Fresh Deciduous Fruit Annual

An Expert's View about Pome Fruits (such as apples or pears) and Stone Fruits (such as peaches, cherries, etc.) in Canada

Posted on: 28 Nov 2012

Following an April frost, apple production in several of the provinces was dramatically affected.

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: 11/1/2012 GAIN Report Number: CA12041 Canada Fresh Deciduous Fruit Annual October 2012 Approved By: Robin Gray Prepared By: Mihai Lupescu Report Highlights: Following an April frost, apple production in several of the provinces was dramatically affected. With production expected to be down by approximately 80 percent in those provinces, Canada's overall apple production is expected to decrease approximately 30 percent. Pear production numbers will also be affected by the frost. Moreover, the declining trend in pear production caused by the disappearance of the processing industry will continue into 2012, with a further estimated reduction of nearly 25 percent. Canada imports over 95 percent of its fresh table grapes and will continue to do so in the years to come. For 2012, Post forecasts a 4.3 percent increase in imports. Executive Summary: Canada experienced a 5.2 percent increase in fresh apple production for marketing year (MY) 2011/12, up to 390,362 metric tons (MT) from 371, 025 MT during MY 2010/11. Despite the improvement in 2011, the fresh apple crop will experience crippling losses in MY 2012/13, adding to low production figures 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 jump 18.4 percent to 225,000 during MY 2012/13, coming off low domestic production. This 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 6,250 MT for MY 2012/13, down 24.6 percent from 8,293 MT in 2011/12. This drop in production in MY 2012/13 is largely due to the April frost. However, Canada was already experiencing a downward trend, 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 the volume of imported fresh pears for MY 2012/1 to remain flat, at 70,000 MT from 70,042 MT in 2011/12. 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 4.3 percent increase in imports of table grapes for MY 2012/13, up to 180,000 MT from 172,550 MT in 2011/12. APPLES NOTE: "NEW Post" data reflect author's assessments and are NOT official USDA data APPLES 2010/2011 2011/2012 2012/2013* 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 18,377 18,110 0 17,619 17,500 Area Harvested 16,139 16,245 0 15,914 16,000 Production 346,700 371,025 360,000 390,362 275,000 Imports 191,400 191,377 200,000 190,060 225,000 Total Supply 538,100 562,402 560,000 580,422 500,000 Fresh Dom. Consumption 369,100 359,833 395,000 403,402 335,000 Exports 29,000 29,029 25,000 26,350 15,000 For Processing 140,000 173,540 140,000 150,670 150,000 Total Distribution 538,100 562,402 560,000 580,422 500,000 Data in hectares or metric tons / *Post forecast Production: Following significant losses in the spring due to frost, Post forecasts nearly a 30 percent decrease in fresh apple production for marketing year (MY) 2012/13, down to 275,000 metric tons (MT) from 390, 362 MT during MY 2011/12. Production is expected to be dramatically affected by loses in the east where spring frosts were the main growing challenge. Warm weather in February and March led to early blossoms that were decimated by frost in April. Some estimates indicate that Ontario apple farmers have lost about 88 percent of their crop. Of note, particular varieties, such as Northern Spy and Gala, are in good supply across Ontario. In a normal year, about 35 percent of available apples come from Ontario, in 2012/13, it is expected to be more like 5 percent. The situation is less severe in Quebec, where numbers are expected to be down about 20 percent. Meanwhile, the 2012/13 apple crop in the west has been very good and Nova Scotia an average crop. Source: Statistics Canada / * Post forecast 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 area for MY 2012/13 remained flat compared to MY 2011/12, but reflects the continued declining trends for production. Bearing area declined for the five previous consecutive years, 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. Some anticipated that production areas will decline further next year after the devastating impact of the MY 2012/13 crop. 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. 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 Consumption in MY 2012/13 is expected to drop 17 percent, mostly related to market conditions. 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. Source: Statistics Canada / *Post forecast We reported last year on a consumption trend away from some of the more traditional varieties, noting a newspaper article: "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." Given that in MY 2012/13 some varieties were more affected by the frost, it will be interesting to see if this consumer preference trend is cemented by production realities. 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. Trade: Post forecasts an 18.4 percent increase in Canadian imports of fresh apples, up to 225.000 from 190,000 MT during MY 2011/12. This increase will nearly match the 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 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 2011/12 World 178,317 166,628 173,448 184,006 191,377 190,060 for processing 30,157 22,523 30,883 36,504 48,911 48,709 organic 2,999 5,588 7,616 9,477 9,741 10,129 other 145,160 138,515 134,947 138,025 132,723 131,221 United States 139,641 132,597 138,656 144,420 155,388 150,965 for processing 30,070 22,523 30,129 36,155 47,233 46,252 organic 2,123 4,344 5,429 6,506 7,262 7,415 other 107,446 105,728 103,096 101,759 100,892 97,300 Chile 21,211 19,199 18,942 23,933 20,630 21,741 New Zealand 7,486 6,922 7,501 7,333 7,767 7,702 South Africa 2,958 1,992 2,924 1,963 3,308 4,075 China 5,832 5,084 5,116 3,855 2,285 2,855 All other 1,189 834 309 2,502 1,999 2,722 Import Market Shares United States 78.3% 79.6% 79.9% 78.5% 81.2% 79.4% Chile 11.9% 11.5% 10.9% 13.0% 10.8% 11.4% New Zealand 4.2% 4.2% 4.3% 4.0% 4.1% 4.1% China 1.7% 1.2% 1.7% 1.1% 1.7% 2.1% South Africa 3.3% 3.1% 2.9% 2.1% 1.2% 1.5% Source: Global Trade Atlas Note: Tariff lines for organic apples were introduced on January 1, 2007 In MY 2011/12 the import volume of fresh apples into Canada, both globally and originating from Unites States, dipped to around 190,000 MT. 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. Canada: Exports of fresh apples Marketing year: July-June / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 World 37,427 49,661 30,373 21,266 29,029 26,350 for processing 3,674 14,429 4,346 3,776 5,139 5,583 other 33,752 35,232 26,027 17,490 23,890 20,767 United States 28,603 40,831 26,141 17,213 23,128 20,786 for processing 3,525 14,237 4,249 2,746 3,022 3,918 other 25,078 26,594 21,892 14,467 20,106 16,867 Mexico 2,926 3,057 1,645 1,069 1,872 1,175 United Kingdom 2,398 3,364 1,127 1,223 1,560 1,623 All other 3,500 2,409 1,460 1,765 2,469 2,766 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. Given the significant decline in production, Post forecasts a 43 percent decline in exports during MY 2012/13 from 26,350 MT in 2011/12. MY 2011/12 was the first time in a decade when Canada's export volume actually increased. However, that small increase represented 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 PEARS 2010/2011 2011/2012 2012/2013* 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 761 800 0 812 800 Area Harvested 696 693 0 693 700 Production 7,800 7,833 7,500 8,293 6,250 Imports 68,300 68,221 70,000 70,042 70,000 Total Supply 76,100 76,054 77,500 78,335 76,250 Fresh Dom. Consumption 75,700 75,533 77,200 78,058 76,000 Exports 200 161 100 107 50 For Processing 200 360 200 170 200 Total Distribution 76,100 76,054 77,500 78,335 76,250 Data in hectares or metric tons / * Post forecast Production: Post forecasts a drop of nearly 25 percent in fresh pear production, down to 6,250 MT during MY 2012/13 from a level of 8,293 MT in 2011/12. Pears were also dramatically affected by the spring frost. Additionally, there has been a 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 Bearing area declined an additional 1.5 percent since MY 2011/12, while overall pear planted area declined by more than 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. 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 Trade: Post forecasts that imports of fresh pears will remain flat in MY 2012/13, at 70,000 MT. 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 2011/12 World 76,497 77,250 68,461 71,511 68,221 70,042 for processing 3,332 2,431 58 205 14 0 organic 717 1,486 1,339 1,578 1,427 1,686 other 72,448 73,333 67,064 69,729 66,780 68,356 United States 40,366 44,098 35,440 42,277 37,936 39,668 for processing 3,332 2,431 58 205 14 0 organic 385 1,068 1,030 1,245 820 1,042 other 36,648 40,599 34,353 40,827 37,103 38,626 Argentina 14,960 10,871 11,584 9,757 10,598 9,724 China 12,810 12,823 12,517 10,931 10,428 10,460 South Africa 2,933 2,889 3,438 3,526 4,647 5,469 Australia 952 1,694 1,860 1,951 1,622 1,681 Chile 2,468 2,996 2,074 1,343 1,494 1,189 All other 1,899 1,773 1,440 1,631 1,417 1,851 Import Market Shares United States 52.8% 57.1% 51.8% 59.1% 55.6% 56.6% China 16.7% 16.6% 18.3% 15.3% 15.3% 14.9% Argentina 19.6% 14.1% 16.9% 13.6% 15.5% 13.9% South Africa 3.8% 3.7% 5.0% 4.9% 6.8% 7.8% 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. In MY 2011/12 its share dropped below 60 percent, but is expected to rebound somewhat in MY 2012/13 to 1042 MT. Canada has an insignificant volume of exports of fresh pears. FRESH TABLE GRAPES NOTE: "NEW Post" data reflect author's assessments and are NOT official USDA data GRAPES 2010/2011 2011/2012 2012/2013* 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 3,300 3,105 3,000 2,744 3,000 Imports 188,900 188,890 170,700 172,550 180,000 Total Supply 192,200 191,995 173,700 175,294 183,000 Fresh Dom. Consumption 189,700 189,505 171,700 173,204 181,000 Exports 2,500 2,490 2,000 2,090 2,000 For Processing 0 0 0 0 0 Total Distribution 192,200 191,995 173,700 175,294 183,000 All data in metric tons / *Post forecast 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, 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. 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 4.3 percent increase in imports of table grapes for MY 2012/13, up to 183,000 MT from 175,294 MT in 2011/12. Canada: Imports of fresh grapes Marketing year: June-May / Quantity in metric tons 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 World 173,539 191,690 189,853 182,813 188,890 172,550 organic 0 0 9,581 4,784 3,197 2,318 other 173,539 191,690 180,272 178,029 185,693 170,232 United States 85,716 99,598 98,850 96,928 96,384 91,531 organic 0 0 184 2,505 1,763 1,742 other 85,716 99,598 98,666 94,423 94,621 89,789 Chile 62,128 64,055 63,587 64,347 61,857 53887 Mexico 16,120 20,402 20,983 16,251 22,870 17262 Peru 590 1,119 1,175 1,444 3,587 5389 Brazil 3,051 3,046 2,922 1,713 2,264 2206 All other 5,934 3,470 2,336 2,130 1,928 2275 Import Market Shares United States 49.4% 52.0% 52.1% 53.0% 51.0% 53.0% Chile 35.8% 33.4% 33.5% 35.2% 32.7% 31.2% Mexico 9.3% 10.6% 11.1% 8.9% 12.1% 10.0% Peru 0.3% 0.6% 0.6% 0.8% 1.9% 3.1% Brazil 1.8% 1.6% 1.5% 0.9% 1.2% 1.3% Source: Global Trade Atlas Note: Tariff lines for organic grapes were introduced on January 1, 2009 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 INFORMATION Prices: Agriculture and Agri-Food Canada (AAFC) 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 Following the spring frost, many have expressed hope that the federal government will provide compensation for losses. Word is that the government is currently doing background work, but it is unlikely that any program would be announced before final numbers are out in February. Approximately 65 percent of farmers in Ontario have crop insurance, according to the Ontario Apple Growers. It is expected that the financial hit to the 35 percent who do not have insurance will be significant. Additionally, though insurance will help growers this year, provincial insurance plans are based on production averages over six years, so this year's production will have a negative impact for the next six years. In the last year Agriculture and Agri-Foods Canada has announced several initiatives important to the production of apples, pears and grapes. These include: A program in Quebec to assist apple growers and wholesalers in the development of an experimental commercial process and production chain prototype to extract the natural sugars from lower-quality apples. http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2012&page=n120928 The newest apple variety, Salish, introduced at the University of British Columbia Apple Festival. http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2012&page=n121013 Two new initiatives to assist with organic production: http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2012&page=n121023 http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=2012&page=n120605 AAFC's website can be monitored for ongoing announcements at: http://www.agr.gc.ca/cb/index_e.php?s1=n&s2=index&page=2012_10
Posted: 28 November 2012

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