Spain is a heavyweight player in the European citrus market and beyond, but it has not been an easy road for growers and exporters, who have battled to make the most of a competitive market and have even resorted to selling their fruit below cost.
The country now provides more than half - 66 per cent - of the total volumes of citrus in Europe and, over the last 10 years or so, has built up the potential to produce bumper crops, most notably a few years back in the 2006-07 season, when volumes exploded onto the market following two campaigns in which weather-related problems held back supply.
But this season, plantings have remained steady and volumes will be some 20-25 per cent lower than last year, which could go some way to creating a stronger market. All indications for this season are that fruit will be larger than in previous years, which could open up more opportunities for Spanish exporters to supply the UK - if, they stress, the price is right.
Spanish supply is set to get underway in the next few weeks, to build on some token early fruit that is already on the market but not yet meeting eating expectations. The season will kick off with the popular Navelina, Navel and Navelate, as well as soft citrus including okitsus, clementines and satsumas. These will be followed by lemons at the end of the month.
Clemenules are still the most popular easy- peeler variety planted, while Clemenruby, an early variety, is becoming more readily available for the UK market in early October.
Guy Dixon, director of MMG Citrus, is anticipating something of a turnaround for Spanish growers and exporters this season, with those who have come through several difficult seasons set to produce a high-quality crop. However, he stresses that it is the supermarkets’ recognition of this commodity sector and their willingness to pay growers fair returns that will allow the category to grow.
“Many farmers have been literally abandoning their fields in recent times,” Dixon explains. “In past seasons, returns have been so poor that their activities have been severely constrained and production in many cases has become economically unsustainable. This is the largest factor behind the drop in production, with satsuma production probably most notably affected.
“For those growers still in production, it is clear that the weather has been relatively kind, with a good internal maturity index showing at present, improved calibres and excellent juice content recorded so far. The Spanish government has also played its part and taken action towards combating the fruit fly plague, which has left recorded levels at an all time low. This is all pointing to a superb quality of citrus from Spain this year.”
Valencia is the top region for citrus exports, home to 76 per cent Spanish production. The 2008 campaign alone saw Valencian growers and exporters send €142 million (£130.7m) worth of citrus to the UK.
Juan Bautista Juan Gimeno, director of the regulatory council for Valencian citrus PGI, expects that growers and exporters will fare better this season, which should give them respite from what has been a run of tough campaigns and “excessively low” returns. “For this year’s campaign, there are some more favorable predictions, since we are expecting a high-quality crop, in part thanks to the reduced impact of pests and disease,” he says. “And the sector is hopeful that there will be an increase in citrus consumption among consumers in order to ward off illnesses, such as swine flu.
“We expect that this season is going to be more stable and moderate than the previous campaign, in that we are not going to produce the excess offer that characterised the last campaign.
“Although it is foreseen that there will be a decline in crop volumes - of 20-25 per cent - both growers and exporters are optimistic that the quality of the fruit will be very high. The data collected by by Ava-Asaja and the Unió de Llauradors shows that Valencian production will reach three million tonnes and national volumes will sit between 4.9mt and 5.32mt. However, this is just an estimate, since the weather conditions from this point on could still modify the figures substantially.”
A significant reduction in Navelina and later Clemenules from northern producers is expected. On top of this, satsuma volumes are set to fall dramatically, by as much as 35 per cent.
Julien Tiratay, commercial manager at Valencia-based Agriveg, confirms that this season looks better than last year, given the lower volumes and bigger sizes. On top of this, he expects that the size boost will bode well for sendings to the UK, across all the major varieties.
“Oranges are expected to be bigger than they were last year, as are easy peelers, which should work out well for exporters sending to the UK market,” Tiratay explains. “In volume terms, it is still hard to tell how this season will work out, but we will know more when we start work on the fields.”
But the challenges facing the Spanish citrus sector are many and varied. Even with prospects looking more attractive, growers and exporters will have their work cut out to make the most of their offer. The rising cost of production and obstacles including water shortfalls and restrictions on pesticides, competition from alternative sources such as Morocco and Turkey and the tough market made more challenging by the exchange rate, are just some of the difficulties facing Spanish growers and exporters. These have, in recent years, resulted in industry leaders calling for the situation to change, or else risk the decline of the sector as increasing numbers of growers and exporters drop out of the game.
Intercitrus president Jorge García says the main challenge facing the Spanish sector is to meet market demands for citrus at every given moment. “Intercitrus is a forum for information and consultation that permits us to carry out a monitoring of citrus campaigns and to resolve the problems that are presented in the sector,” he says. “In recent years, the situation has been complicated, with prices failing to cover production costs - a situation that itself cannot be prolonged over time. Nevertheless, the quality of Spanish citrus and our commercial relationships with our main markets should permit us to remain the top exporter in the world for fresh citrus fruit.”
Across the board, growers and exporters are hoping that returns will improve this year, especially now that they will have larger fruit. However, this will depend on outside factors, namely what happens in other supplying countries, such as Morocco, Turkey and South America. “I believe that Spanish fruit is still at the top,” says Tiratay. “Here, growers are looking at new varieties including hybrids; they are always trying to improve fruit quality and they are looking at the most effective ways of using water and pesticides, which is becoming increasingly important with the summer that we have had and new legislation. Above all, they can be flexible and adapt to customer requirements.”
It looks as if growers and exporters who can deliver a high-quality product on a consistent basis could this year be rewarded for their long-term struggle. If this is the case, the sector could be ready to reinvest and reverse the decline in Spanish plantings.
“On the assumption that the grower can consistently deliver a quality product in their grove, their main challenges are the weather, currency and receiving a fair return for the fruit to allow them to sustain their agricultural activity,” says Dixon. “Over the last two years, the sterling-euro exchange rate has been eroded by more than 20 per cent. This, coupled with increasing competition of later varieties from the southern hemisphere and other Mediterranean countries in season, is squeezing market share.
“Plantings in the Valencia province are currently in decline and have fallen significantly this year,” he continues. “If we can demonstrate better returns and economic viability, we may be able to help redress the balance and pick up the planting rate again soon.”
Spanish growers, like their counterparts around the world, are seeking to find more ways to reduce production costs in a bid to maximise returns. Citrus producers are struggling with some of the highest expenses including labour, water and insurance, but these are not matched by sales.
“It is essential that we improve the health of the citrus sector and arrive at a total recovery,” says Juan Gimeno. “And we believe that we should face up to other challenges, such as innovation and the development of the citrus category, the release of new varieties, improved marketing and concentrate the offer to open up markets that favour high-quality and value-added produce.
“The fact that the citrus sector has endured several campaigns in a row with negative results, as a result of prices being so low and returns not meeting production costs, means many are opting to leave the sector. Our main concern is that we are able to revitalise the citrus sector and make sure that price oscillations will not make such a big impact of producers.
“One of the most efficient tools to alleviate this situation would be to increase the financial aids that growers receive, as well as reduce the structural prices so that the producer can obtain a greater reward by the sale of their fruit.”
But despite the challenges, Spanish citrus players are innovating to try to make the most of their offer. Across the country, growers are investing in research and development and forming varietal clubs with the ambition to manage and market new varieties more effectively to the consumer.
“We are confronting the future with a positive mood and aim to come out of the economic crisis fully reinforced,” says Juan Gimeno. “Nevertheless, the economic fiasco has affected all the countries of the world and therefore also our country, whose economic motors - in which agriculture plays an important part - have been considerably affected.
“We must not forget that good management in these times is very important if we are to return the vigour to a sector hit so hard by the economic situation.”
At the same time, Spanish citrus players must remain competitive and strive to offer a consistently good eating quality product in order to get supermarkets on side and encourage them to recognise the importance of this high-volume product, while paying a reasonable return to the grower. This alone will allow the sector to sustain itself in the long term.
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