Regional and Country Highlights 

Market fundamentals, which for the past two years have worked to the benefit of Greek producers, have turned and now offer hope to other world producers.  For the last two years, world prices have been depressed due to the enormous production and export of Greek product.  Although 2002/03 world production is forecast to be up slightly from last year’s level, exports for the 2002/03 year are forecast to be down by 17 percent or by 90,000 tons.  This is due principally to the 32-percent drop in Greek production, and concomitant reduction in Greek exports.  The reduced export availability is the principal factor helping to bring prices back to normal levels.  In addition, Greek canners will be receiving smaller subsidy payments.  At the same time, the euro is gaining strength against the U.S. dollar and other currencies, which will raise the price of Greek product. 

Greece 

Canned peach output for the 2002/03 marketing year is forecast at 276,000 tons, down 32 percent from the previous year and 24 percent from the May forecast.   The total supply available for export in the coming year is the smallest since 1998/99 marketing year.  Exports last year set a new record, reaching 458,000 tons, up 68,000 tons over the previous record set in 1995/96.  Exports for 2002/03 are forecasted to be 300,900 tons.

Last year withdrawals totaled 50,000 tons compared to 204,000 tons the year before.  This year withdrawals totaled only 3,000 tons, due to the reduced production.  The EU’s policy is 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  Last year, the EU paid growers about 10.4 U.S. cents/kg for withdrawn fruit.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 for fresh and processed markets and for both freestone and cling peaches.  This coming marketing year, the EU will reduce this quantity to 10 percent of the total quantity marketed.

Support to growers is paid directly to producers’ organizations for distribution to producers.  This support is estimated to comprise about 4.3 cents of the price or 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 suspicion that a portion of this aid was kept by processors and used to maintain inefficient operations, by acting as an indirect export subsidy.  Essentially the EU forced international competitors to the wall to maintain their industry.  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 from about 27 during the heydays of the mid 1990’s to 15 in MY 2001/02.  However, the 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. 

Greek exports set a record 458,300 tons last year due to an unprecedented supply of low-priced, subsidized product and an appreciating U.S. dollar.  However, several Latin American countries, whose currency depreciated against the euro, took protective action against imports of 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 antidumping duty of 100 percent on top of a 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 shipments into the United States.

As Greece solidifies its dominance in the canned peach sector, production of fruit mixtures will increase.  Peaches are the fundamental ingredients 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 last year.  Production for the coming year is forecast at 33,600 tons. 

Italy

Italian canned peach, pear, and mixed fruit output levels for 2001/02 are estimated at 17,000 tons, 46,500 tons, and 66,000 tons, respectively.  Forecast production levels for 2002/03 are 21,000 tons, 46,000 tons, and 66,000 tons, respectively.  

The appreciating dollar helped boost canned peach exports by 2,000 tons from their normal level of 32,000 tons.  To a large extent, Italy was exporting a more expensive, higher-quality domestic product, while importing a lower-valued Greek product for domestic consumption.  Production for 2002/03 is estimated at 21,000 tons and exports are estimated at 37,000 tons.  This export figure is a bit higher than normal due to reduced Greek supplies.

Canned pear output for 2001/02 is estimated at 46,500 tons, up 500 tons from the previous forecast. Production for 2002/03 is estimated at 46,000 tons.

Italian exports of canned pears and mixtures are forecast to increase in marketing year 2002/03 to 39,000 tons and 65,000 tons, respectively.  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 the 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 

Forecast 2002/03 production of fruit for processing (peaches, pears, and apricots,) is placed at 250,800 tons, an increase of 16 percent from a year earlier.  Fresh fruit expected to be delivered for processing comprises about 43,800 tons of apricots, 117,000 tons of peaches, and 90,000 tons of pears.  This increase is expected to result in a 34-percent rise in canned fruit production (canned peaches, canned pears, canned apricots and canned fruit mixtures).

Exports of canned fruit in 2002/03 are expected to grow by 24 percent.  The principal export is canned peaches, which will increase from 50,000 tons exported in 2001/02 to a forecast 70,000-tons in 2002/03. 

South Africa’s fruit canning industry is the fourth largest in the world.  The domestic 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 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.  Except for peaches, 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 quotas for marketing year 2000 were shared among 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 Kristin Kezar at 202-609-0556.)