Although the European citrus sector will continue to evolve in the next five years, in many cases the die has already been cast, with Spain continuing to exert increased influence over the EU. At the same time, the Spanish sector will have to fight off emerging competition from other suppliers such as Turkey and Egypt in the northern hemisphere.
With the majority of export demand concentrated in key EU markets, and also with the spectre of static consumption, Spanish growers and exporters will have to look at opportunities that might exist in emerging markets for any incremental growth. Although Spain itself does not begin to compare in size with established citrus giants such as the US, China and Brazil, it is still a large-scale producer and Spain is also the world’s largest exporter by some way. The fortunes of the Spanish sector therefore lie very much in the international market, its ability to fend off emerging competition and identify and explore new market opportunities.
The Valencia region accounts for 3.4 million hectares of the 5.3mha devoted to the crop. The Spanish industry has a well-funded promotional campaign worth an estimated $10m per annum, funded through a combination of sources including the EU Commission, Foods From Spain (ICEX), various regional government agencies and the main industry body, intercitrus. The Valencia industry has also developed its own quality mark in order to differentiate its products in the domestic and international market. Along with the Anecoop organisation, which represents 120 fruit and vegetable co-operatives in Spain (of which about half are in the citrus sector), there is ongoing work in the development of new varieties and the adoption of ICM and IPM type production techniques across the sector.
Looking at the situation facing Spanish and other EU producers, in terms of product analysis:
•In the orange sector, production in the EU has stabilised at 5.5m tonnes per annum, almost 50 per cent of which is now accounted for by Spain, and 30 per cent by Italy. Traded volumes, in terms of product moved around the EU and/or imported from other third countries, has also stabilised at 2.2mt. Production in Greece and Portugal by comparison is small, and unlikely to increase in the foreseeable future
•Soft citrus production in the EU has now reached 2.5mt per annum, and although Spain dominates this sector, volume has fallen in recent years to 1.6mt. In terms of imports, these have remained relatively stable at 1.3mt, although growth is being seen in the seedless varieties vis-à-vis seeded
•In the grapefruit sector, EU production is very modest and any growth will come from Turkey, which at this stage is still an associate member of the EU. Imports have also been in long-term decline in the last 10 years, and have now fallen below 600,000t a year.
•Lemon production has stabilised in the EU in the last few years at 1.5mt, some 65 per cent of which is now accounted for by Spain, but with falls in production in other key producers such as Italy and Greece. Imports have increased modestly in the last five years, and have now reached 650,000t a year.
In terms of direct competition to the Spanish sector, the Turkish citrus industry will continue to develop in the next five to 10 years. Some observers predict that this might double in size in time. Control of much of the international trade is now in the hands of 10 packers and exporters who have built good reputations in the main EU markets, and have taken advantage of the government support that is offered. To date this includes some level of subsidy and preferential loans for the export sector. An exporters’ union, which also receives some government support, is involved in areas such as market research and promotional activity. The Turkish export sector will continue to focus increasingly on the EU market, although from a geographic perspective it is also ideally placed to serve the Gulf markets and eastern Europe.
In terms of markets within the EU, the UK, France Germany and the Netherlands are still the “Big Four” and even with the accession of the eastern European countries this is unlikely to change too much in the future. Of the countries that are lined up to join the full EU in 2004, only Poland with its large population of 40m and its relatively well developed retail system, dominated by west European players, offers any significant interest to citrus producers, probably either in or outside of the EU.
Many of the other applicant countries are relatively small markets, or have very low per capita incomes, and are already supplied via existing re-export channels from the Netherlands and Germany. It is only when the other nine east European markets are looked at together that they begin to represent any real market opportunity in their own right.
With the four main EU markets still holding the key to the future of the Spanish industry in the short to medium term, it is critical that new business development and marketing initiatives are pursued if the sector is to continue to move forward. It is likely that there will be further links developed with other suppliers in non-EU countries such as Israel, South Africa and Argentina, in order to offer customers in the EU a more cohesive supply of fruit and varietal choice over extended periods of the season.
The Spanish industry has shown itself to be an excellent producer of fruit in the last 10 years, but the real challenge for the next 10 will be to demonstrate that it has achieved excellence in marketing as well. This means getting to grips with the new routes to market that will emerge in the next few years, and demonstrating the ability to take on the new roles, skills and expertise required to fulfil the role of category manager for the leading retailers, especially as they look to continue their expansion into new geographic markets in Asia and, to a lesser extent, Latin America.
It is in these parts of the world that the Spanish sector will need to firm up its links with other international suppliers, as they too are looking to establish trade in the emerging markets. Not least, being the largest exporter in the global market, the Spanish industry has much to gain by being first to market and leading the way, rather than moving into these regions on the coat-tails of others.
Spain needs to be first, and reap the potential reward that Asia and other emerging markets offer. However, growers and exporters will also need to understand the nature of these markets, and develop a more entrepreneurial attitude in the sector. To date, the Spanish industry has made its money in markets which are relatively close to home, and which are - for better or worse - reasonably well understood. They are also relatively safe markets. Asian markets, the FSU and other emerging areas are far more risky, and require new skills to exploit the opportunity that exists within them.
A less conservative approach is required if the opportunity is to be taken advantage of. This only serves to underline the need for Spanish growers and exporters to search out new markets, develop new alliances and build new opportunities in the emerging regions of the world, rather than sitting back and relying on the traditional home market of the EU to deliver the goods. And pressure from Turkey in the European arena will only reinforce the need for the Spanish industry to look outside its traditional markets for its future success.
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