USDBC PORTUGAL & SPAIN TRADE MISSION NOVEMBER 10-13, 2009

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1 c/ Borrell 7 Local St. Cugat del Vallès (Barcelona) Spain Tel: (34) Fax: (34) dmcclellan@dmcclellan.com USDBC PORTUGAL & SPAIN TRADE MISSION NOVEMBER 10-13, 2009 Submitted to: USDA/FAS GRAIN AND FEED DIVISION SOUTH AGRICULTURAL BUILDING 14TH & INDEPENDENCE AVES. S.W. WASHINGTON, D.C Submitted by: David McClellan USDBC Regional Marketing Representative Date: November 14, 2009

2 USDBC PORTUGAL & SPAIN TRADE MISSION NOVEMBER 10-13, 2009 Introduction: McClellan visited various dry bean buyers in Portugal and Spain to gauge buyer interest in US beans in general, and especially in dark and light red kidney beans because we saw special interest from buyers in these two bean classes at the ANUGA show the prior month. During this trip, McClellan concentrated on buyers that produce canned or frozen beans as well as importer/wholesalers selling to the food processing industry. Tuesday, November 10 A.M. Meet w/ Joao Maia, Director & Salvador Oliveira Maia, President Raimundo & Maia, Lda. Estrada de Chiqueda Alcobaça Portugal tel: fax: joaomaia@raimundomaia.com Web: Notes: Raimundo & Maia is the largest legume importer in Portugal and perhaps in Europe, handling 55-60,000 mt/yr of 1. garbanzos 2. white beans 3. cranberry beans (cans pintos as well) 4. black beans 5. dark and light red kidney beans 6. pigeon peas as well as growing volumes of pardina lentils for its DIA contract in Spain. The company wholesales, packages and cans legumes, 95% under store and distributor brands, and sells to companies across Europe as well as in north Africa, Angola and Mozambique. R&M even has a cranberry bean production project in Mozambique. On Oct. 16 th, a fire destroyed most of the building housing R&M s canning and jarring line. Joao and his father Salvador have been able to contract production with other companies to cover their contracts. Construction of a new plant will begin shortly and is scheduled to be operational by summer Joao Maia said he was not buying any beans right now because of high and rising prices (R&M has around 14,000 mt of legumes in their warehouses), but at the same time said he thinks bean prices in China and Argentina have to trend up over the next few years as the cost of local labor and other inputs goes up. He sees the supply-demand situation very tight right now, meaning any drop in bean production in China, India, etc. will quickly push prices up.

3 Maia complained of frequent strikes in the Lisbon port and said he prefers working through the port of Sines. He buys all his beans in 50 kg. and 100 lb. bags because this allows him to stack higher and store more beans per m2 of warehouse space. P.M. Meet w/ José Manuel Soares, Director MEPS (Maria Emilia Pereira Soares & Filhos, Lda.) AP. 278 Agrela, Bouças Fafe Portugal Tel: Web : Notes : MEPS imports, wholesales, packages and cans legumes mostly under its own Meps brand for the Portuguese market, though also trading pintos into Angola. He complained that the drop in production of cranberry beans in North America and in China was making his job difficult. He was worried about the N.American pinto crop being so late and at what moisture levels farmers would have to harvest. He said there is a big carryover of beans in China, that prices are stable but high for small-seeded beans, with Chinese dark red kidney currently offered at $900 CIF Lisbon. Soares said the prices demanded by the supermarket chains made it almost impossible to pay a premium for higher-quality beans. He believes the best way to promote greater consumption of beans is by communicating beans nutritional benefits to consumers, something he says nobody is currently doing in Portugal. Soares said Argentina stole the US s market in Portugal when they started producing cranberry and light red kidney beans. And now they produce 5,000 mt/yr of the canela bean, very similar to the canela bean produced in the León region of Spain and traditionally exported to Portugal. P.M. Meet w/ Carlos Moreno, Director LPL - Leguminosas de Portugal, Lda. Zona Industrial do Socorro, Lotes (Apartado 255) Fafe, Portugal Tel: Fax: geral@trevi.pt + lpl.leguminosas@sapo.pt Notes : LPL is a newly-formed company set up by Carlos Moreno in association with Raimundo & Maia. While R&M specializes in sales to supermarket chains, LPL sells legumes, lupines and dried fruits and nuts to traditional customers: small independent retailers, itinerant market stall operators, and hotel and restaurant trade. Moreno says he sells 6-7,000 mt/yr of dry beans all imported. LPL buys mt/yr of canela beans from Argentina at an average price of $1,200-$1,300/mt. Argentina started producing canela beans a few years ago before that prices were even higher. Moreno says consumption of canela beans has dropped over the years in favor of cheaper varieties especially black beans which are popular in Brazilian grilled meat restaurants.

4 He buys LRK for northern Portugal (from Argentina 185 grains/100g at $800-$920/mt CIF Lisbon until they ran out) but no DRK (now at around $1,000/mt from China), and estimates the total market for LRK at 1,000-1,500 mt/yr. Would prefer larger beans, and says there used to be a flatter LRK from the US that had a creamier texture. Requests offers for 5 fcl US LRK in 1 mt big bags or 50 kg and 25 kg. Cranberry and chickpea sales are strongest in the south, and alubias and blackeyes are in highest demand in central Portugal. The market for canned and jarred legumes is growing at the expense of dry legumes. There is a huge price war now with jarred legumes. Something has to change 0,45 /jar retail is below the cost of production He says there are small productions of dry beans in Portugal sold locally in farmer s markets. Mr. Moreno also said he trades dry beans into Angola, Mozambique and Cape Verde where he says there is growing demand for blackeye and black beans as well as pinto beans, and for more ½ kg, 1 kg and 5 kg formats vs 100 lb bags. Wednesday, November 11 A.M. Meet Gaspar Luengo, General Director & Luis Álvarez, Sales Legumbres Luengo, S.A. Ctra. Nacional VI, Km Riego de la Vega (León) Tel: Notes : Luengo is the nº2 national brand of dry packaged legumes and is also a major jarred and canned legume producer. Mr. Luengo says his company has to produce store brands but tries to keep it below 50% of production. Focus on his own brands allows him to buy better beans. He said he buys around 250 mt/yr of DRK ( caliber for jarring and 185 caliber for packaging) and says there are now no aggressive offers from China. Mr. Luengo mentioned that Chinese DRK get hard and dry and will not cook after June-July. A.M. Meet w/ Esteban Salvadores El Maragato c/ Camino de los Molinos, s/n Astorga Tel: Notes : El Maragato specializes in selling locally-produced beans to HRI and small, traditional retailers in Spain, but in order to offer competitive prices and a complete range of products, most of his volume consists of imported beans, chickpeas and lentils. The local bean crop was very short this year due to low yields. Spanish farmers see beans as a risky crop and Mr. Salvadores thinks production will continue to decline. We are still 50 days from receiving Chinese DRK Current offers were at $920/mt. Mr. Salvadores uses Argentine DRK for packaging and Chinese DRK for canning. I can pay a small premium for the security of US origin, but not $200

5 He reports that all Argentine beans are small this year he buys alubias, cranberry and DRK from Argentina. The colored bean market is growing, he says, because of demand from Spain s immigrant populations, especially black beans, DRK and blackeyes. P.M. Meet w/ Pedro Alvarez PEDRO ÁLVAREZ, S.L. c/ Villarejo, Veguellina de Órbigo (León) Tel: Notes : Pedro Alvarez specializes in the processing and sales of locally produced legumes and in general legume sales to HRI suppliers. Mr. Alvarez says Spanish market data for last year shows a decline in jarred legume sales and an increase in dry legumes. Jarred legumes are a favorite loss leader product used by Mercadona to gain market share and by the other supermarkets to try and fight back. The company s new canning and jarring plant has been in operation since January 2009, and is one of the plants producing product for Raimundo & Maia in the wake of the fire. Pedro Alvarez has not bought significant quantities of DRK or LRK beans in the past, but the growth of its canning and jarring operation may change this. P.M. Meet w/ Eulogio Sánchez, Purchasing Director Alimentos Naturales, S.A. Pol. Ind. De León, s/n Onzonilla, León Tel: Notes : ANSA is the largest dry legume packager in Spain and a leading producer of jarred legumes. Mr. Sánchez complained that the current price war between supermarket chains made it impossible to pay more for better quality legumes. He mentioned there are two major DRK production areas in China with distinct pricing, the lower-priced beans well be low US prices and better quality beans sold at around US prices. He noted that Argentina sells all its colored beans right after harvest, that quantities are limited and that it doesn t work for canning. ANSA buys some LRK as well primarily for its Tachino brand sold in Portugal. Sánchez said he prefers using the port of Gijón over Valencia because of proximity, and that he brings in most of his beans from Argentina and Mexico through Gijón. He said MSC out of Montreal serves Gijón. Thursday, November 12 P.M. Meet José Luis Izco, Purchasing ULTRACONGELADOS VIRTO, S.A. Pol. Badina, Parcela C Azagra (Navarra) (next to San Adrian) Tel: jluis.izco@virto.es

6 Web: Notes : Virto is the largest producer of frozen vegetables in Spain. Their principal (almost exclusive) client in Spain is Mercadona for which they produce 60-65,000 mt/yr of frozen vegetables and pre-cooked dishes. Virto also exports to the UK, France and the US and recently purchased the Belcor company in Houston, Texas. The previous Purchasing Director Miguel Calatayud is now General Manager of the company and is directly in charge of the new US operation. Virto s frozen pulse line includes white beans, flageolets, red beans (DRK & LRK), pocha white beans, chickpeas, Madagascar beans and lentils. Friday, November 13 A.M. Meet w/ Juan José Chocarro, Purchasing Manager Ardovries España S.A. (ARDO/FINDUS) Avda. Estación, Marcilla (Navarra) Tel: juanjosechocarro@ardo.es Web: Notes : The Ardo group is one of Europe s leading frozen vegetable producer and processors. Ardo España has 10 production factories in the northern Navarra and Rioja regions and 8 more in Murcia and southern Spain. The Marcilla plant is their central mixing, packaging and distribution center as well as their corporate headquarters. The company s Findus brand is market leader in Spain (both at retail and for foodservice), but 70% of the firms production is distributor brands. The firm buys white beans, lima beans, black beans and garbanzos locally, and imports about 10 fcl/yr of DRK. Mr. Chocarro said he prefers buying US origin DRK but that price pressure obliges him to buy Chinese. Ardo uses cooked, frozen DRK beans in a number of mixtures and also sells them in bulk to other food manufacturers. Their production cycle runs March through December Mr. Chocarro requests offers for US DRK for this period, CIF Cadiz or Lisbon. The most crucial quality factor for Ardo is skin checks and beans that split open during cooking. Other factors are hard skin, tender texture once cooked, and color retention. A.M. Meet Luis Peleato, Director Gerente HERMANOS CUEVAS, S.A. (PICUEZO) Ctra. Arnedo, km Autol (La Rioja) Tel: luis.peleato@picuezo.es Web: Notes : Hermanos Cuevas is a leading vegetable canner and producer of jarred legumes. 30% of its sales are exports, especially to France. The company buys around 6,000 mt/yr of legumes, mostly from local Spanish wholesalers. 2-3,000 mt/yr garbanzos 2,000 mt/yr dry beans (mostly alubias) 1,000 mt/yr lentils

7 Mr. Peleato says he usually buys 4-5 fcl/yr of DRK ( calibers), 1-2 fcl/yr LRK and 1 fcl/yr of blackeyes. The biggest problem he mentioned with DRK was getting beans that keep their color through the cooking process. He requests offers for US DRK would be interested in getting information and offers for small red beans to see if they are big enough and offer enough of a price advantage to use as a substitute for DRK. Mr. Peleato is currently buying Spanish chickpeas but is interested to receive offers for US product (CIF Valencia or Bilbao if possible). He buys mostly and 65-70/Spanish oz, plus some caliber for special quality, and says there is a very limited market for jarred pedrosillanos. Mr. Peleato buys Chinese lentils because they are cheap and hold together well through the cooking process, but admits they yield poorly and do not produce a top-quality finished product. He would be interested to test using US pardina lentils if he could get some information on temperature, cooking time, cooling and any other recommendations on how to keep the lentils whole through the cooking process. One advantage Peleato sees to buying locally is being able to buy in euros rather than dollars. Contracts with supermarket chains can be fixed for up to a year and currency fluctuation can have a major impact on profitability. P.M. Meet w/ Sr. Angel Castillejo, Raw Materials Purchasing Congelados de Navarra Pol. Ind. Santos Justo y Pastor, Parcela Fustiñana (Navarra) Tel: angelcastillejo@congeladosnavarra.com Notes : Congelados de Navarra is the second largest frozen vegetables producer in Spain. It is a young, fast-growing company owned by Benito Jiménez (ex- Findus). The company s 2-year-old 50 million euro fully automatic production plant in Fustiñana has a 30,000 pallet storage capacity to which the firm will soon add capacity for another 40,000 pallets making it the largest in Europe. CdeN is a European leader in the production of frozen broccoli, producing 30,000 mt/yr. [Mr. Castillejo explained that most vegetables produced in northern Spain (Navarra and La Rioja) go to the freezer industry (85% in the case of broccoli) while vegetables produced in the south (Murcia and Almeria) are sold predominantly into the fresh market.] The Fustiñana plant also has a major line dedicated to producing fried and grilled onions, peppers, eggplant, etc. to serve growing demand for this type of value-added products. The company produces 300 mt/yr of frozen DRK beans (requiring 150 mt of raw material), 200 mt/yr of frozen white beans and 500 mt/yr of frozen garbanzos, as well as large volumes of pre-cooked, frozen rice. Bean and rice production is scheduled in the winter months when there are no fresh vegetables available. Cooking is done with a rotary blancher. 10% of CdeN s production is sold under its own brand and 90% under distributor brands.