Regional and Country Highlights

The canned deciduous fruit sector is suffering a market crisis throughout the world, due principally to an overproduction of canned peaches, low prices, and increased competition among the principal exporters: Greece, South Africa, Chile, and Australia.

Greece

Despite unfavorable weather during January 2002, the clingstone peach crop does not appear to be seriously reduced from last season’s level. Canned peach output for the 2001/02 marketing year is now estimated at 407,000 tons, up nearly 11 percent from the November estimate and 10,000 tons over the 2000/01 level. In fact, last year’s output is the second largest on record after the 441,000 tons produced in 1999/2000. The total supply available for export in the coming year is the third largest, exceeded only by the quantities on hand during the two previous marketing years. Exports last year set a new record, reaching 420,000 tons, up 30,000 tons over the previous record, set in 1995/96. Exports for 2002/03 are forecast to be 395,000 tons.

Last year withdrawals totaled 50,000 tons compared to 204,000 tons the year before. The quantity of peaches withdrawn from the market declined due to the EU’s policy to phase out withdrawal payments by marketing year 2003/04. Last year the EU paid growers about 10.4 U.S. cents/kg for withdrawn fruit. The maximum quantity available for this payment equaled 20 percent of the total fruit marketed. This included both freestone and cling peaches, for fresh and processed markets. This coming marketing year, the EU will reduce this quantity to 10 percent of the total quantity marketed.

The price paid for withdrawn fruit equaled almost 48 percent of the price of peaches delivered to processors, (21.8 cents/kg). The support to growers is provided through producer organizations. This support is estimated to comprise about 20 percent of the price (21.8 cents/kg) received by growers. Thus, growers’ income is a function of a weighted average price consisting of the withdrawal price, market price and EU subsidy.

Under the EU’s previous canned fruit regime, the growers’ subsidy or guaranteed price was passed through the processors. The EU paid the processors a “processing aid,” which theoretically was to be included in the price processors paid to the growers. However, there was always a general concern among global competitors that a portion of this aid was held back by processors and used to maintain inefficient operations, acting as an indirect export subsidy. As a result of the reform of the canned fruit regime, principally the payment of subsidies to producer organizations and the gradual elimination of the withdrawal aid, the number of processing plants declined to 15, compared to 22 in marketing year 2000/01 and to about 27 during the peak of the mid 1990’s. However, this decline in the number of processing plants did not translate into a decline in the capacity of fruit processing, which has always exceeded the demand for fruit. Currently most of the fresh fruit is processed in plants operating at two-thirds of capacity. The Greek industry claims that processors prefer not to increase output in order to stabilize prices in international markets. However, prices in the international markets may rise , if the quantity of fresh fruit available to Greek processors declines in response to a total elimination of subsidies to growers.

Greek exports set a record 420,000 tons last year, due to an unprecedented supply of subsidized product and an appreciating U.S. dollar. However the appreciating dollar did not have a significant impact in Latin America, as evidenced by protective action taken by several Latin American countries, whose currency depreciated against the EURO. Fundamentally, Greek prices last year were extremely low, resulting in large exports and causing some import relief actions against Greek shipments. Argentina initiated a countervailing duty of 12 percent on top of a 35 percent tariff and a $0.5/kg safeguard measure. Brazil initiated an anti-dumping duty of 100 percent on top of 16.5 percent tariff and an additional tariff of 55 percent for a special listing of the product on an exception list. The loss of these two markets contributed to expanded Greek shipments into the United States.

As Greece solidifies its dominance in the canned peach sector, Greek production of fruit mixtures is expected to increase. Peaches are the fundamental ingredient in a traditional fruit cocktail mixture. Excess production of fresh peaches accompanied by surplus processing capacity should, with proper management, provide a solid base for a larger output of canned fruit mixtures. Since 1997, Greek production of fruit mixtures has increased from 1,800 tons to over 28,000 tons in 2001. Production for 2002 is forecast at 32,000 tons.

Italy

Italian canned peach, pear, and mixed fruit output for 2001/02 are estimated at 21,000 tons, 46,000 tons and 73,000 tons, respectively. Forecast production for the upcoming 2002/03 year is unchanged from these figures.

The competitive price of Greek canned peaches on the international market forced Italy to rebuild its stocks. Due to large stocks, Italian canned peach imports are forecast to decline in 2002/03, whereas exports should remain stable.

Canned pear output for 2001/02 is estimated at 46,000 tons up, 12,000 tons from the previous forecast. The Italian canned mixture production has also been revised upward from 68,000 tons reported in November to 73,000 tons.

Italian exports of canned pears and mixtures increased in marketing year 2000/01, despite a decline in fruit mixture output. In fact, Italian canned pears and mixtures remain competitive on the international market, due to the quality of Italian pears and their relatively low prices.

From a marketing standpoint, canned peaches and pears are generally considered to be a mature food product, with little room for growth, due to competition from fresh fruit imports, which are increasingly available throughout the year. Fruit cocktail, however, is considered to be a convenience food that still offers market opportunities, especially in export markets. Canned pears and peaches are destined almost exclusively for the catering industry in Italy, while canned mixtures are still consumed by families.

South Africa

Estimated 2002 canned fruit production (peaches, pears, apricots, and mixed fruit) is placed at 168,000 tons, a decrease of 10 percent from a year earlier, due to lower fresh production. Exports, in particular to EU markets, are forecast to increase, due to strong demand at premium prices.

Despite lower output, exports of canned fruit in 2002 are expected to grow by 14 percent while domestic consumption will rise by 5 percent. Of the total fresh fruit expected to be delivered for processing, about 41,300 tons are apricots, 114,800 tons peaches, 57,442 tons pears, and 213,552 tons mixed fruit. Total canned fruit exports during 2001 decreased from the previous year to around 129,400 tons.

South Africa’s fruit canning industry is the fourth largest in the world. The industry is made up of four main canners, Langerberg Foods, Sapco of Delmonte Brand, Ashton, and Rhodes Fruit Farm Foods. Exports account for 90 percent of all canned fruit production, 50 percent of which goes to Europe. According to the Canning Fruit Producers Association (CFPA), the canning fruit market is growing only slightly each year. Not all of South Africa’s deliveries for processing are used for canning. Depending on the quality, fruits are also processed for juice, or pureed as pulp and baby food.

South Africa’s canned fruit exports to Europe are still important, although sales to the Far East and the rest of the world are constantly rising as a result of South Africa’s shift in marketing strategy from Europe to other regions. Under the SA/EU Trade Agreement, which became effective in January 2000, the South African canners have closely monitored their EU shipments to get the maximum possible benefit from their allocated tariff quota. There has also been close liaison with government departments and the South African Revenue Service (SARS) regarding the management of the quotas. The 2000 quotas were shared amongst the canners, based on their historical average share of exports to the EU during the period 1996 to 1998. Although this procedure complies with the SA/EU Free Trade Agreement Protocol, it does not take into account shifts in individual canner export patterns.

The FAS Attaché Report search engine contains reports on the Canned Deciduous Fruit. For information on production and trade, contact Robert Knapp at 202-720-4620. For information on marketing contact Kristan Kezar at 202-609-0556.)



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