Canned Deciduous Fruit 2011

An Expert's View about Food , Beverages and Tobacco in Taiwan

Posted on: 31 Oct 2011

The Greek canned peach industry is in transition and recovering from difficult circumstances.

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: 9/30/2011 GAIN Report Number: GR1111 Greece Canned Deciduous Fruit Annual Canned Deciduous Fruit 2011 Approved By: Jim Dever Prepared By: Ornella Bettini Report Highlights: MY 2011/12 Greek cling peach production is estimated at 330,000 metric tons (MT), significantly down from last year. The smaller harvest in Greece is due largely to the uprooting of peach trees in Imathia and Pella at the end of last season, as growers switched to other crops. Also, hailstorms in May and June both reduced the quality and the size of late varieties. The Greek canned peach industry is in transition and recovering from difficult circumstances. In MY 2011/12, Greece is expected to work off burdensome stocks due to improved demand as well as to reduced competition from China (due to greater domestic consumption). Sources report that due to the global financial crisis and the Greek debt crisis, the government no longer earmarks EU aid for historic peach producers but now pools it with all other EU aid. Thus, peach producer received no aid or emergency income support in 2009 and 2010 or thus far in 2011. The lack of earmarked aid is also expected to accelerate the transition from cling peaches to other horticultural production. CANNED PEACHES Production Horticultural production, especially fruit production, generates about 1/3 of agricultural income. Table 1. shows Greece?s annual harvested production of fresh peaches, pears, and apricots (see GR1108 for additional information). Table 1. Annual Fresh Fruit Production (MT) 2009/10 2010/11 2011/12 Fresh Peaches 779,800 681,300 630,000 Fresh Pears 43,000 54,000 46,000 Fresh Apricots 52,100 74,000 42,500 Source: Eurostat and industry contacts Cling Peaches: Peach production is far less concentrated in Greece than in the United States. Greek farms are typically four or five hectares, much smaller than the average size in either the EU or the United States. Although there are no official statistics, cling peaches are grown on approximately 23,900 hectares in six territories of Central Macedonia and Thessaly, located in northern Greece. As a result of the downturn in the industry, some smaller growers reportedly are switching to apples, kiwis, or table peach production. There are about 17 peach processors in Greece, compared to four in the United States. Most Greek peach processors are located in Central Macedonia, particularly in Pella and Imathia counties. MY 2011/12 Greek cling peach production is estimated at 330,000 metric tons (MT), significantly down from last year. The smaller harvest in Greece is due largely to the uprooting of peach trees in Imathia and Pella at the end of last season, as growers switched to other crops. Also, hailstorms in May and June both reduced the quality and the size of late varieties. An estimated 320,000 MT of the MY 2011/12 crop was harvested and sold to canners and other processors, with the remainder sold for fresh consumption or left on the farm. Table 2. shows the conversion rate for raw cling peaches to canned peaches and puree. Table 2. Conversion Rates for Canned Peach Production 1 standard case = 17 kg of grade I peaches raw + 2 kg of rejected peaches used for puree 1 case = 20.4 kg (11.52 kg drained weight) 1 MT = 45 standard cartons of 24 x 850 ml peaches Canned Peaches: The Greek canned peach industry depends on domestic fresh peach production for all of its raw material. Of the 330,000 MT of cling peaches harvested and bought by processors, the industry will can 180,000 MT, puree 90,000 MT (for juice), dice 30,000 MT (for mixes), and freeze 20,000 MT. Table 3. Cling Peach Production and Processing (MT) 2009/10 2010/11 2011/12* Production 450,000 400,000 330,000 Procured 280,000 390,000 320,000 Canned 160,000 180,000 180,000 Juiced 80,000 150,000 90,000 Diced 20,000 30,000 30,000 Frozen 20,000 30,000 20,000 *Final estimates will be released by the end of October and may differ by 2-3 percent. The Greek canned peach industry is in transition and recovering from difficult circumstances. MY 2008/09 was the first year in which production exceeded demand due to increased export competition from China, coupled with reduced demand due to the global financial crisis. In MY 2009/10, processors adjusted by limiting purchases of raw material and reducing prices. Producers, especially marginal ones, who do not have the same flexibility will opt out to produce other crops and continue to press the government for additional assistance. In MY 2010/11 processors continued to adjust. In MY 2011/12 Greece is expected to work off burdensome stocks due to improved demand as well as to reduced competition from China (due to greater domestic consumption). Observers expect the Greek industry will stabilize around its current level while cling peach production will continue to decline. Table 4. Canned Peach Production (Million Std Greek Cases) 2009/10 2010/11 2011/12 Begin Stocks 7.5 4.9 2.2 Production 10.0 10.8 11.0 Total Supply 17.5 15.7 13.2 Consumption 0 0 0 Exports 12.6 13.5 13.6 Total Use 12.6 13.5 11.6 End Stocks 4.9 2.2 1.6 Total Distribution 17.5 15.7 13.2 Greece will produce a similar volume of canned peaches this year compared to 2010 despite a reduced crop volume and rising production costs. Raw material prices are reported to have climbed sharply, reaching ?0.17-20/kg. Prices Processors increased MY 2011/12 prices to ?0.25/kg. for grade 1 peaches for canning due to the increased demand and reduced competition from China. Prices for cling peaches for other uses are generally lower (?0.15/kg.). Table 5. Cling Peach Grower Prices 2004 2005 2006 2007 2009 2010 2011 Paid by canners (?/kg) 0.22 0.19 0.23 0.23 0.18 0.20 0.25 Aid to grower (?/kg) 0.05 0.05 0.05 0.05 0 0 0 Total (?/kg) 0.27 0.24 0.28 0.28 0.18 0.20 0.25 Source: United States International Trade Commission and industry sources Sources report that production costs for an average size (7-acre) cling peach farm is ?0.17/kg and about ?0.15/kg for larger (25-acre) producers. Lack of financial support is the chief reason for peach growers? protests, which receive national and international attention when they block highways and ports. Sources report that due to the global financial crisis and the Greek debt crisis, the government no longer earmarks EU aid for historic peach producers but now pools it with all other EU aid. Thus, peach producer received no aid or emergency income support in 2009 and 2010 or thus far in 2011. The lack of earmarked aid is also expected to accelerate the transition from cling peaches to other horticultural production. Several things should be done in the short term to ease this transition. Observers note that coops, which play a major role in marketing cling peaches, are inefficient and can cost producers as much as ?0.03/kg. However, despite their weak financial situation, coops still represent the interests of an important portion of Greek producers. Reforming the coop system may make peach production more profitable for producers. Additionally, it may be possible to reduce costs for seasonal labor. Trade Greece is the largest exporter of canned peaches in the world, accounting for over one-third of global canned peach exports. Most (about 76 percent) of Greek canned peach exports are destined for other EU countries. Sources expect increased exports to SE Asia, particularly Thailand, where international processors repack, mix, and re-export canned fruit to the United States and other markets. Greek exports resumed on October 1, 2010, following a 10-day work stoppage due to protests by truck drivers angry at new austerity reforms being introduced by the country's government. The drivers reportedly blocked key roads in the country to protest plans for overhauling licensing rules as part of the measures Greece agreed to in order to receive international rescue loans and avoid bankruptcy. The strike ended when the Greek government threatened to jail striking truck drivers and strip them of their licenses. Table 6. Greek Exports of Canned Peaches (MT) 2009/2010 2010/2011 EU-27 201,305 204,224 Germany 63,205 65,066 Poland 23,893 24,072 United Kingdom 20,279 24,009 France 17,543 16,460 Italy 15,176 16,028 Austria 13,361 11,631 Extra EU-27 62,208 93,099 Thailand 12,140 19,046 United States 7,675 9,020 Russia 5,152 8,553 Egypt 5,000 4,514 United Arab Emirates 3,743 2,548 World 263,513 297,323 Source: GTA Policy Background on EU Subsidies: For decades the U.S. canned peach industry has sought relief from the EU?s canned peach subsidies. The long history of the U.S. dispute with the EU over its canned fruit subsidy regime has included numerous U.S. government interventions at the very highest levels, even including a bilateral agreement under which the EU agreed to discontinue subsidizing its canned peach processors. Despite these efforts, subsidized EU canned peaches weaken the competitive position of U.S. canned peach growers and processors relative to their EU counterparts. Consumption of canned peaches within the United States has fallen alongside domestic production since 2002. While imports accounted for 8 percent of U.S. consumption in 2004, they rose to 18 percent of consumption in 2006, with similar trends in canned pears (12 percent to 16 percent) and in canned fruit mixtures (3 percent to 7 percent). The United States is the largest producer of canned peaches in the world followed by Greece. Accession into the European Union greatly enhanced Greek peach production. When Greece entered the European Union, Greek producers received production subsidies, access to the EU market, and protection from foreign competition. CAP Reforms: The aim of the Common Market Organization (CMO) reforms, which entered into force on January 1, 2008, was to bring the Fruits and Vegetable (F&V) sector in line with other agricultural sectors that have already been reformed under the Common Agricultural Policy (CAP) (Council Regulation 1182/2007). Under this reform, the old-style production-linked payments are being 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. Commission Regulation 1580/2007 lays down rules for the implementation of the reform. The F&V sectors were integrated in the Single Payment Scheme (SPS), and land utilized for F&V production (including orchards and potatoes for human consumption) will be eligible for payments under the decoupled aid scheme, which already applies in other farm sectors. All existing support for processed F&V (tomatoes, citrus fruit, peaches, pears, prunes, figs, and dried grapes) has been decoupled and Member States? (MS) budgetary ceilings for the SPS were increased accordingly. Within the framework of the SPS, the calculation of the budget to be paid to the farmers is based on the historical average payments received by peach growers (see below). However, these amounts have been globally added to the SPS envelope, and they can be reattributed among farmers (in conformity with point A of annex IX of Regulation 73/2009 - previously point M of annex VII of Regulation 1973/2004). Subsidies: Unlike the United States, Greece has provided direct decoupled payments to peach and pear growers under the EU Common Agricultural Policy (CAP). Following the 2008 reforms of the CAP Common Market Organization for fruit and vegetable production, the Greek government announced that it would have followed a fully decoupled payment scheme and would have allocated ?11.8 million of its awarded CAP subsidies to historic (base period) peach producers from 2008 to 2013. However, due to the global financial crisis and the Greek debt crisis, sources now report that the ?11.8 million have never been earmarked for peach growers. Sources also report that the government did not provide emergency support to peach growers. Marketing The purée market is quickly expanding in Greece, and most Greek peach producers have opened a purée line. Purée production uses a large amount of fresh peaches, and as this market expands the cost of Greek cling peaches may rise. CANNED MIXED FRUIT There are no official statistics for pear and apricot production. Greece is the second largest canned fruit mixtures producer in the EU behind Italy, and it accounts for about 26 percent of EU production. Canned fruit mixtures usually consist of peaches, pears, cherries, pineapples, and grapes. Greece is a minor producer of canned pears and is the fourth largest canned pear producer in the EU behind Italy, Spain, and France. Greece is a net-exporter of canned fruit mixtures. While far behind canned peaches in terms of value, canned fruit mixtures are Greece?s second most important canned fruit export. About 68 percent of Greek canned fruit mixture exports went to other EU countries in MY 2010/11. Table 7. Greek Exports of Canned Fruit Mixtures (MT) 2009/2010 2010/2011 EU-27 17,029 11,378 Germany 5,360 4,332 Netherlands 4,359 1,047 United Kingdom 3,361 1,947 Finland 1,118 1,027 Sweden 776 674 Extra EU-27 4,237 5,268 Japan 1,525 1,709 Canada 748 415 Switzerland 620 614 World 19,406 16,646 Source: GTA While Greece did not import any canned fruit mixtures from the United States during MY 2010/11, it did import limited quantities during MY 2007/08 and 2008/09. In MY 2010/11, 69 percent of Greece?s imported canned fruit mixtures came from other EU countries. Greece is a minor destination for U.S. exports of canned fruit mixtures, as the majority goes to Japan, Canada, Switzerland, Mexico, Saudi Arabia, and others. CANNED APRICOTS Greece is a net-exporter of canned apricots. Canned apricots are Greece?s third most important canned fruit export. About 90 percent of Greek canned apricot exports go to other EU countries. Table 8. Greek Exports of Canned Apricots (MT) 2009/2010 2010/2011 EU-27 12,209 18,326 France 5,814 7,482 Germany 3,566 6,183 Italy 672 1,925 Czech Republic 536 467 United Kingdom 457 589 Extra EU-27 1,238 2,313 Libya 284 112 Albania 216 148 Saudi Arabia 114 67 Russia 112 42 World 13,447 20,639 Source: GTA Greece began to import canned apricots from the United States during the first half of 2009. In MY 2010/11, 74 percent of Greece?s imported canned apricots came from other EU countries. CANNED PEARS Greece is a net-importer of canned pears. Canned pears are Greece?s least important canned fruit export. Table 9. Greek Exports of Canned Pears (MT) 2009/2010 2010/2011 EU-27 600 91 Germany 283 36 United Kingdom 293 11 Poland 21 5 Extra EU-27 142 340 Canada 88 32 Japan 18 0 Angola 18 0 Albania 15 5 World 742 431 Source: GTA Table 10. Greek Imports of Canned Pears (MT) 2009/2010 2010/2011 EU-27 191 161 Italy 113 68 Germany 69 88 Extra EU-27 3,669 3,342 China 2,410 2,111 Argentina 1,188 1,068 South Africa 71 164 World 3,860 3,503 Source: GTA
Posted: 31 October 2011

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