Fresh Deciduous Fruit Annual

An Expert's View about Agriculture and Animal Husbandry in Canada

Posted on: 27 Nov 2011

After a poor harvest in 2010, apple production is expected to improve in 2011. Post forecasts a 4 percent increase, however the crop level remains well below the five-year average.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 11/01/2011 GAIN Report Number: CA11061 Canada Fresh Deciduous Fruit Annual 2011 Approved By: Robin Gray Prepared By: Mihai Lupescu Report Highlights: After a poor harvest in 2010, apple production is expected to improve in 2011. Post forecasts a 4 percent increase, however the crop level remains well below the five-year average. The declining trend in pear production caused by the disappearance of the processing industry will continue into 2011, with a further estimated reduction of 7 percent. Canada imports over 95 percent of its fresh table grapes and will continue to do so in the years to come. For 2011, Post forecasts a 2 percent decline in imports. Canada ? Fresh Deciduous Fruits Annual ? November 2011 Executive Summary: After a particularly poor harvest in 2010 caused by late spring frost, Post forecasts a 4 percent increase in fresh apple production for marketing year (MY) 2011/12, up to 360,000 metric tons (MT) from 346, 677 MT during MY 2010/11. Despite this improvement in 2011, the fresh apple crop level remains low compared to the production recorded over the past decade. In fact, apple production has been on a declining trend for a number of years. This is consistent with a longer term declining trend in planted area which in turn, reflects a declining profitability in apple cultivation. Post forecasts imports of fresh apples to remain flat at a high level of 190,000 MT during MY 2011/12. A low supply level in Canada, stable demand and a persistently strong Canadian dollar that gives imports a competitive advantage over the local production are the main factors behind this trend. Pear production will continue its declining trend, with an estimated crop of 7,500 MT for MY 2011/12, down 4 percent from 7,833 MT in 2010/11. This downward trend was aggravated over the past several years by the slow death of the pear processing industry in Canada. In 2008 CanGro closed the St. Davids pear cannery in Ontario, the last one of 32 fruit canning plants that existed in the province. Post forecasts a small increase of 2.5 percent in the volume of imported fresh pears for MY 2011/12, up to 70,000 MT from 68,221 MT in 2010/11. Similar factors to those prevailing for apples influence this trend (strong Canadian dollar and stable demand). In addition, specific to pears is the disappearance of canning plants; ten years ago 13 percent of total imports of fresh pears were destined to processing. This has now dropped to zero, thus slowing import growth. Only a small fraction of Canada's grape production consists of fresh table grapes. Based on available data from Statistics Canada and information from provincial authorities Post estimates that Canada produces about 3-4,000 MT of fresh table grapes annually. Domestic consumption is basically satisfied through imports of table grapes, with annual volumes around 180-190,000 MT. Post forecasts a 2 percent decline in imports of table grapes for MY 2011/12, down to 185,000 MT from 188,894 MT in 2010/11, mainly reflecting supply conditions and a stagnant demand in Canada. The Orchards and Vineyards Transition Program has come to an end. Over the past three years, Canada?s major tree fruit producing provinces operated an orchard replant program. These programs assisted producers with the removal of older, lower-yielding, less popular varieties and replacement with more efficient, higher-density plantings of newer varieties. 2 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 APPLES NOTE: "NEW Post" data reflect author's assessments and are NOT official USDA data 2009/2010 2010/2011 2011/2012 APPLES F Marketing Year: July to June resh Canada USDA NEW Post USDA NEW Post USDA NEW Post Official Data Data Official Data Data Official Data Estimates Area Planted 20,137 20,137 18,377 18,110 17,243 Area Harvested 17,147 17,147 16,139 16,245 15,761 Production 413,096 413,096 405,000 346,677 360,000 Imports 184,128 184,014 195,000 191,383 190,000 Total Supply 597,224 597,110 600,000 538,060 550,000 Fresh Dom. Consumption 435,768 403,160 440,000 369,251 375,000 Exports 21,266 21,270 20,000 29,029 30,000 For Processing 140,190 172,680 140,000 139,780 145,000 Total Distribution 597,224 597,110 600,000 538,060 550,000 Data in hectares or metric tons Production: With good growing conditions reported in Central Canada, Post forecasts a 4 percent increase in fresh apple production for marketing year (MY) 2011/12, up to 360,000 metric tons (MT) from 346, 677 MT during MY 2010/11. Despite this improvement in 2011, the fresh apple crop level remains low compared to the production recorded over the past decade. For the current year, production is expected to decrease slightly in British Columbia and Nova Scotia, which together supply over one third of the total Canadian volume. Production in New Brunswick is expected to remain stable. In turn, higher crop levels are expected in Central Canada (Ontario and Quebec), which combined accounts for over 60 percent of total volume. This is especially the case in Ontario, which is expected to rebound from a previously difficult season. In 2010, spring frosts were the main growing challenge. Trees were in full bloom by early May when few days with temperatures below zero and several inches of snow killed the buds. This resulted in a 2010 production level 16 percent below the previous year's level. Ontario was hit the hardest, with a 19 percent reduction in apple production. 3 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Source: Statistics Canada / * Post forecast for production volume In terms of longer term trends, the decline in fresh apple production in Canada is consistent with the declining trend in planted areas which, in turn, reflects a declining profitability of apple cultivation. Bearing areas have declined for the fifth consecutive year, with a drop of 3 percent from MY 2010/11, and a total drop of nearly 30 percent since MY 2001/02. Changing agricultural practices, resulting in higher density plantings on smaller areas, and a reduction in the number of smaller producers, exiting because production costs outpaced market returns, are the leading factors underlying this trend. More affordable imports from the United States, Chile and other low cost countries, combined with high production costs and a strong Canadian dollar continued to force the apple industry to downsize. Many apple growers are responding to the evolving market situation by converting orchards over to new plantings of vinifera grapes and other fruits, as well as by turning land over for new housing development projects. Growers that intend to remain in the industry are turning to newer, more popular varieties such as Ambrosia and Honeycrisp and new, modern intensive planting systems in an attempt to remain competitive with imports. To assist producers adapt to industry pressures and changing markets, Canada?s federal and provincial authorities ran replant programs between 2008 and 2010. 4 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Consumption: Of all fresh apples available in Canada, about three quarters are consumed fresh and about one quarter is used in the processing industry (for use in apple juice, pie filling, apple chips, etc.). The share of the fresh apple market in Canada has continuously increased over the past decade, reflecting consumer preferences for fresh fruit versus processed products. Between 30 and 40 percent of domestic fresh consumption comes from imports. Source: Statistics Canada / *Post forecast Per capita apple consumption, which is not only a function of market conditions but of total population numbers as well, has remained remarkably stable over the past three decades, ranging between 10.5 and 12.75 kg (kilograms) per person, with an average around 11.5 kg per person. Over the same period, Canada's total population increased by nearly 40 percent, with an increase in ethno-cultural diversification. The consumption trend reflects the popularity of apples as a universal fruit consumed not only across generations, but across various cultures and ethnicities as well. 5 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Source: Statistics Canada / *Post forecast A recent article in a newspaper noted: "For many Canadians, McIntosh means iMacs and MacBooks. McIntoshes just don't age well." At the same time, the Ontario Apple Growers Association reports that "one in every three apples eaten in Ontario is a Gala, most likely grown in Washington state or Chile. In the last decade, Gala apples, firm and crisp with a mild sweetness, cornered a 33 percent market share of the Ontario apple growing industry. The McIntosh: only 12 percent." For decades in a row and for generations of Canadians, McIntosh used to be the most popular variety of apples. But not anymore. It will probably remain, though, "culturally significant, if not gustatorily popular." Over the past two decades or so there has been an undeniable shift in consumer preference when it comes to apples. As a result, older apple varieties have been replaced with new cultivars, and many growers have adopted a new variety strategy as a way to improve profitability, as new varieties tend to sell at a premium price and have gained significant consumer appeal. For instance, another newspaper article reports that "Honeycrisp apples sell at a 50 percent premium." The same article indicates that "apple consumers can be segmented into different groups: urban, comfortable country, plain rural living and youth 18 and under", and advises that "it is important to align apple varieties with the customer base". Data from Nielsen reported by yet another article show that among the fresh bagged apples the most popular varieties in 2010 were Gala, Royal Gala, Red Delicious, Granny Smith and Golden Delicious. The Canadian Horticultural Council reports that McIntosh, Red Delicious, Spartan, Idared, Cortland and Empire are the major varieties produced mostly in Eastern Canada. In British Columbia it is Gala, with almost 40 percent of production, which has moved ahead of Red Delicious and McIntosh as the most popular variety. According to the same organization, the introduction of new varieties has been particularly important in British Columbia, where growers have been planting new varieties like Gala, Fuji, Braeburn, Jonagold, Honeycrisp and Ambrosia. New plantings of Ambrosia, which apparently commands the highest premium among all apple varieties in British Columbia, have nearly doubled every year in the past five years, and the variety has been so well received by the market that producers cannot keep up with demand. 6 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Trade: Post forecasts a modest decline of 0.7 percent in Canadian imports of fresh apples, down to 190,000 MT during MY 2011/12 compared to a record high level of 191,383 MT in 2010/11. The United States is the largest supplier of fresh apples, with a stable market share of about 80 percent. A low production level in Canada, stable demand and a very strong Canadian dollar that gives imports a competitive advantage over the local production are the main factors behind the current trend. The projected imports, although in small decline, remain at a historical high level, given that the five-year average is close to 174,000 MT. Canada: Imports of fresh apples Marketing year: July-June / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 World 178,317 166,628 173,448 184,014 191,383 for processing 30,157 22,523 30,883 36,504 48,911 organic 2,999 5,588 7,616 9,478 9,737 other 145,160 138,515 134,947 138,032 132,733 United States 139,641 132,597 138,656 144,428 155,393 for processing 30,070 22,523 30,129 36,155 47,233 organic 2,123 4,344 5,429 6,509 7,257 other 107,446 105,728 103,096 101,766 100,903 Chile 21,211 19,199 18,942 23,933 20,630 New Zealand 7,486 6,922 7,501 7,333 7,767 South Africa 2,958 1,992 2,924 1,963 3,308 China 5,832 5,084 5,116 3,855 2,285 All other 1,189 834 309 2,502 2,000 Import Market Shares United States 78.3% 79.6% 79.9% 78.5% 81.2% Chile 11.9% 11.5% 10.9% 13.0% 10.8% New Zealand 4.2% 4.2% 4.3% 4.0% 4.1% China 1.7% 1.2% 1.7% 1.1% 1.7% South Africa 3.3% 3.1% 2.9% 2.1% 1.2% Source: Global Trade Atlas Note : Tariff lines for organic apples were introduced on January 1, 2007 At 191,383 MT, MY 2010/11 marked a second consecutive record in terms of the import volume of fresh apples into Canada, both globally and originating from Unites States. Over the past decade Canadian total imports of fresh apples increased by 72 percent, while imports from United States increased by 86 percent. The second largest supplier of apples is Chile, which has a strategy focused on developing export markets. Chile's market share in Canada increased from 7 percent to 11 percent over the past ten years, with a high of 13 percent in 2009/10. In 2007, Canada was the first country to introduce Harmonized System (HS) customs codes for organic products. Available statistics show an increase of 75 percent in the volume of imports of organic apples. These represent about 5 percent of the volume of total apple imports and up to three quarters of these originate in the United States. 7 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Canada: Exports of fresh apples Marketing year: July-June / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 World 37,427 49,661 30,373 21,266 29,029 for processing 3,674 14,429 4,346 3,776 5,139 other 33,752 35,232 26,027 17,490 23,890 United States 28,603 40,831 26,141 17,213 23,128 for processing 3,525 14,237 4,249 2,746 3,022 other 25,078 26,594 21,892 14,467 20,106 Mexico 2,926 3,057 1,645 1,069 1,872 United Kingdom 2,398 3,364 1,127 1,223 1,560 Taiwan 567 669 221 137 1,347 All other 2,933 1,740 1,239 1,628 1,122 Source: Global Trade Atlas Canadian exports of fresh apples have steadily declined over most of the past decade, reflecting the decline in production and reduced profitability and competitiveness in export markets. Post forecasts a 3 percent increase in exports, up to 30,000 MT during MY 2011/12 from 29,029 MT in 2010/11, which was also the first time in a decade when the export volume actually increased. Nevertheless, this forecast volume represents one half of what Canada used to export ten years ago. PEARS NOTE: "NEW Post" data reflect author's assessments and are NOT official USDA data 2009/2010 2010/2011 2011/2012 PEARS F Marketing Year: July to June resh Canada USDA NEW Post USDA NEW Post USDA NEW Post Official Data Data Official Data Data Official Data Estimates Area Planted 878 878 761 800 785 Area Harvested 789 789 696 693 679 Production 8,400 8,400 7,500 7,833 7,500 Imports 71,724 71,511 70,000 68,221 70,000 Total Supply 80,124 79,911 77,500 76,054 77,500 Fresh Dom. Consumption 79,806 79,593 77,250 75,363 77,150 Exports 68 68 50 161 100 For Processing 250 250 200 530 250 Total Distribution 80,124 79,911 77,500 76,054 77,500 Data in hectares or metric tons 8 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Production: Post forecasts a further decline of 4.3 percent in fresh pear production, down to 7,500 MT during MY 2011/12 from a level of 7,833 MT in 2010/11. In addition to the longer term declining trend in the profitability of pear cultivation, a major contributory factor has been the slow death of the pear processing industry in Canada. In 2008, CanGro closed the St. Davids pear cannery in Ontario, the last of 32 fruit canning plants that existed in the province. Source: Statistics Canada / * Post forecast for production volume Bearing area has declined an additional 2 percent since MY 2010/11, while overall pear planted area declined by nearly 45 percent over the past decade. Pear production is also down by the same percentage since MY 2001/02. Consumption: Since the closure of the last pear canning plant in Ontario back in 2008, basically all pears available in Canada are consumed fresh. One decade ago, approximately 10 to 15 percent of available fresh pears were used in the processing sector. In the last couple years, only a few hundred metric tons of fresh pears are processed in Canada, mainly as artisanal production sold in farmers' markets. About 90 percent of domestic fresh pear consumption comes from imports. 9 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Source: Statistics Canada / *Post forecast Per capita consumption of fresh pears has been on a constant decline over the past decade, reflecting the diminished appeal of this fruit among consumers. While the Canadian population increased by about 12 percent since year 2000, the overall consumption of fresh pears has remained relatively stable, explaining the declining trend on a per capita basis. Source: Statistics Canada / *Post forecast 10 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Trade: Post forecasts a small increase of 2.6 percent in the volume of imported fresh pears for MY 2011/12, up to 70,000 MT from 68,221 MT in 2010/11. A lower domestic production level in Canada, stable demand and a very strong Canadian dollar influence this trend, and will bring imports back to more traditional levels. An additional factor affecting pear trade has been the disappearance of the canning plants; ten years ago 13 percent of total imports of fresh pears were destined to processing. This has dropped to zero today contributing to the slowdown in import growth. Canada: Imports of fresh pears Marketing year: July-June / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 World 76,497 77,250 68,461 71,511 68,221 for processing 3,332 2,431 58 205 14 organic 717 1,486 1,339 1,578 1,427 other 72,448 73,333 67,064 69,729 66,780 United States 40,366 44,098 35,440 42,277 37,936 for processing 3,332 2,431 58 205 14 organic 385 1,068 1,030 1,245 820 other 36,648 40,599 34,353 40,827 37,103 Argentina 14,960 10,871 11,584 9,757 10,598 China 12,810 12,823 12,517 10,931 10,428 South Africa 2,933 2,889 3,438 3,526 4,647 Australia 952 1,694 1,860 1,951 1,622 Chile 2,468 2,996 2,074 1,343 1,494 All other 1,899 1,773 1,440 1,631 1,417 Import Market Shares United States 52.8% 57.1% 51.8% 59.1% 55.6% China 16.7% 16.6% 18.3% 15.3% 15.3% Argentina 19.6% 14.1% 16.9% 13.6% 15.5% South Africa 3.8% 3.7% 5.0% 4.9% 6.8% Source: Global Trade Atlas Note : Tariff lines for organic pears were introduced on January 1, 2007 The United States is the main supplier of fresh pears, with China and Argentina as major competitors. Since the introduction of organic HS codes in 2007, the import volume of organic pears has remained stable at some 1,500 MT, or about 2 percent of total imports. Typically, the United States supplies about three quarters of organic imports, but in the past year its share dropped below 60 percent. Canada has an insignificant volume of exports of fresh pears. 11 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 FRESH TABLE GRAPES NOTE: "NEW Post" data reflect author's assessments and are NOT official USDA data 2009/2010 2010/2011 2011/2012 GRAPES F Marketing Year: June to May resh Canada USDA NEW Post USDA NEW Post USDA NEW Post Official Data Data Official Data Data Official Data Estimates Production 2,671 2,671 3,050 3,293 3,000 Imports 182,819 182,819 185,000 188,894 185,000 Total Supply 185,490 185,490 188,050 192,187 188,000 Fresh Dom. Consumption 182,639 182,640 185,550 189,697 185,500 Exports 2,851 2,850 2,500 2,490 2,500 For Processing 0 0 0 0 0 Total Distribution 185,490 185,490 188,050 192,187 188,000 All data in metric tons Production: Canada has systematically developed its wine industry over the past two decades. Today, about 70- 80,000 MT of grapes are produced annually and used for producing wine and other processed products (such a grape juice). The two provinces that supply Canadian grapes are Ontario, with a market share of about 75 percent, and British Columbia accounting for the balance. By contrast, only a small fraction of Canada's grape production consists of fresh table grapes. Based on available data from Statistics Canada and information from provincial authorities, Post estimates that Canada produces about 3-4,000 MT of fresh table grapes annually. Domestic consumption of table grapes is basically satisfied through imports, with recent annual volumes around 180-190,000 MT. Over half of Canada's table grape imports originate in the United States. Consumption: As with apples, per capita table grapes consumption, which is not only a function of market conditions, but also of total population numbers, has remained remarkably stable over the past three decades. Per capita consumption ranged between 4.2 and 5.5 kg (kilograms) per person, with an average around 5 kg per person. Over the same period, Canada's total population increased by almost 40 percent, and became extremely diversified form an ethno-cultural point of view. The consumption trend reflects the popularity of grapes as a fruit consumed not only across generations, but by Canadians with various ethnic backgrounds as well. 12 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 Source: Statistics Canada / *Post forecast Trade: As indicated earlier, Canada imports over 95 percent of its fresh table grapes. Local grape production is primarily used in wine making. Post forecasts a decrease of 2 percent in imports of table grapes for MY 2011/12, down to 185,000 MT from 188,984 MT in 2010/11. Canada: Imports of fresh grapes Marketing year: July-June / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 World 173,539 191,690 189,853 182,819 188,894 organic 0 0 9,581 4,790 3,197 other 173,539 191,690 180,272 178,029 185,697 United States 85,716 99,598 98,850 96,935 96,380 organic 0 0 184 2,511 1,763 other 85,716 99,598 98,666 94,424 94,617 Chile 62,128 64,055 63,587 64,347 61,881 Mexico 16,120 20,402 20,983 16,251 22,870 Peru 590 1,119 1,175 1,444 3,587 Brazil 3,051 3,046 2,922 1,713 2,264 South Africa 2,472 2,380 1,292 933 1,046 All other 3,462 1,090 1,044 1,196 866 Import Market Shares United States 49.4% 52.0% 52.1% 53.0% 51.0% Chile 35.8% 33.4% 33.5% 35.2% 32.8% Mexico 9.3% 10.6% 11.1% 8.9% 12.1% Peru 0.3% 0.6% 0.6% 0.8% 1.9% Brazil 1.8% 1.6% 1.5% 0.9% 1.2% South Africa 1.4% 1.2% 0.7% 0.5% 0.6% Source: Global Trade Atlas Note: Tariff lines for organic grapes were introduced on January 1, 2009 13 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 The United States is the main supplier of fresh table grapes, with a market share of just above 50 percent, while Chile and, to a lesser extent Mexico, are the major competitors. In 2009, Canada introduced organic HS codes for grapes, and after an initial spike, organic imports have steadily decreased. Compared to the size of its imports, Canadian exports of fresh table grapes are not significant. ADDITIONAL INFOMRATION Fresh Fruit Consumption Trend: The combined Canadian per capita consumption of apples, pears and grapes continues to remain relatively stable, a trend that has been observed over the past 30 years. However, Statistics Canada reported a slow increase in per capita consumption of fresh fruits in recent years. Source: Statistics Canada / *Post forecast Factors that have contributed to this upward trend, and that may very likely continue to shape consumption trends in the future, include: an increasingly aware Canadian consumer that is more concerned about dietary impacts on health; an aging population of considerable and increasing share that focuses on good health and its connection to fruit consumption and nutrition; an increasingly diverse ethnic composition of the population and an increasing share of immigrant population of non- European origin that is used to a higher consumption of fresh fruits. 14 | P a g e Canada ? Fresh Deciduous Fruits Annual ? November 2011 This last factor, however, may also pose a challenge to Canadian growers of traditional fruits such as apples, pears and grapes: they fear the competition from exotic fruits, which are in increasing demand from such ethnic groups and which may erode the consumption of traditional fruits. Prices: Agriculture and Agri-Food Canada monitors fresh apple, pear and grape prices in the major Canadian wholesale markets. The daily and weekly market prices are available electronically at the Agriculture and Agri-Food Canada?s (AAFC) InfoHort website: http://www4.agr.gc.ca/IH5_Reports/faces/wholesale_price_reports.jsp?lang=e&ref=wholesale_price_re ports Policy: Orchards and Vineyards Transition Program Ended Between 2008 and 2010, Canada?s major tree fruit producing provinces operated an orchard replant program. These programs assisted producers with the removal of older, lower yielding, less popular varieties and replacement with more efficient higher density plantings of newer varieties. The last implementation year for these programs was 2010. Ontario reported that in total C$18 million were spent and 11,100 acres (about 4,500 hectares) of fruit trees were removed. At the national level, statistics show that the area planted with apple trees has decreased by 15 percent between 2008 and 2011, while the area planted with pear trees was reduced by 32 percent. Both these developments have been supported by the transition program. Government Supports Apple Research in the Maritimes The federal government announced an investment of C$226,000 to the Nova Scotia Fruit Growers Association for research focused on apple quality in the orchard. Over the next three years, researchers from the Nova Scotia Fruit Growers Association will work collaboratively with researchers at the Atlantic Food and Horticultural Research Centre to study how weather impacts the maturity and quality of new high-value apple varieties. 15 | P a g e
Posted: 27 November 2011

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