As the exchange rate continues to bite into the import business in the UK, the top-fruit category - a traditionally resilient market - is bracing itself further, with a certain confidence that it will weather the storm well.
The last quarter proved a positive one. Sales were good in the festive season before a British boom on Cox in January. “It has been quite incredible how successful a month it has been for Cox in particular,” says one insider. “UK sales have been very strong this year; I think good storage and good quality are the main reasons. There has been some pretty attractive fruit to be had.” Gala and Braeburn have also been winners as consumers turn to classic home-grown varieties.
The weakened sterling has hit all imports hard and companies are looking at ways to avoid the impact. An industry expert puts it well: “We are all braced for this and there are genuine fears that some suppliers may simply turn their backs on the UK; we are not exactly an attractive market right now.
“We have seen that prices have rocketed for some other products, such as cucumbers, and it is scary to look first at what is being asked and then what is being paid - the line needs to be drawn somewhere.
“So far, top-fruit sales as a whole have been fairly flat, but people are trying to protect some of the premium lines as they are at the forefront and will be the first to see a sales drop-off.
“There is no doubt there has been a serious devaluation and the marketplace has become really tight. The first thing we have to do as an industry and as individual businesses is to plan. Plan marketing and plan training - the extras that are still valuable - but plan volumes as tightly as possible too.”
Another prominent figure says: “Apples and pears are lucky in that they are a staple crop. They are mid-priced and will be the last to disappear if fruit sales did seriously begin to drop off - at the end of the day, they are the most readily available and some of the most popular.”
This is backed up by the current boom in the southern hemisphere market, as announced by the World Apple and Pear Association (WAPA) after its annual meeting in Berlin this month. The forecasts for the hemisphere make positive reading, as Argentina, Australia, Brazil, Chile, New Zealand and South Africa look to attain a four per cent increase in apple and pear production to 5.2 million tonnes. Pear production is forecast to enjoy a significant increase of 9.4 per cent, with volumes around the 1.5mt mark.
A decrease in exports from leading source Argentina by almost 10 per cent could put a dent in this time of prolific production as traditionally exported fruit is left for the domestic market. The exchange rate is proving a particular sticking point. Exports are likely to be around 674,400t. Growing markets such as Russia - a market which had been expanding at a rate of 15 per cent year on year - have also been put on hold slightly as the plunging ruble, devalued by more than 20 per cent, has led some importers to ask for cash payments or pull out altogether.
Final crop forecasts show a higher apple crop than estimated, both in the EU and the US. European apple and pear stocks, as of January 1, were at 360,000t and 411,000t respectively, which represent an apple increase of 12 per cent and a sharp decrease of 24 per cent compared to the same time last year for pears. US apple stocks were also considerably higher at 1.7mt, an increase of 22 per cent, while pear volumes were only slightly higher at 173,400t.
This follows an extension of New Zealand’s apple varieties this year, as reported in FPJ, with licensed variety Jazz joining fellow licensed varieties Pink Lady and Tentation in seeing huge plantation rises of up to 71 per cent, eating into the traditional Royal Gala and Braeburn crops.
However, the New Zealand boom, which could see more than 17m cases packed, will face stiff competition in Europe at the start and end of its season as numbers continue to increase year on year, with the UK, France and Italy battling on the apple side, while pear production has become tight across the board.
Overall, pear production was down by 16 per cent compared to an average of the previous three years, with big producers such as Belgium and France seeing a 32 per cent drop-off to 17,700t and 157,000t of production respectively. Spain, Italy and the Netherlands - all big players in the pear market - took heavy hits, while UK production fell by 21 per cent in 2008, compared to the previous year.
The adverse weather conditions seen throughout Europe have yet to have an effect on the resilient top-fruit category and financial turmoil continues to be the main concern. One French insider comments: “We had some frost in the winter, at the end of November, but it was too early to have a real effect as we were not close to flowering.
“Greater conflict for us is coming from the difference between now and the previous season, because of the economic crisis and difficulty with different values. We needed to get more money for the growers this season and we had to increase the price in sterling, but value for growers in Europe has not increased.
“In the end, we have to find a fair solution for everybody and it may be a switch to trading in the euro to counter the equalisation problem. The UK is too important a market to lose.”
One expert concludes: “It is a bit tough out there, but we are in a decent position. The key is to be reactionary, as being static helps nobody.”
AGROVISTA GIVES FOOD FOR THOUGHT
Agrovista UK’s agenda is to look forward and introduce new subjects and opportunities for top-fruit growers, and we have made a start by holding three Fruit Spring Briefings in Ledbury and Ashford, says the company’s regional director, Charles Coslett.
These meetings, which were held in February, involved presentations from some of our team members and researchers, as well as industry members from companies such as Norman Collett, the Netherlands’ Plant Research International and Inova Fruit. Subjects varied from targeting and optimising chemical input applications to improve quality, to dormant season control of mussel scale, fruit growing and marketing in the UK, and biotechnology and GM use in top-fruit orchards - giving some 30 industry players in each group plenty to think about.
I believe that acceptance of biotechnology by consumers and companies alike will come in time. Top fruit can last longer, look better and perform better. Politicians have a decision to make as to how wide they open the gate to these new ideas, and large businesses will have to get the environmental quarter on side. It is interesting that fresh food may be the product to lead the way.
Agrovista was formed in January 2001, following the merger of Profarma Ltd and the Crop Care Group of companies, to provide specialist agronomy and crop protection products to British agriculture. Agrovista UK has a number of arms and we are very much involved with food production and all levels of growers. We want to be the top-fruit grower’s choice for quality of service and innovation.
We have a lot of experience and resources to pool from. We are owned by a large Japanese company, the Marubeni Corporation, and are one of the largest crop protection companies in Europe. We have a Dutch arm of the business, as well as a fully committed shareholder in Marubeni, rather than a bank. This means that we can pay our suppliers on time, ensuring continuity of supply. Cash is king in the current environment and credit is tight. Having the backing of a shareholder gives us an advantage over the competition.
As well as focusing on soft fruit, arable crops, fine turf and vegetables, we aim to share advice on and increase the production of apples in the UK. Our new service Agrogate falls in line with this and is a fee-paying service at the farm gate, which supplies an adviser on site to help growers with entry-level schemes, higher-level schemes and contract farming agreements.
My main focus is to look to individuals within our business and not spend money where we will not get any return. I strongly advise any growers to do the same. We are carrying out trials with fungicides to improve scab control in apple production and looking to make insect control easier for growers in these pressured times. As well as meeting the project’s aims, we need to make sure the products we offer are good value for money, do the job for the grower and fit our customers’ budgets.
Our development work is second to none. We have good laboratory practice and a high standard of external field trials; the data we provide to our clients is very reliable. We have also invested £100,000 into our distribution system and have made sure we are up to the British Agrochemical Standards Inspection Scheme (BASIS) requirements. To move forward in business, you have to spend more to get ahead of the competition and then reap the benefits. We are now well covered throughout the UK and our distribution centres are no more than two hours away from any of our customers.
We have high hopes for 2009 and plan to develop international study tours for top-fruit growers and improve products that are of value to UK growers.
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