This has been an interesting phase for the citrus market, which is worth £606 million and is performing well against the rest of the fruit market.
Rising prices have been the main reason behind the growth, while consumers are buying more often and more each time they shop. This indicates that, contrary to the principles of promotions, higher price tickets do not always spell a sales slowdown.
Yet again, growth is being led by easy peelers including tangerines, mandarins and satsumas.
Prag Mistry, managing director of Fruitmann, describes the category as “fairly stable”, with “reasonable supply, but not oversupply”.
“A lot of fruit is coming in as part of programmes, rather than how it was historically, with extra volumes for just-in-case sales,” he says. “That will affect businesses in the long run. But everything seems to be coming into order and as we go into November and December, we will get past this lull that has come about as the weather changed last week.”
The fact that substantial volumes are coming in as part of
pre-arranged schedules has made for stable prices.
However, buyers should bear in mind that a lot of exporters are continuing to reconsider their options and trade with alternative markets to the UK.
South African supply is coming to a close now, with only Valencia still being packed in any significant volume. This year has enjoyed high volume exports and a better than expected market, with total sendings expected to be close to the 2008 figure - up around seven per cent on last year.
The final figures will be in the order of 94 million (15kg) cartons, with supply of easy peelers, Navel, Valencia and lemons increasing and only grapefruit falling, from 13.9m cartons last year to 12.5m cartons this time around.
The last shipments of oranges are heading to the UK to make it before the duty deadline on 16 October, when the rate increases to 16 per cent.
“The reports we get is that prices have been good in 2010, at a level higher than 2009,” says an insider. “However, the exchange rate has been against exporters, with a very strong rand impacting on grower returns.
“In addition, late rains made early season fruit harvesting and packing difficult, with some impact on shelf life and quality. The Transnet strike further exacerbated this issue by delaying shipping.
“Growers are facing audit fatigue, as importers seem to add new requirements every year. This is not only costly, but also time consuming and does not, in general, result in any increase in returns.”
Meanwhile in the northern hemisphere, expectations are high for the coming season.
An early start to the Israeli grapefruit season will bring some much-needed relief to the category in the UK, after a tight period.
Marius du Plessis, general manager of MTEX UK, is positive about prospects for the season, which is running 10 days ahead of schedule. “This has already benefited us, as we were able to bring forward our Marsh and Sunrise grapefruit programmes to fill a sizeable gap that was created in the marketplace by various issues in South Africa and Mexico,” he says. “The southern hemisphere had its logistical problems and strikes at points have delayed arrivals. That has now returned to normal, but I think the stability and reliability that Israel was able to provide during that spell was crucial for the balance of the market.
“In more general terms, we’re finding that value in the category has increased but that has been to the detriment of overall volume,” he continues. “This is because promotional tools such as multi-buys have become less effective during the recession, as consumers become more focused on price points.
“Having said that, the citrus category has really kept hold of its loyal consumers through the tough economic period and perhaps even added a few. People will still buy their basic products and citrus is seen as a must-have item for a huge proportion of consumers in the UK. Naturally, shelf space increases during the winter months, as people see citrus as an integral part of a healthy diet.”
Predictions are for a smooth switchover to the next set of seasons. A Southern Hemisphere Association of Fresh Fruit Exporters (SHAFFE) meeting just two weeks ago has allowed the main players to share their expectations for the next season.
The Spanish crop looks to be a little later and the southern hemisphere is finishing now, so the market should be well supplied but not oversupplied.
Growers in Spain’s key citrus production region of Valencia are expected to benefit from a higher forecast harvest this coming season that, if realised, will mark a substantial recovery from last year’s disappointing campaign. According to early estimates from the regional government of Valencia’s department of agriculture and citrus sector association, CGC, total production in the region will surpass last year’s three million tonnes, thanks to more favourable weather conditions.
All in all, growers and suppliers are preparing for the increased consumption traditionally associated with winter. How the next few months pan out remains to be seen, but improved returns will be key if the UK is to continue being a core market for the major producing countries.
SECURING THE YEAR-ROUND SUPPLY
Israel has a world renowned reputation for citrus. Here, Agrexco UK general manager Oded Yacovson talks about achieving 52-week supply from Israel and beyond.
Maintaining continual supply of the same quality citrus to our customers is key, so when the Israeli season is finished we have to look elsewhere to find suitable alternatives. Peru has been one source over the last 10 years - in fact, we were the first company to introduce Peruvian citrus into the European market, starting with the minneola. The climate in the South American country is perfect, with growing areas starting in the south where the first Okitsu satsuma was developed and spreading to Piura in the north, with the latest variety Star Ruby.
We exported 10,000 tonnes of fruit last summer, concentrating mainly on satsumas and minneolas as well as smaller volumes of other varieties. To ensure that we can sustain continual supply, we work with several sources so as to avoid any potential shortages.
Our technicians, agronomists and marketing team work closely alongside Peruvian growers from the orchards through to the packing houses and final shipping of products - it is almost a case of “cutting” the depth of knowledge and experience accrued by our departments in Israel and “pasting” it into the minds and manuals of our selected partners worldwide in order to achieve the same quality and reliability associated with Agrexco.
One of our company strengths is reflected in our marketing desk, otherwise known as the problem-solving team. In this industry, so much depends on the weather. If it is a bad year, it will show in sizes, quality and availability of produce and ultimately affect our growers and customers alike. But we find solutions. Our wholesale desk, for example, gives us the advantage of distributing surplus quantities to various channels such as food processing, catering and juicing without a loss to our growers.
On the home front in Israel, the last three years have seen major plantations of easy peelers - mainly Or - to keep up with consumer demand. Agrexco has been grafting and uprooting Sweetie and Shamouti, again to increase plantations of Or. It is anticipated that there will be a 10-12 per cent increase in volume from last year, with an expectation of between 35,000-40,000 tonnes coming from all citrus varieties.
Israel has already proved itself with grapefruit. The length of the season far outstrips others and the quality of the fruit is the best in the Mediterranean. The UK, followed by Europe is our major market, accounting for 70 per cent of total volumes, but in saying that, we are seeing a big rise in demand from the Russian market particularly for grapefruit and easy peelers as well as Sweetie, with better prices being paid.
As with all companies, we are constantly looking for new markets and have invested heavily in time, effort and money to find new outlets in the Far East, Japan and Australia to ease the pressure of grapefruit and Sweetie from Europe. I am happy to say that this has been successful.
Our range of citrus includes limes, for which we have a small, regular season from Israel during August and September. The majority goes to the local market, with a small percentage for export and this is expanding each year. This is important as it allows us to bring fruit to Europe in the event of shortages from Brazil and Mexico - a situation that can happen once every two years due to excessive rain.
But as with other citrus lines, we work to supply limes year-round under the management of sales manager Ian Crispin. We have established a great working relationship with the two best countries of supply, namely Brazil and Mexico. The long-term relationship we share with growers has brought in a consistent product in both supply and quality to the UK market.
Growers are environmentally aware. Limes are grown organically, a vital factor as lime trees, unlike a lot of citrus, need to be replaced every 12-14 years and many growers have switched to the easier production of sugar cane to give them quick returns with minimal risks. But this tends not to keep the soil in the best condition. Cyclical prices of commodities have seen many growers give up or go bankrupt.
Our strong quality control team is able to sort the right lime for the right customer and we are now selling more than four containers a week from Brazil and Mexico to all of the multiples, food processors and to the catering sector.
Lemons also feature in the citrus basket. The Israeli season runs from November, but the full colour, yellow fruit comes in from mid-January to early April. There are many varieties, but one that is gradually taking precedence is Eureka, which has fewer seeds, is fleshy and full of juice. The main export market traditionally has been the Far East. Customers there know and appreciate the quality and in doing so, pay the price, but as customers elsewhere are becoming more aware of the quality, sales are rising.
It has been an auspicious start this season. South Africa is finished and as yet there is only product from Cuba and some from Mexico. We brought in our Israeli grapefruit early, the quality and stability of which is second to none, with no comparison to the frequent quality issues of fruit grown in tropical climates.
We also have some important changes on our sales desk as we are welcoming Mike Lister, who is joining us as sales manager for citrus. Lister brings a wealth of experience with him, having worked in the fresh produce industry for a number of years, and we are confident that with his understanding of the industry and great knowledge of citrus lines we will be able to extend the business further.
CITRUS AND BASKETBALL: THE UPS AND DOWNS OF AN ISRAELI GROWER
Boaz Giladi grows citrus, sharonfruit and avocados for MTEX in Israel. He tells FPJ about himself and his career as a grower.
How many years have you been a grower?
I have been in the trade for 25 years.
What products do you grow?
We are currently growing 1,500 hectares of various citrus varieties, 80ha of sharonfruit and 100ha of different varieties of avocado.
Has that changed over the years?
Yes, we have grown many different varieties over the last quarter of a century and not only have we changed with the years, we have made sure that our mix of varieties reflects the changing taste of consumers in the markets we supply. In the last few seasons, for instance, we have decreased the amount of white grapefruit, Shamouti and Valencia we grow, as it has become increasingly evident that there is not a growing demand for these products at the moment on the international marketplace.
For the last 10 years, we have been working hard to develop and improve new citrus varieties that will fulfill the demand of MTEX’s customer base and the new taste preferences of consumers (new plantings of easy peelers being the best example of that). Our number one priority as a grower is to produce fruit that has a great taste, impressive external appearance, and last but not least, a long shelf life.
Which markets do you concentrate on as a grower?
We have a wide outlook, concentrating on markets all over the European Union (including the UK), Russia, the Far East and North America.
How has the production season been in 2010 and what are your expectations for the season?
Our 2009-10 season was very successful from an agricultural viewpoint. The yields we achieved were high, the quality of the fruit for export was excellent and demand from our customer base around the world was outstanding. As a good farmer, I’m looking forward to a very successful season this time around and, as all of my grower colleagues around the world will no doubt agree, we’re hoping there won’t be any weather disasters (hail, strong winds or storms) to upset us over the next few months.
Has the grower community in Israel fared well in the last few years?
Until last season, we in Israel had experienced a very successful couple of agricultural seasons. Unfortunately, although the recession has not been too hard on us domestically, it has affected the export business and last season was a difficult one, due to the global economic financial crisis.
How confident are you in the long-term future?
As an Israeli and an MTEX grower, I’m very confident and positive that in the long term, we will continue to be profitable and successful. That is why we have the confidence to go through so many changes to continually improve our business. We always stay up-to-date with the latest technology available and our team is constantly learning, improving and keeping up to speed with the wider industry. We have made very large investments in our agricultural business.
How do you feel the market and consumers perceive your products?
We are lucky in fresh produce that our products are popular all over the world and hopefully, in the future, our clientele will continue to expand with every season.
What have been your biggest successes as a grower?
One of my biggest successes has been gaining the recognition of my managers regarding my professionalism and management within the orchards. That achievement has given me the opportunity to manage a big area of the company’s fields.
What are your hobbies outside work?
I like all kinds of sport and I am also a keen philatelist and numismatist -ie I collect stamps and coins.
What is your favourite fruit or vegetable that you don’t grow yourself?
I love cherries and nectarines.
Favorite actor?
Brad Pitt.
Favourite sports team?
It’s the Maccabi Tel-Aviv basketball team.
Favourite music?
I mainly listen to oldies and classical baroque.
What do you hope to achieve in the remainder of your career?
Hopefully, I still have many years to achieve these - but the main two ambitions for me are to continue and improve in my profession and to have a bigger influence and responsibility at MTEX.
No comments yet