label ranges. Morrison‟s private label portfolio consists of: Morrison‟s (quality and value); The Best (premium foods); Eat Smart (healthy foods); and Betterbuy (price led products). Morrison‟s stands out from other grocery stores due to its “Market Street” feature. This is where a collection of fresh food counter stalls are designed to look like a market including butchers, bakers, fishmongers, delicatessens and salads. The majority of products sold in the Market Street are private label. Morrison‟s has small non-food sections within its stores focusing on music and video, health and beauty products.


Waitrose
Waitrose
Doncastle Road
Bracknell Berkshire,
Tel: +44 1344 424 680
Website: www.waitrose.co.uk

Waitrose is the supermarket business of the John Lewis Partnership, a leading department store chain. It offers a broad range of products and high quality ingredients to an upper-middle class customer base. Waitrose stores are located in areas where consumers with a higher-than-average disposable income live. Waitrose stores are usually medium-sized compared to their UK supermarket rivals. However, Waitrose has introduced a larger store format called Waitrose Food & Home, e.g. their 5000m² store in Canary Wharf, London, and a new up-market food hall in the John Lewis department store in the well known shopping area of Oxford Street, London. Waitrose, like the major supermarket chains, has an internet shopping service. However, it has chosen to use a key associate company, Ocado, rather than perform their own deliveries.

Waitrose has 185 stores that are predominately based in the south of the UK. In November 2008, Waitrose opened its first store outside of the UK. It now has two stores in Dubai. Since Waitrose customers are less price-sensitive, it may present opportunities for American products that are of superior quality but not always the lowest priced.

Marks and Spencer
Marks & Spencer
Waterside House
35 North Wharf Road
London, W2 1NW
Tel: +44 20 7935 4422
Website: www.marksandspencer.com

Marks and Spencer is one of the UK‟s leading consumer retailers with over 21 million people visiting its stores each week. Marks and Spencer has over 600 stores located throughout the UK, ranging from large out-of-town stores of over 100,000 sq ft to Simply Food Stores of around 700 sq ft. The largest store in the UK is located on London‟s Oxford Street in the center of London and has trading space of over 170,000 sq ft, featuring both food and clothing ranges. As well as the UK, Marks and Spencer also has 285 stores in 40 countries. Marks and Spencer has premium quality food departments that are aimed at middle–upper class customers who are less price-conscious. They also attract customers shopping for special occasions such as dinner parties, birthdays, office celebrations, and holidays. Marks and Spencer is also a lunchtime destination for office workers picking up sandwiches and other snack items. In order to make the most of this market, Marks and Spencer has opened 205 stand alone Simply Food Stores that are convenience format stores of around 700sq ft in size. They are based in town centers, train stations and motorway service stations. Marks and Spencer pioneered the concept of chilled ready prepared food and has led the way in its development. Their food technical specifications are strict, particularly with regard to the traceability of ingredients. Apart from a few exceptions, Marks and Spencer sell products under only its own label.

Whole Foods Market

Whole Foods Market
63-97 Kensington High Street
London W8 5JE
Tel: +44 20 7368 6100
Website: www.wholefoodsmarket.com/uk/index.html

Whole Foods Market opened its flagship store on London‟s High Street Kensington in June 2007. The 80,000 square foot store is not only the largest food retail space in central London, but is also the first Whole Foods Market in Europe and marks a major step in expanding the company‟s brand beyond North America. It also owns four Fresh & Wild stores, which were acquired in 2004 and are based in central London. Fresh & Wild was a natural fit with the Whole Foods Market ethos and today they continue to showcase organic, natural, wholesome, and ethically-sourced products. Fresh & Wild‟s marketing platform is to stock food without artificial colorings, hydrogenated fat, flavorings, sweeteners or preservatives. In its first couple of years of trading in London, Whole Foods reported significant losses. This is likely due to a number of factors including the location and size of the store, the slowdown in organic food sales, the highly publicized rise in food prices and the trend of shoppers moving towards discount food shopping.

Aldi
Aldi Stores Ltd
Holly Lane Atherstone
Warwickshire, CV9 2SQ
Tel: +44 1827 711800
Website: www.aldi.co.uk

Aldi is a German owned company who opened its first UK store in 1990. Aldi, along with Lidl are the biggest “discounter” supermarket chains in the UK. Aldi currently has 328 stores in the UK and three percent market share. Thanks to the UK credit crunch, Aldi has seen sales increase by 40 percent in the last 18 months and are 25 percent up year-on-year. A few years ago, discounter stores were seen as stores for working class families on low incomes. However, the high quality of the products, low prices and numerous awards received by the discounters have seen all this change. Now, half of the customers through the door are those from upper and middle class families. People who in the past would have shopped at Sainsbury‟s or Waitrose. With a 45-percent pre-tax increase in profit in the past year, it is well known that the discounters are doing well. It is definitely a case of right retailer, right place at the right time. With consumer spending likely to fall even further in the next year, both Aldi and Lidl should expect continued increases in market share. This is just the boost that the discounters needed to increase customer acceptance. Tesco has certainly felt pressure from these stores and has developed their own “discounter” range. Aldi opens an average of one new store each week in the UK. The majority of Aldi‟s products are private label. As well as its everyday range, it has an up-market range called Specially Selected. The average size of Aldi stores is 1,000 sq meters. Due to limited stock, consumers buy staple food and drink items from the Discounter, and “top off” with specialty purchases from other retailers.

Lidl
Lidl UK
GmbH 19 Worple Road
Wimbledon SW19 4JS
Tel:+44 870 444 1234
Website: www.lidl.co.uk

Lidl, like Aldi, is German owned. It opened its first UK store in 1994. Lidl operates 430 stores throughout the UK and currently has a 2.4-percent market share. Unlike Aldi, Lidl has introduced well known brands into its stores as well as private label. Since 2005, both Lidl and Aldi have been going “up market” making their stores more attractive to meet the expectations of Middle Britain. The big difference between the discounters and the big four retailers is the number of lines they stock. A mainstream supermarket chain can stock 32,000 product lines compared to 1,600 in Lidl and 900 lines in Aldi. Instead of having 20 different lines of mustard, they stock one exceptionally good value product that they sell in high volume. Post Contact and Further Information If you have any questions or comments regarding this report, require a listing of UK importers, or need any other assistance exporting to the United Kingdom, please contact the USDA office in London. United States Department of Agriculture Embassy of the United States of America 24 Grosvenor Square London, W1A 1AE Tel: +44 20 7894 0040 Fax: +44 20 7894 0031 E-Mail: aglondon@fas.usda.gov Website: www.fas.usda.gov or www.usembassy.org.uk/fas/index.html


Further information on the UK retail grocery sector is available from the British Retail Consortium and the Institute of Grocery Distribution.

Institute of Grocery Distribution (IGD)
21 Dartmouth Street Grange Lane
Letchmore Heath London, SW1H 9BP
Watford, Hertfordshire WD2 8DQ
Tel: +44 20 7854 8900
Tel: +44 1923 857141 Website: www.brc.org.uk Website: www.igd.com

United Kingdom Retail Food Sector 2009 - USDA FAS

United Kingdom Retail Food Sector 2009 - USDA FAS

In the UK the retail grocery industry is concentrated with seventy-five percent market share in the hands of just four supermarket chains. The remainder is scattered over hundreds of outlets. This report overviews the characteristics of UK retail outlets and how best to place U.S. products in the UK market.

Over the last 12 months, the UK food and drink industry has faced challenging trading conditions as shoppers, manufacturers and retailers have been impacted by a range of factors. Increased pressure on household budgets, unemployment, the banking crisis, and the availability of credit continues to impact consumer spending. Despite these challenges, the UK food and grocery market remains robust. While not recession proof, food and grocery is more resilient to the
current downturn in the economic market than other sectors. The UK grocery market was worth £141.7 billion ($226.7 billion) in 2008, this is an increase of 5.1 percent over 2007. Groceries account for 12.8 percent of total household spending in the UK, making it the third largest area of expenditure, following housing and transport. Food and grocery expenditures account for 49p in every £1.00 of retail spending (excluding restaurants). 20p in every £1.00 spent on food and grocery is spent in convenience stores.

There are 97,442 grocery stores in the UK. These are split into 4 sectors. Supermarket Chains: Supermarkets have a sales area of 3,000-25,000 square feet and sell a broad range of grocery items. Superstores are defined as stores that have a sales area above 25,000 square feet, selling a broad range of grocery and non-food items. Convenience Stores: These stores have sales areas of less than 3,000 square feet, are open for long hours, and sell products from at least 8 different grocery categories. Traditional Retail and Developing Convenience Stores: These stores have sales areas of less than 3,000 square feet, and include news stands, green-grocers, liquor stores and gas stations. Alternative Channels: This category includes a wide range of outlets such as internet or catalogue home shopping, farmers’ markets, and other produce markets and vending machines. Economic indications continue to point towards weakening consumer confidence, as household budgets come under pressure from increases in energy, transport and housing cost. However, the food and grocery market is relatively resilient and growth opportunities remain both at the value and premium ends of the sector. The Institute of Grocery Distribution (IGD) estimates that the UK retail grocery market will grow at an average annual rate of 2.9 percent over the next five years. It is expected to be worth ₤145 billion ($232 billion) by 2010, at current prices.

Advantages & Challenges to U.S. Products in the UK Retail Sector The UK is a sophisticated market that mirrors some trends in the U.S. retail sector. However, it can be surprisingly different from the United States and in-depth research and analysis should be carried out before attempting to export. U.S. products face fierce competition in the British market. Not only is UK food production advanced, but EU countries benefit from duty free access. However, there are opportunities for U.S. products in this competitive and challenging retail environment. The United States is the largest non-EU country supplier to the UK, but on average represents just 5-6 percent of food imports. Due to EU technical barriers, market access can sometimes prove a challenge for U.S. products.


SECTION II. MARKET SEGMENTS Supermarket Chains

This report gives a broad outline of the UK supermarket chains. A more detailed report entitled “UK Supermarket Chain Profiles” is available at http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp. Four large supermarket chains dominate UK food retailing, and together they account for 75 percent of the market. Tesco is the market leader, by a sizeable margin. Tesco has 30.9 percent market share, followed by Asda/Wal-Mart (17.2 percent), Sainsbury’s (15.7 percent) and Morrison’s (11.5 percent). In the last year, the Cooperative purchased Somerfield. Therefore this group now has 8.1 percent of the market (Cooperative at 5.4 percent and Somerfield at 2.7 percent). Other UK supermarket chains include Waitrose, Iceland, Aldi, Budgens, Netto and Lidl. Discounters Discount retailing is the new boom in UK grocery sector. Aldi and Lidl are leading the pack in the UK. Both are German owned and both entered the UK market in the 1990’s. The main features of discount supermarket shopping are every day low cost; limited product ranges and a focus on price. Stores are also smaller and relatively uniform in size and layout. Stores range from 800sq m. (8,600 sq ft) to 1,500 sq.m. (16,000 sq ft.). They carry predominately private label products; however, these are exclusive labels rather than store name. The discounters now account for 5.4% share in grocery spending. This is higher than ever before. They are also the fastest growing sector of the market. While the discounters share in the UK has reached a new record, this is still low in comparison with the continent where discounters accounting for 11% of the market in France and 38% in Germany. In September 2008, Tesco unveiled its own discounter range with 350 discounter-style, branded products. The range now has 700 lines. Tesco announced that these products would provide better quality than its value range of basics and prices cheaper than the best know brands. Tesco’s aim is to become the UK’s biggest discounter.
Market Shares of the UK’s Supermarket Chains
Retailer Share %
Tesco 30.9
Asda/Wal-Mart 17.2
Sainsbury’s 15.7
Morrisons 11.5
Cooperative 5.4
Somerfield 2.7
Waitrose 4.0
Aldi 3.0
Lidl 2.4
Iceland 1.7
Netto 0.8

As a result of town planning regulations, supermarkets in the UK are smaller than their counterparts in Germany or France. For example, Tesco and Sainsbury’s stores are just 3,500m² (37,700 sq ft) on average. Planning restrictions have resulted in limited availability of suitable sites. This in turn has fueled a move back towards smaller stores by the large supermarket chains, and created a polarization between superstores and convenience stores formats. The major UK supermarket chains have also developed store formats that sit alongside gas stations. For example, Marks and Spencer with BP Connect, Tesco with Esso, and Sainsbury’s with Shell. The UK has one of the most advanced private label markets in the world (valued at around $100 billion). The UK's major supermarket chains dominate the private label market and on average 40-50 percent of products in their stores are private label. Originally, private label goods were a copy of a branded product, but today they are often innovative. They give UK retailers the opportunity to diversify their product ranges and develop new revenue streams. The extreme of UK private label grocery shopping can be seen by visiting a Marks and Spencer (M&S) food hall. Ninety nine percent of what M&S sells is own-label goods. Despite Marks and Spencer recently experiencing difficult trading conditions in their clothing departments, their food halls have continued to grow. Most M&S customers buy the majority of their food from other mainstream grocery retailers. They use M&S for special occasions, for convenience food such as ready-meals and as a top-up to their regular shop by buying a few luxury items. M&S consistently offer-innovative, high quality and rigorously checked food. In June 2007, the U.S. chain Whole Foods opened its flagship store in London’s High Street Kensington. Whole Foods has the largest food retail space in central London at 80,000 square feet. Partridges, part of the 9-store Shepherd Foods company, also deserves a mention for its continued dedication to stocking U.S. products. Partridges is essentially a large delicatessen celebrating both British and international foods.

Internet or Online Shopping


The internet and online grocery market in the UK is dominated by four of the UK’s major supermarket chains – Tesco, Sainsbury’s, Asda and Waitrose, which is partnered with Ocado. Outside of these suppliers, the market is mainly populated by a wide range of niche, specialized retailers, many of which offer products that are not always available in major supermarkets. Apart from the leading online suppliers, no other supermarket chains in the UK operate in the online grocery market. This is because the costs and complexity of establishing an online service appear to be too much of a risk. IGD, the grocery market research organization, predicts that sales of groceries online will reach £5 billion within the next five years. Although this number seems high, it is only 2 percent of total groceries sold in the UK. This is likely to rise to 3 percent by 2012. On-line shopping for food remains a niche market, but there is considerable potential for growth. It is most popular with the younger generation, families, and more affluent consumers. There is very low uptake among the over 45s. This is probably due to the acceptance and use of technology, along with a preference for well established routines. The majority of consumers (55%) are reluctant to even try shopping for food online. The highest number of users of internet shopping are in Scotland, followed by East Anglia and the Midlands. These are all more rural areas. Tesco is by far the largest online grocer in the UK, selling £1.23 billion groceries online. This is 3 ½ times more sales than it was achieving five years ago. Half of British adults now have internet access from home. This is up from only 7 percent in 2002. Internet connections have also become faster and retailers have made their sites easier to use and have improved delivery services

Chile Fresh Deciduous Fruit Annual - USDA FAS

Chile Fresh Deciduous Fruit Annual 2009 - USDA FAS

Report Highlights: Due to unstable weather conditions, Chile’s production of table grapes is expected to fall. The projected expansion of apple and the stable pear production will depend on the development of “El Niño” a weather phenomenon which is affecting Chile’s climatic conditions.

Executive Summary: New estimates show that production of table grapes and pears will increase slightly in MY2009 (Jan-Dec 2009), but apple output which has been affected by abnormal high temperatures during late spring and early summer will fall slightly, when compared to the previous season. For the coming year, although it is to early for a forecast no major changes in production are expected as the planted area has not expanded and most orchards have reached their mature stage of production.

The industry forecasts a small expansion in fresh apple production, as weather has been favorable in most growing areas. No changes are expected for fresh pears. For table grape production, due to frost in an extensive area of the main production regions and unstable weather expected as the climatic phenomenon “El Niño” develops, a fall in output is expected. No major changes are expected for apple juice production.

Table Grapes As a result of favorable weather conditions in most growing areas during the summer and harvesting time, total output in MY2009 (Jan-Dec 2009) resulted slightly larger than the previous year. For the coming season, production is forecast to be smaller than this season as weather has been unfavorable for table grape production. Frost during September and beginning October has damaged many planting from Region III (Copiapo) through Region VI (Rancagua), at certain areas temperatures below -2º C were measured in the Copiapo area affecting reportedly over 300 hectares. In Region V (Aconcagua) a similar situation was reported but damages were not as extensive. In general, an industry source has indicated that production is expected to fall at least over 10 percent when compared to last years output. A contact at Fedefruta (The Fresh Fruit Producers Association) has indicated that although the production volume will be affected, a good quality production is expected and the supply of the export market is expected to be normal. The But there is another negative factor that could affect total volume and quality of the production, is the development of a climatic phenomenon called “El Niño” which calls for unusual rain during
summer and up normal temperatures in most growing areas. This climatic phenomenon could affect the quality of the production and for sure increase the costs of production (more spraying will probably be necessary). Chile produces over 36 varieties of table grapes for export. Thompson Seedless and Flame Seedless account for the bulk of production. Varieties like Red Globe, Superior Seedless, Crimson and Autumn Royal have increased significantly in the last few years, as most of the replanting has been with these varieties. Table Grapes are planted from Region III (Copiapo) to Region VII (Curico-Talca).

Crop Area The Ministry of Agriculture together with the Producers Association updated table grape planted area figure based on the 2007 agricultural census together with special table grapes nation wide case studies. As a result, we have adjusted upwards the total planted area and harvested area of table grapes in our PS&D table for 2009. Nevertheless, industry sources agree that new additional plantings are not likely for the next few years as economic returns have been
affected by increasing costs and falling prices for table grapes. Returns fell reportedly almost 20 percent in 2009, when compared to the same period last year, in spite of the larger exported volumes.

Trade:Table grape export volumes increased in 2009 as a result of a larger and good quality production. Exports to the US expanded almost 10 percent in 2009 when compared to the previous year, mainly due to more favorable dollar value when compared to the Euro. Nevertheless, the EU remained as the second export market in spite of a fall of almost 15 percent of the deliveries to that market. For 2010 a smaller production is expected. As a result exports are expected to fall accordingly. As in the past, table grapes are being imported during the off-season.

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/

South Korea Citrus Annual - 2009

South Korea Citrus Annual - 2009

Unshu orange production for MY 2009/10 is forecast at 650,000 metric tons, up more than 130,000 metric tons from the previous year. A variety of government and industry programs have been introduced to remove lower quality fruit from the marketplace in order to limit the downward price pressure resulting from this year’s bumper crop. Meanwhile, MY 2009/10 orange imports will rebound to 110,000 metric tons in large part due to improved economic conditions.

Orange imports from Jan-Sep totaled 68,000 metric tons, down 35 percent from the previous year. This drop in imports was due to the weak won and the economic slowdown. However, orange imports during MY 2009/10 are expected rebound to 110,000 metric tons due to a relatively favorable foreign exchange rate, the availability of quality oranges in California, and signs of economic recovery. This projected increase in trade is expected to attract new importers. The
prospects for U.S. oranges in MY 2009/10 are expected to remain bright in large part due to consumers’ familiarity with the high-quality fruit. The U.S. was the top supplier from Jan-Sep, with imports totaling 64,000 tons, which was nearly 95 percent of total imports. The remainder was from Chile, South Africa, Spain and Australia. The U.S. is expected to retain its strong foothold in the Korean market. In addition, the KORUS FTA will strengthen that position through the reduction of import duties. More information on the benefits of the FTA is available at:
http://www.fas.usda.gov/info/factsheets/Korea/commodity-citrus.asp





Production: Unshu orange (tangerines) production for MY 2009/10 is forecast at 650,000 metric tons, up more than 130,000 metric tons from the previous year (Note: greenhouse production and late varieties are excluded from these estimates). This year’s bumper crop, which is mainly due to favorable weather, combined with large pear, apple and persimmon crops could put downward pressure on local orange prices depending on the success of various industry and government initiatives to limit production. In order to stabilize prices, the Jeju government and local growers plan to reduce the total volume of oranges in the marketplace through marketing orders, tree thinning programs and support payments. In addition, check-off and FTA transition funds are used to improve industry infrastructure and conduct marketing activities. These programs are explained in further detail below. Marketing Orders At the request of the Jeju government, the Ministry for Food, Agriculture, Forestry, and Fisheries (MIFAFF) implemented a marketing order for Unshu oranges in MY 2009/10. The aim of this action is to supply only the highest quality fruit to the market by removing small, oversized, and otherwise inferior fruit. The lower quality fruit is used in juice production and private consumption. The order is in effect from October 29 through March 31, 2010. Last September, the growers and Jeju government announced a separate campaign to remove 15 percent of MY 2009/10 production from commercial channels. This program will in effect remove 100,000 metric tons of disqualified fruit, including small and damaged fruit, from the market. This activity will continue until the end of harvest season. Earlier in the year, Jeju implemented a fruit reduction program that included tree removal, tree thinning, farm closure, etc. Through this program 37,000 metric tons of Unshu orange production capacity was eliminated. Direct Payment Programs The Jeju government introduced a direct payment program to help stabilize citrus prices in MY 2009/10. This program is a biennial harvesting program, which removes all fruit from trees during the early season in order to improve yields the following year. The Jeju government paid growers over 3 billion won ($2.5 million) to take 2,470 hectares out of production thereby reducing production capacity by an estimated 41,000 metric tons. FTA Transition Fund The Jeju government requested 50.6 billion won ($42.1 million) in FTA transition funds for 2010. MIFAFF is expected to provide the requested funding, which is nearly 35 percent larger than the previous year’s request. These funds will be used to upgrade citrus production infrastructure and improve crop quality. As part of the plan, Jeju will build another large scale Agriculture Product Processing Centers (APC) next year. The APC will have a capacity of 10,000 metric tons. Jeju plans to build six more large scale APCs and 13 medium size APCs by 2017. Check Off Program Jeju continues to use its citrus check-off program in MY 2009/10. The funding for this year’s program is 2 billion won ($1.7 million). The central government provides half of the funding, while the remainder is collected through a 0.5 percent check-off fee from auction sales and producer group donations. Check-off funds are used to support marketing activities, foreign market development, training farmers to produce quality fruit, and improving marketing channels. The marketing activities include television commercials, citrus festivals across major Korean cities, and advertisements in large apartment buildings.


Trade: Jeju authorities have set a goal to export 10,000 metric tons of Unshu oranges during MY 2009/10. The goal seems overly ambitious compared to the previous year, which recorded exports of 1,342 metric tons. However, the Jeju government is strongly encouraging farmers to export as way to help prop up domestic citrus prices. The export markets targeted are Russia and Canada with 4,000 metric tons each and South East Asian countries with 2,000 metric tons. Exports to the United States are minimal because of quarantine issues. In order to reach these export targets, the Jeju Citrus Grower’s Cooperative Federation has been working with farmers to approve a long-term export contract in order to secure a stable supply of citrus regardless of the fluctuation of domestic citrus production level. The Federation is working to improve packaging in order to minimize damage during shipping and has also developed a Good Agricultural Practice (GAP) certification program for farms and packinghouses. Orange imports from Jan-Sep totaled 68,000 metric tons, down 35 percent from the previous year. This drop in imports was due to the weak won and the economic slowdown. However, orange imports during MY 2009/10 are expected rebound to 110,000 metric tons due to a relatively favorable foreign exchange rate, the availability of quality oranges in California, and signs of economic recovery. This projected increase in trade is expected to attract new importers. The prospects for U.S. oranges in MY 2009/10 are expected to remain bright in large part due to consumers’ familiarity with the high-quality fruit. The U.S. was the top supplier from Jan-Sep, with imports totaling 64,000 tons, which was nearly 95 percent of total imports. The remainder was from Chile, South Africa, Spain and Australia. The U.S. is expected to retain its strong foothold in the Korean market. In addition, the KORUS FTA will strengthen that position through the reduction of import duties. More information on the benefits of the FTA is available at: http://www.fas.usda.gov/info/factsheets/Korea/commodity-citrus.asp


Policy: As part of the existing import protocol, NPQS applies a 100 percent fumigation policy for imported California oranges due to red scale. For the existing import protocol, please contact the Plant Protection and Quarantine Division in APHIS headquarters. In response to the detection of the Mediterranean fruit fly in LA County (La Verne) and San Diego County (Mira Mesa, Imperial Beach and Escondido), California and the detection of citrus fruit fly and white striped fruit fly in LA County (La Verne) in 2009, the National Plant Quarantine Service (NPQS) imposed an import ban on citrus including oranges from quarantine areas designated by the Animal Plant & Health Inspection Service (APHIS). Phytosanitary discussions with Argentina (oranges), Mexico (limes) and Chile (mandarins) and others are still pending.

Australia Citrus Annual 2009 - USDA FAS

Australia Citrus Annual 2009 - USDA FAS

Total exports of oranges in 2010/11 are forecast at 130 TMT, unchanged from the estimate for the previous year. A historically high Australian dollar value for the foreseeable future is expected to constrain exports of Australian oranges despite a modest increase in production. Industry sources remain highly skeptical of prospects for increasing exports during 2010/11 while the Australian dollar remains at historically high levels. Exports to the US numbered 18 vessels for the 2009/10 citrus crop. At the time of writing this report, shipments for 2009/10 were down on the previous year due to poorer market conditions in the US, despite the improved quality of the Australian crop. Full-year exports for 2009/10 are expected to be equal to the previous year. Subdued demand and increased competition from other countries exporting to the US have created more difficult conditions. Countries such as Chile and Peru are reportedly undercutting Australian citrus prices by a significant margin.

Planted Area Post has revised area planted to oranges downwards sharply across the series, in line with recently released industry figures for 2008/09. The last time such figures were released was for 2003/04. Total area planted to oranges for 2010/11 is forecast at 19,600 hectares, down around two percent on the revised estimate from the previous year. Recently released industry figures placed area planted to oranges for 2008/09 at 20,351 hectares, down sharply on the 27,000 hectares previously reported by post. Industry sources believe planted area is falling by roughly two percent a year over the longer term as the industry continues to restructure. Post has revised its area for 2008/09 in line with industry reports and trended its estimates and forecasts downwards in line with the longer term trend. Industry statistics show that between 2003/04 and 2008/09 the Australian citrus industry has lost around 13 percent of its growers, eight percent of its total planted area and four percent of its trees. Industry rationalization and severe drought are believed responsible for this decline. During this time the average property size increased from 13.1 hectares (32.4 acres) to 14.1 hectares (34.8 acres) nationally. Going forward, industry sources remain upbeat about the industry’s fortunes despite the fall in planted area with “non bearing” plantings reported at around 14 percent of total planting. This figure indicates that the remaining industry continues to make significant investments in new plantings.

Oranges Total orange production for 2010/11 is forecast at 440 TMT, up slightly on estimated production from the previous year. Industry sources expect Navel production to be up slightly while Valencia production is expected to remain largely unchanged. This forecast relies on a modest improvement in production conditions as a return to more normal weather conditions is expected to see production increase. Post forecast is largely consistent with long term trends showing a modest increase in Navel production over the longer term while Valencia production has continued to decline steadily. Industry sources have suggested that recent historically high retail prices for fresh orange juice will likely limit the decline in Valencia production during the forecast year.

Post has revised production of oranges for 2009/10 downwards significantly to 430 TMT in line with recently released industry figures. Continued dry conditions are expected to keep production below levels previously forecast by post. According to industry figures, this production figure accounts for around 233 TMT of Navel productions and 197 TMT of Valencias.

Exports Oranges Total exports of oranges in 2010/11 are forecast at 130 TMT, unchanged from the estimate for the previous year. A historically high Australian dollar value for the foreseeable future is expected to constrain exports of Australian oranges despite a modest increase in production. Industry sources remain highly skeptical of prospects for increasing exports during 2010/11 while the Australian dollar remains at historically high levels. Exports to the US numbered 18 vessels for the 2009/10 citrus crop. At the time of writing this report, shipments for 2009/10 were down on the previous year due to poorer market conditions in the US, despite the improved quality of the Australian crop. Full-year exports for 2009/10 are expected to be equal to the previous year. Subdued demand and increased competition from other countries exporting to the US have created more difficult conditions. Countries such as Chile and Peru are reportedly undercutting Australian citrus prices by a significant margin.

Argentina Citrus Annual 2009 - USDA FAS

Argentina CITRUS ANNUAL 2009

Fresh citrus production for CY 2010 is estimated to decrease to 2.4 million metric tons (MT). Lemon production is forecast to decrease due to drought and late frosts. Orange and tangerine production is expected to increase as a result of favorable weather conditions in CY 2009. Grapefruit production is forecast to decrease as area planted to grapefruit is being primarily devoted for sugar cane production. Exports of lemons and oranges are projected to increase due mainly to the recovery of export markets. Tangerine and grapefruit exports are estimated to remain stable. Lemon, orange, and grapefruit domestic consumption is expected to remain stable, and tangerine consumption is estimated to increase slightly.

Production: CY 2010 lemon production is forecast to decrease significantly to 1 million MT, as a result of a severe drought and late frosts in September 2009. Orange production is expected to rebound to 840,000 MT, and tangerine production is estimated to increase to 370,000 MT, as a result of favorable weather conditions in CY 2009, which favored blossoms. Grapefruit production is forecast to decrease to 225,000 MT, as area planted to grapefruit is being primarily devoted for sugar cane production since the grapefruit business is becoming increasingly unprofitable. Both international and domestic demand for grapefruit is gradually decreasing. In CY 2009, lemon production is expected to decrease substantially to 1.2 million MT due to a severe and long drought during the summer and autumn of 2009. Orange production is forecast to fall to 700,000 MT, and tangerine production is estimated to decrease to 310,000 MT, as a consequence of drought and frosts. Grapefruit production is also projected to fall to 230,000 MT, as area planted is decreasing. In CY 2009, area planted to lemons increased slightly, compared to CY 2008. There is a significant amount of new plantations, but production is down due to unfavorable weather conditions. Area planted to oranges and tangerines remained stable, and area planted to grapefruit is expected to decrease gradually as old plantations are being replaced by sugar cane and orange plantations. Citrus production costs in CY 2009 increased between 30-40 percent, compared to the previous year. The highest increase was for labor.

Trade: Exports Fresh lemon exports are expected to rebound in CY 2010 to 290,000 MT as export markets recover from the global financial crisis, and there will be less fruit availability in the Northern Hemisphere. Fresh orange exports are also projected to increase to 100,000 MT due to the recovery of export markets, and tangerine and grapefruit exports are estimated to remain stable. Fresh lemon exports in CY 2009 are expected to decrease drastically to 240,000 MT as a consequence of lower production, fruit oversupply in Spain and Turkey(Argentina’s main competitors in the international playground), as well as smaller export demand due to the crisis, and financial difficulties and local currency devaluations in some of the main export markets, such as Russia. In addition, the lemon industry has recently implemented a system to determine the highest quality standards of the fruit to be exported. Thus, the lemon export supply was restricted, preventing a steep decrease of international prices. In CY 2009, fresh orange exports are forecast to decrease significantly due to the impact of the crisis on export markets, and fruit oversupply in South Africa. Fresh tangerine exports are estimated to increase primarily due to smaller production in South Africa than initially expected, and fresh grapefruit exports are expected to decrease as a result of smaller international demand. Local producers have adjusted well to lower MRLs (maximum residue levels) that were introduced in Russia on October 31, 2008. Russia was the largest market for Argentine fresh tangerines, and second largest market for fresh lemons, oranges, and grapefruit. Implementation of the initial change in requirements for Argentine citrus, apples, pears, and table grapes, was delayed for 60-days after negotiations between phytosanitary authorities in both countries. The regulations are currently in effect, but have not had a major impact on exports. The new MRL levels are lower that those required by the E.U., Japan, Canada, and the U.S., among other countries. In CY 2008, Russia accounted for an average of 28 percent of total Argentine fresh citrus fruit exports: 40 percent of tangerines, 30 percent of grapefruit, 22.5 percent of oranges, and 19.5 percent of lemons. MRLs are becoming an increasingly important issue at multilateral meetings among representatives from fruit export and import markets. Argentine phytosanitary authorities continue negotiations with China to reopen the market for Argentine fresh lemons. Trade was interrupted in 2005 when China established cold treatment for all citrus fruit, which damaged the fruit quality. The industry has been focusing on other export destinations pending negotiations with officials in China. Currently, the market is open to fresh “sweet” citrus varieties. Moreover, there are on-going negotiations with the U.S. to reopen the market for Argentine fresh citrus fruit.

China and biotechnology - USDA FAS

China - Peoples Republic of Post: Beijing Biotechnology USDA FAS

Executive Summary: On November 21, 2009, Beijing-based Origin Agritech announced that it is the first company to receive de-regulated status for genetically modified corn for planting in China. Confirmed by China’s Ministry of Agriculture, Origin’s phytase corn product recently received the final biosafety certificate that permits its domestic sale and marketing. Biosafety certificates restrict use to certain provinces and it is currently unclear in which provinces MOA has permitted the use of this product.

The deregulation of this product is a ground-breaking event in Chinese agriculture. Though Chinese leaders have long stated that the technology can be safely used given the proper safety evaluation and precautions, no large-scale commercially viable food crops have ever been granted a safety certificate. Prior to this announcement, the list of approved genetically modified plants approved for planting in China included: cotton, tomato, sweet pepper, petunia, poplar, and papaya. At this time, the only large-scale planting of approved biotech plants is cotton and poplar, while there is limited production of biotech papaya. China has approved over 200 varieties of biotech cotton for planting. China currently permits 28 varieties of corn, cotton, canola, sugar beet, and soybean to be imported for processing. While the granting of the safety certificate is a milestone, it will likely be several years before these seeds are in the hands of farmers. First, seed companies need to register individual seed varieties (conventional or biotech) with provincial authorities. This process of testing can take two years or more. Following the variety approval, the company would then need to replicate the seeds in the field to obtain enough seed for commercial sale. As a result, Chinese farmers may not see these seeds on sale until the 2012 planting season or beyond. Though farmers and livestock producers may want to see the technology in fields sooner, this is a normal timeframe of the development and marketing of new seeds in China, conventional or biotech.

A Canadian Thanksgiving - USDA FAS report

This Week in Canadian Agriculture - USDA FAS

What Are You Paying to Give Thanks? Last week the American Farm Bureau Federation (AFBF) released its 24th annual calculation of the average cost for a classic Thanksgiving dinner in the United States. The AFBF’s informal survey indicates that the average cost of a typical feast for 10 people is $42.91, down 4 percent from the costlast year. Canada celebrated their Thanksgiving in October and the menus are basically the same. Using the AFBF ingredients the price of this Thanksgiving feast is calculated for Ottawa. The total cost in the Canadian capital is C$70.96 or US$66.33 using the current exchange rate.

Canada and the Doha Round – Defending Supply Management In early November the Canadian Parliament’s Standing Committee on International Trade issued a report called “Defending Supply Management at the WTO.” The report summarized presentations before the committee from the Government and representatives of the supply managed commodities (dairy, eggs, turkeys and chickens) responding to the December 2008 Doha text which would “effectively undermine Canada’s system of supply management.” The committee expressed appreciation for the Government’s ongoing support of the supply management system and issued one recommendation: “That the Government of Canada affirm its unequivocal support of, and commitment to defend, Canada’s supply management system.” Support came from parliamentarians from all the political parties. There have, however, been editorials which are far less supportive of defending supply management. For example, an editorial in the National Post argues the report should have been titled “Let’s Keep Screwing Consumers” and goes on to suggest the supply management system has stymied the competitiveness of the dairy industry resulting in high consumer prices and thwarting exports. An editorial in the Edmonton Journal lamented that Canada is missing an opportunity at the upcoming December WTO ministerial conference where the United States, Brazil, India, Japan, South Africa, and China are viewed as players trying to advance the Doha Round by considering and discussing potential additional concessions in agriculture, industrial products, and services access negotiations. Canada onthe other hand will expend most of its efforts on trying to maintain protection for its poultry, eggs and cheese and dairy products industries instead of focusing on expanding international agricultural trade. For the author, Canada’s protectionist position is at the expense of both consumers, who pay more at the grocery store, and Canada’s export-oriented agricultural sectors that pay in terms of lost opportunities for expanded market access for grains, oilseeds, livestock and meat, and processed agricultural products around the world. The editorial concludes that Canada’s agricultural exporters may be left with a result negotiated on the priority interests of other countries.

Carrefour abandons Russian Food Retail Market - USDA FAS Report

Carrefour Abandons Russian Food Retail Market - USDA FAS


The French international hypermarket chain, Carrefour, has decided to close its business in Russia after only four months of operation due to inadequate growth and acquisition opportunities. Lenta, O’Key, Aushan and X5 Retail Group are all considered likely candidates to buy the Carrefour stores. Carrefour's exit from Russia will undoubtedly affect other international retailers contemplating market entry.

General Information: The French international hypermarket chain, Carrefour, came to the Russian market in 2009 following other foreign-owned retailers such as the German-owned hypermarket chain Metro Cash & Carry which opened its first store in Russia in 2001, followed by French rival Aushan in 2002. Carrefour opened its first store in Russia in June 2009 in Moscow, a
second store opened in Krasnodar in September, and its third outlet was scheduled to begin operations in Lipetsk before the end of the year. The company recently signed a lease to open its fourth location in the River Mall in Moscow, where it intended to launch a store in 2011. Currently Carrefour operates 15,600 stores in 35 countries worldwide. Carrefour is the largest hypermarket chain in the world in terms of size, and the second largest retail group in the world in terms of revenue, and third largest in profit after Wal-Mart and Tesco. Carrefour operates mainly in Europe, China, Colombia, Brazil, Argentina and in the Dominican Republic, but also has shops in North Africa and other parts of Asia. Carrefour means "crossroads" in French. The company’s net sales in 2008 were $127.45 billion, while net profit was $1.9 billion. On October 15, 2009, after only four months in the Russian market, Carrefour announced plans to sell off its holdings in Russia. The company cited several factors behind its decision such as inadequate growth and acquisition opportunities in the short- and medium-term that would have enabled the company to become the leading retailer in Russia. But there are likely to be other factors at play in Carrefour's decision to pull out of such a potentially lucrative market. Industry observers believe the main reason is that Carrefour failed to acquire the grocery chain Seventh Continent (which currently has 140 stores in Russia) after negotiations were suspended earlier this year. Carrefour reported a 2.9 percent drop in group sales for the third quarter of 2009, with the steepest sales decline coming from its core European base. Sales in France declined 3.4 percent and turnover in the rest of Europe was down 6.6 percent. The only regions to report positive growth were Asia and Latin America, with sales increases of 5.1 and 5.3 percent, respectively. Another factor in Carrefour's exit from Russia could be that despite the strong growth potential in the Russian food retail market, major obstacles to market entry exist, including a complicated legislative framework, government bureaucracy, and red tape. Corruption also persists at both regional and local levels, further hindering business development. Carrefour Chief Financial Officer Pierre Bouchut said that the company has no current plans to abandon any other markets, but that it is "permanently reassessing the situation of all business units" to ensure that they are able to "secure a profitable leadership position over time.” Carrefour has announced that their three stores currently operating in Russia will remain open until the company finds a buyer. Press reports indicate that Carrefour is making proposals to various Russian retailers to find a franchising partner, which it has done in Africa, the Middle East, and Japan. The company would offer domestic retailers to develop a chain of stores under the brand name Carrefour. However, most retail players are satisfied with their own brands. Finding a franchising partner is attractive to Carrefour because it gives them the opportunity to return to the market in the future. Currently only the Victoria Retail Group (more than 210 stores in Russia) has shown interest in franchising under the Carrefour umbrella. Lenta, O’Key, Aushan and X5 Retail Group are all considered likely candidates to buy the Carrefour stores. Carrefour's exit from Russia will undoubtedly affect other international retailers contemplating market entry. Wal-Mart may now be wary of going ahead with its development in the country. On the other hand, it may see this as an opportunity to pick up assets on the cheap and with one less foreign competitor. Wal-Mart has long studied the Russian market and years of careful planning illustrate that it is reluctant to make a quick move. In the meantime, while Russia undoubtedly remains a risky market, the long-term gains from successful market entry could be
abundant. Indeed, Carrefour may come back to this country after necessary market reforms and when the country becomes more open to international retailers.

EU 27 Commission Communication on better functioning food supply chain: USDA FAS

From the USDA FAS: Commission Communication on better functioning food supply chain

Report Highlights: On October 28, 2009, the European Commission adopted a Communication on ‘A better functioning food supply chain in Europe’. Having noted that the sharp decline in agricultural commodity prices of 2008 has so far failed to fully translate into lower food prices at producer and consumer levels, the Commission has identified the following three priorities: a. promote sustainable and market-based relationships between stakeholders in the food supply chain; b. increase transparency along the chain to encourage competition and improve its resilience to price volatility; c. foster the integration and competitiveness of the European food supply chain across Member States.


General Information: The Communication on ‘A better functioning food supply chain in Europe’ that was adopted by the European Commission on October 28, 2009 notes that the sharp decline in agricultural commodity prices of 2008 has so far failed to fully translate into lower food prices at producer and consumer levels. To counter this asymmetry, the Commission has identified three priorities: a. promote sustainable and market-based relationships between stakeholders in the food supply chain; b. increase transparency along the chain to encourage competition and improve its resilience to price volatility; c. foster the integration and competitiveness of the European food supply chain across Member States. In response to priority a), the Commission considers that action is needed to eliminate unfair contractual practices between actors in the food supply chain. To this end the Commission intends to work with Member States to exchange information on contractual practices, launch awareness campaigns to inform stakeholders of their contractual rights, and exchange best practices on notification of contractual practices (e.g. Ombudsmen and actions by enforcement authorities). On the basis of the information gathered, the Commission will work together with the food supply chain stakeholders to prepare sets of standard contracts (the use of which would be voluntary). Additionally, unfair contractual practices in the Internal Market would be assessed and Community measures to address such practices would be proposed as appropriate. The Commission also proposes to create, where necessary, joint working teams within the European Competition Network (ECN) dedicated to the analysis of specific practices and markets which may be critical for the functioning of the food supply chain. In response to priority b), the Commission will make proposals to improve the oversight and overall transparency of agricultural commodity derivatives markets. The Commission has also published the first edition of the European Food Prices Monitoring tool and commits itself to examining ways of developing it further.

With this in mind, it calls on the National Statistical Institutes to collect the necessary data to achieve broader coverage starting from the summer of 2010. Furthermore, the Commission recommends that all Member States have web-based and easily accessible food retail price comparison services. In response to priority c), in order to remove obstacles and end practices that fragment the Internal Market, the Commission will assess measures to address territorial supply constraints and will produce an Impact Assessment based on a detailed study by the end of 2010.

The Commission also urges the Council and the European Parliament to rapidly adopt the Commission’s proposal for the revision of the legislation on labeling rules. Additionally, the Commission will review selected environmental standards and origin labeling schemes that may impede cross-border trade, with a view to establishing whether the policy objectives of those regulations can be achieved with less impact on the integration of the food supply chain. It will also work with Member States and the industry towards betterharmonizing the implementation of food safety standards. In order to foster the competitiveness of the food supply chain, the Commission will promote the restructuring and consolidation of the agricultural sector both in the context of the Rural Development policy (notably by encouraging the creation of voluntary agricultural producer organizations) and in the broader context of post-2013 Common Agricultural Policy. This will first be examined for the situation in the dairy sector by the High Level Expert Group on Milk. The Commission will also take action to bring forward the proposals of the High Level Group aiming to improve the competitiveness of the agro-food sector, notably of Small and Medium sized enterprises, and to foster innovation and exports in the sector.

Changsha, central China’s dynamic pioneer : USDA FAS report

China - Peoples Republic of Post: Guangzhou Changsha, central China’s dynamic pioneer: From the USDA FAS


Highlights: Located in the center of Hunan province, the capital city, Changsha, leads the province's development. It is linked with coastal cities and serves as distribution hub to central China. The booming economy fueled more disposable income, and Changsha consumers are already famous for their willingness to spend and openness to try new products. Both the city’s retail and HRI sectors demonstrate good potential. Imported food items, especially fruit, crackers, frozen potato products and cheese are becoming popular. The local livestock sector would like to see more high quality U.S. purebred swine to further boost production. The prominent Changsha market presents opportunities for U.S. agricultural products.

Israel Citrus Annual 2009 : USDA FAS

Israel Citrus Annual 2009 From the USDA FAS

Report Highlights: In 2009/10, citrus production in Israel is forecast at 627,000 tons, a 10 percent increase compared to the previous year. The expected increase in production is due to an increase in local easy peelers (mainly Or variety) and red grapefruit production. Citrus exports are expected to increase about 3-6 percent from the previous year, and delivery to processing plants is expected to increase about 15 percent.

Executive Summary: In 2009/10, total citrus production is forecast at about 627,000 tons, a 10 percent increase compared to the previous year. Out of the total production, approximately 183,000 tons (29 percent) is expected to be exported, 260,000 processed (42percent), and the remainder consumed fresh. The expected increase is mainly due to increased yields of Or variety (easy peeler) and red grapefruit. In 2008/9, despite the global economic recession combined with unfavorable exchange rates of the euro and U.S. dollar (mainly between September-December), and reduced imports of Israeli citrus from the Scandinavian countries, England and France, citrus exports increased 1 percent to 173,400 tons. In August 2009, planted area totaled 17,724 ha, of which 14,748 ha (83 percent) were fruit-bearing. In 2008 and 2009, about 1,436 ha of fresh citrus were planted, mainly easy peelers (Or and Ora), red grapefruit (Star-Ruby and Rio-Red), and newhole (oranges). On the other hand, about 1,633 ha of citrus were uprooted in 2008 and 2009 mainly white grapefruit, sweetie, shamouti oranges, and pomelo (white & chandler) due to low profitability.

Trade: Exports are forecast to increase about 3-6 percent (about 183,000 tons) compared to the previous year. The expected slight increase in exports is mainly due to the increase in local red grapefruit and easy peelers production. Citrus exports increased slightly in MY 2008/09 because of the global economic recession combined with unfavorable exchange rates of the euro and U.S. dollar (mainly between September-December), and reduced imports from Scandinavian countries, England and France. Out of total citrus exports in 2008/9, 48.9 percent and 31.3 percent were the grapefruit and easy-peelers varieties, respectively. On the other hand, the market share for oranges has decreased by nearly 20 percent, from 19.9 percent market share in 2007/8 to 16.0 percent market share in 2008/9.

Oranges – due to continued competition from other oranges suppliers combined with decreased growers’ revenues from oranges exports, exports of oranges in MY 2008/9 decreased by 8 and 21 percent compared MY 2007/8 and 2006/7, respectively.

Easy Peelers – In recent years, exports of easy peelers have increased and are expected to continue to increase in the forthcoming years. Post estimates that Or variety exports will continue to increase significantly in the near future (in MY 2008/9 Or exports totaled nearly 18,000 tons). In addition, Suntina variety exports reached a record high of 17,627 tons in 2008/9. It is estimated that Suntina exports will increase about 5-10 percent in 2009/10.

Grapefruit – In 2008/9, exports of red grapefruit (Sunrise variety) increased by 10 percent compared to the previous year and red grapefruit exports are expected to continue to grow by 5-10 percent in 2009/10. Exports of white grapefruit in 2008/9 were unchanged from the previous year and totaled 11,520 mt, of which 20 percent was exported to Italy. On the other hand, exports of sweetie variety decreased 10 percent compared to the previous year. The decrease was mainly due to the decrease in sweetie exports to Japan.

Other Citrus - Due to continued competition from China, post estimates that exports of the white and red pomelo varieties to Europe and Japan will continue to decrease in MY 2009/10. As a result of increased demand for lime in the local market, there were no lime exports in MY 2008/9. However, due to increase in local lime production in 2009/10 combined with increasing demand for lime in Europe, post estimates that in 2009/10 lime exports will total about 500-700 tons. Japan - Exports of the sweetie variety to Japan in 2008/9 decreased by 35 percent compared to the previous year (from 427,250 cases to 277,936 cases). In addition, due to increased competition from China, no exports of red pomelo to Japan were recorded in 2008/9. On the other hand, due to decreased grapefruit production in Florida in 2008/9, exports of Israeli white grapefruit to Japan totaled 4,064 cases compared to 0 and 1,328 cases in 2007/8 and 2006/7, respectively. Post estimates that due to the continued decrease in grapefruit production in Florida, Israeli white grapefruit exports to Japan should continue to increase in 2009/10.

China Fresh Deciduous Fruit Annual 2009

China Fresh Deciduous Fruit Annual for 2009 from USDA FAS

Report Highlights: For MY 2009, China's apple production is forecast at 32 MMT, up 7 percent from the previous year because new plantings in the northwestern provinces have begun bearing. Concentrated apple juice (CAJ) production is projected to fall to 500,000 MT due to weak global demand. Apple and grape imports are projected to rise to 58,000 and 125,000 MT on continued strong domestic demand. China's apple exports are estimated at 1.46 MMT, up 25 percent from last year because of anticipated robust demand from Asia and the Middle East. Pear and grape exports are estimated at 470,000 MT and 85,000 MT, respectively.


Executive Summary: For MY 2009, China’s total apple production is forecast to increase to 32 MMT because new plantings in the northwestern provinces have begun bearing. Total apple acreage is expected to rise slightly. Concentrated apple juice (CAJ) production is forecast at 500,000 MT, down 18 percent from the previous year primarily due to weak global demand. Pear and grape production are expected to rise. In MY 2009 pear production is forecast at 13.8 MMT, up only 2 percent from last year (compared with an average increase of 6 percent within the past 3 years) as major producing provinces were affected by poor weather and disease. Pear acreage is stable and forecast at 1.08 million hectares. Grape production is projected to rise to 7.7 MMT, primarily due to acreage expansion. For MY 2009, apple imports are estimated at 58,000 MT, up 20 percent from MY 2008 on strong demand for high quality fruit and anticipated supply increases in Chile and the United States. Grape imports are estimated at 125,000 MT, also attributed to strong domestic demand. For MY 2009, China’s fresh apple exports are estimated at 1.46 MMT, up 25 percent from the previous year on anticipated robust demand from Asia and the Middle East. Pear and grape exports are estimated at 470,000 and 85,000 MT, up 5 and 34 percent from last year on growing demand from ASEAN and neighboring Asian countries.

Apples For marketing year (MY) 2009 (July-June), China’s total apple production is forecast at 32 million metric tons (MMT), up 7 percent from last year because new plantings in the northwest provinces have begun bearing. Production in major apple producing provinces such as Shaanxi, Shanxi, and Gansu is expected to rise by more than 10 percent, while other areas (e.g. Henan, Hebei, and Liaoning) are forecast to increase by 3 to 5 percent. Shandong (the largest apple producing province) production is projected to drop by 10 to 15 percent because of poor weather. MY 2008 production was revised to 29.8 MMT, which reflects official Chinese Ministry of Agriculture (MOA) data. Fruit quality continues to improve due to better orchard management, as high quality fruit receive a higher price and potentially a more lucrative return.

For example, some Shandong apple farmers (many have over 20 years experience) are prudently applying fertilizer and other inputs so that they can market a higher quality product. Application is also controlled by packing houses and other middle men, which contract out to farmers provided they use specific inputs and apply them at predetermined amounts.

This year, the Chinese Fuji apple’s appearance (overall uniformity and color) and taste (sweetness) have greatly improved, even in Shandong where the apple size is smaller due to colder temperatures and drought. Total apple acreage is expected to rise slightly. Provinces in the Yellow Plateau (Shaanxi, Shanxi, and Gansu) are still expanding fresh consumption apple planted area on continued strong domestic demand (international demand accounts for approximately 5% percent of production), while apple acreage in northern China including Shandong, Henan and Hebei is expected to remain stable because of limited available land for expansion. Fuji is the dominant apple variety in north China (over 65 percent of total production). Early maturing varieties (20 percent of total production), such as the Gala, are not as popular since they cannot be kept in cold storage for relatively long periods of time (Galas have more sugar content, which affects storage potential). MY 2009 production costs continue to increase from last year. Shaanxi and Shandong fertilizer prices increased by 10 percent and 30 percent, while pesticide prices rose 5 percent and 10 percent. Shaanxi labor costs are reported at USD $8.80 per day, up 20 percent from the previous year, while Shandong labor costs have risen to USD $13.25 per day, almost double from the previous year due to labor shortages. According to contacts in Shaanxi province, total agricultural input costs (not including labor) were USD $441 per hectare.

Pears For MY 2009, pear production is forecast at 13.8 MMT, up only 2 percent from the previous year (within the past 3 years annual growth was approximately 6 percent) as major producing provinces were affected by poor weather and disease. Part of the crop in Hebei (accounts for more than 25 percent of total production) was damaged due to two rain storms in July and August, while Huangguan pears (grown in the same province) suffered from “chicken paw” disease. Notwithstanding, overall pear quality has improved in the last few years because of better orchard management. MY 2009 pear acreage is stable and forecast at 1.08 million hectares. Major varieties include the Su, Ya, Cuiguan, Fengshui, Golden, Huangguan, Nanguo, and Fragrant pear. MOA estimates that the current total average production cost for pears (not including labor) is USD $86 per Metric Ton (MT).

Grapes MY 2009 (June-May) grape production is forecast at 7.7 MMT, up 8 percent from the previous year primarily due to increased acreage, which is forecast up 4 percent to 468,000 hectares. Greenhouse production is also rising based on steady market returns.

While acreage is generally not expanding in northern provinces like Xinjiang, Hebei, and Shandong, grape production has risen in southern provinces such as Zhejiang, Jiangsu, Guangxi, and Yunnan because of strong demand near the Yangtze River and Pearl River Delta. Among all the varieties grown in China, the Red Globe is the most popular (comprises 30 percent of total production). Runners up include Kyoho, Muscat, and Thompson Seedless grapes. The wine industry has developed rapidly in response to rising demand, particularly by health-conscious and wealthier Chinese consumers. According to industry sources, domestic wine production and imports were 698 and 163 million liters in 2008, an increase of 23 percent and 11 percent from the previous year.

Export For MY 2009, China’s fresh apple exports are forecast at 1.46 MMT, up 25 percent from the previous year due to robust demand from Asia and the Middle East. Russian purchases (the largest buyer of Chinese apples) are expected to slow because of the global economic recession. Post revised the MY 2008 export number to 1,173,259 MT to reflect official Chinese government statistics. In MY 2009, pear and grape exports are forecast at 470,000 and 85,000 MT, up 5 and 34 percent from the previous year on growing demand from ASEAN and neighboring Asian countries.