The Canary Islands industry has endured an unsettling period of falling production, lacklustre prices in key markets and rising competition. The current climate is challenging to say the least.
As growers gear up for the new season, insiders are hoping for an improvement in the situation. But they are being realistic - Canary Islands salads have long found favour in the UK market but, unfortunately, favour has not been enough to cushion the blows the sector has faced in recent years.
“Over the last four seasons, there has been a steady decline in tomato exports from the Canary Islands and the trend is expected to continue this season,” says Morna Blair-Cornwell, managing director of SpaniaFresh Produce. “The pressure is on this season more than ever, for better returns are expected by growers in order for their investments to pay off and for them to continue growing in the future.”
Tomato growers, in particular, have faced a rocky ride and in recent years the industry has faced logistical challenges, debts, reduced production, increased competition, and pests and diseases such as whitefly and yellow curly leaf.
This season’s tomato sendings are a little earlier than normal and the latest reports from Foods from Spain put the crop at 160,000 tonnes. However, some insiders are predicting volumes could be down by as much as 12-15 per cent on that figure.
“In general for the 2008-09 season, we can expect reduced exports due to less acreage being planted overall in comparison to last year,” says Blair-Cornwell. “There has been no shortage of nurseries available for rent, but not many takers.”
José Hernandez, of Fortuna Frutos, says his company’s first plantings took place in mid-August. “We expect to start picking our first tomatoes around the middle of October, but there won’t be significant volumes until the middle of November,” he tells FPJ.
Bob Curwood, commercial director of Allfruit International Ltd, also anticipates small quantities of tomatoes during the last week of October, with volumes rising in November. “Quality is expected to be good after we experienced success with the varieties grown last season,” he says.
However, he adds that the economic situation during last season and going forward into the 2008-09 deal has reduced tomato production. Increased production costs, in addition to less financial support from the banks as credit facilities have been reduced, as well as a stronger euro against sterling, have exacerbated the situation.
Moreover, fertiliser and fuel costs have escalated in the last six months and the prices returned last season against yields produced were much lower than before, says Blair-Cornwell.
Curwood predicts that volumes out of Tenerife will be lower than last year. “Some growers have not planted and others have stopped altogether,” he adds.
Hernandez says that other grower groups around the Canaries have dramatically lowered their plantings by as much as 40 per cent. “This is not just on tomatoes; cucumber production will also be slightly lower than last season,” he says.
However, due to good customer demand in the UK, Curwood expects to receive similar quantities to last season. The crop reduction will primarily mean that fewer tomatoes are shipped to the continent.
All of the producers FPJ spoke to say they will handle similar amounts of tomatoes to the previous season.
“Despite the difficulties the Canary tomato business is facing, we have managed as a group to sustain the same overall planted surface or hectares we planted last season,” says Hernandez.
“Our production of cucumbers and tomatoes in the Canaries is expected to slightly increase on 2007-08 in terms of acreage planted,” says Blair-Cornwell.
However, producers are not ruling out making further changes in the future. “What we are finding is that the worst growers will go out of business,” says Hernan Cortes, of Cortes Ltd. “Also, growers will cease producing where conditions are not really suitable, for example if they have problems with soil, water, etc - it is a case of natural selection.”
The Canary Islands are known for producing round tomatoes, but the sector is also adapting to market demand by producing other varieties. In particular, cherry, plum and on-the-vine varieties are gaining in popularity, says a spokesperson for Foods from Spain.
Growers have also begun diversifying into other crops in recent times and this trend looks set to continue, say exporters.
“Whereas before manygrowers relied onmainly producing tomatoes, after a few poor years, many have looked to alternative crops such as papayas, melons and peppers for local consumption and possibly future exports to take place,” says one insider.
“It’s difficult when the market is undercapitalised,” says Cortes. “You need significant amounts of money to make big changes.”
Despite the difficult times, the UK is the largest importer of Canary Islands tomatoes and insiders say the Canaries will always supply the market. “The Canary Islands have a leading edge over the rest of Europe because of the climatic benefits they enjoy during the winter months,” says Steve Cornwell of SpaniaFresh Produce. “Because of this, and the historical preference the UK shows for the quality and flavour of Canary Islands tomatoes, we are confident that they will continue to play an important role in the salad supply chain within the UK and the rest of Europe, despite the steady decline in exports over the last four years.”
Allfruit is also optimistic that UK demand will continue for Canary Islands tomatoes. “We have strong links with our customers, who appreciate the consistent supply during the difficult winter months,” says Curwood. “The Canary Islands’ weather is generally more stable than we have seen in mainland Spain over the last few years and this, together with good quality and varieties, means that there is demand for Canary Islands salads from those customers who value the growers there.”
Scandinavia is another key market for the Canary Islands and, according to one importer, this market is considered to be more stable in terms of prices than the UK.
In addition, eastern Europe has been flagged up as a market to watch. Curwood acknowledges good demand from the area, but he says the prices achieved are not particularly favourable.
Despite the precarious situation, insiders are keen to stress that the Canary Islands have made improvements to their operations. A number of growers have invested in new improved structures in plantations, as well as stepping up growing techniques. “The fruit from these growers is more consistent in quality and the investments have paid off,” Curwood insists.
Meanwhile, transport remains high on the agenda. Depending on the weather, it takes four days (quay to quay) to transport Canary Islands tomatoes to the UK, says a spokesman for the Port of Southampton.
As the sole UK port receiving Canary Islands produce, Southampton has extensive specialist facilities dedicated to this trade. Canary Islands Fruit Terminal provides 14,500sqm of cool and coldstorage, with a temperature range of -2ºC to 15ºC, and has deep-water berths capable of accommodating two ships simultaneously.
Despite falling tomato volumes, the Port of Southampton anticipates it will handle similar levels of salads this season, compared to 2007.
Southampton handles around 80,000t of fresh produce from the Canaries each year, between October and May. Tomatoes dominate volumes, but smaller volumes of peppers, avocados and cucumbers make up the offer.
Transport costs are rising every year as a result of fuel increases. In previous years, the government has provided subsidies to help towards shipping costs, but these are under threat of not being paid out this year. “This puts more pressure on growers who are finding it tougher to survive in the current economic climate,” says Blair-Cornwell.
Inevitably, producers are hoping for improved conditions this season and they are universally agreed on one key point - prices need to rise to ensure the survival of the sector.
“The prices being achieved do not correspond to the crops we have in either the Canary Islands or Spain,” says Cortes. “Prices are unsustainable in the current climate, especially with sterling being so weak.”
“This forthcoming season is a crucial one for the Canary Islands industry, but all the signs point to it being a good season against all odds,” says Blair-Cornwell. “It will certainly be a decisive season for many and the survival of the fittest in terms of quality and yields produced, against ever-increasing costs.”
“Despite all these challenges, we at SpaniaFresh remain optimistic and positive for a good season ahead.”
For the short-term future, Foods from Spain says the sector is making improvements to its operations. “In the next three years, companies will be investing in improving the installations in the production system in order to avoid new viruses and diseases that could affect them,” says a spokesperson.
Curwood predicts that the Canary Islands industry will see further consolidation during the next few years. “All salads from the Canary Islands are under economic pressure and perhaps other new specialised products will have a future,” he says. “This is something we are looking at. The sector is constantly evolving and further changes are inevitable.”
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