Melon producers in Brazil are busy gearing up for the forthcoming season and once again the UK will be a major target for suppliers.
Brazil generally faces very little competition when fruit comes on line in August, but according to some insiders, it may need to use this advantage to the full as it advances with this year’s campaign.
It appears that a stronger currency could take precedence over weather conditions and volumes during the 2006/07 deal and those handling Brazilian melons are hoping for more stability compared to recent seasons.
“Following the total disaster of last season for exporters and importers alike, we are somewhat nervous of the upcoming 2006/07 Brazilian melon season,” says Terry Watts, managing director of Janic. “The dollar/real position is extremely concerning and is one of the main reasons why growers have been forced to push FOB prices up so sharply.”
“The current exchange rate is a floating R$2.14 to the dollar and with Brazil’s strong economy, that does not look like changing too much in the foreseeable future. This will continue to put pressure on grower costs and will make some producers very vulnerable.”
Watts says some producers have already either reduced melon production considerably, targeted the US market or even stopped completely as they are unable to find European buyers.
One producer that doesn’t intend on being too active in the UK and Europe this season is Rio de Fruta. The producer-exporter produces Honeydew melons in the São Francisco Valley and until November 2005, it shipped to Europe and counted the Netherlands as its main market in the region. It also exported some 15 per cent of its shipments to the UK.
However, the strength of the real has curtailed its export programme. “Exporters received over R$3 per US$ during the 2004 season,” says Joao de Sa of Rio de Fruta. “At present he would receive just R$2.15. We are not expecting any change in this scenario in the short-term future.”
The exchange-rate situation has been further exacerbated by rises in oil prices and seafreight hikes.
“Our industry is controlled by supply and demand and whilst I am sure Brazil will supply the right quality, they also have to be competitively priced to create a sustainable demand,” Watts says. “However, to make this business viable for all concerned, retails will have to go up this year and this will have a negative effect on demand. Hopefully this will only be a short-term problem while retailers and consumers adjust to accepting the fact that melons from the southern hemisphere cost more than those coming from the northern hemisphere.”
Watts acknowledges that it isn’t easy finding a balance between paying the growers a fair price, delivering the right quality product, retailing at realistic levels and at the same time offering value for money and ultimately, providing consumer satisfaction.
Although it is early days, there are some bright spots and leading Brazilian producer Nolem is confident about some aspects of the forthcoming campaign. “Quality wise, we expect an excellent season,” says Marcelo Gadelha, Nolem’s export director.
Europe is a major market for Nolem and the firm believes that marketing campaigns are excellent tools for increasing consumption. As well as the UK, the company is targeting Spain and France and has enjoyed “very positive” results. “Tastings and merchandising programmes at selling points are important actions,” Gadelha says, adding that other ways to increase demand include developing new varieties and improving existing varieties.
“Companies like Nolem have to meet the diverse requirements of all its customers,” he says.
Nolem claims it is the first Brazilian melon producer and exporter to achieve EurepGAP certification. The firm has additionally achieved Nature’s Choice accreditation and its next goal is to work towards ISO 9001 and 14001 certification.
“These accreditations underline the seriousness with which Nolem takes its responsibilities in terms of the safety of its products, the environment (implementing Integrated Pest Management and Integrated Fruit Production) and the wellbeing of its employees,” Gadelha says.
In order to maintain its prime position, Nolem will continue to invest heavily in its infrastructure and production processes. he adds: “As part of this investment, we maintain a research centre focused on improving existing melon varieties and developing new cultivars. The research and development areas of Nolem are key departments of our company and are pioneers on varietial development.”
“Our training centre, which is key in developing the skills of our workforce and ensuring their safety, works in partnership with several external institutions.”
When questioned about prices achieved during the 2005/06 campaign, Gadelha is frank. “Prices were not good at all,” he says. “The returns to the growers were bad, due to different factors, but especially due to the low dollar rate against the real. However, Nolem’s commitment to its clients, and supermarkets is very high, therefore it was important to keep supplying on a regular basis.”
In terms of volumes, there was some good news for Nolem. The producer sold more than 8.7 million cartons of melons last season. According to Gadelha, about 6.7m cartons were exported and 2m cartons were sold domestically. “This represents approximately a 30 per cent increase compared to the previous season,” he says.
Nolem devotes 8,000 hectares to melon production and grows the majority in Rio Grande do Norte, where some 90 per cent of all melons for the international market are produced. Ceará is also an important growing region for Nolem.
Meanwhile, UK importers are hoping to overcome significant obstacles this season and are busy preparing for the new campaign.
Utopia works with three Brazilian producers which supply Galia, Cantaloupe and conventional and organic Honeydew melons. “Two of our growers are located close to Mossoro and the other is on the coast to the north of Fortaleza,” says Utopia’s Karen Charman.
Utopia supplies Tesco with the retailer’s Finest Cantaloupe melons. “We produce the Finest melon using technology and advanced agronomy in partnership with our grower - this sector could see market growth,” claims Charman.
Up to mid-August, growers were reporting normal weather conditions. “There have been no adverse effects on production at this stage,” Charman says. “Our growers will be increasing volumes.”
When asked about challenges this season, Charman adds that financial issues will certainly be an issue. In addition, threats of leaf miner and whitefly plagues could also be a consideration.
In terms of increasing consumption, Charman says that promotions tend to work well, and more awareness of the health benefits of melons could boost sales. “We know that for example, pomegranates and blueberries are good for health, but Cantaloupes are also high in antioxidants and melons are low in calories,” she says.
JO Sims expects to receive its first volumes of Brazilian melons on September 5 and will handle Honeydew, Cantaloupe and watermelon.
Brazil could enjoy early market conditions this year, believes JO Sims’ Darren Matschull. “It’s been such a difficult Central American and Spanish season so we’re in need of a good Brazilian season,” he says. “Spain finished early so we will be ready for Brazilian melons when they start. They will come in on a good market.”
The majority of JO Sims’ Cantaloupe programme will consist of the Magritte variety. “The seeds cost more but this type of melon fetches a premium and more buyers are beginning to request the Italian striped melons rather than the US types,” he says.
While Brazil has increased its production of Cantaloupe and Galia melons in recent years, de Sa believes that Honeydew will continue to reign supreme.
“Honeydew has a long shelf life and is much easier to handle than Cantaloupe and Galia,” he says. “Piel de Sapo is a great fruit, but not popular in the UK. I think yellow Honeydew will remain the most important variety in the long term.”
Observers are mindful that it is not going to be an easy season and the strengthening of the Brazilian real is a significant issue. However, other factors are still part of the equation. The country needs to find a market for its melons and the UK remains eager and willing to take its fair share.
