Citrus Annual 2012

An Expert's View about Citrus Fruits in China

Posted on: 28 Dec 2012

China’s total citrus production will reach 30 million metric tons (MMT) for marketing year (MY) 2012/13, up nearly three percent.

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: 12/17/2012 GAIN Report Number: 12074 China - Peoples Republic of Citrus Annual Annual Approved By: Michael Riedel Prepared By: Ryan R. Scott, Jojo Shen, and Wu Bugang Report Highlights: The Office of Agricultural Affairs in Beijing (OAA/Beijing) forecasts that China’s total citrus production will reach 30 million metric tons (MMT) for marketing year (MY) 2012/13, up nearly three percent from the revised estimate of 29 MMT in MY 2011/12. Government funding has been allocated to improve production and build processing facilities in key orange producing provinces like Jiangxi. The United States is the top orange and lemon supplier to China. Brazil and Australia are the dominant suppliers of frozen concentrate orange juice (FCOJ) and tangerines/mandarins, respectively. Commodities: Citrus, Other, Fresh Production: Oranges OAA/Beijing forecasts that China’s orange production will reach 7.0 MMT in MY 2012/13 (November-October), slightly up from the revised estimate of 6.9 MMT in MY 2011/12. This year’s production in Jiangxi, the largest orange producing province, is expected to be lower than last year because of excessive rainfall during the bearing season. However, higher-than-normal production in other key producing provinces (like Sichuan and Chongqing) will likely offset declined production in Jiangxi. In MY 2012/13, China’s orange-planted acreage is forecast at 800,000 hectares, up two percent from MY 2011/12. Navel oranges remain the dominant variety and are harvested in November and December. China is aiming to extend its orange supply season, so new varieties (including Valencia) are being planted earlier and later in the season. Fruit farm consolidation is forming, but some growers are willing to consolidate, while others refuse, so large-scale companies find it difficult to operate on limited land. Private investment companies are building new facilities in key producing areas (like Jiangxi and Chongqing) to process citrus into wine, vinegar, and juice. Update on Jiangxi, China’s top orange producer: Over the past few years, Jiangxi’s orange production has increased dramatically. Plantings from 2003 to 2006 are now bearing fruit and are expected to continue through the next three to five years. Current production is around 1.3 MMT of oranges on acreage of 116,000 ha. The provincial government has a production goal of 3.0 MMT by 2015 and 3.5 MMT by 2020 with planted acreage reaching 133,333 and 146,666 hectares, respectively. Frozen Concentrated Orange Juice (FCOJ) Production of frozen concentrated orange juice (FCOJ) is expected to reach 45,000 MT in MY 2012/13 (October- September), which is an increase of 13 percent from the revised MY 2011/12 estimate. FCOJ production depends on market prices for fresh oranges. If prices for fresh oranges are too expensive, there will be short supplies of oranges used for processing. This is a challenge for newly built juicing facilities in Chongqing and Fujian as processors report that there are inadequate amounts of oranges available for processing. With China expanding its supply season and planting more Valencia oranges, processors remain optimistic that more supplies will become available for processing. Tangerines/Mandarins OAA/Beijing estimates China’s tangerine/mandarin production in MY 2012/13 (October-September) at 17 MMT, up six percent from the revised MY 2011/12 estimate of 16 MMT. Although dry weather conditions in summer months lowered production in Guangdong, the largest mandarin producer, other main producers, including Hunan and Hubei, are expecting a bumper harvest. Compared to previous years, tangerine/mandarin acreage remains relatively flat at 814,000 hectares. Some farmers are switching from old tangerine/mandarin varieties to newer, more profitable varieties such as honey mandarins. Canned mandarins OAA/Beijing forecasts that China’s canned mandarin production will reach 440,000 MT in MY 2012/13 (October- September), up 10 percent from the revised MY 2011/12 estimate of 400,000 MT, primarily driven by domestic demand. Reliable industry sources reported that domestic sales of canned mandarins increased in MY 2011/12, but the majority of canned mandarins are destined for the export market, which recently shown modest signs of recovery according to China Customs statistics. China’s canned mandarin exports (from Jan-Oct 2012) were five percent higher than the same time in 2011. Grapefruit/pomelos OAA/Beijing estimates that China’s grapefruit/pomelo production will reach 2.9 MMT in MY 2012/13 (October- September). This year’s poor weather conditions in Fujian (the largest grapefruit/pomelo producing province) have led to a 30 percent decline, which will also cause China’s overall production to fall by nearly 10 percent. Local sources also reported lower production in Chongqing. Lemons China’s lemon production is forecast at 400,000 MT in MY 2012/13 (October-September), up 14 percent from the previous year, primarily because of a bumper harvest in Anyue (a county located in Sichuan province). Anyue, China’s top lemon producer, accounts for 80 percent of total lemon production and is expected to harvest about 350,000 MT this year. Anyue’s local government plans to produce 500,000 MT by 2016 and, to meet that goal, it is working to standardize production, establish a research center on processing technology, and build a specialized wholesale market for lemons. Anyue’s lemons are mainly supplied to the domestic market, but there are some that’s exported to Russia, Hong Kong, and Southeast Asian countries. Consumption: With increasing disposable income and dietary change for healthier lifestyles, Chinese consumers are willing to pay higher prices for fruit and fruit products. Consumer purchasing behavior shifted between 2011 and 2012. According to the 2012 China Statistical Yearbook, per capita income of Chinese urban households in 2011 increased by 14 percent to $3,429, which is almost four times higher than 2000. Also, per capita expenditure on food also increased by 15 percent to $874 in 2011. However, the economic recession in 2012 affected consumers’ buying decisions in China. Consumers are paying more attention to market prices, and traders (middle men) purchase fruits based on more solid market assessments. Sources note that the economy is showing modest signs of recovery during the fourth quarter of 2012, so they believe that fruit consumption will continue to increase in MY 2012/13. Emerging fruit outlets in urban areas and new marketing venues (such as online sales and weibo, Chinese equivalent to Twitter) are increasing the availability of fruit and fruit products. Traditional supermarkets and wet markets continue to play a dominant role, but retail chains that exclusively sell fruit are expanding throughout China. Overall, consumers have developed higher requirements on fruit quality and grade. Only five percent of citrus production is processed, but sources note that consumption of processed citrus is also improving. Orange juice and drinks remain the top choice for fruit juice/beverage buyers. Canned citrus products (such as orange-flavored wine and vinegar) are also becoming popular among young professionals. Trade: Imports Source: China Customs For MY 2012/13 (November-October), OAA/Beijing estimates that China’s orange imports will reach 110,000 MT, up 12 percent from MY 2011/12. Imports from the United States, the largest orange supplier to China, are faced with competition from South Africa. As noted above, fruit consumption in China will likely continue upward as online fruit merchants are focusing on imported fruits. FCOJ imports are forecast at 55,000 MT in MY 2012/13 (October-September), down nearly 10 percent from the previous year. China’s juice consumption continues to grow at a fast pace. Brazil remains the largest FCOJ supplier to China. In MY 2012/13 (October-September), imports of tangerines/mandarins are expected to reach 10,000 MT, up 20 percent from the revised MY2011/12 estimate – the lowest estimate over the past three years. With adequate domestic supplies, China imports limited quantities of tangerines/mandarins. Australia is the top supplier of tangerines to China during local off-season. Grapefruit imports are forecast at 15,000 MT in MY 2012/13 (October-September), up 15 percent from the previous year. Consumers are becoming more aware of the nutrition attributes of this fruit, and more high-end hotels and restaurants use grapefruit for juicing purposes. Main suppliers include Thailand, the United States, South Africa, Taiwan, and, more recently, Israel. Exports China’s tangerine exports are forecast at 900,000 MT in MY 2012/13 (October-September), up 7 percent from the previous year. Although there are reduced supplies in Guangdong and Guangxi, two of China’s leading tangerine/mandarin sources for export to Southeast Asian markets, China’s overall export pace is expected to be slightly higher than last year’s record high of 840,000 MT. In MY 2011/12, China’s tangerine exports increased by nearly 40 percent, due to unprecedented import demand from Southeast Asia. Global demand for canned mandarins is showing some signs of recovery. OAA/Beijing estimates that China’s canned mandarin exports will reach 380,000 MT in MY 2012/13 (October-September), up nearly 12 percent from the previous year. The United States is the largest buyer, followed by Japan and the European Union. OAA/Beijing forecasts that China’s orange exports will reach 120,000 MT in MY 2012/13 (November-October), down nearly seven percent from the previous year, due to reduced exportable supplies. Excessive rains in Jiangxi, China’s top orange producing province, will result in less exportable supplies and also larger sized fruits, which will challenge typical buyers in Asian and Middle Eastern markets who prefer small sized oranges. OAA/Beijing forecasts China’s grapefruit/pomelo exports at a record 140,000 MT in MY 2012/13 (October- September), up nearly 20 percent from the previous year, due to higher import demand from the European Union (mainly the Netherlands) and Russia, the largest buyers of China-origin pomelos. Policy: In June 2012, the State Council released guidelines on the development of Ganzhou, Jiangxi, and orange production is listed as one of the key sectors in agricultural development. The guidelines commit to providing subsidies for orange seeds/seedlings. In August 2012, the Ministry of Commerce identified Ganzhou as one of the pilot cities to implement the program on delivering fruit in the west to the east. Under this program, the central government will provide 51.4 million RMB ($8.2 million) to build 15 distribution centers in Ganzhou region, two distribution centers in major consumption regions, one wholesale market, and five wet markets. In cooperation with private businesses, total investment is expected to reach 674 million RMB ($107 million). The project will also encourage private companies to establish processing facilities for nectar, wine, vinegar, and essence. In addition, each year, the Ganzhou government allocates 20 million RMB ($3.2 million) on citrus development. This funding is used to improve seed breeding, insect and disease control, and construction of distribution system. The government may also subsidize farm cooperatives on purchasing waxing facilities and/or insect capturing lights. Every year, the Ganzhou government hosts an international orange festival before or during the harvest season. Marketing: The United States remains the leading supplier of citrus products to China. In MY 2011/12, U.S. citrus export volume remains steady for oranges, lemons, and orange juice, but, for fresh tangerines and mandarins, there is strong competition from Australia, Taiwan and Thailand. Domestically-produced oranges in Jiangxi province are the main competitors for U.S. Navel oranges. South Africa is the main foreign competitor for U.S. Valencia oranges, given its competitive prices and timing to supply during China’s off-season. More direct imports of citrus products are arriving at commercial ports in Shanghai, Dalian and Tianjin, but Jiangnan Fruit Wholesale Market in Guangzhou remains the primary distribution hub for U.S. citrus products, and Shanghai is the leading port for South African citrus products. The majority of imported citrus is sold to major retailers, convenient fruit shops, star-rated hotels and high-end restaurants to middle-upper income consumers. Sales of imported citrus depend on season and promotional activities such as Chinese New Year and western holidays. Imported fruits are very popular for gift-giving. In- store promotions have been successful in introducing U.S. citrus products to Chinese consumers. Fruit convenient stores have become popular in China and are adding sections exclusively for imported fruits. These stores are located in the working class communities in urban areas. Shopping through online, television, and mobile devices are developing rapidly and becoming the new marketing and sales trend to promote and sell imported citrus products. For more marketing information, please visit the 2011 GAIN report: %20Peoples%20Republic%20of_12-16-2011.pdf Table 1: Citrus Historical Production Tables by Province Orchard Area and Production by Province 2008 2009 2010 2011 1000 Ha 1000 MT 1000 Ha 1000 MT 1000 Ha 1000 MT 1000 Ha 1000 MT Hunan 335.9 2,976 376.2 3,385 379.0 3,889 390.8 4,204 Guangdong 248.0 2,805 276.0 3,221 282.6 3,500 290.0 3,787 Jiangxi 281.9 2,485 296.4 2,994 300.6 2,686 308.0 3,567 Guangxi 178.4 2,655 189.2 2,892 197.9 3,132 206.6 3,550 Hubei 211.1 2,555 225.6 2,747 229.2 3,010 244.5 3,310 Sichuan 231.4 2,576 244.5 2,773 253.2 2,929 267.8 3,194 Fujian 173.5 2,565 175.2 2,668 175.4 2,723 175.8 3,004 Zhejiang 122.1 2,384 116.7 1,975 114.5 1,908 112.2 1,944 Chongqing 120.3 1,137 126.3 1,263 138.0 1,390 147.5 1,533 Yunnan 32.9 327 34.1 383 34.3 417 36.5 450 Shaanxi 25.7 237 28.9 308 33.9 287 35.5 342 Guizhou 38.5 191 38.6 194 40.9 204 43.2 208 Shanghai 10.7 265 9.9 236 9.0 202 7.5 177 Jiangsu 3.7 51 4.6 60 3.6 54 3.4 51 Hainan 3.8 39 4.4 44 5.1 48 5.2 45 Henan 10.1 40 10.7 40 10.9 42 10.8 39 Anhui 2.5 22 2.7 23 2.7 28 2.7 29 Gansu 0.3 3 0.3 3 0.3 3 0.3 4 Total 2,030.8 23,313 2,160.3 25,211 2,211.0 26,452 2,288.3 29,440 Source: Ministry of Agriculture Abstracts Production, Supply and Demand Data Statistics: Fresh Oranges Oranges, Fresh C 2010/2011 2011/2012 2012/2013 hina Market Year Begin: Nov Market Year Begin: Nov Market Year Begin: Nov 2010 2011 2012 USDA USDA O New Post Official New Post fficial O New Post USDA fficial Area Planted 735,000 735,000 760,000 780,000 800,000 Area Harvested 0 0 0 0 0 Bearing Trees 0 0 0 0 0 Non-Bearing Trees 0 0 0 0 0 Total No. Of Trees 0 0 0 0 0 Production 5,900 5,900 6,600 6,900 7,000 Imports 99 99 110 98 110 Total Supply 5,999 5,999 6,710 6,998 7,110 Exports 92 92 125 129 120 Fresh Dom. Consumption 5,727 5,727 6,260 6,349 6,390 For Processing 180 180 325 520 600 Total Distribution 5,999 5,999 6,710 6,998 7,110 (Unit: 1,000 MT, Hectare) Fresh Tangerines/Mandarins Tangerines/Mandarins, Fresh C 2010/2011 2011/2012 2012/2013 hina Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct 2010 2011 2012 USDA USDA USDA O New Post fficial O New Post fficial O New Post fficial Area Planted 812,000 812,000 815,000 815,000 814,000 Area Harvested 0 0 0 0 0 Bearing Trees 0 0 0 0 0 Non-Bearing Trees 0 0 0 0 0 Total No. Of Trees 0 0 0 0 0 Production 14,000 14,000 15,000 16,000 17,000 Imports 13 13 12 8 10 Total Supply 14,013 14,013 15,012 16,008 17,010 Exports 607 607 840 840 900 Fresh Dom. Consumption 12,926 12,926 13,632 14,568 15,450 For Processing 480 480 540 600 660 Total Distribution 14,013 14,013 15,012 16,008 17,010 (Unit: 1,000 MT, Hectare) Fresh Grapefruit/Pomelo Grapefruit, Fresh C 2010/2011 2011/2012 2012/2013 hina Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct 2010 2011 2012 USDA New USDA New O USDA Official New Post fficial Post Official Post Area Planted 0 0 0 Area Harvested 0 0 0 Bearing Trees 0 0 0 Non-Bearing Trees 0 0 0 Total No. Of Trees 0 0 0 0 0 Production 2,800 2,800 3,000 3,200 2,900 Imports 12 12 12 13 15 Total Supply 2,812 2,812 3,012 3,213 2,915 Exports 84 84 120 118 140 Fresh Dom. Consumption 2,728 2,728 2,892 3,095 2,775 For Processing 0 0 0 0 0 Total Distribution 2,812 2,812 3,012 3,213 2,915 (Unit: 1,000 MT, Hectare) Frozen Concentrated Orange Juice (FCOJ) Orange Juice C 2010/2011 2011/2012 2012/2013 hina Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct 2010 2011 2012 USDA O N USDA ew Post New Post fficial O New Post USDA Official fficial Deliv. To Processors 180,000 180,000 325,000 520,000 600,000 Beginning Stocks 15,000 15,000 25,000 25,000 20,000 Production 13,850 13,850 25,000 40,000 45,000 Imports 76,544 76,544 80,000 60,485 55,000 Total Supply 105,394 105,394 130,000 125,485 120,000 Exports 5,236 5,236 6,500 3,111 4,000 Domestic Consumption 75,158 75,158 90,000 102,374 116,000 Ending Stocks 25,000 25,000 33,500 20,000 0 Total Distribution 105,394 105,394 130,000 125,485 120,000 Note: Numbers have been converted to concentrated orange juice using a ratio of 6:1 between single strength and concentrate. Products under HS Codes 20091200 and 20091900 are both treated as single strength juices.
Posted: 28 December 2012

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