CANNED DECIDUOUS FRUIT SITUATION FOR SELECTED COUNTRIES
Production declines due to frost
A hard spring freeze severely reduced Greek production of stone fruit. Fresh peach production in 1997/98 is forecast at 460,000 tons, 44 percent below the 1996/97 output. Production of clingstone peaches, which normally accounts for two thirds of Greece's peach production, declined by 49 percent to 280,000 tons. Greek canning capacity is around 400,000 tons but this year only 170,000 tons were delivered. This year's short crop yielded a canned output of 195,000 tons, net weight, 48 percent below last year's record production of 378,000 tons, net weight.
Deliveries of canning apricots to processors in 1997/98 are estimated at 10,000 tons, down 38 percent. Canned output in 1997/98 is forecast down 8,000 tons from last year's level of 20,000 tons.
Prices increase due to short crop
Although the 1997 EU minimum price to growers is about two percent below the 1996 level, canners paid a third more than last year for canning grade peaches. Prices were quoted around 100 drs/kg this year compared to 83 drs/kg in 1996.
Exports forecast to decline sharply
Exports of canned peaches in 1997/98 are forecast to decrease 47 percent to 189,000 tons based on smaller production. Reportedly 90 percent of the tonnage already produced has been contracted for and 80 percent has been shipped.
The Greek Government's policy to uproot 15,000 hectares of clingstone peaches resulted in only 5,250 hectares being removed as of December 31, 1996. The cost for removal is $US 6,000/ha.
Earlier this year CAP reform, under the name of "Common Organization of Markets" was introduced. While this new regime will continue the minimum grower price, the processor aid, and the withdrawal price provisions of the CAP for canned fruit, withdrawal prices paid by the EU and the quantities on which the prices will be paid are to be reduced each year until 2002.
Spring frost reduced Italian production of canning peaches in 1997/98 by 9 percent to 30,000 tons. Canning pear production was reduced as deliveries to canners declined 36 percent to 30,000 tons. The fresh product delivered for mixtures declined by 26 percent to 60,000 tons.
Canned peach production in Italy peaked in 1992/93 at 98,000 tons, but has declined steadily since, due to strong competition from Greece and shifting consumer demand toward fresh fruit. Apparently, some Italian canners have either stopped or reduced production of local product and are marketing imported canned Greek product under their label.
Competition from Greece stimulated consolidation of the Italian canning sector. Reportedly, one major multinational fruit company moved all of its production to South Africa. Italy's position as a net exporter of canned peaches declined from 58,000 tons in 1992/93 to 11,000 tons last year and domestic consumption declined from 48,000 tons to 21,000 tons.
French canned peach production in 1997/98 declined marginally to 16,560 tons, the lowest level produced this decade. Production continues to decline due to stiff competition from less expensive Greek product, and lower EU guaranteed minimum prices. France is a net importer of canned peaches. The vast majority of French trade is within the European Union.
The French pear canning sector remains strong. France accounts for 30 percent of Europe's canned pear production in 1997/98 compared to 25 percent last year, due to a decline in Italy's production.
Production of canned fruit mixtures appears to have declined by a third from quantities produced during the first half of the decade. This downward trend closely parallels that of canned peaches. The viability of the French fruit canning industry is closely tied to the peach situation.
Canning Industry Reorganizes
The French canning industry, like the Italian industry, is undergoing a significant reorganization. Serious financial difficulties, due to currency devaluations and stiff competition, forced the leading French canning company "Verjame" to sell 51 percent of its company to the Italian holding company "Conserve Italia". Because the company is no longer controlled by French interests it is speculated that it will import fresh canning peaches from Greece rather than contract for the more expensive domestically produced product. Higher quality French peaches will be used in fruit mixture packs while the lower quality Greek fruit will likely be packed as peaches.
The Spanish canned peach situation remains relatively unchanged from the 1996/97 season. Production of canned pears in 1997/98 is forecast at 150,000 tons, 1,000 tons more than last year's level but up significantly from the 1993 to 1995 average of 112,000 tons. Spain processes about 40 percent of its fresh pear production.
Japan's canning peach production, which declined precipitously during the first half of this decade, (from a high of 22,000 tons) appears to have stabilized at 6,300 tons. About 90 percent of domestic production is of white varieties.
Current consumption of canned peaches (at 64,000 tons) continues to be down from the record 93,000 tons of 1994/95. This decline is due to a weakening yen which made aggressive discounting by supermarket chains more difficult. Prior to the weakening of the yen, price promotions at retail level (so called "high-yen" or "price destruction sales") were instrumental in boosting demand.
Imports of canned peaches in 1997/98 are forecast at 55,000 tons, up 6 percent from the previous year. China continues to be the largest supplier, accounting for almost a third of Japan's total imports, followed by Greece at 29 percent, and South Africa at 20 percent. China is the largest supplier because it produces white peaches which are not available from other foreign suppliers.
The Japanese canned fruit market is basically price-driven, with fluctuations in the volume imported driven by the yen/dollar exchange rate. In 1994 and 1995, when the exchange rate was below 100, imports were large as retailers promoted canned fruit as a discount item. The current 118 rate sharply reduced this price incentive. This year Japanese buyers are waiting to place orders until they see South Africa's new offering prices. U.S. brands are also being challenged by improving quality and lower Chinese fruit prices.
Brazilian canned peach production is on the road to recovery following a fierce 5 year assault by subsidized Greek competition. Brazilian imports of Greek product increased from 7,433 tons in 1993 to 30,209 tons in 1995. However, imports in 1996 decreased to 28,460 tons. This decrease in imports is due in part to an increase in the import duty from 14 percent to 35 percent and to restrictions on supplier import credits. Prior to April 1997 importers were allowed 360 days to finance imports. However, currently the importer must make an advance payment and pay cash at the time of customs clearance for terms of less than 180 days.
Canned peach production is located entirely in Pelots, Rio Grande do Sul. Peaches account for 35 percent of the canning industry. Before the large influx of Greek peaches, this region produced up to 50,000 tons of canning peaches and supplied product to 40 canning operations. The lower priced imports reduced the demand for the domestic product. Production was severely reduced as producers pulled trees in response to low prices and the number of canneries fell to 18. This year however, enough peaches were grown to produce 28 million cans compared to 22 million cans of peaches in 1995/96.
Data concerning China's fruit processing industry are limited. Production for all canned fruits, preserves and fruit beverages is estimated to have increased steadily from 1.06 million tons in 1994 to around 1.6 million tons in 1997. An accurate breakdown of production by product is not available.
There are about 1,000 fruit canneries in China, of which 400 are authorized to export. Only the highest quality product is usually exported. In spite of efforts to maintain product standards throughout the industry, the quality produced reportedly varies greatly. The industry realizes that inconsistent quality is a problem and seems to be focusing on acquiring new machinery and materials to solve the problem. However, there seems to be little work being done on proper supply management techniques and pre-processing storage facilities. Post harvest handling and storage is not modern. Farmers often store their harvest on the farm, either underground or under straw. Spoilage ranges from 15 to 25 percent.
China canned fruit exports in 1996 totaled 127,000 tons, slightly less than 10 percent of total processed fruit production. Imports are small, totaling less than 3,000 tons in 1996. The most popular export item is canned white peaches. Canning high quality white peaches is a difficult and expensive process because the varieties used are easily damaged. China is the only country willing to supply this item in any quantity. Nevertheless, the Chinese quality of this item has declined and Japanese interests approached Chilean producers to supply the item. The Chilean producers declined this offer because of the difficulty and expense involved in producing this product.
Peach production for canning reached 483,100 tons in 1997/98. This is the second largest tonnage moving to canned product since 1981. Sixty-seven percent of this quantity (323,683 tons) went to canned peaches, 25 percent to (120,772) fruit cocktail, 5 percent (24,156) to mixed fruit, and 3 percent (14,493) to the frozen sector. The average price paid to growers was $218/ton compared to $200/ton last year.
Fresh pears for canning reached a record 194,108 tons compared to a five year average of 163,000 tons. This year's canned pear production is up 117 percent from last year's weather reduced crop of 89,152 tons. Growers received $235/ton vs $285/ton last year. Due to last year's reduced crop, inventories of canned pears are depleted. The major concern for U.S. processors is correctly pricing the current crop to move sufficient quantities and avoid large carryovers into the next year.
This year U.S. production of apricots for canning reached 46,700 tons compared with 20,000 tons last year. Growers received $320/ton, the same as last year. Apricots destined for concentrate are estimated at 27,700 tons vs 21,500 tons in 1996/97. This year prices received by growers declined from the $250 to $240/ton compared with $190/tons last year. Due to the sizable quantity of canned production, U.S. imports of canned apricots are expected to decline markedly.
(For supply demand information, contact Robert Knapp,
202-720-4620. For marketing information contact Pamela McKenzie