While China is the world’s largest producer of asparagus, the majority of its product is designated for domestic consumption - and that leaves Peru free to dominate the rest of the globe. And with the ability to offer year-round product, exporters of Peruvian asparagus are indeed cornering an increasing share of the world-wide market as consumption levels continue to soar.
In the first 17 weeks of 2004 Peru exported 261,000 boxes (5 kg) of asparagus to the UK, while in the same period this year the number rose by almost 50 per cent to 390,000 boxes. Given that 2005 to date has seen aggressive sendings from Mexico and California, Peru’s success is a true testament to the rise in consumer demand, according to Philippe Augier, managing director at UK importer Midifruit.
Peru has slowly but surely been leaving lesser contenders in its wake. Earlier this year the Washington asparagus industry suffered a major blow as the state’s last processing plant, Seneca Foods, closed announcing plans to follow Del Monte in moving its operations to Peru. At the same time Washington’s growers are seeking federal trade protection from Peruvian imports during their season, which runs from April to June.
Pepe Chlimper, former minister for agriculture in Peru and president of Midifruit’s supplier, Agrokasa, says Peru has already witnessed the first 200 hectare investment from a Washington State grower and he believes production in Washington, as well as California, will increasingly migrate to Peru and Mexico. However, Mexico is too dependant on weather fluctuations, which prevent it from achieving the strong position enjoyed by Peru, claims Chlimper.
“Mexico is still planting more acreage but is very dependant on weather,” he says. “This will be the situation every January and February. If, as was the case in 2005, their crop was excellent thanks to the clemency of the weather, they will be major players on the markets of Europe and Asia thanks to their relative proximity to these markets and because of the unmanageable peaks in production which they need to market. There will, however, be years like 2004 when bad weather conditions seriously impeded Mexico’s exports, but Peru was ever-present.”
Meanwhile, closer to home, European importers are progressively re-valuating their sourcing strategies. “What we are finding is that the Spaniards are losing volume market share within the UK for several reasons,” says Augier. “The supermarkets have basically said they would rather not have Spanish asparagus because historically speaking, Spain has not always met the required level of service, which is largely down to the vagaries of the weather. This year the crop was six weeks late and I think that has been the final nail in the coffin for the big multiples, although not for small retailers of course, for which Spanish asparagus is still a good option.”
Whereas England has been the market leader in Europe on year-round consumption, in other countries, for example France, Spain and Italy, consumers tend to show more loyalty to mainland European sources, restricting purchases to their respective windows of availability. However, Europe is beginning to revise such preferences, according to Augier. “The supermarkets in these countries, France and Spain in particular, have seen the added value of being able to sell asparagus 52 weeks of the year and have created a greater demand for Spanish asparagus when it is in season.”
With such an attractive opportunity Spanish producers will hardly feel the loss of the UK market, says Augier. “Spain has a fabulous home market within its own supermarkets and has formed contracts with supermarkets in France, Germany and Switzerland which are, by and large, easier to serve so they would rather go there. Spanish volumes are on the increase but this increase is actually being taken up by these new customers in Europe.”
With regards to Peruvian production, Augier says as a result of new plantings the acreage is increasing slightly. However, given that a lot of the fields are reaching maturity the net increase is negligible, he explains. “A lot of the fields are reaching peak capacity and the older fields are now going on a downward spiral of production, so increases in production are not going to actually increase the overall volumes coming from Peru but rather compensate for the lack of production from older fields.”
Peru’s success in the UK and the rest of Europe, has been aided by the weakness of the US dollar during the last three years. However, Augier says people fail to appreciate that Peruvian asparagus will never be a cheap product, owing to the severe costs being heaped upon its exporters. Chlimper explains the impact of the global economy: “Early in 2004, our local exchange rate was 3.50 sols to the dollar. Today it stands at 3.25 sols, that is to say the sol has appreciated in value by seven per cent. This has increased our costs expressed in dollars by the same seven per cent. To that you need to add the effect of crude oil that stood at $30 per barrel in March 2004 and is now hovering at around $50. This has created the double whammy of increasing the price of pesticides, fertilisers, plastic, internal transport etc, on one side, and increasing the price of airfreight on the other. The first inflates our production costs and the second eats into our net FOB (Freight on Board) returns.
“Today, within the C&F (Cost and Freight) Europe price of a box of asparagus it is safe to assume that well over 50 per cent of the cost is airfreight and airport charges.”
At the moment around 60 per cent of Peruvian asparagus is sold to the US and, given the sheer size of its market, Peruvian exporters will continue to value the stability of trade it provides. “Agrokasa has got a security valve in the US,” says Augier. “It sells asparagus at the right value throughout the world and any excess goes to the US, which is such a huge market it can easily absorb it. It uses the US to regulate the volumes it has to send to the other 19 countries it exports to, in order to keep a decent price overall.”
However, Peruvian growers have increasingly been moving away from countries using the US dollar in order to strengthen its position, says Chlimper. “This tactical change has gone some way to counterbalance the negative effects of the dollar. As things stand, the situation is stable and no dangers are rearing their heads.”
With a 500ha replanting programme scheduled for the next two to three years, Agrokasa’s commitment to asparagus shows no sign of abating, Augier says. “In Peru I don’t think people will opt out of asparagus. It is still a good option for them but what will understandably happen, as is the case everywhere, is that the more efficient people will survive and continue to gain market share while the rest are gradually unable to make it pay.”
While Spain assumes a sense of loyalty with respect to its European partners, Peru has a completely different view of the global market place. That means its exporters are not inhibited on cultural grounds, Augier claims. Chlimper agrees and says having such substantial volumes to rely on enables Agrokasa to select the best markets to work with.
“At Agrokasa we supply 23 countries on five continents and the companies we have selected as our partners in each country have been chosen for being the strongest in their field,” he says. “These companies help us to adjust our production programmes so as to balance out the peaks and troughs of world production following the ever-changing weather patterns.
“This total flexibility in our production means that we never have to put pressure on our partners to take on unwanted volumes and this lets them concentrate on getting the best available value for the product. It also allows our partners to take on programmes of any volume and never let the customer down.”
In terms of varietal preference, Augier says growers are trying to push production away from the standard UC157 types to other thicker varieties, in the search for higher yields. However, consumers still generally prefer the familiar UC157 varieties, which are more regular in shape and have a larger percentage of green on the spear. “It is quite common to get 24-25cms of green in UC157 but very difficult to get this with other varieties, making butt waste a costly problem for the end user,” he says.
While white asparagus gets mentioned from time to time, Augier is not expecting it to make a dramatic penetration in the UK. “It is a much more fragile animal than its green counterpart with a shorter shelf-life,” he says. “It is more complicated to prepare - it needs peeling for a start - it is more expensive to produce, and therefore more costly to retail.”
As such, for the UK market it is destined to remain a niche product championed by a select few. “Sure enough there will always be a consumption of white thanks to the presence of foreign chefs who grew up on white asparagus, but even continental European white asparagus consumption strongholds are being converted to green and not vice versa.”
While Augier recognises the AGA’s success in promoting British product, Peruvian imports will continue to flourish even during the British season, he claims. “The problem with the British product is the vagaries of the English weather. “For example, today we sold more imported asparagus to produce packers who are themselves selling English product. All you need is two or three frosty nights and all of a sudden the English asparagus supply will completely dry up. That is why even during the UK season importers will always keep the doors open to Peruvian asparagus.”
