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: 12/20/2010 GAIN Report Number: IS1014 Israel Citrus Annual Approved By: Cynthia I. Guven Senior Agricultural Attaché U.S. Embassy, Cairo Prepared By: Gilad Shachar Agricultural Marketing Specialist Report Highlights: In 2010/11, citrus production in Israel is estimated at 588,000 tons, a 2 percent decrease compared to the previous year. The expected slight decrease in production is mainly due to unfavorable weather conditions in August 2010. Citrus exports are expected to increase about 8 percent from the previous year, and delivery to processing plants is expected to decrease about 7 percent. In recent years, the share of easy peelers has increased significantly and it is expected to further expand in the near future. Executive Summary In 2010/11, total citrus production is estimated at 588,000 tons, a 2 percent decrease compared to the previous year. Out of the total production, approximately 193,000 tons (33 percent) is expected to be exported, 170,000 tons processed (29 percent), and the remainder consumed fresh. The expected slight decrease is mainly a result of the extremely heat waves that Israel experienced in August 2010. Exports in 2010/11 are forecast to increase about 8 percent compared to the previous year. The expected increase in exports is mainly due to the increase in local easy peelers production combined with the fact that citrus export season for Israel has started earlier this year as a result of the warm weather which caused early ripening mainly of the Sunrise variety (red grapefruit). In 2009/10, despite the global economic recession combined with unfavorable exchange rates of the euro and U.S. dollar, citrus exports increased by 3 percent to 178,266 tons. In August 2010, planted area totaled 17,600 ha, of which about 14,600 ha (83 percent) were fruit-bearing. In CY 2009, 1,216 ha of fresh citrus were planted, mainly easy peelers, red grapefruit, and newhole variety (oranges). On the other hand, due to low profitability about 900 ha of citrus were uprooted in 2009 mainly white grapefruit, sweetie, shamouti and Valencia oranges, and pomelo (white & chandler). Commodities: Grapefruit, Fresh Lemons, Fresh Oranges, Fresh and Juice Citrus, Other, Fresh Tangerines/Mandarins, Fresh   Production The forecast for 2010/11 is for a total production of about 588,000 MT, a two percent decrease compared to the previous year. The decrease is mainly a result of extreme heat waves that Israel experienced in August 2010 combined with the uprooting of oranges, white grapefruit and pomelo. On the other hand, due to increased plantation of easy peelers varieties in recent years, easy peelers production is expected to continue to increase to 160,000 tons in 2010/11. Oranges ? Due to the extreme heat waves that Israel experienced in August 2010 combined with the uprooting of oranges in 2009 (Shamouti and Valencia varieties), oranges production in MY 2010/11 is expected to decrease about 6 percent to 139,000 tons. Easy Peelers ? In recent years, as a result of the increased new easy peelers plantations, easy peelers production increased and is expected to continue to increase in the coming years. In MY 2010/11, easy peelers production is estimated to total 160,000 tons, a 7 percent increase compared to the previous year. Grapefruit ? Due to the extreme heat waves that Israel experienced combined with the continued uprooting of white grapefruit and sweetie, grapefruit production in MY 2010/11 is expected to decrease about 4 percent to 226,000 tons. Lemons ? In 2010/11, it is estimated that local production of lemons will total approximately 50 tmt, a 4 percent increase compared to the previous year. The slight increase is mainly due to new lemon plantations in recent years. Other Citrus - Due to continued aggressive competition from China, uprooting of white and red pomelo increased in 2010 and is expected to increase in the 2011 and 2012. As a result of the uprooting combined with the extreme heat waves that Israel experienced, other citrus production is estimated to decrease about 7 percent to 13 tmt in MY 2010/11. Table 1: Citrus Production by Varieties, Thousand Tons MY Total Easy Peelers Lemon and Grapefruit Other Production Orange Lime Citrus [1] 2007/8 560.0 125.0 145.0 35.0 242.0 13.0 2008/9 567.0 155.0 139.0 29.0 232.0 12.0 2009/10 595.0 148.0 150.0 48.0 235.0 14.0 2010/11* 588.0 139.0 160.0 50.0 226.0 13.0 Source: The Plants Production and Marketing Board, Citrus division, Israel [1] *Forecast: Based on information collected; Other Citrus- Kumquat, Ethrog (Citron), Red & White Pomelo, Limquat. Table 2: Species Share Out of Total Production, Percent MY Oranges Easy Peelers Lemon Grapefruit Other Citrus Total 2007/8 22.3 25.9 6.3 43.2 2.3 100 2008/9 27.3 24.5 5.1 40.9 2.2 100 2009/10 24.9 25.2 8.1 39.0 2.8 100 2010/11* 23.6 27.2 8.5 38.4 2.3 100 Table 3: Citrus Disposition, by Destination, Tons Delivery to Period Total Exports Processors Local Fresh Market MY Quantity % Quantity % Quantity otal % T Percent 2007/8 172,059 30.7 212,097 37.9 175,844 31.4 100 2008/9 173,413 30.6 223,310 39.4 170,277 30.0 100 2009/10 178,266 30.0 182,203 30.6 234,531 39.4 100 2010/11* 193,000 32.8 170,000 28.9 225,000 38.3 100 Source: The Plants Production and Marketing Board, Citrus division, Israel Planted Area In August 2010, planted area totaled 17,600 ha, of which 14,800 ha (84 percent) were fruit-bearing. Out of total planted area, 11,250 ha (64 percent) are relatively young orchards which were planted between the years 2000 and 2010. About 3,200 citrus growers exist in Israel. In 2009, about 1,216 ha of citrus were planted, mainly easy peelers, red grapefruit and newhole orange. Out of total new citrus plantations from 2009 through 2011, 74 percent are expected to be easy peelers varieties (see table 4). On the other hand, about 900 ha of fresh citrus were uprooted in 2009, mainly sweetie (200 ha), white grapefruit (200 ha), Shamouti/orange variety (200 ha), Valencia/orange variety (200 ha), and pomelo (white & chandler). Most of the citrus planted area is grown along the coastal plain, mostly in central and southern parts of the country. Table 4: New Citrus Plantations, Ha, CY Ha 2009 2010 est. 2011 est. Total (ha) % Of Total Oranges 204 99 111 414 10.9 Grapefruit 133 28 26 187 4.9 Lemons 170 48 94 312 8.2 Easy peelers 681 1,000 1,115 2,796 73.8 Others 28 24 26 78 2.2 Tota 98 1,372 l 1,216 1,1 3,787 100 Source: The Plants Production and Marketing Board, Citrus Division, Israel Consumption In 2010/11, it is estimated that local consumption of fresh citrus will total approximately 225 tmt, a 3 percent decrease from the previous year. The decrease is mainly a result of the expected slight decrease in local citrus production. In recent years local citrus consumption has increased significantly. The increased local consumption is mainly due to the decrease in deliveries to the processing plants combined with increased per capita consumption. It should be mentioned that a portion of the local citrus production is sold in the West Bank (the figures are not known). As the economic situation in the West Bank is improving, more Israeli citrus will be sent to the West Bank. In 2009, the GDP growth rate of the West Bank totaled 7.2 percent. In addition, the Palestinian economy in the West Bank is estimated to have grown an annual 9 percent in the first half of 2010, according to the International Monetary Fund. The Processing Industry The forecast for 2010/11 is for a continued decrease in deliveries to the processing plants. Total deliveries are expected to decrease about 7 percent to 170,000 MT. The expected continued decrease is a result of expected lower prices for white grapefruit and oranges paid by the Israeli industry in 2010/11. Due to the above mentioned reason, uprooting of oranges (Shamouti and Valencia varieties) and white grapefruits increased in CY 2009 and 2010. Due to lower prices for oranges and white grapefruits paid by the local industry in MY 2009/10 combined with increased uprooting, deliveries decreased by 18 percent compared to MY 2008/9. Out of total white grapefruit production, about 90 percent are delivered to the processing industry. Table 5: Delivery to the Processing Plants, MY, Tons 2006/7 2008/9 2009/10 Tons % Tons % Tons % Oranges 83,750 30 53,500 24 45,772 25 Grapefruit 156,750 55 141,674 63 107,076 59 Easy Peelers and Others 42,500 15 28,136 13 29,335 16 Total 283,000 100 223,310 100 182,203 100 Source: The Plants Production and Marketing Board, Citrus Division, Israel Citrus Products, Production, Consumption and Trade The Israeli processors produce mainly concentrates, juice, bases, puree and slices. About 70 percent of their products are exported (mainly to the EU) and the rest is consumed in the local market. The annual local consumption of juices and nectars per capita stands at 4- 5 liters and has been increasing in recent years as a result of a decrease in consumption of carbonated soft drinks. In recent years, as a result of increased uprooted oranges and grapefruit orchards, delivery to the processing industry has decreased significantly (36 percent decrease from 2006/7). Led by recovering global economy and lower availability of local oranges for processing, it is expected that imports of orange juice will increase by about 10 percent in MY 2010/11. Trade Citrus growers in Israel currently raise some 590,000 tons of fruit, of which about 30 percent is exported as fresh fruit. While export quantity in 2009/10 increased by only 1 percent compared to 2006/7, exports value increased significantly. In 2009/10, Israel's citrus exports value totaled approximately $140 million (FOB), a 22-percent increase over the past four years. The increased exports value is mainly due to new plantations of profitable citrus varieties (mainly easy peelers and red grapefruits) on the account of non-profitable citrus varieties (mainly oranges and white grapefruits). In recent years, there was a change in the Israeli export markets, and in MY 2009/10 Russia became the No. 1 market for Israeli citrus, on the account of the U.K. market. Other main markets include France, Italy, Holland and Sweden. About 50 percent of Israeli citrus exports and exported to the EU market. It is known that Israeli citrus also reaches the Gulf states through a third party without the origin marked. Exports in 2010/11 are forecast to increase about 8 percent compared to the previous year and will total 193,000 tons. The expected increase in exports is mainly due to the increase in local easy peelers production combined with the fact that citrus export season for Israel has started earlier this year as a result of the warm weather which caused early ripening mainly of the Sunrise variety (red grapefruit). Out of total citrus exports in 2009/10, 47 percent and 38 percent were the grapefruit and easy-peelers varieties, respectively. In recent years, easy peelers exports have increased significantly, and is expected to continue to increase in the coming years, led by the Or, Suntina and Minneola varieties. On the other hand, the market share for oranges has continued to decrease by 25 percent, from 16 percent market share in 2008/9 to 12 percent market share in 2009/10. Out of total citrus exports, about 80 percent is controlled by 2 export companies (MTEX and Agrexco), and the rest is controlled by 37 companies. Oranges ? Due to continued competition from other orange suppliers combined with increased orange orchards uprooting (mainly Shamouti and Valencia varieties), exports of oranges in MY 2009/10 decreased by nearly 40 percent compared MY 2006/7. Valencia exports decreased by 60 percent in 2009/10 to 2,330 tons. It is expected that oranges exports in MY 2010/11 will continue to decrease by about 5 percent compared to the previous MY. Easy Peelers ? In recent years, easy peelers exports have increased significantly and it?s expected to continue to increase by about 15 percent in MY 2010/11. In MY 2009/10 Or variety exports reached a record high of 26,000 tons, a 45 percent increase compared to the previous year. Grapefruit ? In 2009/10, exports of red grapefruit (Sunrise variety) increased by nearly 2 percent compared to the previous year. Red grapefruit exports are expected to continue to grow by 5-15 percent in 2010/11. Out of total grapefruit exports, 72 percent are red grapefruit. On the other hand, exports of White grapefruit in 2009/10 decreased by 7 percent from the previous year and totaled 10,700 mt. In addition, exports of sweetie variety decreased nearly 8 percent compared to the previous year. The decrease was mainly due to decrease in sweetie exports to Japan. Other Citrus - Due to continued aggressive competition from China, post estimates that exports of the white and red pomelo varieties to Europe will continue to decrease in MY 2010/11. In MY 2009/10 pomelo exports decreased by 55 percent compared to the previous year to 2,260 mt. Japan - Exports of the sweetie variety to Japan in 2009/10 decreased 3 percent from the previous year (from 277,936 cases to 270,391 cases). On the other hand, due to continued decreased grapefruit production in Florida, exports of Israeli white grapefruit to Japan totaled 8,520 cases compared to 4,064 cases in 2008/9. Due to the expected continued decrease in grapefruit production in Florida, Israeli white grapefruit exports to Japan are forecast to continue to increase in 2010/11. Table 6: Fresh Citrus Exports by Varieties, Tons, MY 2009/10 % 2009/10 % Variety 2006/7 2007/8 2008/9 2009/10 Change Change Compared Compared to 2008/9 to 2006/7 Oranges 35,180 30,396 27,768 21,591 -22 -39 Grapefruit 82,130 81,110 84,836 84,234 -1 -3 Easy Peelers 51,641 50,112 54,275 67,445 24 31 Lemon 2,316 4,024 1,827 1,775 -3 -23 Other Citrus 5,957 6,417 4,707 3,221 -32 -46 Grand Total 177,224 172,059 173,413 178,266 3 1 Total Export Value, $115 $129 $130 $140 8 22 $ Million (FOB) Value per Ton $649 $750 $750 $785 5 21 Source: The Plants Production and Marketing Board, Citrus Division, Israel Table 7: Export Markets, MY 2009/10 Tons Market Share Russia 42,784 24 England 23,175 13 France 17,826 10 Italy 16,044 9 Holland 14,261 8 Sweden 14,200 8 Germany 5,348 3 Japan 3,565 2 U.S. & Canada 3,350 2 Other 37,713 21 Total 178,266 100 Source: The Plants Production and Marketing Board, Citrus Division, Israel Table 8: Israeli Fresh Citrus Export to Japan, Cases, MY (till December) MY 2008/9 2009/10 2010/11 Sweetie 277,936 268,152 246,344 Red Pomelo 0 4,064 5,208 0 4,536 11,552 White Grapefruit Source: The Plants Production and Marketing Board, Citrus Division, Israel Value of Citrus Production In MY 2009/10, the total value of citrus production increased by 53 percent compared to MY 2000/1. While production in recent years decreased, the value of citrus production increased significantly (from $240 million in MY 2000/1 to $366 million in MY 2009/10). The increased production value is mainly due to new plantations of profitable citrus varieties on the account of non-profitable citrus varieties. Table 9: Value of Citrus Production, MY 2000/1 2006/7 2009/10 2009/10 % Change Compared to 2000/1 Production (tons) 785 650 600 -24% Value (FOB, $ million) $240M $310M $366M 53% Average FOB Revenue $1,041 $1,820 $2,495 140% per 1 fruit-bearing ha Source: The Plants Production and Marketing Board, Citrus Division, Israel Production, Supply and Demand Data Statistics: PSD Tables Fresh Grapefruit Grapefruit, Fresh Israel 2008/2009 2009/2010 2010/2011 Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 4,850 4,850 4,897 4,840 4,750 Area Harvested 4,200 4,200 4,250 4,260 4,210 Bearing Trees 0 0 Non-Bearing Trees 0 0 Total No. Of Trees 0 0 0 0 0 Production 232 233 245 235 226 Imports 0 0 Total Supply 232 233 245 235 226 Exports 85 85 80 84 90 Fresh Dom. 5 6 6 44 32 Consumption For Processing 142 142 159 107 104 Total Distribution 232 233 245 235 226 HECTARES, 1000 TREES, 1000 MT Fresh Oranges Oranges, Fresh Israel 2008/2009 2009/2010 2010/2011 Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 4,650 4,600 4,618 4,550 4,350 Area Harvested 4,150 4,150 4,100 4,010 3,900 Bearing Trees 0 0 Non-Bearing Trees 0 0 Total No. Of Trees 0 0 0 0 0 Production 155 155 160 148 139 Imports 0 0 Total Supply 155 155 160 148 139 Exports 28 28 29 22 20 Fresh Dom. 73 73 65 80 81 Consumption For Processing 54 54 66 46 38 Total Distribution 155 155 160 148 139 HECTARES, 1000 TREES, 1000 MT Fresh Tangerines/Mandarins Tangerines/Mandarins, Fresh 2008/2009 2009/2010 2010/2011 Israel Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 5,200 5,050 5,884 5,600 6,100 Area Harvested 4,700 4,000 4,900 4,250 4,600 Bearing Trees 0 0 Non-Bearing Trees 0 0 Total No. Of Trees 0 0 0 0 0 Production 139 139 150 150 160 Imports 0 0 Total Supply 139 139 150 150 160 Exports 55 54 65 67 77 Fresh Dom. 58 57 55 56 57 Consumption For Processing 26 28 30 27 26 Total Distribution 139 139 150 150 160 HECTARES, 1000 TREES, 1000 MT Fresh Lemons/Limes Lemons/Limes, Fresh Israel 2008/2009 2009/2010 2010/2011 Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 1,660 1,711 1,830 1,830 Area Harvested 1,300 1,500 1,550 1,570 Bearing Trees 0 0 Non-Bearing Trees 0 0 Total No. Of Trees 0 0 0 0 0 Production 30 29 55 48 50 Imports 0 5 0 Total Supply 30 34 55 48 50 Exports 3 2 3 2 3 Fresh Dom. 25 31 48 44 45 Consumption For Processing 2 1 4 2 2 Total Distribution 30 34 55 48 50 HECTARES, 1000 TREES, 1000 MT Other Citrus Citrus, Other, Fresh Israel 2008/2009 2009/2010 2010/2011 Market Year Begin: Jan 2008 Market Year Begin: Jan 2009 Market Year Begin: Jan 2010 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 650 600 555 Area Harvested 600 560 540 Bearing Trees 0 0 0 Non-Bearing Trees 0 0 0 Total No. Of Trees 0 0 0 Production 12 14 13 Imports 0 0 0 Total Supply 12 14 13 Exports, Fresh 5 3 3 Fresh Dom. 7 11 10 Consumption For Processing 0 0 0 Total Distribution 12 14 13 HECTARES, 1000 TREES, 1000 MT Orange Juice Orange Juice Israel 2008/2009 2009/2010 2010/2011 Market Year Begin: Oct 2008 Market Year Begin: Oct 2009 Market Year Begin: Oct 2010 USDA Official New Post USDA Official New Post USDA Official New Post Deliv. To Processors 54,000 54,000 66,000 46,000 38,000 Beginning Stocks 360 360 460 460 500 Production 4,900 4,900 5,900 4,200 3,500 Imports 26,700 26,700 27,200 26,340 29,050 Total Supply 31,960 31,960 33,560 31,000 33,050 Exports 15,800 15,800 17,000 15,000 16,500 Domestic Consumption 15,700 15,700 16,000 15,500 16,100 Ending Stocks 460 460 560 500 450 Total Distribution 31,960 31,960 33,560 31,000 33,050 MT