COMMISSION OF THE EUROPEAN COMMUNITIES COMMISSION STAFF WORKING DOCUMENT. Annex to the

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1 COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, SEC(2006) 838 COMMISSION STAFF WORKING DOCUMENT Annex to the REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the situation of the sector of soft fruits and cherries intended for processing {COM(2006) 345 final} Review of the sector of soft fruits and cherries intended for processing in the EU EN EN

2 INTRODUCTION In the Presidency conclusions concerning the simplification of the common organisation of the market for fruit and vegetables in November 2004, the Commission was requested to carry out an analysis of the new situation in the EU markets resulting from the enlargement and, if necessary, bring forward proposals to address specific problems. The present document provides an analysis of the sector of soft fruits and other red fruits for processing. It is accompanied with a Report of the Commission to the Council and the European Parliament which summarises the major elements of the analysis presented in the present document and draws conclusions. The present document is organised as follows: the first two chapters provide information of general nature. Chapter 1 elaborates on the major features of the sector in the EU. Chapter 2 provides the major features of the sector in Poland, the largest producing Member State with around two-third of the volume of EU production of soft fruits for processing. Subsequent chapters provide sectoral reviews of the most important products: strawberries (Chapter 3), blackcurrants (Chapter 4), raspberries (Chapter 5), sour cherries (Chapter 6) and sweet cherries (Chapter 7). EXECUTIVE SUMMARY CHAPTER 1 MAJOR FEATURES OF THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN THE EU The significance of the sector is the highest in the Northern European countries with the exceptions of strawberries and sweet cherries. With a share of 1.1%, Poland is the country where the sector has the greatest weight. With the enlargement of 2004, the EU production of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries increased significantly: the cultivated area jumped from around hectares in the EU-15 to hectares in the EU-25 on average in , of which hectares in Poland. At EU level, the area under soft fruits and sour cherries cover a limited share of total arable land: 0.25% only. With the exception of currants and cherries for which the harvest can be mechanised, soft fruit production is labour intensive. Given that prices on the processing market are lower than on the fresh market, competitive pressure entails that the sector of soft fruit for processing is located mainly in countries with low labour costs. Soft fruits are often part of a narrow range of possible crops in less-favoured regions (e.g. semi mountainous areas). In addition the possibility to produce soft fruit on a small scale entails that the sector is particularly suited to small farms that are often predominant in less favoured or semi mountainous areas. On these farms, soft fruits allow a better use of family labour force. They often provide additional income to part-time farmers. While the sector has a limited economic size in the overall agriculture, it is often concentrated in specific regions in producing countries. Hence it can contribute significantly to the regional economy. The sector has often developed as a way to divert from production of other crops or to diversify production on farm. EN 2 EN

3 In the last twenty years, the use of soft fruits and sour cherries by the food processing industry has increased significantly. Out of tonnes of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries produced annually in the EU-25 in the period , around tonnes were directed to the processing industry (43% of total production). The processing industry imported also almost tonnes (frozen or pre-cooled) of the same products from third countries. These imports represented 22% of its total supply. Poland represented 67% of the EU production destined to the industry. The major Community policies that can impact the sector are reviewed: the different measures of the common market organisation for fresh and processed fruit and vegetables; the single farm payment implemented with the CAP reform of 2003; pre-accession support measures (SAPARD); Rural development programmes; promotion of agricultural products; EU legislation on phyto-sanitary products. CHAPTER 2 MAJOR FEATURES OF THE SECTOR OF SOFT FRUITS AND CHERRIES IN POLAND Poland represents two thirds of all EU soft fruits and sour cherries produced for the EU processing industry. In the last 15 years, the fruit orchard area has been rather stable in the range of hectares. Out of this, around 15% are devoted to fruit bushes (currants, gooseberries, raspberries and other bushes) and 10% to sour cherries. Areas devoted to strawberries have fluctuated widely in the last 15 years (the lowest level was hectares in 2002 and the highest was hectares in 2001). Soft fruit production is concentrated regionally. Its significance is the highest in three regions (also named voivodships, which are Nuts 2 regions) which represent around 55% of national soft fruit and sour cherry production in : Lubelskie (24.1% of total production in volume), Mazowieckie (20.9%) and Łódzkie (11.4%). The region of Lubelskie produces more than 70% of all raspberries. In the context of a high level of unemployment in rural areas and small farm structures, the sector of soft fruit for processing represents an important source of labour and income. Polish sources estimate that the overall fruit and vegetable sector provides the equivalent of full time jobs (production, marketing, processing). In the soft fruit and cherry sector only, this would amount to around full time jobs. Excluding farms with an area under soft fruits or sour cherries below 0.1 hectare, which are usually considered to be subsistence oriented, the agricultural census of 2002 indicates that there were producers of sour cherries (with an average area under sour cherry of 0.22 hectare), producers of strawberries (with an average area of 0.36 hectare), producers of currants (with an average area of 0.42 hectare) and producers of raspberries (with an average area of 0.21 hectare). Soft fruit and cherry production is therefore fragmented. However these averages mask that for blackcurrants and sour cherries, farms with an area higher than one hectare represent around two third of national production. The fragmentation of production is compounded by a low level of organisation of the producers. For all fruits and vegetables, the organised sector represents only 2% of total marketed production. The food industry is the largest branch of the manufacturing sector in Poland with a share of more than 20% of total sales value. The industry in the fruit and vegetable sector processes around 60% of all fruit production and 10 15% of vegetable production in Poland. In 2003 there were fruit and vegetable processing companies. EN 3 EN

4 Owing to the fragmentation of supply of most soft fruits, fruits are collected in collection centres which are disseminated in villages throughout production regions. Large farms usually sell directly to the industry. A minor share (estimated at 10 15%) of supply of soft fruits and sour cherries to the industry takes place within the framework of contracts between producers and processors. CHAPTER 3 THE SECTOR OF STRAWBERRIES FOR PROCESSING IN THE EU The sector in Poland The sector of strawberry for processing has developed in Poland over several decades with output levels regularly above tonnes. Already in the 1980s, the sector was specialised in the production for the processing industry with exports primarily to Western European markets against hard currencies. The main competitive advantages of the sector are: established business relationships with food processors, low labour costs, extensive domestic frozen fruit and vegetables industry, and finally, quasi-exclusive production of a hard sought strawberry, the cultivar Senga Sengana. This cultivar has features that make it particularly suited to the processing industry. This is why it is sought for by part of the European industry (part of jam production, for certain purees and for juice/drinks). Due to relatively low investment costs, production of strawberry for the processing industry has become an additional source of income for numerous households in rural areas. From the social point of view, the sector plays a considerable role in rural areas. Farm structures are fragmented and marketing to the processing industry is mainly done via the collection centres located in the villages. Large producers sell directly to the processing industry. Contracts between farmers and processors concern a minority of the delivered produce. Due to the fragmentation of production, low input uses, the cultivation technique and the own features of the Senga Sengana cultivar, the average yield per hectare is rather low and production volume can fluctuate significantly depending on the weather. Additionally, the harvest period is short as it lasts for a period of three to four weeks. In the medium to long term, production of Senga Sengana on large farms with hired labour may diminish for the following reasons: firstly, profitability of cultivation of Senga Sengana is constrained by the facts that the fruit cannot be sold on the fresh market and that it produces low yields. This may place Polish production at a disadvantage if prices in the processing industry remain low. Overall profitability for producers in competing countries depends partly on the fresh market which provides better prices. Therefore, they can afford lower profitability thresholds for the production they sell to the industry. Secondly, supplies to the EU from third countries have increased since the 1990s and are becoming a more permanent feature of the market. Therefore, it is less likely that similar producer price peaks in Poland such as those of 1998 or 2003 will ever happen in the future. The increase in imports at very low prices has had a significant effect on the sales and profitability of the Polish producers of Senga Sengana. Finally, in the long run, labour costs in Poland will increase alongside its economic catching up. In a historical perspective, labour costs have always conditioned the location of production of strawberries for processing in Europe. Despite the lower yield, the Senga Sengana is key for the processing industry and, for a number of products, cultivars destined to the fresh market cannot substitute the Senga Sengana. The processing industry needs a diversified supply of strawberry cultivars in order to provide the full range of products currently on the market. EN 4 EN

5 EU external trade and competition from third countries The steady growth of EU demand for frozen strawberries could not be met only by supplies from Poland: EU imports grew from around tonnes in the mid-1990s to more than tonnes from 2001/2002, whereas exports by Poland never exceeded tonnes. Among the main producers of frozen strawberries, only China and Morocco have developed significant exports of frozen strawberries to the EU. In both countries, the strawberry sector has developed since the 1990s, in different contexts however: while in China strawberry production is primarily intended for domestic consumption, the sector in Morocco is almost completely export-oriented. With limited availability of arable land and a large rural labour force, China benefits from important comparative advantages in labour-intensive crops such as fruits and vegetables. Production of strawberries in China has developed dramatically since the 1990s. The dynamic growth of the strawberry sector was triggered by an increasing domestic demand for the fresh market. Processing destinations play a modest role in comparison with the fresh market. Yet, production and export of frozen strawberries have developed strongly in the last ten years. Since 1997/1998, when Chinese strawberries started to be imported in the EU at sizeable quantities, the prices of frozen strawberries from China have often been the lowest in the EU market. Their average level in the marketing year 2004/2005 was extremely low ( 520 per tonne) and even passed below 400 per tonne towards the end of the marketing year. Production of strawberries in Morocco started in the beginning of the 1990s. From the outset the objective was to export fresh strawberries to the EU market taking advantage of low labour costs and the possibility to export fresh strawberries early in the EU marketing year. In order to extend the strawberry harvest season, Morocco developed also the production of frozen strawberries. Production of frozen strawberries has increased to reach 70 80% of total strawberry production in the last years. The significance of the freezing sector has contributed to maintaining the predominance of Camarosa due to its suitability for both the fresh market and the frozen fruit and vegetables industry. EU supply in strawberries for the processing industry and uses Total supply in the EU-25 of strawberries for processing amounts to around tonnes annually on average in the period 2001/2002 to 2003/2004, of which around tonnes are frozen strawberries and around tonnes are processed directly into purees, jams and concentrates. The share of EU-25 imports of frozen strawberries from third countries in the total supply of strawberries to the industry increased from less than 20% until 2001/2002 to 25% in 2002/2003 and 38% in 2003/2004. In the supply of frozen strawberries, the share of imports was the highest in 2003/2004 (53%) and decreased to 38% in the following marketing year. In 2004/2005, EU production of strawberries for processing significantly increased (generating high levels of stocks of frozen strawberries in 2005), owing to a large harvest in Poland and in other European countries and imports which were maintained at a rather high level. The main uses of strawberries by the industry are the jam industry, the fruit preparation industry and the juice and drink industry. EU demand for semi-processed strawberries has increased dynamically since the 1990s. However, growth has concerned to a large extent the fruit preparation industry and the juice and drink industry. The needs of the jam industry have remained stable. EN 5 EN

6 Due to its own features (flavour, strong red colour) Senga Sengana is the preferred cultivar for part of the jam industry (mainly in Northern European countries) and for the juice industry. The fruit preparation industry is less dependent on a specific cultivar. Major conclusions of Chapter 3 Senga Sengana has features that make it particularly suited to the processing industry. On the other hand, it is an old cultivar which is used exclusively by the processing industry, produces low yields with a short harvest season. These characteristics place pressure on its cultivation under the current conditions of low prices. The conditions for growing Senga Sengana in larger commercial farms (i.e. farms that rely on hired labour) are getting less favourable under current producer prices. If current price levels are maintained, these farms may switch to products which offer better prices, including strawberries for the fresh market. Poland has probably the potential to develop a sizeable strawberry sector oriented towards the fresh market if it can mobilise appropriate capital investment and technologies. The Member State benefits from an extensive experience in the sector and in particular active research and variety creation in strawberries. Low labour cost compared to other EU countries is an advantage. Poland is well endowed with sandy soils that suit strawberry production. It is located within short road distance from the main EU consumption locations. While part of the large farms may withdraw from the sector of strawberries for processing in the medium to long term, medium-sized and smaller farms have a role to play. However, the development of this segment of the sector is constrained by the fragmentation of supply to the semi-processing industry and the lack of adequate facilities for post-harvest handling. The establishment of producer groups and producer organisations would help to streamline marketing relations with the processing industry, to improve post-harvest handling (e.g. with investment in cooling storage capacity) and product quality (by advising on cultivation techniques), and to improve procurement of inputs. CHAPTER 4 THE SECTOR OF BLACKCURRANTS IN THE EU Blackcurrant is mainly produced in Europe. The EU blackcurrant sector does not face major competition from third countries. In the present days, competition is essentially an internal EU matter. In 2003 and 2004, the EU-25 production of blackcurrants reached the record level of tonnes. Poland represents around 70% of total EU production with more than tonnes on average in the period European production of blackcurrants displays cycles over periods of around ten or twelve years which correspond roughly to the lifetime of a plantation. The cycle is generated by the fact that many producers create new plantations when prices of blackcurrants are high. High prices in the end of the 1990s and the beginning of the 2000s prompted producers to increase areas of blackcurrants in many Member States: between 1999 and 2004 the area under blackcurrant increased in the EU-25 from around hectares to hectares. In Poland only, the area increased from to hectares. The new plantations generated a sharp increase in production and a situation of oversupply. Production in Poland is dispersed among numerous farms. However, since the 1990s, the development of production has concerned more the medium-sized and large farms. Producers are not organised and sell individually to the industry. By contrast, farms are in average larger EN 6 EN

7 in the other producing Member States and the level of organisation of producers is higher (between 50 and 90% depending on the country). Annual and pluri-annual contracts with guaranteed price between the producers and the industry concern a minor part of the marketed blackcurrants in the EU, with the notable exception of the United Kingdom. Recent pressures on prices have in addition led a number of processors to discontinue some of the contracts that were coming to an end. Producers are therefore strongly exposed to the current low market prices without much buffer. It is estimated that the needs of the industry stand around tonnes annually whereas supply in 2003 and 2004 reached almost on average. The sector was therefore in a situation of oversupply in by a range of tonnes. Two thirds of all blackcurrants destined to the industry are used by the juice industry for the preparation of concentrate. As the consumption of blackcurrant-based drinks is stable in most EU markets, the increase in production has strongly affected prices of concentrate: they fell from more than 8 per kg in 2000 to around 2 in In some Member States, consumption of blackcurrant-based drinks has suffered recently from the development of other products (e.g. orange juices, cranberry juice). The jam and fruit preparation industries use smaller quantities of blackcurrants than the juice industry. Conclusions of Chapter 4 The blackcurrant sector is confronted with a situation of oversupply since It is an EU problem created by EU over-production. Production levels have reached records while the consumption of blackcurrant processed products has not shown similar dynamism and prospects for exports outside the EU are limited. Prices of raw material and semi-processed products have therefore reached very low levels. An adjustment of areas under cultivation needs to take place, so that production comes back to more appropriate levels. Grubbing up of excess plantations is one of the tools usually applied by the farmers. It is not considered that an EU financed grubbing up scheme would be a satisfactory solution. Such a scheme could speed up a return to more normal levels of production but would not abolish the economic cycle of blackcurrant. Moreover, the availability of EU support for grubbing up would probably entail more planting in the expansion phase of the cycle. Better organisation of the sector in Poland would improve its command on the growth of production and, in the long term, contribute to ensuring a better stability of the sector at the EU level. Increasing the role of producer groups and organisation in the sector should be assigned priority. On the demand side, consumption of food products incorporating blackcurrants is stable. Blackcurrant products suffer from the competition of other products and the lack of product innovation. More communication would probably increase consumption of blackcurrant products. Such programmes have already been implemented in individual Member States. EU support can be mobilised to develop promotional programmes. EN 7 EN

8 CHAPTER 5 THE SECTOR OF RASPBERRIES FOR PROCESSING Production in the EU and Poland In the EU, raspberry production is concentrated in the Northern and Central European countries. However, raspberries are also produced in Southern European countries (Italy, Spain and Portugal), often resulting from the diversification of production in the strawberry sector, targeting exclusively the fresh market. The level of production in the EU has jumped since the enlargement of 2004 from tonnes in the EU-15 on average over to tonnes in the EU-25 with two new producers: Poland (with tonnes) and Hungary (with tonnes). The processing industry is the primary destination of the fruits in the two new Member States. Raspberry cultivation is labour intensive. The fragility of the fruits and of the plants limits the possibilities to use machine harvesting. This explains why machine harvesting is implemented in few countries only, and mainly for the production of concentrate and puree. In Scotland, efforts to mechanise harvest in the 1990s did not prove successful. In all major countries supplying the EU market of frozen raspberries (Chile, Hungary, Poland and Serbia), harvesting is mainly done by hand. Given the importance of labour costs, production of raspberries for processing has diminished considerably in the EU-15 in the course of the 1990s. In these countries, the bulk of raspberry production is oriented towards the fresh market. In Poland, the production of raspberries is very concentrated geographically: the region of Lubelskie alone represents more than 70% of the national production in 2003 and Production is fragmented: out of hectares of raspberries in 2002, 20% (2 700 hectares) were cultivated on farms with less than 0.1 hectare of raspberries (20% of total area); 55% were cultivated on farms with an area of raspberry comprised between 0.1 and one hectare; only 10% (1 400 hectares) were cultivated in farms with an area with raspberry higher than two hectares. As for other soft fruits, producer groups and organisations play a negligible role in the marketing of raspberries to the semi-processing industry in Poland. Both production and marketing of raspberries are therefore fragmented. Fruits are assembled in the collection points or directly delivered to the semi-processors. Nevertheless, the frozen fruit and vegetables industry maintains closer relations with the farmers than for other soft fruits due to the fragility of the raspberries. In particular, contracts play a more important role than for the other soft fruits. Two thirds of the raspberries delivered to the industry in Poland are semi-processed by the frozen fruit and vegetables industry, the other third is used for the preparation of concentrate and purees. Outputs of both industries have increased strongly in the last years. Poland benefits from several advantages that could help it to capture a more important share of the EU IQF market in the near future: it has a strong industrial basis, promising cultivars, an active research on new cultivars, appropriate natural conditions and specialised farms in the region of Lubelskie. Exports by Hungary of frozen raspberries to the EU have declined in recent years indicating an eroding competitiveness. The country has indeed had to face increased competition on the market, whereas internally the sector faced increased costs. In addition, natural conditions in Hungary would imply the development of irrigation which is not profitable currently on the processing market. In Scotland, the raspberry sector was oriented towards the processing industry. However, despite the implementation of an EU co-financed programme to enhance its competitiveness, the sector reduced steadily in the course of the 1990s and disappeared in the beginning of the EN 8 EN

9 2000s. Since then, raspberry production in Scotland is oriented towards the fresh market. Efforts to mechanise the harvest, the only solution to lift the constraint of labour cost, were ruined by the fact that the most suited cultivar was highly susceptible to root rot. International trade and major third countries exporting to the EU EU imports of frozen raspberries have increased very dynamically since the 1980s: from 1983 to 2004, the average annual rate of growth in volume was 8.4%! Currently, the major third countries supplying frozen raspberries to the EU are Chile and Serbia. In Chile, the sector of raspberries has developed since the late 1980s targeting export markets. Production reached tonnes on average in the period with an average area of hectares. Serbia is by far the major supplier of the EU, with a share of all EU supply in frozen raspberries above 50%. Raspberry plantations have stabilised in the last four years in Serbia at around hectares. Serbia is the second-largest European producer of raspberries after Russia. In Serbia, the sector consists mainly of small farms (of a total area of 8 10 hectares) with an average area of raspberry of 0.20 hectare. Plantations are usually open-field without plastic protection and are not irrigated. The production volume is therefore highly sensitive to weather conditions and can fluctuate heavily year-on-year. The assortment of cultivars is rather modest with the predominance of Willamette which represents more than 90% of total production. In volume, 90% of raspberry production is frozen and 10% is used by the processing industry (for the production of juices, purees and jams) or sold in the domestic fresh market. EU-25 supply of raspberries and use by the processing industry EU-25 supply of raspberries for processing has increased in the 2000s from around tonnes in 2000 and 2001 to more than tonnes in Total supply amounted to tonnes on average in the period , 54% in volume were imported from EU-25 third countries. Out of this total, frozen raspberries represented around two thirds of the volume with tonnes in Supply originating from Poland has increased from tonnes on average in to tonnes in average in 2003 and Raspberries are mainly used by the jam and the fruit preparation industries. Frozen raspberries are also used by the pastry industry, food catering services and consumed directly by households from the retail sector. Use by the juice and drink industry is relatively limited since, as a flavour, raspberry is not very popular in fruit-based drinks, ranking behind blackcurrant or strawberries. Major conclusions of Chapter 5 Raspberry production has increased strongly in the world in the last two decades. The EU has proved a dynamic market for the industrial use of the fruit. Several countries have established as suppliers of frozen raspberries of the EU, Serbia, the world leader, Chile and more recently Poland. Poland has succeeded to take an increasing share of the market in the last decade, reaching around 30% of all EU supply in frozen raspberries and seems poised to further improve its EN 9 EN

10 position owing to a number of advantages: tradition in growing raspberries; low labour costs; research on cultivar creation and promising cultivars; existence of a large semi-processing industrial basis. The improvement of production at farm level and of marketing to the semiprocessing industry will be critical in this process of consolidation. As for strawberries, the establishment of producer groups and organisations would be one solution to lift the major constraints at production level. This would apply also to Hungary. Research in the creation of cultivar, whether for the processing and/or the fresh markets, is critical in ensuring the long-term competitiveness of the sector. Research is necessary on a wide range of subjects: suitability of cultivars to processing; resistance to important diseases; meeting consumer demand, improving taste and other quality criteria for fresh consumption. CHAPTER 6 THE SECTOR OF SOUR CHERRIES FOR PROCESSING EU sour cherry production The sour cherry sector in the EU is dominated by three countries: Poland ( tonnes in ), Hungary ( tonnes) and Germany ( tonnes). Together, these three countries account for 87% of total EU production. In the period , EU-25 production of sour cherries increased at the average annual rate of 5.0% to reach tonnes in Most of this growth originated from Poland. Poland represents 60% of EU sour cherry production. The recent increase in production in the EU-25 was triggered by the creation of new orchards in several Member States and in particular in Poland. In this Member State, the overall area under sour cherries has remained stable in recent years. However, this masks that the area in the commercial sector has increased from hectares in 1998/1999 to hectares in 2004/2005 whereas in the same period the area in non-commercial production has decreased by one third, from to hectares. Farm structures are small in Germany and Poland, although the weight of large farms is increasing in Poland. By contrast, large farms dominate in Hungary (farms with ten hectares or more representing 50% of total area, against 3% in Poland). Owing to small farm structures, the cherries are harvested manually in Germany and Poland. In Hungary, mechanised harvest concerns 30% of the production. Therefore, labour costs play a decisive role in the profitability of production and Germany is at a disadvantage in relation to Hungary and Poland. In Germany and Hungary, producer organisations and producer groups play an important role in the marketing of sour cherries to the processing industry: 40% of total production in Germany and 50 60% in Hungary. By contrast, in Poland they still play a marginal role. EU supply of sour cherries and use by the industry The analysis of price series of sour cherries sold to the processing industry shows that while prices have been at their lowest in 2004, they had been declining in the last ten years under the pressure of an increasing production. Estimations for the last five years indicate that the supply of sour cherries to the EU-25 processing industry would have increased from around tonnes in the period to tonnes on average in 2003 and 2004, the share of EU-25 imports from third countries in total supply remained stable at 11% in volume. EN 10 EN

11 The three most important users of sour cherries are the juice industry, the canning industry and the frozen fruit and vegetables industry (for further processing into jam and fruit preparations mainly). Supply increased for the three major uses of the sour cherries, however, the increase would have been the highest for the juice industry. Conclusions of Chapter 6 The analysis shows that, together with imports from third countries, the EU sour cherry sector has potentially the capacity to exceed the needs of the industry, which was the case in 2003 and In Poland, the sour cherry sector is fragmented and, by contrast with Germany and Hungary, producer organisations still play a minor role in the marketing of the fruits to the industry. The establishment of producer groups and organisations in Poland and their strengthening in Hungary would contribute to lifting the major constraints at production and marketing level. CHAPTER 7 THE SECTOR OF SWEET CHERRIES FOR PROCESSING Production of sweet cherries in the EU amounts to tonnes in , an estimated share of 15% is sent to the processing industry. Three Member States have a part of their sector oriented towards the processing industry: France, Italy and Spain. The main uses are canning (cherries in syrup and other products), preparations with spirit (partly for the confectionery industry) and sugar-preservation (sugar-preserved cherries). Since the beginning of the 1990s, production of preserved sweet cherries has reduced in the EU, partly due to their substitution by preserved sour cherries imported from Central Europe or imported preserved sweet cherries. EU production of sweet cherries prepared with spirit has also faced the competition of imports from third countries of similar products. The sector has reduced considerably. France and Italy are the largest producers of sugar-preserved cherries in the EU, followed by Spain. In France and Italy, the sector has developed along distinct paths since the 1990s. In Italy, the industry switched in the beginning of the 1990s from Italian produced raw material to imports from third countries (Bulgaria, Turkey and Romania). A significant part of the raw material (provisionally preserved cherries) imported from third countries is re-exported after minor processing (grading, sorting, etc.) to third countries. Part of the raw material is processed into sugar-preserved cherries. In France, the sector has followed a strategy based on a strong integration of the commodity chain and concerted approaches and actions within the inter-professional context. Different measures to foster the competitiveness of the commodity chain were developed within the inter-professional framework. This strategy has ensured that despite increased competition the industry still uses locally produced raw material. EN 11 EN

12 TABLE OF CONTENTS INTRODUCTION...2 EXECUTIVE SUMMARY...2 TABLE OF CONTENTS...14 LIST OF TABLES...14 LIST OF FIGURES...15 LIST OF TEXT BOXES...17 LIST OF MAPS...17 LIST OF ABBREVIATIONS THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN THE EU Importance of the sector in the EU Community policies affecting the sector of soft fruits and cherries Other important aspects of the sector THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN POLAND Economic significance of the sector of soft fruits and sour cherries in the Polish economy Farm structures and sector organisation in fruit and vegetables sector Impact of the implementation of pre-accession SAPARD programme and of rural development measures in the fruit and vegetables sector Structure of the semi-processing industry (freezing and concentrate industry) Marketing of produce to the semi-processing industry THE SECTOR OF STRAWBERRY FOR PROCESSING IN THE EU EU production of strawberries for the processing sector Major third countries supplying frozen strawberries to the EU EU trade in semi-processed strawberries Use of strawberries by the EU food processing industry Major conclusions and implications for the Polish sector THE BLACKCURRANT SECTOR IN THE EU Blackcurrant production Marketing and semi-processing of blackcurrants EU trade in fresh and semi-processed blackcurrants...92 EN 12 EN

13 4.4. Use of blackcurrants by the EU food processing industry Conclusions THE SECTOR OF RASPBERRIES FOR PROCESSING IN THE EU Raspberry production in the world Raspberries for processing in the EU Marketing and semi-processing of raspberries in the EU Major third countries supplying frozen raspberries to the EU EU trade in semi-processed raspberries Use of raspberries by the EU food processing industry Conclusions THE SOUR CHERRY SECTOR IN THE EU Sour cherry production in the world Sour cherry production in the EU Marketing and semi-processing of sour cherries in the EU Major third countries supplying sour cherries to the EU EU trade in semi-processed sour cherries Use of sour cherries by the EU food processing industry Conclusions THE SECTOR OF SWEET CHERRIES FOR PROCESSING IN THE EU Sweet cherry production in the world and in the EU Sweet cherry for processing in the EU Cherries prepared with spirit Preserved sweet cherry products (without spirit) Sugar-preserved cherries The cherry sector in the main third countries exporting raw material or processed products to the EU market Conclusions Annex to Chapter REFERENCES GLOSSARY EN 13 EN

14 LIST OF TABLES Table 1-1. Soft fruits and sour cherries in the EU Table 1-2. EU production of redcurrants (in tonnes)...27 Table 1-3. EU production of gooseberries (in tonnes)...27 Table 1-4. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (tonnes)...28 Table 1-5. EU-25 imports of fresh, frozen and provisionally preserved soft fruits ( 000)...28 Table 1-6. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (tonnes)...29 Table 1-7. EU-25 exports of fresh, frozen and provisionally preserved soft fruits ( 000)...29 Table 2-1. Economic data in the three largest producing regions...31 Table 3-1. Main economic data of strawberry production in Poland...46 Table 3-2. Estimates of supply and use of fresh strawberries in Poland...50 Table 3-3. Extra EU-15 imports of frozen strawberries (July n / June n+1) (tonnes)...63 Table 3-4. Estimates of EU-25 supply of strawberries for processing (in tonnes),...68 Table 3-5. Production of jam, jelly and marmalade...70 Table 3-6. EU-25 production of fresh strawberries (in tonnes)...77 Table 3-7. Area under strawberry production in the EU-25 (hectares)...77 Table 3-8. Average production costs of strawberries in family farms in Poland...78 Table 3-9. Extra EU-15 imports of frozen strawberries by Member States (in tonnes)...79 Table Share of EU-15 Member States in extra-eu imports of frozen strawberries (%) 80 Table 4-1. EU production of blackcurrants (tonnes)...81 Table 4-2. Evolution of prices of fresh blackcurrants in France, Germany and Poland...85 Table 4-3. Estimates of supply and use of blackcurrants and processed products...91 Table 4-4. EU-25 trade in fresh and frozen blackcurrants (tonnes)...92 Table 4-5. Member States imports of frozen blackcurrant (tonnes)...93 Table 4-6. Total dispatches of frozen blackcurrants by Member States (tonnes)...94 Table 4-7. Estimates of EU-25 supply to the industry of blackcurrants ( 000 tonnes)...95 Table 4-8. Average yields in major producing countries (tonnes per hectare) Table 4-9. Area in blackcurrants in the EU-25 (in hectares) Table Major EU importers of pre-cooled blackcurrants and main suppliers (tonnes).101 Table 5-1. EU production of raspberries (tonnes) Table 5-2. Major economic variables of raspberry production in Poland Table 5-3. Estimates of supply and use of raspberries and processed products in Poland Table 5-4. Raspberries in Chile: area (hectares), volume produced and exported (tonnes).112 Table 5-5. Raspberry production in Serbia Table 5-6. EU-15 imports of fresh raspberries for processing EN 14 EN

15 Table 5-7. EU-15 imports of frozen raspberries (marketing year: July n / June n+1) Table 5-8. Estimates of EU-25 supply of raspberries for processing (in tonnes) Table 5-9. Area under cultivation of raspberries in the EU (hectares) Table Average production costs of raspberries in family farms in Poland Table Major cultivars grown in Europe and third countries Table 6-1.EU production of sour cherries (tonnes) Table 6-2. Price of sour cherries sold to the processing industry (ECU or /kg) Table 6-3. Estimates of supply and use of sour cherries in Hungary ( 000 tonnes) Table 6-4. Estimates of supply and use of sour cherries and processed products in Poland 136 Table 6-5. Major data of sour cherry production in Serbia Table 6-6. Exports of sour cherries of Serbia (tonnes) Table 6-7. Intra and extra EU-25 trade in sour cherry products (tonnes) Table 6-8. EU-15 imports of fresh sour cherries and sour cherry products (tonnes) Table 6-9. Production of preserved sour cherries in some EU Member States (tonnes) Table Areas cultivated with sour cherries in the EU (hectares) Table Average family farm production cost for sour cherries in Poland Table Major sour cherry cultivars (% of total production or area) Table Unit values of EU-15 imports of fresh sour cherries ( /tonne) Table Tentative estimates of EU-25 supply of sour cherries for processing Table 7-1. EU-25 production of sweet cherries (tonnes) Table 7-2. EU-25 trade in prepared cherries with spirit (tonnes) Table 7-3. EU-25 trade in canned sweet cherries without spirit (tonnes) Table 7-4. EU-15 trade in preserved sweet cherries (without spirit) (tonnes) Table 7-5. Production of canned sweet cherries in selected Table 7-6. EU-25 trade in provisionally preserved and in sugar-preserved cherries Table 7-7. Extra EU-15 trade of provisionally preserved cherries (tonnes) Table 7-8. EU-15 trade in sugar-preserved cherries (tonnes) LIST OF FIGURES Figure 1-1. EU trade (intra EU trade + extra EU imports) of frozen soft fruits...21 Figure 2-1. Simplified marketing chart of fresh and semi-processed soft fruit in Poland...37 Figure 3-1. Production of strawberries in Poland since 1980 (hectares, tonnes)...41 Figure 3-2. Distribution of strawberry area in Poland according to the size of plantations...46 Figure 3-3. Evolution of area and producer prices (hectares and PLN/kg)...47 Figure 3-4. Comparison of average production costs on family farm with producer prices...48 Figure 3-5. Price paid to strawberries according to destinations (PLN/kg)...51 EN 15 EN

16 Figure 3-6. Strawberries in Spain: total production and quantities sold for processing...56 Figure 3-7. EU-15 annual imports of strawberries from Morocco (tonnes)...58 Figure 3-8. Evolution of Extra EC/EU imports of frozen strawberries since 1976 (tonnes)...61 Figure 3-9. Imports of frozen strawberries of the EC (EC-10, EC-12, EU-15) from Poland..62 Figure Share of Poland, China and Morocco as suppliers of EU-15 (%)...64 Figure Monthly unit values of EU-15 imports of frozen strawberries ( /tonne)...65 Figure Production of yoghurts in France ( 000 tonnes)...73 Figure EU-15 Production of flavoured yoghurt (without Spain and Belgium) (tonnes) 74 Figure 4-1. EC/EU import unit values of pre-cooled blackcurrant...83 Figure 4-2. Number of blackcurrant bushes (million) and producer prices in Poland...84 Figure 4-3. Production of blackcurrant in Poland since 1980 ( 000 tonnes)...86 Figure 4-4. Distribution of the area of currants (black, red and white) in Poland...87 Figure 4-5. Price of blackcurrant juice concentrate in the EU (65 brix) in /kg...96 Figure 5-1. Major producers of raspberries (tonnes, annual average ) Figure 5-2. World production of raspberries (tonnes) Figure 5-3. Distribution of raspberry area in Poland according to size of plantations Figure 5-4. Distribution of raspberry area in Hungary according to the size of plantations107 Figure 5-5. Area under raspberry cultivation in Scotland (hectares) Figure 5-6. Extra EU (9, 12, 15) imports of frozen raspberries (tonnes) Figure 6-1. World production of sour cherries since 1990 (tonnes) Figure 6-2. Comparison of structures of orchards in Hungary and Poland Figure 6-3. Distribution of cherry area in Poland according to the size of the orchards Figure 6-4. Area in sour cherries in Poland according to farm categories ( 000 hectares).133 Figure 6-5. Poland: comparison of average production costs and producer prices Figure 6-6. EU-15 imports from third countries of canned sour cherries without spirit Figure 6-7. Estimates of EU-25 use of sour cherries for processing ( 000 tonnes) Figure 7-1. Evolution of area and production of sweet cherries for processing in France Figure 7-2. Extra EU-15 imports of preserved sweet cherries without spirit (tonnes) Figure 7-3. Net imports and production of canned cherries in France (tonnes) Figure 7-4. EU Member States dispatches of sugar-preserved cherries to the UK (tonnes).163 Figure 7-5. France: production and exports of sugar-preserved cherries (tonnes) Figure 7-6. Imports and exports of provisionally preserved cherries by Italy (tonnes) EN 16 EN

17 LIST OF TEXT BOXES Text Box 3-1. Extremely high producer prices in marketing year 2003/ Text Box 4-1. A measure to manage production level: non-harvesting...90 Text Box 4-2. Promotion campaign to boost consumption in the United Kingdom...96 Text Box 5-1. The sector of raspberries for processing in Scotland LIST OF MAPS Map 2-1. Strawberry production in Poland...38 Map 2-2. Currant production in Poland...38 Map 2-3. Gooseberry production in Poland...39 Map 2-4. Raspberry production in Poland...39 Map 2-5. Sour cherry production in Poland...40 Map 3-1. EU production of strawberries...78 Map 4-1. EU production of blackcurrants Map 5-1. EU production of raspberries Map 6-1. EU production of sour cherries Map 7-1. EU production of sweet cherries EN 17 EN

18 LIST OF ABBREVIATIONS AFIDEM Association des fruits et légumes transformés CAP common agricultural policy CIF Cost insurance freight CMO common market organisation CN Combined Nomenclature CNDP Complementary National Direct Payment CSO Central Statistical Office of Poland (also referred to as GUS) EAFRD European Agricultural Fund for Rural Development EAGGF European Agricultural Guidance and Guarantee Fund OEITFL Organisation of European Fruit and Vegetable Processing Industries ECU European Currency Unit EU European Union FAO Food and Agriculture Organisation of the United Nations FDI Foreign direct investment GDP Gross domestic product GSP Generalised System of Preferences GUS Główny Urząd Statystyczny (Central Statistical Office, CSO) HUF Hungarian Forint IERiGŻ Instytut Ekonomiki Rolnictwa i Gospodarki Żywnościowej (Institute of Agricultural and Food Economics) IQF Individually quick frozen KUPS Polish Association of Juice Producers MFN Most Favoured Nation MIP Minimum import price NFC Not from concentrate (juices) PG Producer group PLN Polish Złoty PO Producer organisation RDP Rural development programme SAPARD Special Accession Programme for Agriculture and Rural Development SAPS Single Area Payment Scheme SCRI Scottish Crop Research Institute SOP Sectoral operational programme USA United States of America USDA United States Department of Agriculture VAT Value Added Tax VMP Value of marketed production EN 18 EN

19 1. THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN THE EU The present chapter has two major aims. The first one is to introduce the reader to the major features of the sector of soft fruits for processing. These include the importance of the sector in the EU agriculture and the economy, the economic characteristics of the sector, the evolution of uses of the fruits by the processing industry and the importance of international trade. In addition, the paper discusses briefly two other issues that are important for the sector: soft fruits and human health and the importance of breeding research. The second aim is to shed light on the Community policies that may have an impact on the sector. Products covered by the analysis are cherries and the so-called soft fruits. The term soft fruit usually covers three groups of fruits: the berry fruits: blackberry, raspberry, loganberry and boysenberry (genus Rubus) and mulberry (genus Morus); gooseberries and currants (genus Ribes) and blueberry (genus Vaccinium); and the achenes (false fruit, genus Fragaria, i.e. the strawberry). Due to the variety of fruits, the analysis in the present document will focus on the most important soft fruits in the EU context: blackcurrants, raspberries and strawberries. Regarding cherries, analysis will be done separately for sour cherries (Prunus cerasus) and sweet cherries (Prunus avium) Importance of the sector in the EU Importance in the agriculture sector As a rule berry and currant bushes and sour cherry trees prefer regions with a cold climate. Therefore, berry and sour cherry production is more important in Central and Northern Member States. With the exception of strawberries, berries and currants are not present to a similar extent in Southern Member States. In contrast with sour cherries, sweet cherry trees prefer milder climates than those of Central and Northern Europe. Sweet cherry production is therefore more present in Southern Member States 1. At EU level, areas under soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries cover a rather limited share of total arable land: hectares out of a total of 96 million, i.e. 0.25% only. The importance of the sector is the lowest in Southern European countries, while it is more important in Northern European countries. With a share of 1.10%, Poland is the country where the sector has the greatest weight. With the enlargement of 2004, soft fruit and sour cherry EU production increased significantly: the cultivated area jumped from hectares in the EU-15 to the abovementioned hectares in the EU-25 on average in , of which hectares in Poland. Production in volume increased from tonnes in the EU-15 (of which tonnes of strawberries) to tonnes in the EU-25, with tonnes in Poland. While the EU-15 was a modest producer of currants, gooseberries, 1 The sector of sweet cherries is not included in the data presented in the present section as, contrary to the other products, the processing sector represents a minor destination compared with the fresh sector. Blueberry production is not taken into consideration either as no complete data coverage was achieved for this fruit. EN 19 EN

20 raspberries and sour cherries, the EU-25 is the world largest producer of these fruits and also of strawberries Economic characteristics of the sector With the exception of currants for which the harvest can be mechanised, the soft fruit and sour cherry sectors are labour intensive. Given that prices on the processing market are lower or much lower than on the fresh market, competitive pressure entails that the sector of soft fruit for processing is located mainly in countries with low labour costs. Soft fruits are often part of a narrow range of possible crops in less-favoured regions (e.g. semi mountainous areas). In addition the possibility to produce soft fruit at a small scale entails that the sector is particularly suited to small farms that are often predominant in less favoured or semi mountainous areas (e.g. raspberry production in semi-mountainous areas in France, soft fruit production in mountainous areas in Trento in Italy, etc.). On these farms, soft fruits allow a better use of family labour force. They often provide additional income to part-time farmers. While the sector has a limited economic size in the overall agriculture, it is often concentrated in specific regions in producing countries. Hence, it can contribute significantly to the regional or local economy. One example is the region of Lubelskie in Poland which represents 24% of all Polish production of soft fruits and sour cherries. The sector has often developed as a way to divert from production of other crops (e.g. tobacco) or to diversify production on farm (e.g. fruit farms, or cereal and other crop farms) Importance for the EU food processing industry In the last twenty years, the use of soft fruits and cherries by the food processing industry has increased significantly. Out of tonnes of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries produced annually in the EU-25 in the period , tonnes were directed to the processing industry (42.6% of total production), see Table 1.1. Poland represented 67.2% of the EU production destined to the industry. On average in the period , the EU food processing industry used almost tonnes of raw material (currants, gooseberries, raspberries, strawberries and sour cherries). Out of this, almost tonnes were imported (frozen or pre-cooled) from third countries (22%). Table 1-1. Soft fruits and sour cherries in the EU-25: total production and volumes directed to the industry, average Volumes in '000 tonnes Total EU production Estimates of EU Production directed to processing Share of processing in total EU production (%) Production directed to processing in Poland Share Poland in EU production for processing (%) Strawberry , ,6 Blackcurrant , ,4 Redcurrant (1) ,7 18 Raspberries , ,1 Sour cherries , ,5 Gooseberries (1) ,0 6 Total , ,2 (1): for redcurrants and gooseberries only processing in Poland counted (source: IERiGZ) Sources: total production data and volumes directed to the industry see sectoral chapters EN 20 EN

21 There are no historic data regarding the use of soft fruits by the food processing industry, however a rough indicator of the evolution of use is the total trade in frozen soft fruits of the EU from 1988 to Total EU trade (extra EU imports and intra EU trade) of frozen soft fruit (all berries and strawberries), excluding frozen sour cherries (singled out in the combined nomenclature only since 1993), increased from around tonnes in the late 1980s to more than tonnes in the 2000s, at an average annual growth rate of 6.0%. Figure 1-1. EU trade (intra EU trade + extra EU imports) of frozen soft fruits (in volume and value) Volume (tonnes) Value ('000 ECU/ ) Volume Value Source: COMEXT Significance of international trade Until 2004, the largest part of the raw material used by the EU industry was imported from EU third countries. Since the enlargement of 2004, the largest part of EU supply originates from the EU itself with the exception of raspberries. With the objective to understand the dynamics of EU trade with third countries, time series of EU-25 trade have been simulated since 1999 (see Tables in Annex to the chapter). Analysis provided in the sectoral chapters indicates that imports from third countries represent 21% of the supply of EU-25 in on average for frozen sour cherries, but 74% for frozen raspberries. While for these two products the importance of imports from third countries has been rather stable in recent years, this is not the case of frozen strawberries: imports of frozen strawberries from EU-25 third countries amounted to 27% of total EU supply in marketing years /2000 to 2001/2002 and to 42% in marketing years 2002/2003 to 2004/2005 (see sectoral chapters for details). If one considers total EU-25 supply to the industry (including all forms of raw material in addition to frozen fruits), the share of imports from third countries amounts to 11% and 54% for sour cherries and raspberries respectively on average in In the case of strawberries, the importance of imports has increased from less than 20% until 2001/2002 to 25% in 2002/2003 and 38% in 2004/ For strawberries, the supply balance sheet has been prepared on the basis of marketing years (July year n / June year n+1). EN 21 EN

22 In , EU-25 imports of fresh and frozen soft fruits from third countries amounted to 531 million on average. In the same period EU-25 exports to third countries amounted to 115 million Community policies affecting the sector of soft fruits and cherries Measures of the common market organisation for fresh and processed fruit and vegetables As other fruit and vegetables, soft fruits and cherries potentially benefit from the support of the common market organisation through the Producer Organisations (POs). This support consists in an operational fund that finances an operational programme set up by the PO of which 50% is financed by the Community. The EU support cannot exceed 4.1% of the value of marketed production (VMP) of the PO. Support is also provided to Producer Groups (PGs) that implement a recognition plan to meet the criteria to be recognised as a PO. This support is of special relevance to the new Member States where the level of organisation of the sector is often low and emerging groups of producers have a too limited size to qualify as PO in the first years of their existence. On the other hand, only few products are covered by specific measures in the common market organisation for fresh and processed fruit and vegetables: the fresh soft fruits and cherries are not covered by the Community supported intervention regime (Annex II of Council Regulation (EC) No 2200/96). However withdrawals by Producer Organisations financed through the operational programmes are possible; on the fresh market, only cherries and strawberries are covered by a marketing standard; only provisionally preserved cherries and sugar-preserved cherries are eligible to export refunds. Processed fruit and vegetables that incorporate sugar can be eligible to an export refund covering the incorporated sugar; as regards imports from third countries, only cherries are covered by the entry price system. No minimum import price (MIP) applies to any soft fruit within trade agreements signed with third countries since the enlargement of 2004; there is no Community aid scheme for producer organisations supplying fresh soft fruits and cherries to the processing industry. A support measure for the processing of cherries by the canning industry was implemented from marketing years 1980/1981 to 1986/1987. This support was replaced by a system of minimum import price until the end of the 1999/2000 marketing year Direct aid payments in the framework of the CAP reform of 2003 and the Single Area Payment Scheme in the New Member States The 2003 reform of the CAP introduced a new system of single farm payments (income support) and cut the link between support and production (decoupling). Single farm payments are implemented according to two models, the historical model and the regional model. In some countries, implementation is a hybrid between these two models. In order to receive the single payment, two main conditions need to be respected. Farmers must have been granted entitlements to the payment. These are in fact rights to a certain amount of aid per hectare. Secondly, farmers must farm corresponding hectares of land in order to activate these payments. EN 22 EN

23 In the historical model, as they did not generate direct payments in the past, all areas under fruit and vegetables were not included in the establishment of the reference area which set the initial allocation of payment entitlements for each farm. Areas under fruits and vegetables may not be used to activate payment entitlements. Nevertheless, areas that were previously used for fruit and vegetable production may under certain conditions activate the single payment, provided that they are no longer cultivated with fruit and vegetables 3. However, this does not mean that the farmer receives additional direct payments for these areas since the initial allocation of entitlements of the farm itself does not change. It only means that the concerned (former fruit and vegetable) land can trigger payment of part of the allocated entitlements. Therefore, no additional direct payments would be allocated to farmers who, owing to adverse market circumstances, would withdraw from the berry sector and convert to another use of the land. However, Member States may use the national reserve in order to establish new reference amounts for farmers in areas subject to restructuring 4. Besides the historical model, the Member States have the possibility to apply the single payment at the regional level. This is the regional model. In this case, areas cultivated during the reference period in fruit and vegetables, with the exception of permanent crops, were eligible for the establishment of payment entitlements and are eligible for the activation of these entitlement. However, farmers can activate payment entitlements with the cultivation of fruit and vegetables only up to the area that was cultivated with those products during the reference period. Under Community legislation, berry bushes are not considered permanent crops but multi-annual crops. Therefore they are included in the single payment system implemented in the regional model. Areas under cherry, a permanent crop, are not. The New Member States have had the possibility to adopt the Single Area Payment Scheme (SAPS) for a transitional period of three years with a possibility to extend it for two years. This scheme applies in the form of a payment per hectare for all agricultural land, including the one cultivated with fruits and vegetables. The SAPS can be complemented with a Complementary National Direct Payment (CNDP) which is co-financed under the EU rural development programmes. However, areas under fruit and vegetables are not eligible to CNDP. A minimum area per farm can be set by the Member States. In Poland in 2005, in the fruit and vegetable sector, the SAPS amounted to 57.4 per hectare, it will increase in the future according to the phasing-in rates that apply to all direct payments. The scheme is implemented in all NMS except Malta and Slovenia who have implemented the standard CAP schemes. Eventually, all new Member States will apply the regional model, Slovenia and Malta as from 2007 and the other countries in 2009 at the latest Rural development support and other structural measures New Member States: pre-accession support measures (SAPARD) In the framework of the accession process, support to agricultural and rural development in the candidate countries was provided through the Special Accession Programme for Agriculture and Rural Development (SAPARD) that applied from SAPARD offered support to a variety of areas. Among them, the following could have a direct impact on all sectors of agricultural production, including soft fruits: investments in agricultural holdings; 3 4 However, payments for set-aside land would be possible only for the crops that are defined as multi-annual in EU legislation. See Commission Regulation (EC) No 795/2004 which defines multi-annual crops in Article 2(d). All berry and currant bushes are considered multi-annual crops. See Article 42 of Council Regulation (EC) 1782/2003 (OJ L270 of ). EN 23 EN

24 improvement of marketing and processing of agricultural products; development and diversification of economic activities; setting up of producer groups Rural development Rural development represents the second pillar of the common agricultural policy of the EU. A new regulation on rural development was adopted in 2005 (Council Regulation (EC) No 1698/2005) that will apply to community rural development support for the period Within this new framework, EU support is organised around four major axes: Axis 1, improving the competitiveness of the agricultural and forestry sector; Axis 2, improving the environment and the countryside; Axis 3, improving the quality of life in rural areas and diversification of the rural economy; Axis 4, Leader (local rural development strategies). Measures implemented through all four axes, and in particular Axis 1, are important for all agricultural sectors, including fruits and vegetables. This applies in particular to such measures as the setting up support to young farmers, the support to modernisation of agricultural holdings and the support to adding value to agricultural products (marketing and processing). Other measures should help operators of the agriculture and food sector to improve the competitiveness of their sector. That concerns in particular the measure for cooperation for development of new products (innovation) and the measure for participation of farmers in food quality schemes. Under the same Axis 1, transitional measures apply in the New Member States which provide support to semi-subsistence agricultural holdings and to the setting up of producer groups. The former measure was already implemented in the rural development programmes of the New Member States in the period The latter was already available under SAPARD programmes and subsequent rural development programmes. Support measures under Axis 3 foster diversification of the activities in rural areas and, hence, strengthen the local economy and its capacity to cope with difficulties that can be faced in specific agricultural sectors. Contributions of the European Agricultural Fund for Rural Development (EAFRD) is 75% of eligible public expenditures for Convergence Objective regions (regions with GDP per capita below 75% of EU average) and 50% for the other regions for Axis 1 and 3 and 80% for Convergence Objective regions and 55% for the other regions for Axis Promotion of agriculture products In comparison with other fruits, soft fruit markets are of a limited size. This concerns both fresh and processed products. Promotional programmes seldom focus on products of the sector, as a consequence they are often not well known by the consumers. Initiatives have been taken by operators of the sector in some Member States to promote their products. In this context, the EU support to promotion of agricultural products can be an important tool to communicate on soft fruits. In 2000 the Council decided that the EU could assist in financing measures that provide information on, or promote agricultural products and food on the EU internal market and in third countries. These measures can consist of public relations, promotional or publicity actions, in particular, those that highlight the advantages of EU products, especially in terms of quality, hygiene, food safety, nutrition, labelling, animal welfare or environmental-friendliness of their production. Participation in events and fairs are also covered. The EU co-finances these measures with an amount not exceeding 50%, the remainder being paid by the EN 24 EN

25 professional/inter-branch organisations that proposed them and by the concerned Member States. Programmes involving several Member States are also eligible. The EU can finance certain specific measures (for instance information on EU quality and labelling systems) at 100%. The annual total budget for programmes in third countries and on the internal market is around 42 million. Reference to health in the messages disseminated through the promotion programmes is allowed provided that it is based on generally accepted scientific data. Messages referring to these effects must be acceptable to the national authority responsible for public health. This may concern soft fruits as recent scientific research carried out on soft fruits has shown that they are rich in nutrients that have a positive impact on health. On this subject, it is important to recall that new legislation is being prepared at the Community level on nutrition and health claims made on foods which aims at harmonisation at the Community level of health claims with the creation of a list of authorised claims EU legislation on phyto-sanitary products and the soft fruit sector In 1992 a Community-wide review process for all active ingredients used in plant protection products within the European Union was launched. Council Directive 91/414/EEC states that active substances cannot be used in plant protection products unless they are included in a positive EU list. An EU programme of evaluation to create this list is underway. Once a substance is included in the positive list Member States may authorise the use of products containing them. However, given that at the moment of entering into force of the Directive more than a thousand active substances were already authorised in the EU, temporary derogations were foreseen to permit Member States to continue to apply the national rules for existing authorisations. The review programme for all the existing substances will be completed by In the review process, each applicant (phyto-sanitary product manufacturer) has to prove that a substance could be used safely regarding human health, the environment, ecotoxicology and residues in the food chain. The agricultural sectors with a small economic size and representing limited business for the phyto-sanitary industry, such as the soft fruit sector, may face difficulties with the inscription of active substances. This potential problem was anticipated by Directive 91/414/EEC which includes provisions that apply to the so-called minor uses, i.e. uses which concern either minor crops or minor harmful organisms for major crops and which are not covered with authorised plant protection products. The Directive allows Member States to extend the field of application of plant protection products under certain circumstances. In addition, the possibility so far seldom used for a Member State to mutually recognise authorisations with another Member State could solve a minor use problem when there is a use gap in one of the two countries Other important aspects of the sector Soft fruits and human health Recent research carried out on various fruits indicates that red fruits and sour cherries are rich in different nutrients. In particular, they are an important source of anti-oxidants, for instance in vitamins (e.g. vitamin C) or anthocyanins (which gives to the fruits the red, purple and blue colour). The nutritional importance of antioxidants is now accepted. They would have positive effects in contributing to prevent important diseases. These positive features are often ignored by consumers who know less about the soft fruits than about other fruits that are consumed in larger quantities. EN 25 EN

26 Breeding research Breeding research plays a role in the overall competitiveness of the sector of soft fruits for both the fresh and the processing markets. Dynamism of the sector is often linked to the creation of new cultivars. In most sub-sectors (blackcurrants, raspberries, sour cherries, strawberries) the spreading of recently created cultivars has impacted the sector economically: for blackcurrants, this concerns the Ben cultivars created since the 1980s that are used in most European countries; in the raspberry sector, in Poland, recent cultivars like Polana and Polka have spread quickly; in the sector of strawberries, Camarosa, which is used for both the fresh and the processing markets, was created in Breeding research impacts both cost competitiveness (e.g. cultivar that require lower levels of inputs) and overall competitiveness (e.g. product innovation). Several aspects increase the role played by breeding research in the sector since the 1990s and for the future. Firstly, the process engaged in the 1990s to reduce the number of active substances for pesticides implies that cultivars have better resistance to diseases. Secondly, in an increasingly competitive environment, consumer preferences and quality of the products have become more important preoccupations than in the past. Thirdly, global warming is already having an impact in some sub-sectors (e.g. blackcurrant in some countries) and needs to be taken into consideration in the breeding programmes. Breeding research is a long-term effort, it usually takes more than 15 years to release a new cultivar. Therefore, breeding programmes need stable sources of funding. However, current budget constraints sometimes lead governments to diminish public funding. In this context, participation of both public and private institutions in funding can be important to maintain breeding programmes. EN 26 EN

27 Annex to Chapter 1 Hereafter we provide EU production of gooseberries and redcurrants, for the other products, EU production is presented in the sectoral chapters. Table 1-2. EU production of redcurrants (tonnes) Average Austria Belgium Czech Republic Denmark Estonia Finland France Germany Hungary Italy Latvia Lithuania Netherland Poland Slovakia EU EU EU Germany: only Producer Organisations. Blank cells: no data available Table 1-3. EU production of gooseberries (tonnes) Average Belgium Czech Republic Denmark Estonia Finland Germany Hungary Latvia Lithuania Poland Slovakia Sweden EU EU EU For Germany only Producer Organisations. Blank cells: no data available 5 6 Sources: Eurostat for Denmark (with correction 1996 by Ministry of Agriculture), Finland, France, Italy (Ministry of Agriculture for 2002 and 2003), Lithuania, Netherlands and Poland ( Central Statistical Office); Ministry of Agriculture for Belgium, Czech Republic (only orchard production), Latvia and Slovakia (only intensive production); National Statistical Office for Austria (intensive production) and Estonia; ZMP for Germany (only Producer Organisations); FruitVeB for Hungary (include blackcurrant but large majority is redcurrant, only commercial production). Sources: Eurostat for Belgium (with corrections from Ministry of Agriculture), Denmark, Finland, Latvia, Lithuania, Poland, Slovakia and Sweden; Ministry of Agriculture for the Czech Republic (only orchards); National Statistical Office for Estonia; ZMP for Germany; FruitVeB for Hungary (only commercial production). EN 27 EN

28 Table 1-4. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (tonnes) Fresh products Raspberries Blackcurrants Redcurrants Whitecurrants, gooseberries Sweet cherries Sour cherries Strawberries Cowberries, foxberries, cranberries Fruit of species vaccinium myrtillus Fruit of species vaccinium macrocarpum and corymbosum Total fresh fruits Frozen products Strawberries Raspberries Blackcurrants Redcurrants Blackberries, mulberries Loganberries, whitecurrants, gooseberries Fruit of species vaccinium myrtillus Fruit of species vaccinium myrtlloides and angustifolium Sour cherries Sweet cherries Total frozen products Provisionally preserved cherries Source: COMEXT Table 1-5. EU-25 imports of fresh, frozen and provisionally preserved soft fruits ( 000) Fresh products Raspberries Blackcurrants Redcurrants Whitecurrants, gooseberries Sweet cherries Sour cherries Strawberries Cowberries, foxberries, cranberries Fruit of species vaccinium myrtillus Fruit of species vaccinium macrocarpum and corymbosum Total fresh fruits Frozen products Strawberries Raspberries Blackcurrants Redcurrants Blackberries, mulberries Loganberries, whitecurrants, gooseberries Fruit of species vaccinium myrtillus Fruit of species vaccinium myrtlloides and angustifolium Sour cherries Sweet cherries Total frozen products Provisionally preserved cherries Source: COMEXT EN 28 EN

29 Table 1-6. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (tonnes) Fresh products Raspberries Blackcurrants Redcurrants Whitecurrants, gooseberries Sweet cherries Sour cherries Strawberries Cowberries, foxberries, cranberries Fruit of species vaccinium myrtillus Fruit of species vaccinium macrocarpum and corymbosum Total fresh fruits Frozen products Strawberries Raspberries Blackcurrants Redcurrants Blackberries, mulberries Loganberries, whitecurrants, gooseberries Fruit of species vaccinium myrtillus Fruit of species vaccinium myrtlloides and angustifolium Sour cherries Sweet cherries Total frozen products Provisionally preserved cherries Source: COMEXT Table 1-7. EU-25 exports of fresh, frozen and provisionally preserved soft fruits ( 000) Fresh products Raspberries Blackcurrants Redcurrants Whitecurrants, gooseberries Sweet cherries Sour cherries Strawberries Cowberries, foxberries, cranberries Fruit of species vaccinium myrtillus Fruit of species vaccinium macrocarpum and corymbosum Total fresh fruits Frozen products Strawberries Raspberries Blackcurrants Redcurrants Blackberries, mulberries Loganberries, whitecurrants, gooseberries Fruit of species vaccinium myrtillus Fruit of species vaccinium myrtlloides and angustifolium Sour cherries Sweet cherries Total frozen products Provisionally preserved cherries Source: COMEXT EN 29 EN

30 2. THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN POLAND Poland represents two thirds of all EU soft fruits and sour cherries produced for the processing industry. This explains why a specific chapter is dedicated to the general features of the soft fruit sector in this Member State. In this chapter, attention is given to the significance of the sector in the fruit and vegetable sector and its contribution to the economy of concerned areas of production. Attention is also paid to rural development programmes, the level of organisation in the fruit and vegetable sector, the structure of the semi-processing industry and the marketing of soft fruit sold to the industry by the producers Economic significance of the sector of soft fruits and sour cherries in the Polish economy Significance in the agricultural sector Fruit and vegetables are an important branch of the agriculture sector in Poland. They amount to 12% of total agricultural sales and, with hectares, represents 4% of total farmland. The area under fruit production (orchards with fruit trees and bushes and land under strawberry production 7 ) has fluctuated in the last 15 years between and hectares. The orchard area has been rather stable in the range of hectares. Out of this, around 15% are devoted to soft fruit bushes (currants, gooseberries, raspberries and other bushes) and 10% to sour cherries. The sector of soft fruits and sour cherries itself has an important weight in the agricultural economy: it represents 5% of total plant production value (8% of commercial plant production value), 17% of total fruit and vegetables production and 35% of all fruit production value Regional and social importance of the soft fruit sector in Poland Geographic location of the sector Soft fruit production is concentrated regionally. Its significance is the highest in three regions that represent around 55% of national soft fruit and sour cherry production in : Lubelskie (24.1% of total production in volume), Mazowieckie (20.9%) and Łódzkie (11.4%). These regions are located in the centre East of Poland (see maps). Geographical concentration of production varies according to the different fruits: the share of the leading three regions is the highest for raspberries with 87.8% of national production in (Lubelskie alone amounting to 69.7%). Sour cherries and currants follow with 58.8%. Regional concentration is lower for strawberries, where the three leading regions represent 47.0% of national production and is the lowest for gooseberries (42.0%). 7 Cultivated areas below 0.1 hectare are counted in the case of strawberries but not for fruit trees and bushes. EN 30 EN

31 Table 2-1. Area, production, average farm size and unemployment in the three largest producing regions Area under soft fruits and sour cherries in Production of soft fruits and sour cherries in Average area of land per farm in 2002 (hectares) Registered unemployment rate in 2003 (%) Hectares % total Tonnes % total Lubelskie , ,1 6,9 18,7 Łódzkie , ,4 6,8 20,7 Mazowieckie , ,9 7,6 15,4 Poland , ,0 8,4 20,0 Source: Central Statistical Office (GUS) The economy of rural areas and the importance of the sector With 17.7% in 2005 (Eurostat), Poland is the Member State with the highest level of unemployment in the EU (average of 8.7%). Official unemployment is equally important in rural areas in Poland (16.4% in 2004 according to GUS, the Central Statistical Office), but actual unemployment levels are probably higher as there is a large hidden unemployment. Indeed, in the course of the 1990s, the agricultural sector played the role of a social buffer, absorbing part of the surplus of labour force in the economy. This explains why the share of agriculture in total employment in Poland, 17.5% in 2004, is one of the highest among the EU Member States (the EU-25 average is 5.2%). In comparison, the contribution of the sector to the GDP amounted to 5.6% in 2000, rather close to the EU average of 2.0%. There are almost two million farms with an area higher than one hectare in Poland, with a high share of subsistence and semi-subsistence holdings. More than half of these farms have an area below five hectares and use around 20% of total agricultural land. Farms with an area between five and 20 hectares represent 35% of total holding numbers and use 46% of all agricultural land. Holdings larger than 20 hectares amount to only 6% of the farms but they use 35% of total agricultural land. The lack of labour opportunities in the rest of the economy, given the high level of unemployment at national level, slows down the decrease in agricultural labour. This creates major difficulties for the agricultural sector as it constrains productivity increase and its consolidation. In this context, the sector of soft fruit for processing represents an important source of income and labour in rural areas in Poland. It is estimated that the overall fruit and vegetable sector provides the equivalent of full time jobs (production, marketing, processing). In the soft fruit and cherry sector only, this would amount to around full time jobs (according to IERiGŻ, the Institute of Agricultural and Food Economics in Warsaw) Farm structures and sector organisation in fruit and vegetables sector Excluding farms with an area under soft fruits or sour cherries below 0.1 hectare, which are usually considered to be subsistence oriented 8, the agricultural census of 2002 indicates that there were producers of sour cherries (with an average area under sour cherry of 0.22 hectare), producers of strawberries (with an average area of 0.36 hectare), producers of currants (with an average area of 0.42 hectare) and producers of raspberries (with an average area of 0.21 hectare). Soft fruit and cherry production is therefore 8 The Central Statistical Office (GUS) defines as orchards the plantations with an area larger than 0.1 hectare. EN 31 EN

32 fragmented. However these averages mask that for blackcurrants and sour cherries, farms with an area higher than one hectare represent around two third of national production. In the common market organisations for fresh and processed fruits and vegetables, the major actors targeted by the policies are the Producer Organisations created by producers to market jointly their produce. In the new Member States, the level of organisation 9 of the producers is often lower than in the other 15 Member States. This is because these countries have started to apply EU policies only recently and also for obvious historical reasons: the so-called agriculture production cooperatives, of which membership was often imposed and functioning was all but democratic, generated strong reluctance of farmers towards new groups since the collapse of the communist regimes in the late 1980s. In the wake of the preparation for accession to the EU, Poland voted in September 2000 the Law on Agri-Producer Groups and their Unions which gave access to preferential loans and property tax allowances. In December 2003, Poland passed a new law on agricultural markets (including fruit and vegetables) to align the legal environment with the EU s and ensure that producer groups and organisations recognised under this law would also be recognised under the EU framework as from accession. In the beginning of 2006, there were 46 Producer Groups (PGs) and eight Producer Organisations (POs) in the country that sold around 2% of total marketed production of fruits and vegetables in Poland. There were still groups of producers that had been recognised under the law of September 2000 that are getting progressively recognition under the EU framework. POs and PGs are the most active in the sector of tomato for processing (21 PGs/POs in 2004, 23 in 2005). Soft fruits and sour cherries marketed via PGs or POs amounted to around tonnes in 2004 only (around tonnes foreseen for 2005). It is estimated that around 700 informal groups of producers exist in the agricultural sector, with 40% in fruits and vegetables. Despite the advantages that producers would have in joining groups (that have been pointed out in the case of Poland in a publication by Lemanowicz, 2004), the level of organisation in Poland is among the lowest in the new Member States. In January 2006, Poland adopted the legal framework for granting support to Producer Groups that implement a recognition plan. This aid will be granted in capital. Community support will cover 50% of eligible costs, Poland will cover 25% and the PGs will cover 25%. There is no interbranch organisation functioning in the sector of fruits and vegetables in Poland Impact of the implementation of pre-accession SAPARD 10 programme and of rural development measures in the fruit and vegetables sector SAPARD In Poland, SAPARD was implemented from Projects were contracted with final beneficiaries until 30 September Regarding the fruit and vegetables sector, SAPARD support concerned mainly: a) investments on farms; and b) investment in marketing and in the processing industry. Poland did not apply the specific measure for the establishment of 9 10 Which can be measured as the part of the production which is marketed through the producer organisations or producer groups (recognised by the Member States). Special Accession Programme for Agriculture and Rural Development. EN 32 EN

33 producer groups but provided more attractive conditions to farmer groups or farm associations applying for support to investments in marketing and processing. With SAPARD, on-farm investments in the fruit and vegetable sectors were supported through the measure on diversification and valorisation of agricultural production. The objective of this measure was to assist farmers in generating income from non-traditional production. It is not possible to single out the amounts that were used by the fruit sector. In this sector, SAPARD co-financing could be used for investments in equipment (e.g. combined harvester, controlled atmosphere storage capacity). No support was provided to the establishment of new plantations. In total almost projects were financed through this measure and all public funds available (PLN 489 million) were used. This measure was considered very successful 11. Regarding investments in the processing industry, a specific measure provided support for restructuring the processing and improving the marketing of fruit and vegetable products. Producer groups were eligible to this measure and conditions for support were less restrictive for them than for other beneficiaries. However, due to the small number of registered groups, only one project was financed (in the dairy sector). This measure financed 241 projects and all public funds available (PLN 292 million) were used. Overall, SAPARD measures attracted a high interest from operators of the sector. It made a contribution to the improvement of production and processing capacities and is regarded as a success (see for instance FDPA, 2004, which includes an assessment of SAPARD). In addition, farmers could acquaint themselves with the administrative procedures which made them better prepared for the use of support possibilities with rural development programmes that took over upon accession to the EU Rural development programmes From accession to the EU in May 2004, EU co-financed rural development programmes were implemented, with a budget allocation covering the period They consist in two major programmes: the Sectoral Operational Programme (SOP) financed by the Guidance section of the EAGGF and the Rural Development Programme (RDP) financed by the Guarantee section of the EAGGF. SOP finances twelve measures of which farm investments, support to young farmers, investments in food processing and marketing, and assistance to diversification of activities in rural areas. These measures are of special relevance in the framework of the red fruit sector. The RDP offers a set of instruments mainly concentrated on two priorities: the enhancement of the competitiveness of the farm holdings and the sustainable and multifunctional development with a special regard to environmental issues. It provides inter alia support through the early retirement measure, support to semi-subsistence farms undergoing restructuring, to less-favoured areas, to agri-environment and animal welfare, to farms to meet EU standards, to afforestation of agricultural land and to agricultural producer groups. Rural development programmes are financed in Poland for the period with a total public budget of 5.36 billion, of which 4.06 billion from the EU budget. It is too early to assess the impact of the rural development programmes on the fruit and vegetables sector. However, it was reported that support to farm investment attracted a large 11 It is estimated (FDPA, 2004) that one in 15 farms larger than 8 ESU applied to the support to farm investment (ESU: European Size Unit which represents a standard gross margin, one ESU is equivalent to a standard gross margin of 1 200). In the Mazowieckie and Lubelskie regions, more than one in ten farms larger than eight ESU applied. EN 33 EN

34 interest from the farmers ( applications received by 31 December 2005 for the measure investment in agricultural holdings of the SOP and for the measure meeting EU standards included in the RDP). 250 projects are expected to be financed in the fruit and vegetables sector through the measure improving the processing and marketing of agricultural products. Access to the support for the sector is linked to the precondition that at least 50% (in value) of the raw material delivered to the beneficiary industrial plant is contracted with agricultural producers (there is however no obligation regarding price arrangements). As a general rule, investment for the processing of raw material from third countries is not eligible to Community financing. However, as proposed by the Polish authorities, the Polish SOP provides that in case of fruit and vegetables processing, and production of feeds for farm animals and fish, the support for plants, which process raw materials from third countries, is allowed provided that its share does not exceed 30% of the total volume of processed raw materials. As a consequence, the level of aid is reduced proportionally to the declared share of raw materials from third countries Structure of the semi-processing industry (freezing and concentrate industry) The food industry is the largest branch of the manufacturing sector in Poland with a share of more than 20% of total sales value (Maack, 2005). Most of the food industry was part of the socialised sector in the former regime, it was privatised in the course of the 1990s. Processed fruit and vegetables account for 7 8% of total sales of the food industry. Frozen products and concentrated juices account for 20% and 3 4% of the structure of sales of the fruit and vegetables industry. The industry in the fruit and vegetables sector processes around 60% of all fruit production and 30% of vegetable production in Poland. In 2003 there were fruit and vegetable processing companies, 90% of them with less than 50 employees (representing 33% of the employment and 29% of production in the sector). The industry is mainly located in Central Poland, which is the region with the highest fruit and vegetables production. It is also well developed in Southern and Eastern regions of Poland. Foreign capital dominates in all branches of the fruit and vegetables processing industry. The sector has attracted significant amounts of foreign direct investments (FDI). Until 2002, the value of FDI in the processing of fruit and vegetables had reached US$ 318 million (Wilkin et al., 2004). Most European firms involved in frozen products, juice concentrates and other intermediary food products (e.g. fruit preparations) have established a subsidiary in Poland. Support under SAPARD and EU rural development measures (the SOP programme) have facilitated new investments in the sector in the last few years The frozen fruit and vegetables industry It is estimated that more than a hundred plants freeze fruit and vegetables in Poland. However, only around ten of them would work with volumes of around tonnes or more of fruit and vegetables. All the other plants have a much smaller capacity. Although the number of small plants is decreasing, it is often considered by observers that the processing capacity of the frozen fruit and vegetables industry in Poland is too large and fragmented and contributes to price instability. Small plants often carry out an initial processing (washing and freezing) and sell their output to larger plants that further work the products (grading, pitting, packing, preparation of puree, EN 34 EN

35 quality control, etc.). In order to maintain activity for the longest period possible, most plants, especially the larger ones, process a broad range of fruits and vegetables. The storage capacity of the industry is considerable and provides operators with flexibility in the marketing of their produce. In particular, Poland is one of the few countries that can offer spread delivery contracts. Most other countries (e.g. Morocco, Serbia, etc.) have less storage capacity and deliver their products immediately. Many plants are involved in the freezing of strawberries, especially in years of good prices. For other products, the situation can be different. For instance, freezing raspberries may involve more investments than for strawberries (necessity of static freezing for high quality individually quick frozen IQF raspberries), moreover, the process involves maintaining close relations with the farmers in order to ensure quality. Hence, the number of freezing plants that work raspberries is smaller and more stable than for strawberries Concentrate industry Poland has had a powerful fruit juice industry since decades as it is one of the major producers of apple juice in the world. In the 1990s, the European fruit juice industry, which is primarily based in Germany and Austria, bought privatised companies or cooperatives in Poland. As is the case for the frozen fruit industry, most European fruit juice companies, including those specialised in the so-called coloured juices (cherry, blackcurrant, etc.), have settled operations in Poland. Usually, concentrate plants process primarily apple juice. It is estimated that more than 45 plants can produce juice concentrate in Poland. The sector is specialised: usually enterprises producing apple juice concentrate do not produce concentrated juice from soft fruits. Some twelve companies would focus their activities on the soft fruit sector (coloured juices), out of them two would have a market share exceeding 60%. The industry has created the Polish Association of Juice Producers (KUPS) which represents around 80% of the production of juices for direct consumption. One of the aims of the association is to improve the economic monitoring of the sector Marketing of produce to the semi-processing industry The main common features of marketing the various soft fruits and sour cherries to the industry are presented in this section. Specific aspects relating to one or several products are discussed in the sectoral chapters. Until the collapse of the communist regime, an important part of fruit and vegetables for processing where channelled via the horticultural cooperatives which also provided services like input supply, storage or agronomic advice (for details see Maack, 2005 and Wilkin et al. 2004). The cooperatives represented a 50% share of sales of fresh produce, producers marketed the other 50% directly. After 1990 the horticultural cooperatives disappeared and marketing of fruit and vegetables to the processing industry was done directly by the individual producers, often through intermediaries. The share of producer groups and producer organisations is still marginal. Intermediaries play an important role in the assembly of the products between producers and processors Delivery to intermediaries Owing to the fragmentation of supply of most soft fruits, assembly of fruits is carried out in collection centres which are disseminated throughout production regions. These collection EN 35 EN

36 centres are either organised directly by the processors or by private individuals, which then play the role of intermediaries between the farmers and the processors. Most often collection points have only basic infrastructure without storage capacity not to mention cooling storage. Their only function is assembly, sorting and daily delivery to the processing plants. The absence of a direct link between the producers and the processors is no incentive for producers to deliver high quality products. Altogether it is not considered that the best quality fruits are channelled through these intermediary collection points. Processors that demand good quality products establish their own collection points and/or deal directly with the farmers. It is estimated that the margin of intermediaries represents around 10 15% of the price paid to the producers (sometimes in can reach 20%) Direct delivery to processors As a matter of fact, most often large farms deliver their soft fruits directly to the processing plants. In addition, many plants organise their own collection points in order to assemble the produce and regulate delivery at the plant (which the collection points supply twice a day to avoid raw material from spoiling). This also gives them a better control on the quality that is sold to them. In general, large farmers that deliver to the processors receive better prices than through the collection points, not only to cover transport costs but also because they deliver better quality products (homogeneous, according to specifications of processor, etc.). At the national level it is estimated that supply via contracts with producers would cover only 10 15% of all marketed soft fruits, however, visits in different plants would suggest higher levels for raspberries. Most contracts contain technical specifications and delivery quantities. They most often do not contain price specifications (or specify that the spot market price will apply). Sometimes they include premiums that are paid on top of the spot market price. In all cases the spot price remains the reference. These contracts are concluded with the large farmers. A minority of processors have established such contracts that include guaranteed or minimum prices. This concerns processors working on premium or high-quality products that need raw material of very good quality. Due to the fragility of the fruit and the possibility to sell IQF fruits at relatively high prices, it is for raspberries that the contractual relations seems to be the most developed (see the chapter dealing with raspberries). EN 36 EN

37 Figure 2-1. Simplified marketing chart of fresh and semi-processed soft fruit in Poland Small individual farmers Large farmers Export Poland Independant collection point Small semi-processor (cooperative, etc.) who freezes and sells ungraded to larger factory Trader Collection point owned by processor Contracts (without price) Semi processor (e.g. freezing plant) Food processor e.g. jam factory imports in framework or spread delivery contracts or ad hoc imports (to complement supply in raw material) If processors are not in a position to offer fixed guaranteed prices, those that want to ensure at least a minimum level of supply and adequacy with quality requirements provide additional services to the farmers they work with in the form of technical advice to the producers (visits of agronomists, meetings ahead of the harvest, etc.) and sometimes with the provision of inputs in favourable conditions. These arrangements apply mainly to the large farmers as it has proved so far very difficult to work with groups of farmers. The low level of contracting in red fruits for processing comes in contrast with the sector of vegetables for processing. In this sector, a majority of the production for the industry (60 80%) is contracted (delivery contracts, most often without price arrangements). EN 37 EN

38 Annex to Chapter 2: maps of soft fruit and sour cherry production in Poland Map 2-1. Strawberry production in Poland Map 2-2. Currant production in Poland EN 38 EN

39 Map 2-3. Gooseberry production in Poland Map 2-4. Raspberry production in Poland EN 39 EN

40 Map 2-5. Sour cherry production in Poland EN 40 EN

41 3. THE SECTOR OF STRAWBERRY FOR PROCESSING IN THE EU 3.1. EU production of strawberries for the processing sector Strawberry production in the EU-25 stands at around one million tonnes per year. Spain is the largest producer with tonnes on average on 2002 to Italy and Poland are second with tonnes. Germany follows with around tonnes. Among the large producing countries, Poland is the only one with a sector that is specialised in strawberries for the processing sector, with a share of around 60 70% of total production. In Section 1.1 we first provide an analysis the situation of the sector in Poland. Other EU supplier countries, essentially Spain, are analysed subsequently (in section 1.2) The sector of strawberries for processing in Poland A highly fluctuating sector The sector of strawberry for processing in Poland has developed over several decades with output levels regularly above tonnes. In the second half of the 1980s, production reached its highest level with more than tonnes 12. Already in the 1980s the sector was specialised in production for the processing industry with exports primarily to Western European markets against hard currencies. Figure 3-1. Production of strawberries in Poland since 1980 (hectares, tonnes) Hectares EN 41 EN Tonnes Area Production Source: GUS In the course of the 1980s, evolutions of the sector were rather smooth although important fluctuations in volume of production could occur due to weather vagaries. This stability 12 Official statistics. However, aggregation of the various uses would indicate that actual production figures would be higher (see sub-section 1.1.6).

42 stemmed partly from the central command of the economy (administrative control of foreign trade, artificial exchange rates, trade monopoly), the absence of competition within the semiprocessing industry (state-owned companies and horticultural cooperatives) and the role played by horticultural cooperatives in the marketing of fruits to the processing industry. Fluctuations of both areas under cultivation and volumes produced have increased in the 1990s due to the dismantlement of the command economy and larger price variations that followed (see Figure 3.1). In addition, a very strong competition has developed between operators of the semi-processing industry to procure strawberries (see Chapter 2 of the working document) while agricultural supply has become more fragmented with the collapse of the horticultural cooperatives. In this environment, efforts to integrate production in order to stabilise supply of raw material and improve its quality have yet applied to a minor part of produced strawberries. Variations in cultivated areas stem mainly from the anticipations of producers that increase or decrease the area devoted to strawberry depending on the situation on the market. Moreover, relatively low start-up investments make it easier for new producers to start strawberry production than other crops A cultivar grown specifically for the processing market: Senga Sengana Strawberry production has a long history in Poland where it was traditionally grown in the open field as part of crop rotation with cereals, rapeseed, root crops, legumes and potatoes. The crop was more profitable than most other crops, especially on light sandy soils which abound in the Member State. Poland is the only country in Europe where the cultivar Senga Sengana is grown in a large scale. Although the importance of the cultivar has steadily decreased in the last years, it would still represent around 50% of total strawberry production in the Member State and 80% of the strawberries delivered to the processing industry. Besides Senga Sengana, Honeyoe, another cultivar for the processing industry, is also cultivated, but at much lower levels. Major features of the Senga Sengana Senga Sengana was created in Germany in The cultivar grows in the cold climates of Northern Europe. It is particularly suited to Poland as it is very resistant to low temperatures and frost. The cultivar is a June-bearing type, i.e. it produces only one crop per year. The fruit is of small to medium size (usually of a calibre of mm), with a conical shape and a dark red colour. It has a very short self life. These features make it particularly not suited to the fresh market. On the other hand, the cultivar has characteristics that make it particularly suited to the processing industry, of which the fact that its stalk is easy to remove, which is an important aspect for its semi-processing into individually quick frozen (IQF), is only one (see Section 4 on the use by the processing industry). Senga Sengana is considered relatively tolerant to soil-borne 13 and other pathogens prevalent in Polish conditions (arthropods, fungal and nematode pathogens). This makes its cultivation easier than fresh market cultivars which are usually more sensitive to diseases Soil borne diseases (e.g. Phytophtora) can infect soils for years and render them inappropriate for strawberry cultivation. Fumigation with Methyl Bromide used to be the standard disinfection method until its phasing out was decided with the Montreal Protocol on substances that deplete the ozone layer. Different methods are explored to replace Methyl Bromide in strawberry producer countries. EN 42 EN

43 The fruit is fragile to handle and transport as it has a soft skin and spoils quickly. In particular, the plant and its fruits are very sensitive to grey mould (Botrytis cinerea) and need more protection than the majority of cultivars used for the fresh market. This implies spraying programmes and, more importantly, appropriate post-harvest fruit handling with cooling to a temperature of 4 C immediately after picking. However, there should be more cooling facilities. Cultivation technique and yields In Poland, Senga Sengana is grown in the open field most often without plastic mulching or bedding cultivation. Due to the absence of protection in the fields and, most often, of irrigation, fruit formation is very sensitive to weather. In drought conditions (as in 2003) smaller fruits are produced, whereas in humid weather bigger fruits are produced. Therefore production can vary significantly year on year. Senga Sengana strawberries are usually planted in September and produce from the second year in June 15. They usually produce for two years in commercial farms 16 or three years in small farms (plantations of June-bearing strawberries can be maintained for several years). Harvest takes place in an extremely short period of three weeks only in June-July 17 (approximately from 20 th June to mid-july). This very short harvest period is a strong handicap: it affects prices and creates logistical and organisational challenges. Cultivation operations are dependent on the expertise of the farmers and the availability of cash to cover costs of inputs. Usually, farmers that sell to collection points receive little or no agronomic advice. Cash-constrained farmers face difficulties to procure the necessary inputs to maintain an adequate level of quality. This constraint is even more important after marketing years with low prices such as those of 2004 and In addition, the practice to use own plants to establish new plantations is still common (it would represent 30 40% of new plantations) as it allows to limit costs in comparison with buying virus-free plants 18, although it is said to be decreasing. This method of plant propagation has an adverse impact on the plantations (infections of fungal pathogens or viruses, lower quality and yields). It is likely that in the last two years it has not decreased given the low producer prices of strawberries for processing In Polish climate and soil conditions, Senga Sengana is reported to be highly tolerant to Verticillium dahliae, tolerant to crown rot but a little sensitive to leather rot (both caused by Phytophhora cactorum), quite tolerant to antracnosis (Colletotrichum sp.) and leaf spot (Mycosphaerella fragariae) but sensitive to leaf scorch (Diplocarpon earliana) and powdery mildew (Sphaerotheca macularis). The use of so-called frigo plants (that are planted in February and give a crop in June) is not widespread. However, anecdotal evidence suggests that plantations can stay longer in production also in large farms (especially if prices are low). By comparison strawberry harvest in Morocco lasts for seven months, of which the last three months are primarily devoted to the processing destination. In Poland two super-elite / elite nurseries produce virus-free and virus tested plants (the Experimental Station in Brzezna and the Centre for the Elite Nursery Stock in Prusy). Purity of the cultivar is maintained by the National Strawberry Gene Bank located at the Research Institute of Pomology and Floriculture in Skierniewice and in the above-mentioned nurseries. Anecdotal evidence suggests that purchases by farmers of Senga Sengana plants would have decreased in the last two years, some producers preferring to maintain their plantation for another year due to cash-constraint. On the other hand, production levels of certified plants of Senga Sengana have not gone down: 8.8 million (out of a total of 24.2 million strawberry plants) in 2002; 19.7 million plants (out of a total of 37.7 million) in 2003 and 20.2 million plants (out of a total of 46.4 million) in EN 43 EN

44 The Homogeneity of delivered strawberries to the industry tends to be lower at the beginning of the harvest when some farmers deliver strawberries produced for the fresh market but that they could not sell on it 19. Later, deliveries become more homogeneous with primarily Senga Sengana. Due to fragmentation of production, low input uses, cultivation technique and own features of the Senga Sengana cultivar (it is a low yield cultivar), the average yield per hectare for strawberries is rather low: if only plantations bearing fruits are considered it is around five tonnes per hectare at the national level. Experts estimate that the average yield of commercial farms is in the range of six to eight tonnes per hectare. In optimum cultivation conditions in modern farms (with irrigation, mulching and use of certified material) production can reach 12 to 16 tonnes per hectare. These yields are far from those of cultivars produced for the fresh market (e.g. Camarosa in Spain yields tonnes per hectare). However, these production levels are obtained with very different agro-meteorological conditions and production techniques. Despite the lower yield, the Senga Sengana is key for the processing industry and, for a number of products, cultivars destined to the fresh market could not substitute the Senga Sengana. The processing industry needs a diversified supply of strawberry cultivars in order to provide the full range of products currently on the market (see the section on the uses of strawberries by the EU processing industry) Other cultivars and current research in strawberries Production of other cultivars of strawberries, targeting more the fresh market is developing: Dukat, Kent, Elsanta (but there are problems to adapt it in winter), Darselect, etc. For these cultivars production under tunnels is becoming more common. Altogether, they would represent around 50% of all strawberry production in Poland. Widespread cultivation of strawberries for decades may have infected large areas of soil. While Senga Sengana is rather tolerant to soil-borne diseases, this is not the case of more recent cultivars destined to the fresh market whose yields are highly dependent on soil conditions. Even if the Member State does not seem to be constrained in non-infected soils of appropriate nature (well irrigated sandy soils), individual producers or areas can be constrained. Research on strawberries in Poland is carried out in the Institute of Pomology and Floriculture of Skierniewice and focuses mainly on fresh market cultivars. Research is also carried out on developing new cultivars suitable for both fresh and processing markets (with high contents in ascorbic acid, anthocyanins, ellagic acid, soluble solids, etc.). However, this is not an easy task in particular as requirements in terms of colour are different: the processing industry prefers a dark red colour while the fresh market demands a more attractive colour. The researched compromise would be with medium-red fruits that would have high content in anthocyanins. New variety creation could also help to extend the duration of the harvest period. However, years of efforts have yet been unsuccessful in creating a cultivar that could replace Senga Sengana. 19 For instance, the cultivar Dukat would represent up to 10% of Polish strawberries. Producers deliver it to the industry although its quality is lower than Senga Sengana (but it does not need as much care after harvest as Senga Sengana). EN 44 EN

45 Current research on Senga Sengana itself focuses on the elaboration and improvement of techniques of ecological and integrated fruit production, on protection against grey mould and on increasing productivity and fruit quality by using organic bioregulators or with the elaboration of new cultivation methods Farm structures Data on farm structures are available only in the agricultural censuses carried out by the Statistical Office (GUS) in 1996 and No data exist for more recent years. One often reads that there are around producers of strawberries in Poland. This figure derives from the agricultural census of However, 2002 was an exceptional year for strawberry production as the area under production was at its record lowest hectares owing to the low prices of Since then, the area increased to hectares in 2004 and to hectares in The number of producers in the last two marketing years was therefore higher than in 2002, although no official figure exists to confirm this. Due to the high variations of areas it is difficult to measure the extent of consolidation of strawberry production in the period. The Research Institute for Agricultural and Food Economics (IERiGŻ) considers that farms with an area higher than 0.1 hectare of strawberries have primarily commercial orientation. Farms with a smaller area are considered to produce for their own use and the local market. With this criteria, the area under commercial production was stable in 1996 and 2002 at around hectares, while the number of concerned producers diminished from to farmers (of which experts consider farmers with strawberry for processing) leading to an increase in average area per farm from 0.23 to 0.36 hectare. The number of farms larger than ten hectares involved in strawberry production increased from 700 to in the same period with an average area devoted to strawberries which however decreased from 4.5 to 3.9 hectares, representing respectively hectares in 1996 and hectares in Therefore, one observes a consolidation of the farm category with commercial orientation between 1996 and Yet, taking into consideration the distribution of farm size in 2002, farms with an area of less than 0.5 hectare still produced in 2002 around one third of the total harvest (around tonnes out of a total of tonnes, assuming average yield of three tonnes per hectare) involving 90 % of all producers. The other tonnes were produced by the other 10% farmers. EN 45 EN

46 Figure 3-2. Distribution of strawberry area in Poland according to the size of the plantations in 2002 (hectares) farms farms Hectares farms farms farms farms 82 farms Below 0,1 0,1-0,5 0, Over 10 Area under strawberry (hectares) Source: GUS (Agriculture Census of 2002) While farms with less than 0.1 hectare represented hectares in 1996 (year of high area and production), they decreased to hectares in Therefore, the large shifts in area devoted to strawberry production seem to originate more from the micro-producers than the larger farmers. However, it is difficult to infer from this that these producers are also responsible for the large variations in production levels. While they are more likely to sell on the market when offered prices are high, they are indeed the farms that can sell to the collection points even in conditions of low prices since they do not have paid labour costs. Larger commercial farms will sell less when producer prices are below production costs. The large commercial farms usually grow different varieties of fruits in order to mitigate risks and also different strawberry cultivars, for both the fresh and the processing markets. Owing to low prices in the 2004 and 2005 marketing years, anecdotal evidence indicates that some large producers are withdrawing from the processing market. Production of strawberries is spread throughout Poland. However, almost half of the production comes from regions located in the South and South-East of Warsaw. Three regions supply more than 45% of total production: Mazowieckie ( tonnes on average in , 23% of national production), Lubelskie ( tonnes, 16% of national production) and Łódzkie ( tonnes, 8% of national production). Farms located South-East of Warsaw tend to be smaller than in the North and North-West of the country (e.g. in Zachodniopomorskie and Pomorskie regions) where farms rely more on salaried labour Senga Sengana production cycle, prices and production costs Table 3-1. Main economic data of strawberry production in Poland Area of production ('000 ha) 57,9 62,4 63,3 60,5 46,2 61,3 53,6 50,2 52,6 58,3 62,0 65,8 38,0 43,9 52,4 53,7 Production ('000 tonnes) Producer prices (PLN/kg) 0,32 0,29 0,37 0,98 2,43 0,98 1,08 1,64 3,50 2,10 1,35 0,98 2,00 4,20 1,70 1,15 Producer prices ( /kg) 0,31 0,32 0,42 0,89 0,50 0,34 0,27 0,52 0,96 0,37 0,28 Sources: GUS, IERiGZ for producer prices (prices paid by industry for strawberries without stalk) EN 46 EN

47 The strawberry production cycle and prices Strawberry is the only fruit in Poland for which extremely large variations in areas occur in short periods of time. All the areas for the other soft fruits are much more stable. The large variations in areas and production levels that are observed are correlated to the prices obtained by producers: increases and peaks in producer prices (such as in 1994, 1998 and 2003) lead to important increases in areas in the subsequent years which in turn provoke the price slumps. The economic cycle of the production of strawberries for the processing industry that has developed in the 1990s lasts for about four years: following a year of producer price peak, area increases significantly which provokes over-supply and leads to a price collapse. This collapse entails a significant decrease in area under production which then paves the ground for a price peak the following year. Price variations have tended to increase in the last two cycles with the higher level ever reached in 2003 when the average price was PLN 4.2 ( 0.96) and almost reached the price of strawberries on the fresh market (it even reached PLN during the harvest season). Figure 3-3. Evolution of area and producer prices (hectares and PLN/kg) , , Hectares ,5 2 PLN/kg , , Area Production costs and profitability Producer price Source: GUS and IERiGŻ (prices: strawberries without stalk) Labour is a major element in the overall production costs, with a share close to or higher than 50%. Official labour gross salaries stand at around PLN per day for workers in the agriculture sector. However, most seasonal work is not declared, therefore actual labour costs are lower. It is estimated that daily labour cost amounts to around PLN 80 per day ( 17.6) with 20 Average monthly gross wage in the agriculture sector at PLN 2 197, which translates in a daily cost of PLN 110 (source: National Statistical Office, GUS). EN 47 EN

48 Polish worker. Assuming nine hours of work and a productivity of eight kg 21 of strawberries (stalk removed) per hour, leads to picking costs at PLN 1.1/kg ( 0.24 kg) for strawberries for freezing (in 2005 the average producer price of strawberry for freezing was PLN 1.1 per kg). Recruitment of workers from Ukraine allows lowering costs. However, Poland s accession to the EU has made their recruitment more difficult since they now need a visa to enter in the Member State. This would have increased the daily cost of workers from Ukraine from PLN 30 to PLN 50. Figure 3-4. Comparison of average production costs on family farm with producer prices (PLN/kg) 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0, Production costs Producer prices Source: elaborated with data from IERiGŻ IERiGŻ maintains calculations of production costs for family farms (see Table 3.8 in Annex for the details 22 ). These farms rely on family and hired labour (partly for picking). The comparison between production costs and the average prices paid to the farmers by the processing industry shows an unfavourable tendency with decreasing profitability. The situation in 2005 was probably even more difficult in larger farms that rely mainly on hired labour, with the average producer prices almost at the same level as the picking cost itself. Although these considerations are based on averages, which mask that efficient farmers can attract better prices for higher quality products, as a whole in 2004 and 2005 large farms have faced a similar situation as the rest of the sector. In the medium to long term, it is likely that production of Senga Sengana on large farms with hired labour will diminish for the reasons exposed below: profitability of cultivation of Senga Sengana is constrained by the facts that the fruit cannot be sold on the fresh market (contrary to other cultivars grown in other countries such as Picking productivity of open-field strawberries for the fresh market is usually at kg/hour (e.g. for Elsanta). For Senga Sengana it is rather 8 kg/hour due to the small size of the fruit and to the removing of the stalk (for strawberries sold to the frozen fruit and vegetables industry). Data from the IERiGŻ also include remuneration of the own work of the farmer at parity with average salary at national level. However, this remuneration has been excluded from the cost calculations presented here (own farm labour is usually not included in production cost calculations). EN 48 EN

49 Camarosa) and that it produces low yields. This may place Polish production at a disadvantage if prices in the processing industry remain low. Overall profitability for producers in competing countries depends partly on the fresh market which provides much better prices. Therefore, they can afford lower profitability thresholds for the production they sell to the industry; supplies to the EU from other countries have increased since the 1990s and are becoming a more permanent feature of the market. Therefore, it is less likely that similar price peaks as those of 1998 or 2003 will ever happen in the future (see the trade analysis presented in Section 3). The increase in imports at very low prices has had a significant effect on the sales and profitability of the Polish producers of Senga Sengana; labour costs in Poland will increase alongside its economic catching up. In a historical perspective, labour costs have always conditioned location of production of strawberries for processing in Europe. As a matter of illustration, supply of Southern European countries (France, Italy), has moved from France to Northern and subsequently Southern Italy in the 1960s and 1970s. In the 1980s, Spain became an important producer until the Member State focused on the fresh market. In the 1990s supply moved to Morocco and to Poland (which already in the 1980s provided frozen strawberries to Germany and other Northern European countries) Balance supply sheets Tentative balance sheets have been prepared by IERiGŻ on the basis of official production data and estimates of uses and outputs on the basis of information communicated by the industry (see Table 3.2). Given the lack of information in the sector, this exercise is difficult and the results should be considered with caution. The first and foremost difficulty concerns the discrepancies between official strawberry production figures and the uses. The latter appear larger than strawberry production levels. It is not excluded that official strawberry production figures may be under-estimated. The large differences probably stem from the difficulties to estimate production of non-commercial farms 23, which for strawberries is indeed very large. Depending on price levels, this production may be consumed by the household or sold on the fresh market or to the processing industry. 23 Data on strawberry production in Poland cover all production (commercial and non-commercial) without any threshold. For households, estimation of production is based on survey. EN 49 EN

50 Table 3-2. Estimates of supply and use of fresh strawberries and volumes of strawberry processed products in Poland ( 000 tonnes, marketing years are July n / June n+1) 1998/ / / / / / /05 Supply of fresh strawberries (1) Production according to GUS 149,9 178,2 171,3 242,1 153,1 131,3 185,6 (2) Imports 0,9 1,0 1,2 1,4 1,0 1,2 3,7 (3) Exports 15,3 13,3 15,6 22,1 12,0 17,5 25,6 (4) Total supply: (1)+(2)-(3) 135,5 165,9 156,9 221,5 142,1 115,0 163,7 Utilisations of fresh strawberries (5) Processing industry 120,0 145,0 144,0 198,0 170,0 126,0 203,0 (6) Of which : freezing industry 100,0 127,0 125,0 170,0 140,0 100,0 148,0 (7) Of which : juice industry 9,0 9,0 9,0 18,0 18,0 18,0 45,0 (8) Fresh consumption: (4)-(5) 15,5 20,9 12,9 23,5 0,0 0,0 0,0 (9) Production revised (*) 190,0 215,0 205,0 270,0 240,0 185,0 278,0 (10) Fresh consumption revised: (9)-(5) 55,6 57,7 46,6 51,4 59,0 42,7 53,1 Outputs of the processing industry Frozen strawberries 94,0 120,0 118,0 160,0 132,0 93,0 140,0 Of which exported 97,7 94,0 131,8 108,0 75,0 122,3 Juice concentrates 1,0 1,0 1,0 2,0 2,0 2,0 5,0 Jams and marmelades 12,0 13,0 14,0 16,0 17,0 18,0 18,0 Of which exported 3,8 5,0 4,3 5,3 4,5 2,3 Compotes 2,0 2,0 1,5 1,0 1,0 2,0 3,0 Other products (preserves, etc.) 5,0 5,0 8,0 8,0 8,0 7,0 9,0 (*) calculated on the basis of estimation of fresh consumption and reconstructed from industry utilisations Source: elaborated by IERiGZ. Trade: IERiGZ (98/99), COMEXT (for 99/00 to 04/05). Campaigns: July n / June n+1. Fresh consumption and trade There are no data of the level of fresh consumption of strawberries in Poland. Deriving them from the official production figure taking into account the other uses would lead to very low, or even null levels, far below the reality. Experts at IERiGŻ estimate it at around tonnes. Marketing of fresh strawberries by producers takes place primarily in wholesale markets and in farmers and informal market places (e.g. road/street sides). The part that is sold through the large retail chains have settled in Poland since the second half of the 1990s is increasing although still estimated at around 10% that. These chains are supplied by large farmers and imports from the EU are still low. Use by the semi-processing industry The frozen fruit and vegetables industry is the major destination of strawberries for processing, with a share of 80% or more until 2003/2004. Use by the juice industry has gradually increased from around tonnes until 2000/2001, to around tonnes in marketing years 2001/2002 to 2003/2004. In 2004/2005, with the large production and low prices of the raw material 24, a larger share was processed by the concentrate industry, reaching tonnes (22% of strawberries delivered to the industry). While production of concentrate would stand annually between tonnes, it would have increased to tonnes in 2004/2005. Other uses (directly into jam, purées, etc.) represent less than 10%. Part of frozen strawberries is also used by the jam industry in Poland. Outputs have increased significantly in the last few years to reach tonnes. Most production is destined to the domestic market but ambitions are to develop exports to the rest of the EU. 24 Purchases of strawberries by the concentrate industry would have been high also for campaign 2005/2006. The low prices offered by the frozen fruit and vegetables industry have made the offers of the concentrate industry more attractive to producers (who then do not have to remove the stalk of the fruit). EN 50 EN

51 Modalities of marketing to the processing industry Details on the marketing of soft fruits by farmers to the processors are provided in Chapter 2 of the working document. At the national level, it is probably for strawberries that marketing is the most fragmented with the highest share of micro-farms among soft fruits. As already pointed out in Chapter 2, most collection points do not have cooling facilities. Given the fragility of the strawberries and their sensitivity to grey mould and taking into consideration that the harvest lasts for only three weeks, which creates important logistical problems, postharvest handling is considered one of the weakest parts of the commodity chain. Figure 3-5. Price paid to strawberries according to destinations: without stalk (freezing), with stalk (concentrate) (PLN/kg) 4,5 4 3,5 3 2,5 2 1,5 1 0, Strawberries without stalk Strawberries with stalk Source: IERiGŻ For the frozen fruit and vegetables industry the strawberries are delivered with the stalk removed and undergo an initial sorting at the collection point. For the concentrate industry, strawberries are delivered with the stalk. Higher quality strawberries are delivered to the frozen fruit and vegetables industry and lower quality to the concentrate industry. Price differences between the two categories can be quite large, depending on the year, as shown in Figure 3.5. Prices paid to the producers are directly derived from the export price of the semiprocessed product (be it frozen strawberries or concentrate of strawberries) and vary almost daily during the harvest season. The issue of contracting It is estimated that 10 15% of soft fruits are delivered to the processing industry within the framework of contracts. No specific data exist for strawberries but anecdotal evidence suggests that the level of contracts is lower for strawberries than for other soft fruits (such as raspberries for instance). EN 51 EN

52 Fragmentation of supply by producers together with the multiplicity of processors that compete fiercely for raw material in situation of short supply 25 and the fact that the frozen strawberry is easy to produce (in contrast with for instance IQF raspberries which are more fragile and require more stable marketing arrangements) explain why contractual deliveries to processors of strawberries are low. Fragmentation of supply and reluctance of producers to group together for marketing have limited the area of contractual relations to the large farmers. Several producer groups or producer organisations have been established that sell some strawberries to the industry (but soft fruit are not the major product). However, there are at most only few groups that have been established for the purpose to sell jointly strawberries to the processing industry (one is TrusPol in Siedlce). At most, only a handful of processors have established such contracts that include fixed guaranteed or minimum prices for strawberries for processing. This concerns processors working on premium or high-quality products that need raw material of very good quality with adequate traceability. If processors are not in a position to offer fixed guaranteed prices, those that want to ensure at least a predictable level of supply and adequacy with their requirements provide additional services to the farmers they work with in the form of technical advice (visits of agronomist, meetings ahead of the harvest, etc.) and sometimes with support in the provision of inputs (advance payment for their procurement). Several years ago, a processor established four-year contracts with minimum guaranteed price and quality specifications for the delivered raw material with producers that grouped together for this purpose. This experience was not considered conclusive by the processor and is being phased out (contracts are not extended when the four-year period expires). Pressures exerted by the large price variations on the spot market were too strong. Quite obviously, the fluctuations that affect more specifically the sector of strawberries for processing (areas, production and prices) are an important explanation to the absence of arrangements on prices, given the risks they generate. In addition, the large number of processors that compete for raw materials leads to price escalation in period of small crop (farmers selling to the one who offers best prices) as was the case in 2003 (see Text Box 3.1). Similarly to other crops that are produced specifically for the processing industry (e.g. vegetables for the frozen fruit and vegetables industry), it would appear normal that most of the produced volumes of strawberries for processing are contracted. However, while contractual relations should bring stability in the sector, it is not sure that contracts with guaranteed fixed prices will become widespread in Poland. If prices of strawberries that are not specifically produced for the processing market remain low in other supplier countries, prices in contracts for Senga Sengana would have to be set at levels that would not always ensure the competitiveness of the semi-processing industry. They could however develop for the part of production that is processed into high quality products, for instance baby food products or high quality jams. For the semi-processed products that are more exposed to international competition better contractual relations could still be developed, even without guaranteed price (market price plus premium and/or services such as advance payments of inputs, agronomic advice, etc.). 25 While production of IQF of different vegetables or currants, or apples implies additional equipment (e.g. for slicing, cutting into pieces, etc.), freezing of strawberries can be done with relatively modest investment, hence most cold storages process it. EN 52 EN

53 Text Box 3-1. Extremely high producer prices in marketing year 2003/2004 In 2003, harvest of strawberries in Europe was relatively short and there were no carry over stocks of frozen strawberries from the previous campaign either in Poland or other EU countries. Therefore there was a rather strong demand for Polish frozen strawberries. Due to drought, the harvest in Poland was also small (official figure of tonnes). These mere facts were likely to raise prices in Poland. Evolution of strawberry prices during the campaign (strawberries with stalk removed, ex plant, PLN/kg) (source IERiGZ) 6 5 Price in PLN/kg June July However, the price increase reached unjustified levels (see graph above). Factors that explain this overreaction of prices are a) the large number of semi-processors that compete for the raw material; b) the very short duration of harvest (usually only three weeks but it was shorter in 2003); and c) the absence of contracting relations which allowed farmers to sell to the best offers. Cold stores bought the raw material at extremely high prices, expecting they would be able to pass this increase onto their clients. This was not the case for part of the campaign since the latter could switch to other supplier countries. Following the surge in imports from 2003, prices have dropped to levels far below those of the years preceding the high of In summary, current marketing conditions do not ensure stability of supply and prices, nor proper post-harvest handling for an important part of production. They do not allow the setting up of appropriate quality management systems (certification, traceability) for more than marginal levels of current production, which are becoming prominent criteria on the market. Development of better marketing relations will be important for the sector to strive in the future: it will contribute to stabilising production levels and producer prices and will ensure better quality levels and management and provide a better environment for investments. According to Polish sources, the increase in EU imports from third countries has been detrimental to the investment efforts in the sector in the recent years Processing and export of frozen strawberries and strawberry concentrate Pre-cooled strawberries Although most strawberries are used by the food processing industry either as frozen, puree or concentrate, some EU processors also import directly from Poland fresh strawberries, the socalled pre-cooled strawberries. These pre-cooled strawberries are exported at chilled temperatures (below 5 C). EN 53 EN

54 Exports of fresh strawberries, which vary in the range of tonnes per year, are mainly pre-cooled delivered in refrigerated tanks to the European industry for concentrate and jam preparation. A very minor part consists in high quality fresh strawberries for the canning industry. However, in 2004/2005 exports of strawberries for the fresh markets would have increased significantly to reach around tonnes, while the rest, approximately would have been pre-cooled strawberries 26. Frozen strawberries Traditionally semi-processing into frozen products has always been the destination of most fresh strawberries. Traditional classification of IQF (individually quick frozen) strawberries is in two major categories, Class I and Class II 27 : Class I is more stringent on the appearance for the fruit which needs to be undamaged. This class represents a minor part of European trade in IQF strawberries, perhaps below 10%. Class I products are mainly destined to decoration and retail sales. Class II represent the bulk of the products, in Poland it makes up 70 80% of all frozen strawberries. A large part of frozen strawberries are second class IQF (70 80% of total frozen strawberries in Poland), which is the major product on European and world markets. Strawberry concentrate and purees While Poland was specialised in the export of frozen strawberries, the significance of the concentrate industry has increased significantly recently. Until the end of the 1990s, the juice industry used less than tonnes of strawberries, this increased to about tonnes in marketing years 2001/2002 to 2003/2004. In 2004/2005 it further increased to more than tonnes owing to the large crop and to the price fall of frozen strawberries 28. The increased weight stems from the presence in the Member State of all major European operators in the sector who have invested in Poland to take advantage of the supply in major fruit raw material for the juice industry that are apples, cherries and blackcurrants Other EU Member States Poland is the only Member State where the majority of strawberry production is intended for processing. There is still a limited production of strawberries intended for processing in Hungary, but it faces difficulties in the current context. In Germany, limited areas of Senga Sengana were still grown under contract for the industry until Dedicated production that still existed in other countries in the 1990s (e.g. in Denmark) has totally disappeared. In all EU countries but Poland, the industry is the destination only of the fresh strawberries that producers have not been able to sell on the fresh market. In this context the processing Unfortunately, in the combined nomenclature of EU trade statistics, it is not possible to distinguish pre-cooled strawberries for industrial use to fresh strawberries for direct consumption. In Poland, the category jam quality used to play a role but is no longer used in international trade. It concerns frozen strawberries that are sold to the jam industry of the country. Initial reports on the 2005/2006 campaign indicate that as for the previous campaign (but maybe to a larger extent) the low prices offered to producers by the frozen fruit and vegetables industry would have led to large deliveries to the concentrate industry. EN 54 EN

55 industry plays an important role in the regulation of the fresh market. As a consequence, withdrawals are seldom used by the producer organisations 29. Production delivered to the industry includes irregular-shaped, over-ripped and other outsorted fruits, or excessive production that cannot be absorbed by the market or production of end of harvest season. Main countries concerned are Belgium, Italy, the Netherlands and Spain. In France the industry played a role in the regulation of the fresh market until some ten years ago with the freezing of around tonnes of fresh strawberries per year. This has however stopped due to insufficient competitiveness (and less adapted cultivars), minor quantities of high quality strawberries (Darselect, Mara des bois) are processed into high quality jams. In Germany, in the last years tonnes of strawberries were sold annually to the industry in addition to the contracted production mentioned above. In Belgium, around tonnes (5 10% of production) is sold by the Veilingen to the industry for the production of purees and concentrates. In the Netherlands, tonnes of strawberries have been processed annually on average in In Italy, it is estimated that around tonnes of strawberries are frozen annually, either in IQF or block-frozen purees. In Spain the processing industry plays an important role in the regulation of the sector. Depending on the year, between 15% and almost 30% of total production of fresh strawberries ends up as raw material for the processing industry, i.e. between and tonnes 30. However, in the last two marketing years, quantities sent to the processing industry were reduced. Outsorted strawberries represent the first category with amounts of around 8 10% of total production at all moments in the harvest season until the end of May. When competition increases in the EU (either from other producers of strawberries or from other fruit such as peaches) and Spanish strawberry is less competitive, i.e. from the beginning of June (week 21), all quantities harvested are directed to the processing industry until mid-june, provided that price does not go below the harvest cost. It is considered that a producer price in the range of /kg is the threshold under which it is not profitable to sell the strawberries for processing. While in 2004, the industry could pay an average of /kg, in 2005 prices have been reduced to /kg, which entailed a sharp reduction of quantities sold for processing (9 11% of total fresh strawberry crop instead of the usual 20%). Most of the first category is either frozen by the cooperatives which are equipped with freezing tunnels (block-frozen strawberries with stalk), processed into purees or sold pre-cooled in Spain or in other EU countries 31. Until late 2004, no other form of semi-processing than freezing existed in Huelva. These block-frozen or precooled strawberries are primarily used for the preparation of purees and concentrates (and low priced jams). Part of the late-campaign deliveries for industrial use are IQF strawberries. However this latter category is decreasing, mainly due to lack of competitiveness (high labour costs to remove stalk). While frozen strawberries would have amounted to around Strawberries are not eligible to the so-called Community Withdrawal Compensation. However, producer organisations have the possibility to use their operational programme to provide their members with a compensation for withdrawn products, including strawberries. This possibility is seldom used as only 100 tonnes of strawberries were withdrawn in campaign 2002/2003 and in 2003/2004 (all by Spain). 98% of all strawberries produced in Huelva is Camarosa which is considered a good dual-purpose (fresh and processing markets) cultivar. It is estimated that around 50% of strawberries sold to the industry are processed in Andalucia, 40% in Murcia and Lérida and 10% are exported pre-cooled to other Member States (i.e to tonnes depending on the year). France and Germany are the major destination of pre-cooled exports. EN 55 EN

56 tonnes in the last years, in 2004 due to the imports from Morocco this fell to tonnes. A number of processors in Europe are currently switching to Moroccan or Chinese strawberries given their low prices for similar quality. Figure 3-6. Strawberries in Spain: total production and quantities sold for processing (tonnes) Total production For processing Source: Ministry of Agriculture, Fisheries and Food of Spain With the objective to take better advantage of the processing outlet and taking into account the increased competition of Morocco on frozen strawberries, a processing plant was established in late 2004 by the major operators of the strawberry sector in Huelva. This plant produces frozen or aseptic purees and concentrates and should process around 35 50% of all strawberries directed to the industry (around tonnes). Domestic trade and exports of Spanish pre-cooled and block-frozen strawberries would significantly reduce with this new production. By absorbing large quantities of strawberries, the processing industry contributes to alleviating pressure on prices on the fresh market and to maintain a higher quality of the produce destined to the fresh market. It also allows minimising withdrawals from the market. Should it become more difficult to divert fresh production to the industry (for profitability reasons), the pressure on fresh market prices would most likely increase Major third countries supplying frozen strawberries to the EU Worldwide, the largest producers of frozen strawberries 32 outside of the EU are the USA, China, Morocco and Mexico. The USA are the major producer of fresh strawberries with a volume of tonnes on average over , out of which around 25% is frozen, most production is consumed on the domestic market. Strawberry production in China has developed dramatically in the last decade to reach volumes of tonnes, of which around 10% is frozen partly targeting export markets. The strawberry industry in Morocco has 32 There are no FAO data for the production of frozen strawberries, various sources have been consulted (main one: USDA). For fresh strawberries FAO data have been used, except for China for which FAO data are grossly underestimated (according to FAO Chinese production would stand at around tonnes). EN 56 EN

57 developed from the beginning of the 1990s within an export-oriented strategy, the EU being the main target. Production reaches volumes of tonnes on average on , of which around 70 80% is frozen. In Mexico, strawberry production stands at around tonnes, of which around tonnes are frozen. Both fresh and frozen productions target the market of the USA. Among the main producers of frozen strawberries, only China and Morocco have developed significant exports of frozen strawberries to the EU. In both countries, the strawberry sector has developed since the 1990s, in different contexts however: while in China strawberry production is primarily intended for domestic consumption, the sector in Morocco is almost completely export-oriented. Other countries could increase their exports of frozen strawberries to the EU in the medium term: EU imports from Turkey have remained below tonnes per year. Exports have been contained by the dynamic development of the fresh strawberry market 33. Ukraine is often mentioned as a potentially important country in this market, other countries like Moldova, Serbia or Romania could also develop once appropriate capital and technology are provided. However, the analysis below focuses on the current two major suppliers of the EU, i.e. China and Morocco China 34 With limited availability of arable land and a large rural labour force, China benefits from important comparative advantages in labour-intensive crops such as fruits and vegetables. This has made the country an important competitor on world markets for horticultural and processed agricultural products. Production of strawberries in China has developed dramatically since the 1990s, however estimates of the volumes vary according to sources: while it stood at around tonnes in 1991, it reached tonnes in the mid-1990s and tonnes in 2005 according to the USDA. Figures of the Ministry of Agriculture of China give a production at the level of 1.5 million tonnes in China is therefore either the second or first largest world producer. The dynamic growth of the strawberry sector, like for other horticultural products, was triggered by an increasing domestic demand, especially in the middle- and high-income urban populations. Processing destinations play a modest role in comparison with the fresh market. According to the USDA, 10% of the production is destined to the frozen fruit and vegetables industry, another 10% would be processed directly into jams. 70% of total production of frozen strawberries is exported, Europe and Japan being the two largest importers. Growth of the sector, similarly to the rest of labour intensive farming, could face in the medium term the constraint of availability of land and water resources. High prices on the fresh market, together with relatively low start-up investment needs and the possibility to harvest from the first year (contrary to other fruits), have made strawberry production extremely attractive and highly profitable for producers. Most strawberry producers are small-scale farmers and grow a variety of crops beside strawberry. Strawberry production technology is open field (20% of total production, often bedding cultivation and plastic mulching), under plastic tunnels (50%) and greenhouses (30%). Cultivars grown are of Chinese or Japanese origin (e.g. Mibao, a dark red strawberry) or from other parts of the Turkey exports an old Spanish cultivar, Tioga, which is very suited to decoration as it holds well after defreezing. Main source: USDA GAIN reports and Carter et al. (2005). EN 57 EN

58 world, among cultivars listed in Europe one can mention Senga Sengana, Honeyoe, All Star and Darselect. Major cultivars exported frozen are said to be Senga Sengana, American (#3, #6, #13), All Star, Honeyoe, etc. Given the high profitability of the fresh market and the dynamic growth of domestic demand fuelled by the economic growth and changing consumer habits, production of strawberries will most likely remain focused on the fresh market. Production of frozen strawberries is likely to remain a secondary target. Yet, even if the share of frozen strawberries remains at 10%, with a growth of production of strawberries projected at 10 15% annually in the next five years (USDA, 2004), Chinese production of frozen strawberries could amount to tonnes in five-year time. In addition, substantial investments are being done in the processing industry, therefore, the place of China on the frozen strawberry market is most likely to be maintained or to increase. Low production costs together with a good capacity to assimilate new technologies could place China at the forefront of the sector worldwide Morocco Production of strawberries in Morocco started in the beginning of the 1990s, partly with the support of foreign capital. From the outset the objective was to export fresh strawberries to the EU market taking advantage of low labour costs and the possibility to export early in the EU marketing year with preferential access (no import duty in the period November March). With the objective to minimise transport time, which is a crucial issue for exports of fresh strawberries, production has concentrated in the North of the country in the region of Loukkous-Gharb, in the area between Larache and Kenitra, which accounts for more than 90% of the area of hectares (in 2005, hectares in 2004) devoted to strawberries. In addition to logistical considerations, this area is particularly suited to strawberry production with a climate similar to Huelva in Spain, suitable soils and the availability of good quality water. Figure 3-7. EU-15 annual imports of strawberries from Morocco (tonnes) Fresh Frozen Source: COMEXT Preferential access to the EU stops in April when the MFN duty applies, making exports of fresh strawberries less profitable. In order to extend the strawberry harvest season, the country has also developed the production of frozen strawberries. Frozen strawberries from Morocco EN 58 EN

59 have completely free access to the EU market since Strawberries are produced for the fresh market in January March and go primarily to the frozen fruit and vegetables industry in April June. The share of frozen strawberries has increased significantly, reaching 70 80% of total strawberry production. For a part, the development of the sector has benefited from foreign direct investments in agricultural production and freezing plants. The increased significance of the freezing sector has contributed to maintaining the predominance of Camarosa due to its suitability for the fresh market, its capacity to support transport (for the fresh destination) and its very good suitability for the frozen fruit and vegetables industry. Camarosa represents around 80% of all production of strawberries in the country. The sector is well organised with a limited number of large producers that deliver around 60 70% of total production. Whether for fresh or processing destinations, an increasing part of the production meets stringent quality criteria (record of cultivation operations, different marketing standards, traceability, etc.), all exported production of strawberries is certified (HACCP, BRC) and meets traceability criteria. Production technology is micro-tunnels with mulching made of black plastic for 80% of areas, the rest being macro-tunnels. All plants are imported from Spain and plantations replaced every year. Average yields stand at around 37 tonnes per hectare in a par with Spain. Harvest season lasts for seven months, from December to June. While the sector has taken advantage of the low labour costs 35 it is at a disadvantage for inputs and export freight (at least compared to Spain). Overall production costs of frozen strawberries are estimated at around 0.60 per kg. Delivery of strawberries to the frozen fruit and vegetables industry takes place in the framework of contracts, prices are however based on the market. Among factors of the success of the sector both on fresh and processing markets, besides high efficiency of production and low labour costs, one could list the reliance on a cultivar suited to both fresh and processing markets (Camarosa) and a high level of organisation and integration of the agricultural production with marketing and processing channels. In this context, strawberry production could further increase in the near future EU trade in semi-processed strawberries In this section we cover mainly trade in frozen strawberries. With the Combined Nomenclature of COMEXT it is not possible to isolate trade flows of fresh strawberries for processing (so-called pre-cooled, see sub-section ) and those of strawberry concentrates. The concerned volumes are in any case, much less important than those of frozen strawberries. In addition, EU imports from third countries of pre-cooled strawberries and strawberry concentrate are relatively marginal. Trade in other products, such as strawberry jam and preserved strawberries is not analysed in this document as volumes concerned are limited. For strawberry jam, total EU trade amounts to around tonnes, out of which around exported to EU third countries, imports from third countries are negligible. Intra-EU arrivals in canned strawberries have grown from around tonnes in the beginning of the 1990s to more than tonnes in the last 35 Daily salaries of 5 6. However with the reform of the labour code and the new obligation to contribute to social charges, labour costs will increase. Yet, they amount to around one-third to one-half of the labour costs in Poland. EN 59 EN

60 years. EU imports from third countries of canned strawberries amount to around tonnes per year. Imports from China have grown fast since the late 1990s and represent more than 90% of all imports from third countries in 2004 and In order to facilitate the use of time series, in the analysis below we consider trade at EU-15 level. The balance sheet which is presented in a subsequent section of the report (see Table 3.4) has been prepared for the EU-25 and therefore present trade data at that level (from 1999). It is estimated that most Polish exports of fresh strawberries (so-called pre-cooled strawberries), which are more or less stable at around tonnes per year, are used mainly for the production of concentrates, purees and jam 36. These exports are however decreasing since Poland has enough capacity to process directly the raw material. The other major player on this market is Spain which until recently exported annually around tonnes of pre-cooled strawberries to Austria and Germany. However, Spanish pre-cooled dispatches 37 to other Member States will most probably decrease with the new capacity to semi-process recently created in Huelva. Altogether EU internal trade of pre-cooled strawberries would have represented around tonnes annually in recent years EU tariff protection for frozen strawberries Most trade concerns frozen strawberries without added sugar (CN ) to which an MFN duty of 14.4% applies upon entry in the EU-25. Several countries are exempted from the duty in trade agreements: Morocco 38, Turkey, countries from South-Eastern Europe as part of the Association and Stabilisation Process. Some countries face a reduced duty (e.g. Chile with 2.8% in 2006 and exempted of duty from 2007). China does not enjoy any preference. Until 2004 a system of Minimum Import Price was implemented for the acceding countries of Central Europe and the Baltic countries. This system also applied to Bulgaria and Romania but was discontinued after the EU enlargement of Intra EU-15 trade in frozen strawberries Although the EU-15 domestic supply of frozen strawberries stands at less tonnes per year (produced by Italy and Spain), intra EU trade figures amount to around tonnes for most years. This reflects the fact that a significant part of intra-eu trade is actually re-exports from extra EU-15 imports. That concerns in particular Belgium and the Netherlands which are known as transit countries but also other countries such as Germany or Spain (with Apart from minor quantities that are used by the canning industry, which needs high quality raw material, most exports of pre-cooled strawberries are used for the preparation of concentrates and purees and, to a smaller extent, jams. These pre-cooled strawberries are much less expensive than frozen strawberries. In the EU trade terminology, an outward trade flow from a Member State to another Member State is called dispatch and an inward trade flow in a Member State from another Member State is called arrival. On January March Morocco enters with fresh strawberries without duty while MFN duty is 11.2%. In April the MFN duty of 11.2% applies to Morocco with the exception of a 100-tonne quota (at zero duty). In May to July Morocco has MFN access (minimum of 12.8% or 2.4 /kg net). As regards frozen strawberries, Morocco has unlimited access without duties (MFN: 14.4% for frozen strawberries without added sugar). The system was implemented within the framework of the Association Agreements. It applied to fresh strawberries, raspberries, blackcurrants and redcurrants for processing and frozen strawberries, blackcurrants and redcurrants and raspberries (see Regulation (EC) No 1599/97, OJ L 216, , p. 63 EN 60 EN

61 re-exports of strawberries from China and Morocco respectively). On average in the period 2000/2001 to 2003/2004, Spain has exported tonnes per year to the EU-15 at an average unit value of 740 tonne Extra EU-15 trade in frozen strawberries In the present section, most of the analysis of extra-eu trade in frozen strawberries will be carried out taking as reference marketing years (July year n / June year n+1) in order to coincide with the marketing year in Poland. Of course, the marketing year in other supplier countries can be different (for instance Morocco) but Poland has been chosen as the reference since it is the major supplier. From the beginning of the 1990s until 2004/2005, the extra EU-15 imports of frozen strawberries increased by the average annual growth rate of 5.7% ( additional tonnes per marketing year). Imports reached their peak in 2003/2004 with tonnes. They declined in 2004/2005 by tonnes to tonnes (see Table 3.3). Figure 3-8. Evolution of Extra EC/EU imports of frozen strawberries since 1976 (tonnes) China Morocco Poland Turkey Yugoslavia and successor States Total The development of EU imports: three major periods Source: COMEXT In order to facilitate the understanding of how the EC has been supplied in frozen strawberries, the analysis distinguishes three major periods (see Figure 3.9): the first period concerns the 1980s and terminates when transition to market economy starts in Poland in 1989; the second period concerns years when Poland was the major supplier of frozen strawberries in a situation of predominance even if alternative sources of supply appeared lately (first Morocco and then China); 40 CIF (Cost Insurance Fret) price, higher than so-called ex factory price which do not include these costs. In all the rest of the chapter, unless indicated otherwise, unit values are CIF. EN 61 EN

62 the third period concerns the last three marketing years (2002/2003 to 2004/2005) when the market share of Poland significantly reduces to the benefit of other suppliers. Figure 3-9. Imports of frozen strawberries of the EC (EC-10, EC-12, EU-15) from Poland: volumes (in tonnes) and unit values (in ECU or /tonne) First period Volume (in tonnes) Unit values (ECU or /tonne) First period until Volume Unit value Second period Third period Source: COMEXT In the 1980s, frozen strawberries in the EC are supplied partly from own domestic production, which is rather sizeable in several countries (Germany, Denmark, etc.) and partly from extra-ec imports, which grow from around tonnes in the beginning of the 1980s to tonnes at the end of the decade. There are various suppliers among which Poland is the largest one, with volumes that are stable throughout the 1980s at between tonnes depending on the years. In this period, other important suppliers are Spain at around tonnes, Hungary until 1987 with around tonnes and Yugoslavia with tonnes until Most frozen strawberries are supplied by European countries. In that period volumes and prices supplied by Poland are very stable due in particular to the command economy (trade monopoly, exchange rate control) Second period: from 1990 to beginning of 2000s: Poland becomes the main supplier of the EU but processors start to diversify their sourcing of frozen strawberries With the start of transition to the market economy in Central Europe, supply of the EU concentrates on Poland in order to take advantage of a good quality raw material produced at much lower costs than in Western Europe. Production of strawberries for processing therefore almost ceases in the EU. However, as already documented in a previous section, the disorganisation that characterises the sector in Poland entails very large fluctuations of prices and quantities delivered. Due to the fact that Poland finds itself in a predominant situation, with share of extra-eu imports in the range of 60 70%, the sector is able to pass to the EU buyers these large variations of supply in the form of wide price variations of frozen EN 62 EN

63 strawberries. These prices vary between around 800/tonne in years with enough supply to more than 1 200/tonne in years of short supply. Diversification of sourcing by EU processors that use frozen strawberries as raw material has gradually become a necessity for two major reasons. The first one is that the steady growth of EU demand could not be met only by Poland: EU-15 imports have grown from around tonnes in the mid-1990s to more than tonnes from 2001/2002, whereas exports by Poland have never exceeded tonnes. The second reason lays in the fact that the wide price fluctuations have affected business visibility and risks in a context where fruit processors faced an increasing pressure on prices from the retail sector. In the case of the fruit preparation industry, purchases of fruits take place at a time when it has already agreed with its clients on volumes of fruit preparations and prices to be delivered, putting pressure on raw material prices. Table 3-3. Extra EU-15 imports of frozen strawberries (July n / June n+1) (tonnes) 1990/ / / / / / / / / / / / / / /05 Volume (tonnes) Turkey Poland Morocco China Other Total imports Value ('000 ) Turkey Poland Morocco China Other Total imports Market share (% in volume) Turkey 7,2 4,3 9,0 10,8 8,4 7,4 7,9 9,6 9,7 7,0 6,1 6,0 5,5 5,3 4,4 Poland 69,3 81,6 71,0 65,5 56,2 71,7 72,5 62,9 45,2 57,0 63,4 66,4 55,6 36,3 47,5 Morocco 0,1 0,2 1,2 7,3 10,0 5,8 6,9 9,8 14,4 14,9 15,9 14,6 22,4 25,8 18,0 China 0,0 0,0 0,0 0,2 0,7 0,3 0,4 2,2 7,7 5,9 5,0 3,4 7,0 21,2 25,8 Other 23,4 13,9 18,8 16,2 24,7 14,8 12,3 15,5 22,9 15,2 9,5 9,5 9,4 11,4 4,3 Total imports 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Unit value ( /tonne) Turkey Poland Morocco China Other Total imports Source: COMEXT This diversification of sources has taken place by stages with incremental growth of volumes of the new suppliers from one price peak to the next one (see Figure 3.10). With the price peaks of , imports from Morocco increased from tonnes in 1992/1993 to tonnes in 1994/1995. Imports from Turkey increased from tonnes in 1992/1993 to tonnes in 1993/1994. Chinese exports remained negligible. With the price peaks of 1997/1998 and 1998/1999, triggered by low harvests in Poland, the presence of Morocco strengthened and Chinese exports jumped: imports from Morocco doubled from tonnes in 1997/1998 to tonnes in 1998/1999, China increased its exports from tonnes to in the same period. As for the previous peak, the exports of these two countries subsequently maintained the level gained at price peak. The two countries therefore kept a combined share of extra-eu-15 imports of around 20% until marketing year 2002/2003. Exports of Turkey also increased, from tonnes in 1996/1997 to tonnes in 1998/1999. However, in subsequent years, Turkey s exports never exceeded tonnes. EN 63 EN

64 Figure Share of Poland, China and Morocco as suppliers of EU-15 (%) 90,0 80,0 2002/2003 and 2003/2004 price increases in Poland 70,0 60,0 50,0 40,0 30, price increases in Poland price increases in Poland 20,0 10,0 0,0 1990/ / / / / / / / / / / / / / /05 Poland Morocco and China Source: COMEXT From 2002/2003: towards the loss of Polish predominance? After producer prices reached a record low in Poland in 2001/2002 (the crop reached the record level of tonnes official GUS statistics), the area under cultivation fell by almost hectares in one single year, from the record high of hectares in 2001 to the record low of hectares in This reduction contributed to a sharp reduction of production and increase in prices in marketing year 2002/2003 which transferred in an average price of Polish frozen strawberries at per tonne (from 800 in 2001). In marketing year 2003/2004, despite some increase in area, due to adverse weather (drought), the crop was at a record low level of tonnes (official GUS statistics). In front of a very high demand from the EU, this led to extremely high producer prices and prices of frozen strawberries (average of per tonne for Poland). Confronted with this short supply and high prices, EU processors increased imports from the two alternative sources of supply: China and Morocco whose average prices stood at 850 and 730 respectively in the same marketing year. While in the previous two price increases of 1993/1995 and 1997/1999, Poland would still have a share of 50% or more of total extra-eu-15 imports, in 2003/2004 its share fell to 36%. Due to the short crop, its exports of frozen strawberries to the EU-15 fell from tonnes in 2002/2003 to the low level of tonnes in 2003/2004. The market shares of the other two suppliers increased symmetrically: Morocco increased to 26% and China to 21%. While Morocco s exports increased rather moderately by around tonnes from 2002/2003 to 2003/2004 reaching tonnes, exports of China increased by tonnes from tonnes in 2002/2003 to tonnes in 2003/2004. In 2004/2005, exports of Poland bounced back to tonnes and its market share increased to 47.5%. Imports from Morocco decreased to tonnes whereas those of China continued to grow to tonnes. The market share of China reached 25.8%. While prices of frozen strawberries from China have always been the lowest in the EU market (see EN 64 EN

65 Figure 3.11), their levels in the marketing year 2004/2005 were extremely low and even passed below 400 per tonne. Figure Monthly unit values of EU-15 imports of frozen strawberries ( /tonne) /2003. Low harvest in Poland but high EU-15 demand: prices increase together with higher imports form Morocco and China 2003/2004. Very low harvest in Poland but high EU-15 demand: extremely high prices and further increases of imports from Morocco and especially China to meet demand at lower prices 2004/2005. Very large harvest in Poland but lower EU demand (stocks) and high imports from China (and Morocco). Prices of Poland back to 2000/2001 and 2001/2002 levels. Extremely low prices from China / / / / /2005 Polqnd Morocco China Source: COMEXT Even if the market share of China and Morocco could reduce in the coming years (however the experience of the previous two price peaks showed that it did not really), one feature of the market seems to have come to last: diversity of sourcing. Therefore the large price variations that affected the exports of Poland are most likely to be reduced. While Polish producers are likely to benefit from a stabilisation of the prices, these must be at a level where production is still profitable. According to the figures on production costs presented by Polish producers, sales at the price level offered by operators from China would simply not be profitable Major EU importers of frozen strawberries from third countries Table 3.9 in Annexe shows the imports of the EU-15 Member States individually. Germany has always been the largest importer of frozen strawberries with volumes in the range of tonnes in the beginning of the 1990s which reached tonnes in 2002/2003 and 2003/2004. Its share of total imports from third countries varied for most years since the beginning of the 1990s in the range of 45 50%. The second largest importer is France, however with volumes much lower than Germany, fluctuating between and tonnes per year. The Netherlands is also a strong importer but it is essentially a point of entry into the EU since an important part of its imports from third countries are re-exported within the EU. Around two-thirds of the exports of Poland are directed to Germany, the rest is spread among many EU countries. One notes that from 1993/1994 (first Polish price peak in the 1990s), France s imports from Poland decreased strongly to the benefit of Morocco. From that period, the steady growth of French imports focused on frozen strawberries from Morocco. A similar scenario developed in Belgium, however to a smaller magnitude. EN 65 EN

66 Germany is the largest importer of Chinese frozen strawberries. It started to import from China in 1997/1998 (previous Polish price peak) quantities revolving around tonnes. It increased its imports with the next peak in 2002/2003 with tonnes to reach tonnes in 2003/2004 and 2004/2005 (the latter year with tonnes which transited by the Netherlands) Major factors influencing the sourcing of frozen strawberries by the processing industry For the segments of the industry which are not dependent on a specific cultivar of strawberry, choice of sourcing is primarily based on price arbitrage provided that technical specifications are met. These specifications vary widely depending on the needs of the users. They include the cleanliness 41, the calibre and the brix level (sometimes also the colour, etc.). Other criteria such as quality assurance schemes and traceability are important in the case of specific segments of the market (e.g. high quality products, baby food). Elements that influence prices include transport costs to reach EU markets: they are estimated at /kg for China, 0.17/kg for Morocco and /kg for Poland. Frozen strawberries from China are also imposed an import duty of 14.4% (for CN ). EU food processors import frozen strawberries directly from cold stores and/or via traders 42. Choice of sourcing depends partly on the period of the year. The export campaigns of Poland, China and Morocco indeed do not take place at the same moment, although they overlap. Morocco s strawberry campaign is the first one, harvesting lasts from April to June. Largest quantities are shipped in April June with the peak volume in June. Poland s export peak takes place in July after the harvest but exports take place throughout the year. Although China s harvest season of strawberries takes place in March June, exports to the EU start only in June and peak in August (cargo transport lasts for six weeks). Due to large storage capacity, only Poland offers spread delivery of purchased frozen strawberries throughout the year 43, China and Morocco do not provide similar services (at least not to the same extent). Large processors that buy in Poland purchase most of their needs in these conditions. Complementary quantities are bought later from Poland during the year according to adjusted needs and at the price which then applies. Some processors also buy large quantities at the end of the marketing year when cold stores in Poland have to clear their stocks to leave room for the new harvest. Other criteria are important such as: conditions of payment (before delivery with China, after delivery with Poland), delays before delivery (short with Poland, eight weeks for China), etc Absence of foreign parts (leaves, etc.). Most stringent specifications are for the fruit preparations for fresh dairy products. Traders work with several origins, clients, qualities and products. For the users of frozen strawberries, working through traders ensures security of provision of raw material, better logistics and more appropriate price level. Working directly with suppliers of frozen strawberries does not ensure always a similar security of supply. Usually a few months ahead of the new campaign, discussions start on quantities that will be purchased by the user or trader to the cold storage. Prices are not decided until the harvest has started in Poland and the major features of the campaign are known (extent of the crop, quality, etc.), they are based on the situation of the market at harvest time but can be adjusted (e.g. to take into account storage costs). Spread deliveries during the campaign take place at this agreed price. EN 66 EN

67 3.4. Use of strawberries by the EU food processing industry The objective of this section is to analyse the different uses of semi-processed strawberries and, as far as possible, delineate their major trends. We provide an attempt at estimating volumes of supply and uses although, given the complexity of the exercise and the limited data available, the results are only indicative EU supply of strawberries for processing Table 3.4 provides estimates of total EU supply in strawberries for processing. This includes frozen strawberries, pre-cooled and fresh strawberries processed directly in purees, jams or concentrates. The overall results should be taken with care given the shortcomings of the exercise. What emerges from this is that total supply in the EU-25 of strawberries for processing stands at around tonnes annually on average in the period 2001/2002 to 2003/2004, of which around tonnes are frozen and around tonnes are processed directly into purees, jams and concentrates. The share of imports of frozen strawberries from third countries in the total supply of strawberries for processing has increased from less than 20% until 2001/2002 to 25% in 2002/2003 and 38% in 2003/2004. In 2004/2005, EU supply of strawberries for processing increased significantly (generating high levels of stocks in 2005), due to higher production in Poland and other European countries while imports of frozen strawberries were still maintained at a rather high level. Major semi-products used by the processing industry are frozen strawberries and strawberry concentrates and purees. The first category represents around 85 90% of all semi-processed strawberries produced in Poland, with the exception of 2004 when, due to high supply, more concentrates were produced by the juice industry (which used around tonnes of raw material). 44 It should not be forgotten that volumes of frozen strawberries produced in Poland, Italy and Spain are only estimates as no official data exist. In addition, some categories are not recorded by fruit types by trade statistics. This concerns concentrates and purees: strawberry concentrates are not singled out but aggregated with other juice concentrates. Similarly, strawberry purees are counted together with strawberry jams, jellies and marmalades. EN 67 EN

68 Table 3-4. Estimates of EU-25 supply of strawberries for processing (in tonnes), per marketing year (July n / June n+1) 45 Average 2001/ / / / / / / /2004 Frozen strawberries Hungary Italy Poland Spain Total EU production EU-25 imports from third countries EU-25 exports to third countries Total EU supply frozen strawberries Share of Poland in EU supply (%) (1) 56,5 60,2 66,3 55,8 40,5 55,2 59,0 Share of imports in EU supply (%) 31,1 26,6 23,7 34,1 53,2 38,1 36,9 Other strawberries for processing (2) Belgium Czech Republic Germany Hungary Netherlands Poland (3) Portugal Spain Total EU supply Total EU supply frozen + other Share of imports in total EU supply (%) 19,6 18,5 16,7 25,0 37,7 (1): production of frozen strawberries in Poland minus exports of frozen strawberries to EU third countries. (2): pre-cooled strawberries and strawberries directly processed into jams, purees and concentrates. (3): exports of pre-cooled strawberries to EU MS + estimates of utilisation for concentrate + directly processed (jams, etc.) Uses There are five major areas of use of semi-processed strawberries: (1) production of jam, jellies and marmalades with use of strawberry either fresh, pre-cooled, in puree, in concentrate or frozen 46. As for the other uses, fresh and pre-cooled strawberries represent a minor part of the raw material since they are confined to the beginning of strawberry harvest season, whereas, the industry processes throughout the year. The major form of use is IQF (whole or broken, calibrated or not calibrated, depending on the specific needs of the jam maker) since it provides the best quality guarantees for the jam makers; (2) production of fruit preparations to be incorporated in final food products. Fruit preparations are mainly used by the dairy industry (fruit yoghurts), by the ice-cream industry and by the bakery industry (pastry fillings). The major used forms of semiprocessed strawberries are IQF, purees and, to a much lower extent, concentrates. Use of provisionally preserved strawberries is limited to few thousands tonnes per year for the preparation of industrial jam (pastry fillings) for the bakery industry in the UK; Elaborated from different sources: Union of Veilings and other communications for Belgium; expert communications for Germany; FruitVeb for Hungary; Assomela for Italy; Product Board for Horticulture for the Netherlands; IERiGŻ for Poland; Ministry of agriculture for Portugal (processing = 10 15% of production); Ministry of Agriculture for Spain (data for total processed and estimates for frozen strawberrries). Trade data from COMEXT (CN ). Production of year n is counted in campaign n 1 / n for Spain and in campaign n / n+1 for the other countries. Directive 2001/113/CE of the Council allows the use of pulp and/or puree for the preparation of jams (for extra jams only unconcentrated purees and pulp are allowed). For jellies, the directive authorises the use of juice and acqueous extracts (concentrate) of fruits. EN 68 EN

69 (3) production of fruit juices, fruit drinks, use as ingredient for the drink industry (e.g. soft drinks, etc.). The main form of use of the strawberry is under concentrate (triplestrength at 65 of brix) but other forms such as single-strength juice and purees are also used; (4) IQF strawberries are used by the catering industry or directly consumed directly by households; (5) use by the freeze-drying industry (lyophilisation) for incorporation in final food products such as breakfast cereals (the semi-processed material used by the freezedrying industry is whole IQF). To analyse the prospects for production of strawberry for processing it is important to pay attention to the products for which the strawberry is a raw material. Indeed, frozen strawberries from Morocco and Spain are Camarosa while those from Poland are prominently Senga Sengana. China exports different cultivars of frozen strawberries, among which Senga Sengana (or a close cultivar). The cultivars have distinctive features which make them more or less suited to the final products. The possibility to substitute cultivars depends on these distinctive features. This is an important matter since it influences the sourcing of semiprocessed strawberries Jams, jellies and marmalades In all EU countries, national statistics do not maintain data on the production of jams by fruit types. In this working document, production figures for jams, jellies and marmalade are taken from OEITFL, other sources have been used (see Table 3.5). EU-25 production is estimated at around tonnes per year on average in the period Output of the industry is stagnating in most countries with the exception of Poland where it is increasing: the output of the industry has increased by around tonnes since the end of the 1990s (from to tonnes). The industry targets both the Polish market and the rest of the EU. Data on production of strawberry jam do not exist in most countries, with the exception of France. In France, second EU largest producer of jam after Germany, production of strawberry jams stands at around tonnes in the last few years, i.e. 27.5% of all jam production in the Member State. In Poland, IERiGŻ estimates production at tonnes in the last two years (see Table 3.2). For the other countries, in order to infer volumes of strawberry jams, we have considered that its share in total production varies in the range of 25 35% depending on the countries, on the basis of interviews or other information 47. Production of strawberry jam at the EU-25 level is estimated in the range of tonnes per year. Taking an average of 45% of fruits 48, this leads to a rough estimate of around tonnes of strawberries (fruit-equivalent) that would be processed into jams, jellies and marmalade in the EU, i.e. around one-third of the total EU supply of strawberries for processing It has been considered that the share of strawberry jam in total jam production is 35% in Austria, Germany and Hungary; 31% in Denmark and Finland; 27.5% (like in France) for the other countries. Average taking into account that there are three categories of jams: with 35% of fruits, with 45% of fruits and with 55% of fruits. The former category would represent high volumes. EN 69 EN

70 Table 3-5. Production of jam, jelly and marmalade in the European Union (tonnes) Average Austria Belgium Denmark Finland France Germany Hungary Italy Ireland Netherlands Poland Spain United Kingdom EU total EU total trade in strawberry jam amounts to tonnes on average in , tonnes correspond to dispatches to Member States and tonnes to exports to third countries. In the last 15 years dispatches have increased at the average annual rate of 6.8% in volume whereas exports to third countries have increased at the rate of 3.3%. Different tastes and habits and different recipes for the preparation of strawberry jam For production of jam, quality of strawberries in terms of colour, taste and aroma are important criteria. However, taste and habits are not constant across Europe, hence the preferred cultivars. The Polish Senga Sengana has a good flavour, a typical taste and a well coloured dark-red flesh. Both its colour and taste make it the preferred cultivar for jam in some European countries, first of all Germany (also Scandinavian countries). In Germany, the largest market of the EU, strawberry jam is primarily prepared with Senga Sengana, at least for average quality and premium products. For products in the lower price range, blends of strawberries are used that require lower volumes of Senga Sengana. Overall, it is estimated that Senga Sengana represents around 80% of all used strawberries in Germany for the production of strawberry jam. Camarosa has good flavour and aromas, high brix and well coloured flesh, although lighter than Senga Sengana. As Senga Sengana, it is widely used for the preparation of jams. However, its lighter colour tends to be more appreciated in Southern European countries. In France strawberry jam is usually prepared from blends where the preferred cultivar is Camarosa. Senga Sengana would enter at the level of between 30 and 40%. Italy and Spain have similar preferences. In the United Kingdom, taste is not dominated by any cultivar and blends are prepared from a variety of sources. 49 Sources: OEITFL except: Federal Statistical Office for Germany, Adepale for France, IERiGŻ for Poland; for Austria estimates based on OEITFL production data for years ( tonnes in average); for Ireland, estimates based on OEITFL production data for years 1997 and 1998 ( tonnes); for Hungary estimates based on the use of around tonnes of fruits as raw material for the industry (FruitVeB). EN 70 EN

71 For the preparation of jams, the quality of Chinese frozen strawberries would still be 20 40% below Polish Senga Sengana in terms of flavour, colour, flesh and brix level (6 7 as against 8 9 for Polish strawberry). Chinese strawberries would only enter in the processing of jam in limited quantities as part of blends of several cultivars (e.g. in Germany). On the basis of the different tastes in Southern and Northern EU 50, of import trade flows by EU Member States and of origins of frozen strawberries, the volume of Polish strawberries used by the EU-25 jam industry is very roughly estimated at tonnes. This amount includes the so-called industrial jams for the bakery industry to be used as pastry fillings. Prospects for growth of use of strawberries Consumption of jams, jellies and marmalades is stable in Europe. It does not seem likely that the market will become more dynamic in the future given in particular current preoccupations on health and obesity. Among the different fruits, strawberry is the preferred perfume in all countries. In France, figures from the industry show that in the second half of the 1990s, strawberry represented around 30% of the volumes produced, this is now rather close to 27 28%. Given the stable demand in the EU, it is not expected that the needs of the industry will increase in the medium term. They are rather expected to remain stable or even to decline slightly. As already seen, for Northern European countries, the preferred raw material is the Senga Sengana from Poland (provided that it is at market price). Chinese strawberry still plays a minor role on these markets. The capacity of China to export frozen strawberries of the quality that is necessary for jam production is an important question mark. Looking at the progresses that have been made by the Chinese industry in the last few years in terms of quality of its frozen strawberries (e.g. extremely clean IQF without any foreign parts) it may take only another few years before the country will be able to export strawberries that can totally substitute European grown cultivars. Among the factors that could impact the evolutions of the sector in the coming years, the sugar reform may have important implications. Taking into consideration that sugar represents around 60% of jam composition, the sugar reform will lead to price reductions that could have a positive impact on consumption. It is not assumed that the reform would have an impact on export markets since current high sugar prices are compensated by export refunds for the incorporated sugar Fruit preparations for the dairy and ice-cream industry Fruit preparations are semi-processed products that are further used by the food industry, mainly the dairy industry (for ultra-fresh products like fruit yogurts and curd cheeses), the icecream industry and the pastry industry (pastry fillings, etc.). Fruit preparations for the bakery industry (pastry fillings) are also produced by jam makers (sometimes pastry fillings are referred to as industrial jam). While for the jam production we have been able to provide very rough estimates of the strawberries used as raw material, in the case of fruit preparations the endeavour is more risky given the lack of information on the sector % of raw material being considered Polish Senga Sengana in Austria, Denmark, Finland and Germany, 100% in Poland, zero in Spain and Hungary and 40% in the other countries. EN 71 EN

72 In the EU, the major producers of fruit preparations are in Germany and France. In Germany, the output of the fruit preparation industry for the dairy and ice cream industry stands at the annual average of tonnes in In France, the output of the industry revolves at around tonnes. At the EU level, the output of the industry is estimated in the range of tonnes, of which Germany represents more than 50% and France and Germany together around two-thirds. It is estimated that fruit preparation production in the new members States of the EU (mainly the Czech Republic, Hungary and Poland) amounts to around tonnes. A recent survey (GEM, 2003) focusing on France, Germany and Italy, estimated that use of strawberries for fresh dairy products at the EU-15 level was around tonnes (fruit equivalent). For ice-creams, use was estimated of at least tonnes at the EU-15 level. Taking these figures as reference and considering the share of the new Member States in total EU-25 production in the sector of fruit preparations, final fresh dairy and ice-cream products, we infer that the quantities of strawberries for the EU-25 level could amount to around tonnes. For fruit preparations, the most important features of the raw material concern the cleanliness of the IQF strawberries, the firmness and the calibre. Features like aroma and colour a usually less important 51. More specifically, for fruits that are cut in cubes or slices (for the dairy industry), firmness of the texture, size and shape are important criteria. Although the industry can use most cultivars, Camarosa tends to be the preferred one 52 : it is a large fruit (25 45 mm), with a regular shape, a hard skin and firm texture (which remains after heat treatment). However, strawberries produced in China have recently gained more importance in the sector of fruit preparations and could further develop in the future. Senga Sengana is less suited due to its smaller calibre (15 25 mm), irregular shape and relatively soft skin and texture. On the other hand, its dark colour is an advantage for the preparation of high quality purees to be incorporated in ice-creams For production of jam, Council Directive 2001/113/EC prohibits the use of additives to enhance fruit features. In the case of fruit preparations, use of additives is possible (to enhance firmness, colour, flavour or aroma). Cutting processes are different: Camarosa is cut fresh and then frozen. Due to its soft texture Senga Sengana is cut when frozen at the temperature of 8 12 C below zero. The process is therefore more complicated and costly than for Camarosa. EN 72 EN

73 Prospects for growth of use of strawberries Figure Production of yoghurts in France ( 000 tonnes) 800,0 700,0 600,0 500,0 400,0 Plain yoghurts Aromatised yoghurts Fruit yoghurts 300,0 200,0 100,0 0, Source: SCEES, 2004 provisional While it is not expected that use of strawberries for the preparation of jams, jellies and marmalades will increase in the coming years owing to the rather flat demand on the consumer market, the situation is different for the sector of fruit preparations. This sector has indeed benefited from a steady and significant growth of the market of fresh dairy products, which uses 70 80% of all fruit preparations. EU production of flavoured yoghurts (of which the largest part is fruit yoghurts) has indeed increased in volume at the annual rate of 6.8% between 1995 and With such growth rates, it is evident that the major part of growth of use of strawberries for processing in the last ten years originates from the fruit preparation industry. Growth in this market is still expected for the coming years although it has slowed down in Germany, which is the largest market. It is still increasing in other countries, including France (see Figure 3.12). In addition to yoghurts, such products as drinking yoghurts, which incorporate also fruits, are growing at a high pace ( tonnes in 1995 and tonnes in 2004 in France). The development of new products (drinking yoghurts, probiotics, etc.) should contribute to sustaining the demand for strawberry (and other fruit) fruit preparations. While increased use of strawberries can be expected for the near future for fruit preparations, one should keep in mind that, apart for specific products which however concern limited volumes, procurement of the strawberries will be primarily based on price arbitrages and overall competitiveness and, to a lower extent, on strawberry cultivars, although for fresh dairy products, part of the industry may prefer to use Camarosa. For all products for which the industry is not dependent on a specific cultivar it can fully practice global sourcing. EN 73 EN

74 Figure EU-15 Production of flavoured yoghurt (without Spain and Belgium) (tonnes) Source: EU database Prodcom (product code ) Uses by the juice industry Strawberry juice has a universal appeal for most consumers. However, as a flavour it represents only 0.4% of fruit-based drinks in volume in Western Europe (Döhler Market Research) in 2003 and It appeals both to children, which are more targeted by the industry, and adults and is increasing in popularity with the development of new products, such as e.g. smoothies 53 (of which the banana/strawberry would be a bestseller). The use of purees is increasing (in particular for smoothies but also for other drinks 54 ) as well as the one of not-from-concentrate (NFC) juices. With a high level of innovative products, higher appeal of juice/drink products based on health considerations, the juice/drink industry will most likely be an increasingly important user of strawberries and other berries. The largest markets for strawberry fruit-based drinks are in France (35 million litres in 2004), the Netherlands (11.3 million litres) where it ranks fourth in the top flavours of fruit-based drinks, Serbia (9.8 million litres), Czech Republic and Romania (around seven million litres). Senga Sengana is the major cultivar for the concentrate industry because it has a strong colour which ensures a good colour to the finished product. In addition, a large part of the EU concentrate industry is now located in Poland 55. The Polish strawberry also takes advantage that the Chinese strawberries are not yet suitable (too light in colour, high acidity). Chinese concentrate is therefore only used in blends Consumption of frozen strawberries by the catering industry and households Not all frozen strawberries are processed by the food industry before they reach consumers. A minor part of IQF frozen strawberries are either sold to the consumers in small packaging or consumed through the catering and restaurant industry Smoothies are blends of pressed fruits (purees) with fruit juices, usually without sugar added. These products started to develop in California as meal substitutes. Thickies are similar products with liquid yoghurts. Smoothies indeed include all parts of pressed fruits. For other products, puree is added with the objective to provide a fresh fruit sensation and mouth fill to the consumers. Camarosa would not be as suitable (lighter colour) and transport costs from Morocco to Austria or Germany or Poland for processing into concentrate would be too high compared with direct processing of Polish strawberry in Poland or export of pre-cooled Polish strawberries to Germany or Austria. EN 74 EN

75 No overall coverage of direct consumption of frozen strawberries either at home or restaurant and collective catering exist at EU level. In Germany, first frozen strawberry importer, direct sales to the consumers amount to around tonnes in (not account taken of mix fruit boxes) out of a total of tonnes of frozen fruits (i.e %). However, out of the tonnes of frozen fruits that are consumed annually in Germany, most is through catering industry (and restaurants). Assuming that the share of strawberries in the volumes handled by the catering industry is the same as for households, it is estimated that total consumption of frozen strawberries amounts to tonnes in the Member State. It is not possible to infer from this any estimate for the EU level, it is however most likely that overall EU use is not higher than tonnes per year Major conclusions and implications for the Polish sector In the course of the 1990s, Poland emerged as the main provider of frozen strawberries to the EU with the experience of decades of production of strawberries for processing, established business relationships with food processors in the EU and, not the least, quasi-exclusive production of a hardly sought strawberry, i.e. the Senga Sengana. In the current circumstances, the situation looks more uncertain partly owing to the fact that EU processors have diversified sourcing in a context of heavy fluctuations of the sector in Poland, steadily increasing demand for semi-processed strawberries and low prices. EU demand for semi-processed strawberries has increased dynamically since the 1990s. However, growth has concerned to a large extent the fruit preparation industry which is not, for a large part of its products, dependent on any specific cultivar. Growth also concerns the juice and drink industry. The needs of the jam industry are rather stable. Senga Sengana produced in Poland is still a sought for cultivar due to its own features for part of European jam production, for certain purees and for juice/drinks. Other advantages that Poland benefits from are the proximity to the European market, marketing arrangements with customers (spread delivery, etc.) and the availability of a large semi-processing industrial basis (cold stores, concentrate industry). However, the current low prices of China and other competitors place increasing pressure on Polish production. Due to relatively low investment costs, production of strawberry for processing has become an additional source of income for numerous households in rural areas. From the social point of view, the sector plays a considerable role in rural areas. Despite the fact that Senga Sengana is produced exclusively for the processing industry, the significance of contracting in the marketing of the product is low in Poland. Among the major reasons are the fragmentation of supply and the multiplicity of operators of the processing industry that compete to buy the raw material. Given the risks generated by the price fluctuations, there are currently only few contracts with guaranteed fixed prices. Given the international competition, it does not seem likely that this form of contract will extend beyond sub-sectors that have specific needs (e.g. baby food products, high quality jams, etc.). This, however, does not mean that other forms of contracts could not become more widespread (e.g. with premium on top of market price, with specific services, etc.). A higher share of contracts with the industry would most probably ensure a better stability of the sector. Conditions for growing Senga Sengana in larger commercial farms (i.e. farms that rely on hired labour and that have investment capacity) are getting less favourable at current producer prices. On the other hand, labour costs are bound to increase in the long term. The low yield and mono-destination of Senga Sengana are challenges in comparison with such cultivars as EN 75 EN

76 Camarosa which can be sold on both fresh and processing markets and reach higher yields. If current price levels are maintained, large commercial farms may switch to products which offer better prices, including strawberries for the fresh market. Better marketing conditions with the semi-processing industry would probably help to keep large producers in the sector. Senga Sengana has features that make it particularly suited to the processing industry. On the other hand, it is an old cultivar that is destined exclusively to the processing industry, produces low yields with a harvest season that is extremely short. These features place pressure on its cultivation under the current conditions of low prices. Improvement of the cultivar or creation of new cultivars would impact the sector strongly. Poland has probably the potential to develop an important strawberry sector oriented towards the fresh market if it can mobilise appropriate capital investment and technologies. The Member State benefits from an extensive experience in the sector and in particular active research and variety creation in strawberries. Low labour cost compared to other EU countries is an advantage. The Member State is well endowed with sandy soils that suit strawberry production. It is located within short road distance from major EU consumption locations (in particular North-Rhine Westphalia in Germany) although road conditions can be improved. Given the above, increased orientation of large commercial horticultural farms towards the domestic polish market, and possibly, the late season European fresh market could be observed in the coming years, all the more so if prices for strawberries for processing remain at current low levels. While part of the large farms may withdraw from the sector of strawberries for processing in the medium to long term, medium-sized and smaller farms have a role to play in Poland. After all, an important part of current production in the sector originates from these small to medium-sized farms. However, the sector would benefit greatly from the elimination of the fragmentation of supply to the semi-processing industry and post-harvest handling. The establishment of producer groups and producer organisations would help to streamline marketing relations with the processing industry, to improve post-harvest handling (e.g. with investment in cooling storage capacity), to improve product quality (by advising on cultivation techniques) and to improve procurement of inputs. In the long term they would also help the sector to reorient production towards cultivars that allow better flexibility than Senga Sengana, on both the processing and the fresh markets. In the framework of the works relating to the reform of the common market organisation for fruits and vegetables, it would be useful to include the examination of what could be done to improve the situation in Member States with a lower level of producer organisation. Rural development programmes could also be mobilised for the improvement of quality and of marketing (e.g. with investments in cooling storage). EN 76 EN

77 Annex to Chapter 3 Table 3-6. EU-25 production of fresh strawberries (in tonnes) Average Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherland Poland Portugal Slovakia Slovenia Spain Sweden United Kingdom EU EU EU Sources: Eurostat or national statistics (blank cell: not communicated / not available) Table 3-7. Area under strawberry production in the EU-25 (hectares) Average Area Austria Belgium Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Italy Latvia Lithuania Luxembourg Netherland Poland Portugal Slovakia Slovenia Spain Sweden United Kingdom EU EU EU Blank cell: not available 56 Sources: Eurostat for Cyprus, Finland, France, Germany, Greece, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Sweden, United Kingdom; Eurostat with corrections provided by Ministry of Agriculture for Slovakia, Slovenia and Spain; Ministry of Agriculture for Belgium, Czech Republic (commercial farms and households) and Denmark; Statistical Office for Austria (only intensive production) and Estonia; FruitVeB for Hungary; nc: non available / non communicated. EN 77 EN

78 Table 3-8. Average production costs of strawberries in family farms in Poland Direct real costs (PLN / hectare) (1) Fertilisers Phytosanitary products Seasonal remunerated work Other direct costs Indirect real costs (PLN / hectare) (2) Machinery utilisation Taxes, credit reimbursement, rent Other indirect costs Total real cost (PLN / hectare) (1) + (2) Estimated indirect costs (amortisation) (3) Of which plantations TOTAL COSTS (PLN / hectare) (1) + (2) + (3) Commercial yields (kg / hectare) (4) Production cost (PLN/kg) 1,2 1,7 1,2 1,4 Source: IERiGZ Map 3-1. EU production of strawberries EN 78 EN

79 Table 3-9. Extra EU-15 imports of frozen strawberries by Member States (in tonnes) (July n / June n+1) (CN ) 1990/ / / / / / / / / / / / / / /05 Total extra-eu imports of frozen strawberroes Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Portugal Spain Sweden United Kingdom Total EU Extra-EU imports of frozen strawberries from Poland Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Portugal Spain Sweden United Kingdom Total EU Extra-EU imports of frozen strawberries from Morocco Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Portugal Spain Sweden United Kingdom Total EU Extra-EU imports of frozen strawberries from China Austria Belgium Denmark Finland France Germany Greece Ireland Italy Netherlands Portugal Spain Sweden United Kingdom Total EU Source: COMEXT Important note: for the Netherlands, there are significant imports (between and tonnes per year) that are reported under 'secret countries'. EN 79 EN

80 Table Share of EU-15 Member States in extra-eu imports of frozen strawberries (%) 1990/ / / / / / / / / / / / / / /05 Total extra-eu imports of frozen strawberroes Austria 0,5 2,3 2,7 2,5 2,5 2,4 3,5 2,7 2,4 2,3 2,9 Belgium 6,1 3,8 2,6 3,4 5,3 4,3 4,2 4,2 6,6 6,2 7,7 5,1 6,3 8,2 9,7 Denmark 4,5 6,0 5,5 7,5 7,7 6,1 5,9 4,2 3,1 3,9 4,9 6,1 5,8 3,9 4,8 Finland 0,8 3,7 3,0 3,4 2,3 2,5 2,3 2,1 1,8 1,9 2,7 France 14,9 16,9 13,5 13,5 15,7 11,1 8,3 10,4 13,4 11,0 11,3 8,9 9,7 9,9 12,3 Germany 47,1 50,8 51,4 48,0 40,3 45,8 50,9 47,8 39,8 45,3 45,6 51,1 48,3 41,2 32,0 Greece 0,0 0,3 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,2 0,4 0,4 0,5 0,5 0,4 Ireland 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,1 0,1 0,0 0,0 0,0 0,1 0,6 0,0 Italy 3,2 2,8 2,4 1,1 0,7 1,2 1,1 0,9 1,5 1,4 1,6 1,5 1,3 3,3 3,7 Netherlands 14,9 9,6 13,1 11,8 12,6 12,1 10,1 11,6 16,2 12,1 7,1 7,0 6,2 7,1 12,8 Portugal 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,1 0,1 0,0 Spain 0,0 0,1 0,9 3,0 4,0 1,1 2,8 3,1 3,9 5,0 5,5 6,4 8,1 11,8 8,6 Sweden 0,6 4,5 3,8 3,6 3,0 3,2 2,4 2,3 2,3 2,2 3,0 United Kingdom 9,3 9,7 10,7 11,6 11,7 7,8 7,2 8,2 7,5 6,7 7,9 6,4 7,2 7,2 7,1 Total EU ,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Extra-EU imports of frozen strawberries from Poland Austria 0,9 2,8 3,4 3,3 3,1 2,5 4,2 3,1 2,6 3,5 4,7 Belgium 8,4 4,4 2,4 2,7 4,0 3,1 3,1 2,5 4,0 3,4 6,2 2,8 1,4 2,0 8,3 Denmark 6,3 7,3 7,7 11,2 13,0 8,3 7,8 6,0 6,4 6,7 7,6 9,0 10,2 9,5 7,0 Finland 1,5 5,1 4,1 4,9 3,2 3,2 2,3 2,6 2,9 4,5 4,2 France 18,3 18,2 15,3 10,7 9,1 9,4 5,9 6,4 6,6 5,6 6,9 6,2 5,0 3,9 10,5 Germany 58,6 59,7 60,8 61,7 56,7 58,1 63,9 65,7 65,2 68,2 63,3 68,3 68,8 64,1 43,6 Greece 0,0 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,2 0,0 0,0 0,0 0,0 0,1 Ireland 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Italy 0,4 1,4 2,1 1,0 0,9 1,1 1,1 0,5 0,5 0,9 1,1 1,4 0,8 1,4 2,1 Netherlands 0,1 0,1 0,4 0,2 0,2 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,9 8,4 Portugal 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Spain 0,0 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,2 Sweden 1,0 6,2 5,1 5,5 6,3 5,3 3,6 3,4 4,0 5,0 5,1 United Kingdom 8,0 8,8 11,2 12,6 12,8 6,0 5,5 5,2 4,6 3,9 4,8 3,2 4,3 5,3 6,0 Total EU ,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Extra-EU imports of frozen strawberries from Morocco Austria 0,0 0,0 0,0 0,0 0,0 0,2 0,0 0,1 0,3 0,1 0,7 Belgium 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 22,5 21,1 18,5 19,5 19,3 18,6 22,8 Denmark 0,0 0,0 0,0 0,3 0,2 0,0 0,0 0,0 0,5 0,0 0,0 0,0 0,1 0,6 1,1 Finland 0,0 0,4 0,0 0,3 0,4 0,6 0,5 0,2 0,1 0,1 0,0 France 100,0 78,0 30,8 51,1 39,2 47,7 38,4 46,8 43,0 38,6 38,4 27,4 25,8 22,3 20,1 Germany 0,0 0,0 0,0 0,0 0,1 0,0 0,0 2,1 2,1 3,2 3,3 4,7 14,9 7,6 4,3 Greece 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Ireland 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,4 2,0 0,0 Italy 0,0 0,0 2,0 0,0 0,0 0,0 0,1 0,6 0,1 0,0 0,5 0,1 1,1 1,4 3,0 Netherlands 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Portugal 0,0 0,1 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,6 0,0 0,0 0,4 0,1 0,0 Spain 0,0 21,9 67,2 40,3 39,7 17,8 40,1 31,4 27,2 33,3 34,4 43,6 35,9 45,0 45,9 Sweden 0,0 0,0 0,0 0,0 0,0 0,1 0,0 0,0 0,1 0,1 0,2 United Kingdom 0,0 0,0 0,0 2,7 1,5 4,4 1,8 4,3 1,6 2,2 4,3 4,5 1,6 2,1 1,9 Total EU ,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Extra-EU imports of frozen strawberries from China Austria 0,0 4,7 0,0 6,6 6,2 7,1 7,3 8,2 5,0 1,1 0,8 Belgium 0,0 0,0 0,0 0,0 1,2 2,2 5,8 1,1 1,8 8,0 5,8 3,8 Denmark 0,0 0,0 0,0 0,0 0,0 0,9 2,2 0,0 0,0 0,0 0,6 4,9 Finland 0,0 0,0 2,5 0,0 2,8 5,2 10,4 6,7 2,0 0,8 2,6 France 100,0 64,8 0,0 0,0 15,6 36,8 19,2 5,4 5,2 5,9 7,3 12,1 Germany 0,0 35,2 95,3 37,5 52,5 35,9 41,0 56,7 53,8 54,6 64,8 35,0 Greece 0,0 0,0 0,0 0,0 0,0 0,2 0,0 0,0 0,0 0,2 0,4 0,8 Ireland 0,0 0,0 0,0 0,0 0,0 0,2 0,0 0,0 0,0 0,1 0,0 0,0 Italy 0,0 0,0 0,0 0,0 0,0 6,3 4,0 1,5 1,4 1,7 8,2 6,3 Netherlands 0,0 0,0 0,0 0,0 0,0 0,0 0,3 0,0 0,0 0,2 4,1 25,7 Portugal 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 Spain 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,5 0,8 Sweden 0,0 0,0 17,3 3,5 0,1 0,3 0,0 0,0 0,6 1,3 2,0 United Kingdom 0,0 0,0 0,0 42,7 20,6 8,4 14,9 17,7 22,9 21,6 5,0 5,3 Total EU ,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Source: COMEXT EN 80 EN

81 4. THE BLACKCURRANT SECTOR IN THE EU 4.1. Blackcurrant production World and European production of blackcurrant Blackcurrant (Ribes nigrum) is a bushy, perennial shrub which grows 1.5 m in height and which develops mainly in colder regions of Europe. The fruits are small, black, spherical berries. The fruit is hardly consumed fresh (the flavour is quite tart and strong, also astringent) and most of the production is destined to the processing industry. This is an important difference with other soft fruits for which the fresh market is significant. Blackcurrants are processed into fruit-based drinks or other products such as jams, jellies, syrups and liqueurs. They are also used by the dairy and pastry industries. Uses vary from Member State to Member State depending on taste and history. Consumption of fruit-based drinks made from blackcurrant is more important in some Northern European countries (United Kingdom, Germany, Poland, etc.) than in other countries. In France sizeable quantities are used for the preparation of liqueurs. Uses as jams and jellies also vary between countries. In any case, the major form of use of the fruit is in fruit-based drinks. Table 4-1. EU production of blackcurrants (tonnes) Average Austria Czech Republic Denmark Estonia Finland France Hungary Ireland Germany Latvia Lithuania Netherlands Poland Slovakia Sweden United Kingdom EU EU EU EU-15 in EU-25 (%) Poland in EU-25 (%) Blank cells: not available Blackcurrants are essentially a European product. Few countries outside Europe produce sizeable quantities of blackcurrant. Blackcurrant production hardly exists in the USA where its production was banned until recently for sanitary reasons 58. The sector is developing in New Zealand with a production that amounts to around tonnes. China also is said to be developing blackcurrant production although no data regarding the extent of production are currently reported. In Europe itself, production of blackcurrant outside the EU is not As far as possible only commercial production figures were used. Sources: Eurostat (plus complements/corrections for some countries) for Denmark, Finland, France, Poland (data include household production), Slovakia, Sweden and the United Kingdom; national statistical offices for Austria and Estonia; Ministry of Agriculture for the Czech Republic, Ireland, Latvia, Lithuania; producer estimates for Hungary; European Association of Blackcurrant Growers for Germany and the Netherlands. Blackcurrant was banned following accusations that it transmitted the White Pine Blister rust to paper pulp pines. EN 81 EN

82 significant. Therefore, the EU blackcurrant sector does not face sizeable competition from third countries. In the present days, competition is essentially an internal EU matter. In 2003 and 2004 EU-25 production of blackcurrant reached tonnes, the highest levels ever reached (the average in the period was tonnes). Poland represents around 70% of total EU production with more than tonnes on average in the period All other Member States have much lower production levels: the second producer is the United Kingdom with an average annual production of tonnes (see Table 4.1). The other major EU producers are France with tonnes, Denmark with almost tonnes, Germany 59 and Lithuania at tonnes each. All other EU producers stand below tonnes and altogether produce only tonnes of blackcurrant. In Poland, blackcurrant production is located in plains where the mechanisation of the harvest is possible: the area of Poznan and East and South of Warsaw. In the region of Lubelskie areas under blackcurrant have increased significantly since 2000 and represent almost one-third of the total. In France, blackcurrant production is located in four areas: the Val de Loire, Burgundy, the Rhône-Méditerranée and the Oise. In the Netherlands, the majority of the production is located in the South of the province of Zeeland Cultivation practices Blackcurrant plantations can produce for more than ten years. Bushes are usually kept for 9 12 years depending on the market conditions. New plantations usually start to produce in the third year and more rarely from the second year. The best yields are usually reached from the fourth-fifth to eighth-ninth years, afterwards production declines and the plantations are grubbed up. Plantations need constant care (pruning, fight against pests and diseases) otherwise the harvest decreases immediately and significantly. In most commercially-oriented farms, two or three cultivars are grown in order to spread harvesting during the picking season. In most countries, harvesting is done mechanically with either combines produced for this specific purpose (with makers in Finland and Poland) or with grape combines (e.g. in France). Manual harvesting has almost completely disappeared in the EU-15 Member States due to labour costs. In Poland 70% of the production is harvested mechanically Economic cycle of blackcurrant production European blackcurrant production displays cycles over periods of around ten or twelve years which correspond roughly to the lifetime of a plantation. The cycle is generated by the fact that many producers create new plantations when prices of blackcurrants are high. Figure 4.1 displays the evolution of prices of fresh blackcurrants (for processing) imported from intra-ec/eu or imported from Poland in the period 1976 to It shows two entire cycles: the first one from 1977 to 1989 and the second one from 1990 to The cycle can be summarised as follows: as most producers plant when prices are high, there is an important increase in plantations in the year before the price peak and the year of the peak itself. These new plantations enter in production gradually (from the third year) which leads to price decrease. In addition to 59 For Germany we have used data of the European Association of Blackcurrant Growers. Official data regarding blackcurrants sold to the industry exist only for years 2002 to 2004: tonnes in 2002, tonnes in 2003 and tonnes in 2004 (data communicated by the Federal Ministry of Agriculture). EN 82 EN

83 this, part of the new areas are created by new producers diversifying in a new crop and who are often not aware that prices will fall after a few years; yet the prices are still favourable which induces further increases in plantations and add further pressure on the prices; this leads to a period with very low prices and no new plantations; towards the end of the cycle, bushes planted before the previous peak start to produce less; lower production created by the stop in new planting and the aging of plantations leads to a new price peak. Figure 4-1. EC/EU import unit values of pre-cooled blackcurrant from intra-ec/eu and Poland (in ECU/ per tonne) Poland Intra-EC/EU Source: COMEXT Several factors are at the root of the cycle or increase its magnitude. Firstly, there is the fact that blackcurrants are used only by the industry. For other types of fruits, the fresh market often plays an important role in smoothing price evolutions. Secondly, the delays for new plantations in entering into production and decline of production at the end of plantation life contribute to accentuating the cycle. Finally, the fact that the sector is of a limited size entails that variations in areas, that would be judged modest in other sectors, have large impacts for the economy of the blackcurrant sector. The fact that the cycle of the 1990s was shorter than the previous one is attributed to the development of the mechanisation of harvesting in Poland in the course of the 1990s. Figure 4.2 provides the evolution of prices paid to producers and the number of blackcurrant bushes since 1990 in Poland (data on area of blackcurrants exist only since 1998 in Poland 60 ). 60 There is no contradiction between the constant increase in the number of bushes in the last years and the fact that blackcurrant plantations were more or less stable in the last three years at around hectares. The higher number of bushes indeed reflects the higher density of recent plantations. Polish EN 83 EN

84 One identifies three major periods since the beginning of the transition: (1) significant growth of blackcurrant plantations in which contributed to a significant over-supply in the sector throughout Europe from 1992 until 1997; (2) decrease in the number of bushes in the period ; (3) increase in the number of bushes from 1999 with an acceleration of the growth rate from Given the importance of production in Poland, evolutions in this Member State affect the whole European sector. Figure 4-2. Number of blackcurrant bushes 61 (million) and producer prices (PLN/kg) in Poland 75 4, ,5 Million bushes ,5 2 1,5 Producer prices (PLN/kg) , Number of bushes Producer price (PLN/kg) Source: GUS (bushes), GUS and IERiGŻ for prices The crisis in the 1990s, with the low-price years of 1992 to 1997, induced the European growers to work on better organisation and knowledge of the sector. This led in particular to the creation of the Association of European Blackcurrant Growers which held its first annual conference in The recent increase in production and the price crisis High prices at the end of the 1990s and the beginning of the 2000s have prompted producers to increase areas of blackcurrant plantations in many Member States: between 1999 and 2004 the area increased from around hectares to hectares. In Poland the area increased from to hectares (see Table 4.8 in Annex 62 ), in the other Member States, the area under blackcurrant increased from to hectares. Production levels have therefore increased since the year 2000: production in Poland is well in excess of tonnes since In the other countries production increased from around tonnes until 1999, to almost tonnes in and to tonnes in 2003 and Therefore, EU-25 production increased from around tonnes in 1999 and 2000 to data on areas of blackcurrant cover both plantations under production and young plantations that are not yet harvested. The number of bushes also includes household gardens. For countries for which no data were available for a particular year, figures of adjacent year have been retained to provide aggregate. In Table 4.8 in the annex, aggregates have not been adjusted to take account of missing data. EN 84 EN

85 tonnes in 2001 and 2002 and to tonnes in 2003 and However it is often estimated that the potential needs of the processing sector stand at tonnes. The sector is therefore in a situation of over-supply, by a range which is estimated at tonnes (see Section 4.4). Table 4-2. Evolution of prices of fresh blackcurrants in France, Germany and Poland ( /kg) France average price ex-po 1,29 1,41 1,12 1,21 0,73 Germany price received by PO 1,16 0,79 0,91 0,71 0,59 0,29 Poland average producer prices 0,85 1,00 0,56 0,41 0,27 0,08 Sources: GUS and IERiGZ for Poland, ZMP for Germany and Section Nationale Fruits Rouges for France In Poland, while the major cause of the increase in plantations is obviously the high prices of , other factors have also played a role. In particular, the availability of financial support for the purchase of machinery via the EU programme SAPARD has probably been another incentive to enlarge plantations. Taking into consideration that the area under blackcurrant increased strongly in 2002 in Poland (from hectares in 2001 to in 2002) and that new plantations of blackcurrant start production from the fourth year, the blackcurrant harvest should be large in the next marketing years, unless grubbing up of existing plantations takes place in the meantime. Observation of the two previous production cycles shows that it takes several years for prices to pick up from their bottom level. The cyclical evolutions of blackcurrant production in Europe should not hide the fact that Poland has increased its weight in the sector (see Figure 4.3). The increase in production was sustained in the late 1980s and the 1990s because of the spreading of the mechanisation of harvesting. In the 1990s, the modernisation of the sector, with the creation of a large-scale sector and the adoption of high-yield cultivars more resistant to late frosts, has also had an impact on production levels As a matter of fact it is estimated that around 30% of production in Poland was not harvested in 2004 owing to the very low prices. For both France and Germany, these are not prices paid to producers but prices paid to POs (ex-work for France). For the conversion into producer prices PO margins would have to be deducted. France: weighted price average of non-contracted sales. EN 85 EN

86 Figure 4-3. Production of blackcurrant in Poland since 1980 ( 000 tonnes) Trendline Source: GUS Farm structures Poland 65 Farm structures involved in blackcurrant production are of three types in Poland: a) small-scale production; b) fruit farms with up to several hectares of blackcurrant mechanically harvested; c) large specialised farms with a size of up to several hundreds hectares of blackcurrant. The only statistical information that enables a sketching of a picture of the importance of the different farm types in the sector is provided by the last agricultural census of However, it covers all currants and does not single out the different types (black or red). However, in 2002, blackcurrant represented 75% of all areas under currants (the rest was redcurrants). Assuming that the distribution of areas under blackcurrants and redcurrants according to farm size classes was the same, the structure of blackcurrant plantations would have been the following in 2002 out of a total of hectares: farms with an area of blackcurrant below one hectare would have represented hectares (almost half of the total blackcurrant area), of which hectares of predominantly non commercial areas (below 0.1 hectare); farms with a blackcurrant area in the range of 1 10 hectares would have represented hectares and farms with an area larger than ten hectares hectares The available statistical data do not enable to describe precisely the farm structure of blackcurrant production. Due to the lack of statistics in this matter for the most recent years it is difficult to describe the latest tendencies of structural change in the sector. EN 86 EN

87 Blackcurrant production developed until the 1990s primarily in small-scale farms (up to a few hectares). The most salient evolution that can be noted in the last few years is the development of large farms, fully mechanised and devoted to high yield varieties for the juice industry and the consolidation of other farms, although no statistical data allow supporting this. Despite this development, small farms still represent a sizeable part of the sector in Poland. Calculations on the basis of the above-mentioned theoretical farm structures and expert judgement suggest that farms with less than one hectare of blackcurrant would still produce tonnes. Figure 4-4. Distribution of the area of currants (black, red and white) in Poland in 2002 according to the size of the plantations (hectares) farms farms Hectares farms 621 farms 89 farms farms 50 farms Below 0,1 0, Over 20 Size of plantations (hectares) Source: GUS (annual area 2002 and Agricultural Census 2002) Some experts attribute the large fluctuations of production to the small farmers who take the decision to harvest/market their production depending on price levels. In situations of high prices they would rent harvesters or hand pick while if prices are low they pick only what can be harvested by the family. Most experts agree that the importance of the small-scale part of the sector will diminish in the coming years Other Member States Most farms in the other Member States are rather large in size. Blackcurrant is most often only one of the crops grown on the farm: in Denmark, blackcurrant is often grown on fruit farms, other crops are usually other soft fruits, cherries or other fruit trees; in France, other crops are usually fruits in the Rhone valley, vineyards or grains in Burgundy, grains or fruits in the Val de Loire; in Germany, blackcurrant is a minor crop on farms (most often below ten hectares) beside annual crops like grains; 66 This is quite in line with expert judgement that there would be around 300 farms with hectares of blackcurrant, around 50 farms with hectares and two farms with each an area of 400 hectares of blackcurrant, no figures being known for small-scale farms. EN 87 EN

88 in Lithuania, the sector is organised into rather large farms: farms with plantations of blackcurrant between 10 and 50 hectares represent almost half of total commercial plantations in the Member State (and farms larger than 50 hectares represent around 20% of the total area); farms in the United Kingdom are more specialised in blackcurrants although they can also grow other crops (soft fruits, industrial crops, etc.). In this Member State the sector is concentrated around about 50 farms Major cultivars Several institutions in Europe are active in creating new blackcurrant cultivars. In particular, the Scottish Crop Research Institute (SCRI) released several cultivars in the last decades that were adopted widely in Europe, the so-called Ben cultivars. The selection work was focused on three major threads: (a) delayed flowering to mitigate the impacts of late frosts that generate wide variations in yields year-on-year (e.g. Ben Alder); (b) resistance to diseases 67 ; (c) higher levels of anthocyanins and other components. Ben cultivars are the most important in the United Kingdom. When properly maintained these cultivars can produce yields of up to tonnes per hectare. In Poland, the cultivars which have been planted in recent years are mainly the high yield Ben types. More traditional varieties such as Fertödi, Ojebyn, Rodknop, Titania and Triton have not been planted on a large scale recently and are found mainly on small farms. Several new cultivars have been created in the Institute of Pomology and Floriculture of Skierniewice, however they still represent a small part of the orchards (e.g. Tiben, Tisel). Oyebin, Titania and Triton have rather low yields, in the range of 3 8 tonnes per hectare, and are sensitive to late frost. Ben cultivars are more tolerant to late frost and produce higher yields. In Denmark the Ben cultivars dominate the sector (Ben Lomond 40%, Ben Alder 50% and Ben Conan 10%). In Estonia, cultivars from Russia, Poland, Belarus and Estonia are used. The sector in France focuses on low yield and high quality cultivars such as Noir de Bourgogne, which is grown almost exclusively for the liqueur industry (and is less suited to the juice industry), and Blackdown and similar cultivars (Andega, Ténah) for the liqueur, juice and IQF industries. Yields stand at three or four tonnes per hectare. In Germany, the major cultivars are of the Ben type (Ben Alder, Ben Tirran) and Titania. In Lithuania, 90% of plantations are of the Ben types (Ben Alder, Ben Tirran and Ben Lomond). In the Netherlands, cultivars are of the Ben types (Ben Hope, Ben Alder, Ben Tirran and Ben Nevis) and also Foxendown. In this Member State, areas in Ben Alder and Ben Tirran have been devastated by the reversion virus. Among the new targets that will increasingly influence cultivar creation in Europe one can mention global warming which already affects yields in regions lacking cold in the winter, and higher consideration for end-user quality demands (for both the fresh and the processing markets). 67 Cultivar Ben Hope was released in 1998 and is resistant to gall mite which conveys the reversion virus. EN 88 EN

89 Production costs Time constraints have not allowed for the calculation of production costs. IERiGŻ calculates average production costs for the production of blackcurrant on family farms. Other sources provide production costs in Germany and in Denmark. However, these calculations are based on different methodologies which make comparisons impossible. Labour costs do not play a major role for most of the sector as mechanisation is well developed (for harvesting but also pruning). This is however not true for production of high quality IQF blackcurrants which in Poland are often hand-harvested on small farms. Blackcurrants that are semi-processed into IQF in other EU countries (Denmark, France, the Netherlands) are harvested mechanically. As it could be expected, the cost of land shows large differences between the new Member States (in particular Poland) and the others Marketing and semi-processing of blackcurrants Level of organisation of producers Producer organisations and other producer groups represent a sizeable part of marketed production in most Member States: 60 70% in Denmark, 50 70% in France depending on the year, around two-thirds in Germany, cooperatives represent around 50% in Lithuania, more than 90% in the Netherlands. In the United Kingdom, individual producers are directly contracted with the industry for an important part of their production. In Poland the situation is very different since volumes marketed by producer groups or organisations are still very marginal. As a matter of fact, the last crisis of the sector in the first half of the 1990s was an incentive for the producers to improve their organisation level in Member States (case of France where the sector was not organised until then) Marketing of blackcurrants to the industry and semi-processing Annual and pluri-annual contracts with guaranteed prices between the producers and the industry concern a minor part of the marketed blackcurrants, with the exception of the United Kingdom. Recent pressures on prices have in addition led a number of processors to discontinue some of the contracts that were coming to an end (e.g. in Germany). A sizeable part of the blackcurrant sold to the industry is therefore valued at the market price. As a consequence producers are strongly exposed to the current low market prices without much buffer. Blackcurrant production at present price levels is not a profitable activity. Only the segments that have a guaranteed contracted price (or sell specific niche products) can reach a positive profitability. Denmark In Denmark, around two-thirds of production is sold to the juice industry. The rest is semiprocessed mainly in IQF and purees and is used primarily by the jam industry. Most fresh blackcurrants are sold to the industry on the basis of the market price. EN 89 EN

90 France Blackcurrant production in France finds three major uses: a) for the liqueur industry for the production of crème de cassis; b) for the preparation of concentrate for the juice and drink industries (a small part is concentrated in France, the rest in other EU countries); c) for the preparation of purees (for ice-creams, etc.). AFIDEM (Association des Fruits et Légumes transformés, interprofessional organisation for processed fruits and vegetables) has established annual and multi-annual (four-year) contracts between processors and producers. These contracts represent 25 35% of all quantities of blackcurrants marketed in France 68. However, the prices established in these contracts used to provide guidance to price formation of blackcurrants sold outside of these contracts until 2004 when European prices decreased considerably and price paths diverged. Exports of pre-cooled blackcurrant to the European juice industry take place on the basis of the market price. Text Box 4-1. A measure to manage the production level: non-harvesting In France, several producer organisations applied in 2005 a system of non-harvesting in order to mitigate the impacts of the current crisis. On the basis of the orchard inventory carried out at the regional level and of volumes the union considered it could sell at an appropriate price level, all members of the concerned POs were granted a production ceiling in volume. For additional quantities delivered by the farmers, the POs did not guarantee similar price conditions. It is estimated that 30-40% of the harvest was left on the fields following the implementation of the measure in the concerned POs. Producers were not compensated for the non-harvested quantities. Germany In Germany, the major part of produced blackcurrants is semi-processed into concentrate, a minor part is semi-processed into purees or IQF. The production of two thirds of the area of blackcurrant (around 800 hectares) is sold either by producer organisations and cooperatives (Raiffeisen) through contracts (which are for the most part only delivery contracts without a guaranteed price). The rest of the production is sold on the free market. Pluri-annual contracts concern a minority of production (e.g. organic blackcurrant). Lithuania Marketing of blackcurrants in Lithuania is rather concentrated: farm size is large and around 50% of commercial production is semi-processed and marketed by four cooperatives. These cooperatives produce frozen blackcurrant. Freezing is the main destination of fresh blackcurrants, with a share of 80%. The juice industry uses around 15% (10% for not-fromconcentrate (NFC) juices and 5% for concentrate) and 5% goes to the fresh market. Frozen blackcurrants are exported to the Baltic countries, Scandinavian countries and to Germany. 68 Quantities contracted have diminished in 2005: tonnes against more than around tonnes in the period Quantities under multi-annual contracts have increase (from tonnes in 2004 to tonnes in 2005, these contracts are for ), annual contracts diminished due to stock adjustments by the processors. EN 90 EN

91 The Netherlands Most of the production in the Netherlands is concentrated in a cooperative (created in 1989). One third of production goes to IQF and two thirds to the juice industry. Most of the production is contracted to the semi-processing industry. Contracts for the juice industry will terminate in 2008 and will not be renewed since the semi-processor has closed its concentrate line in the Netherlands. Poland Table 4-3. Estimates of supply and use of blackcurrants and processed products ( 000 tonnes) 69 (marketing year: July n / June n+1) 1998/ / / / / / /05 Supply of fresh blackcurrants Production according to GUS (1) 107,9 95,6 93,2 119,1 110,5 141,6 142,6 Imports (2) 0,1 0,1 0,0 0,2 0,0 0,0 0,0 Exports (3) 11,3 20,3 15,3 24,1 8,8 14,6 9,1 Total supply (4) = (1) + (2) - (3) 96,7 75,4 77,9 95,2 101,8 127,0 133,5 Utilisation of fresh blackcurrants Processing industry (5) 60,0 54,0 67,0 87,0 76,0 100,0 95,0 Share of processing in total supply (%) Of which: freezing industry (6) 33,0 28,0 29,0 30,0 25,0 31,0 27,0 Of which concentrate and juice industry (7) 24,0 24,0 36,0 54,0 48,0 66,0 65,0 Direct domestic utilisation fresh (8) = (4) - (5) 36,7 21,4 10,9 8,2 25,8 27,0 38,5 Outputs of the processing industry Frozen blackcurrants 31,0 26,0 27,0 28,0 24,0 29,0 25,0 Of which exported 22,3 19,5 19,6 20,7 16,1 21,5 17,2 Concentrate of blackcurrants 4,0 4,0 6,0 9,0 8,0 11,0 11,0 Jams and marmelades 6,0 6,0 7,0 8,0 8,0 9,0 9,0 Source: elaborated by IERiGZ. Trade: IERiGZ (98/99), COMEXT (99/00 to 04/05) As for the other soft fruits, the marketing of blackcurrant to the semi-processing industry is fragmented. Small farmers market their fruits through the collection points. Larger farmers sell directly to the processors, in the framework of delivery contracts that usually do not include a guaranteed price (they are based on the spot market price and can include a premium depending on quality). Most of the blackcurrants are therefore sold to the semi-processing industry at the spot market price (directly derived from the export price of the semi-processed products, IQF blackcurrants or blackcurrant concentrate). In the last seven marketing years the use of blackcurrant by the frozen fruit and vegetable industry has been relatively stable at around tonnes per year. Since in the other Member States semi-processing into frozen blackcurrant is a minor activity, Poland is by far the largest EU supplier of frozen blackcurrants. In particular, it is the only producer of IQF blackcurrant with the stalk removed. The use of blackcurrants for the production of concentrate has more than doubled in 2003/04 and 2004/05 compared to the late 1990s: from a level of tonnes of raw material to tonnes. The United Kingdom In the United Kingdom, the largest part of produced blackcurrants are processed into concentrate by the juice industry, minor quantities are processed into puree in Scotland and 69 These are estimates and not official data and should be considered as indicative. The estimates for the outputs of the concentrate industry are based on a level of concentration by a factor of six for concentrate at 65 brix (i.e. six kg of fresh blackcurrant are used to obtain one kg of concentrate). EN 91 EN

92 there is no semi-processing into IQF. The largest part of production is under contract with a single juice maker. Purchases are carried out as part of multi-annual contracts that are tonnagebased (on contracted plots, all quantities bought at a guaranteed price up to a certain volume). Areas that are not contracted with the industry have declined recently due to the low market prices Location of the semi-processing industry at the European level and implications for the various EU producing countries Blackcurrants are traditionally produced in several Member States with the semi-processing taking place either in the same or in other Member States. However, the European semiprocessing industry (freezing and concentrate industries) has changed considerably since the 1990s. In particular, the processing capacity of Poland has increased considerably and several semi-processors have transferred their activities to Poland. Producers of blackcurrants in other countries than Poland therefore find fewer potential buyers of their fruits. In addition, current low market prices make it less profitable to export to other countries pre-cooled blackcurrants for processing into concentrate. This explains why intra-eu flows of pre-cooled blackcurrants have decreased in the last few years (see Table 4.4). On the other hand, some concentrators are also interested in buying blackcurrant from various origins for the preparation of specific products or for blending to produce concentrate with stable specifications. Such criteria as aroma, colour and brix level are important. Although the dissemination in Europe of late varieties allows to better cope with late frosts, blackcurrant production in Europe is not sheltered from local weather accidents that would cut production significantly. In this perspective, spreading production of blackcurrants over several countries allows to better cope with the risk EU trade in fresh and semi-processed blackcurrants For the analysis of trade flows in semi-processed blackcurrant products we face the constraint that blackcurrant concentrate is not singled out in the combined nomenclature of the EU tariff 70. The analysis below will therefore focus on the trade of fresh and frozen blackcurrants. Table 4-4. EU-25 trade in fresh and frozen blackcurrants (tonnes) Average EU-25 imports Fresh blackcurrants Intra EU Extra EU Total Frozen blackcurrants Intra EU Extra EU Total Extra EU-25 exports Fresh blackcurrants Frozen blackcurrants Source: COMEXT 70 Blackcurrant concentrate with a brix below 67 is classified under CN (juice of fruit or vegetables, density < 1.33 g/ccm at 20 C (excl. fermented or containing alcohol or added sugar, mixtures, citrus fruit, pineapple, tomato, grape, incl. grape must, apple and pear juice, and juice of fruit of the species Vaccinium Macrocarpum). Blackcurrant concentrate with a brix higher than 67 (limited quantities) is classified under CN EN 92 EN

93 The analysis of trade data of Table 4.4 illustrates that the economy of the blackcurrant sector is essentially an EU matter and only involves third countries to a limited extent. As a matter of fact, currently the EU is supplied in fresh and frozen blackcurrants almost totally from its domestic market 71. The situation is similar for blackcurrant concentrate Trade in fresh blackcurrant (pre-cooled) Imports of fresh blackcurrants consist essentially in the so-called pre-cooled 72 blackcurrants which are further processed (mainly into concentrate). Among all Member States, only Germany, Austria, the Netherlands and Belgium import sizeable quantities of pre-cooled blackcurrants (see Table 4.10 in Annex). None of the other Member States imports quantities above 100 tonnes annually. Pre-cooled blackcurrants are usually semi-processed into concentrate. The two major importers are Germany and Austria which both have an important juice industry. For Germany, the decrease in imports since 2001 is partly attributed to the increase in the processing capacity in Poland. In the case of the Denmark and the Netherlands, imports of pre-cooled blackcurrants have gone down significantly and almost stopped in This is the consequence of the scaling down or closure of activities and of their transfer to Poland Trade in frozen blackcurrant Table 4-5. Member States imports of frozen blackcurrant (tonnes) Total From Poland France Netherlands Germany Italy United Kingdom Denmark Belgium Sweden Finland Austria Lithuania Poland Czech Republic Other EU countries EU Source: COMEXT. All countries with annual imports below or equal to 50 tonnes not indicated EU dispatches of frozen blackcurrants amount to tonnes per year. Poland supplies around two thirds of the products. The level of dispatches is provided in Table 4.6 below. Germany and Belgium account for important suppliers although they are not large producers. Some of the flows are re-exports Prior to the enlargement of 2004, the trade regime applied to imports from Central European countries was governed by the association agreements. In particular, a system of minimum import prices (MIP) was applied (details provided in the chapter on strawberries). Fresh blackcurrants cooled at temperatures slightly above 0 C and transported in tankers immediately after harvest. EN 93 EN

94 Table 4-6. Total dispatches of frozen blackcurrants by Member States (tonnes) Average France Netherlands Germany Denmark Belgium Sweden Austria Estonia Lithuania Poland Czech Republic Hungary Source: COMEXT 4.4. Use of blackcurrants by the EU food processing industry The objective of this section is to analyse the different uses of semi-processed blackcurrants and, as far as possible, delineate the major trends for these various uses. However, it was not possible in the scope of the present analysis to come up with a comprehensive picture of the uses of blackcurrants by the various segments of the processing industry. The present section will therefore focus on qualitative information on the evolutions of the different uses and markets EU supply of blackcurrant Estimates of the major destinations of fresh blackcurrants have been elaborated on the basis of the balance sheets prepared by IERiGŻ for Poland and of information collected for other countries. For several countries in the absence of published data, the average share of the different destinations has been estimated on the basis of expert judgement and applied to total annual production. Assumptions and estimates may be challenged to some extent, however the overall picture of the situation of supply at the EU level should not be affected dramatically. Given all assumptions made, averages calculated for the periods and present the most interest. The observation of the supply of blackcurrants and of price curves of pre-cooled blackcurrants, frozen blackcurrants and concentrate of blackcurrants 73 indeed allows to distinguish two periods: on the one hand with relatively good prices around a peak that took place in 2000 and total EU production in the range of tonnes; on the other hand with lower prices (especially for blackcurrant concentrate) and total EU production of blackcurrants at around tonnes. If it is considered that given volumes and price evolutions, the European market was globally balanced in the years and was oversupplied in the years 2003 and It could be inferred that a balanced production given EU needs stands at around tonnes with a total supply to the industry around tonnes with some tonnes directed to the frozen fruit and vegetables industry and around tonnes to the concentrate industry and 2004 then show an oversupply of around tonnes in comparison with EU needs. These figures are in line with expert judgement. 73 For pre-cooled blackcurrants see Figure 4.1 (frozen blackcurrants follow a similar curve although at higher levels), for producer prices see Table 4.2, for concentrate prices see Figure 4.5. Prices of concentrate have faced a steep decline: they stood at 8.66/kg in 2000 and at 2.1 in 2005 (source: Fruit Processing). Over supply is the highest for concentrate. EN 94 EN

95 Table 4-7. Estimates of EU-25 supply to the industry of blackcurrants ( 000 tonnes) Av Av Total EU supply of blackcurrants (1) Directed to processing Of which frozen Of which juice (mainly concentrate) Of which other processing Other utilisations (fresh market / households) (1): EU production plus imports pre-cooled minus exports pre-cooled Uses There are five major areas of use of blackcurrants ranked by order of importance: (1) production of fruit juices, fruit drinks, syrups, use as ingredient for the drink industry (e.g. soft drinks, etc.). The main form of use of the blackcurrant is under concentrate (triple-strength at 65 of brix) but other forms such as single-strength juice and purees are also used; (2) production of jam and jellies with mainly the use of IQF blackcurrants which provides the best quality guarantees for the jam makers; (3) production of alcoholic drinks and liqueurs, such as the French crème de cassis ; (4) production of fruit preparations to be incorporated in final food products. This concerns mainly the ice-cream industry. The dairy industry (fruit yoghurts) is not an important user. Similarly, little use is made by the bakery industry (pastry fillings). Major used forms of semi-processed blackcurrants are IQF, purees and concentrates; (5) last category, a minor part of IQF blackcurrants is consumed directly by households or used by the catering industry The juice and drink industry Around two thirds of all produced blackcurrants are semi-processed into concentrate. Relatively minor parts of the concentrate are used by food sectors other than the juice and drink industry. This concerns the production of blackcurrant jellies and fruit preparations. The juice and drink industry is therefore the main user of blackcurrants. In Western Europe it is estimated that in 2003 and 2004 blackcurrant amounted to 1.2% of fruit based drinks in volume 75 (source: Döhler Market Research). Consumption of blackcurrant-based drinks is the highest in the United Kingdom (13 million litres in 2004), Austria (seven million litres, declining), France (five million litres, growing), Ireland (five Total supply: see Table 4.1. Estimates of uses made on the basis of expert or Ministry communication and/or published information: all production to concentrate in Austria; most production in Czech Republic for concentrate (most exported pre-cooled); 1/3 of production for frozen fruit and vegetables industry (FI) and 2/3 for the concentrate industry (CI) for Denmark; 5% of production FI and 95% CI for Germany; 1/3 production FI and 200 tonnes CI in Finland; France estimates based on GEM (2004); Hungary data based on reports of FruitVeB; Lithuania: 80% of production to FI, 15% juice industry (10% NFC and 5% concentrate) and 5% fresh market; 1/3 of production FI and 2/3 CI in the Netherlands; for Poland figures based on balance sheets presented in Table 4.3; all production for CI in the United Kingdom. Other processing includes other uses by the industry in Poland (e.g. direct processing into jam) and estimates of use by the liqueur industry in France. Other uses concerns consumption fresh and use by households (concerns mainly Poland). It is assumed that most intra-eu trade in pre-cooled blackcurrants is used by the concentrate industry. Blackcurrant ranks 9 th after (by order of importance): orange, multi-flavour, apple, pineapple, orangemix, grapefruit and grape. EN 95 EN

96 million litres, growing), Germany and Poland. In the other EU countries, blackcurrant has never been a particularly popular drink. In the United Kingdom in 2002, blackcurrant represented 14% of the flavours of dilutables and 10% of fruit drinks. In this Member State consumption of blackcurrant-based drinks has faced recently the competition of cranberry juice. Blackcurrant ranks fourth in the top flavours of fruit-based drinks in Austria and the United Kingdom and fifth in Ireland (source: Döhler Market Research). In Germany, consumption of blackcurrant products is at most stable. However the low price levels of the last two years would have led the discount retail chains to reintegrate blackcurrant products in their offer. In Poland, consumption of blackcurrants is stable or decreasing as consumer preferences switch to more popular drinks such as orange juices (it is estimated that around tonnes of blackcurrant concentrate is consumed in the Member State). The current low prices of the raw material are most often not sufficient to ensure growth of consumption of blackcurrant juices and drinks as the lower prices of the raw material is only partly transferred to consumer prices. Figure 4-5. Price of blackcurrant juice concentrate in the EU (65 brix) in /kg 10,00 9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 0, Source: Fruit Processing However, despite the fact that soft fruit juices and drinks represent rather limited markets in comparison with other types of fruit, they have an increasing appeal for consumers in particular in relation with health aspects. The development of cranberry drinks in the United Kingdom is related to health claimed benefits. In this respect, blackcurrant is one of the fruits that has the best value, therefore appropriate promotion could benefit the product (see Text Box 4.2). Text Box 4-2. Promotion campaign to boost consumption in the United Kingdom Producers of blackcurrants in the United Kingdom have created the blackcurrant foundation ( whose main objective is to promote the benefits of blackcurrants and encourage their consumption. In 2005, they also launched a wide promotional campaign on the forgotten fruit insisting on the major features of the fruit and its positive impact on health. There are some prospects for export of blackcurrant products outside of the EU, in particular towards the USA which have a modest production but where the potential market would be important. EN 96 EN

97 Jams, jellies and marmalades Blackcurrants are not very popular flavour for jams and jellies in most EU countries, accounting for 1 5% of produced volumes. It is more important in Denmark, the United Kingdom and in Poland. Rough estimates (based on production figures for France and Poland and percentages of total jam production for the other countries) lead to around tonnes of blackcurrant jams, jellies and marmalades at EU level 76. Assuming an average fruit content of 45%, the industry s needs are estimated at around tonnes of blackcurrants Fruit preparations for the dairy and ice-cream industry The fruit preparation industry for fresh dairy products does not use sizeable quantities of blackcurrant. Blackcurrant is a more popular for the ice-cream industry although it ranks quite far from the major fruits. According to GEM (2003), blackcurrant is not an important fruit in Germany or Italy. In France, blackcurrant is declining in the market of industrial ice-creams. However on the market of traditional makers it is stable with fruit use level of around tonnes procured from French blackcurrant producers (see GEM (2004)). No figure exists at the EU-25 level, but it is most likely that quantities of blackcurrant incorporated in ice-creams are below tonnes Other uses Liqueur industry In France, the blackcurrant liqueur crème de cassis is traditionally produced in Burgundy in the area of the city of Dijon. Production in volume stood around hectolitres in 2000 and is said to have decreased to hectolitres in The liqueur is prepared from Noir de Bourgogne (used to a level estimated at tonnes) and Blackdown (estimation of tonnes used), see GEM (2004). The market for crème de cassis is on a moderate declining trend. Moreover, the increased share of hard discount retailers would entail lower levels of use of blackcurrants since low price crème de cassis is prepared with smaller quantities of blackcurrants. Frozen blackcurrants in retail and catering industry Frozen blackcurrants can be found in retail shops, most often in mixed fruit boxes (together with redcurrants and blueberries). Together with the use by the catering industry, they concern at most a few thousands tonnes Conclusions The blackcurrant sector is confronted with a situation of oversupply since It is an EU problem created by EU over-production. Production levels have reached records while consumption of the final food products has not shown a similar dynamism and prospects for exports outside the EU are rather limited. Prices of the raw material and of semi-processed 76 Based on production figures for France and Poland and percentages of total jam production for the other countries: 12% for Denmark; 10% for the United Kingdom and Ireland; 5% for Finland; 1% for Austria, Belgium, Germany and Hungary; zero for Italy and Spain. Germany and Denmark based on communication, all other countries: assumptions. The result is tonnes, we therefore consider the range of tonnes to take account of these assumptions. EN 97 EN

98 products have therefore reached very low levels. Excess supply is estimated in the range of tonnes. As already pointed out, the sector stands currently at a low point in the economic cycle of the product. The current crisis has probably been amplified by the strong dynamism of the sector in Poland in the last few years, although increases in planted areas have been observed in most producer countries. An adjustment of areas under cultivation needs to take place so that production can come back to more appropriate levels. Grubbing up of excess plantations is one of the tools usually applied by farmers. Blackcurrant is a multi-annual crop and is integrated in the rotation on the farm. Grubbing up of excess areas also takes place as part of the rotation system applied by farmers. It does not seem that an EU financed grubbing up scheme would be a satisfactory solution. Such a scheme could speed up a return to more normal levels of production but would not abolish the economic cycle of blackcurrant production which is one of the roots of the problem. Moreover, the availability of EU support for grubbing up would probably entail more planting in the expansion phase of the cycle. Non harvesting could be a tool in the case of unexpected and temporary difficulties. The opportunity to make this measure eligible in the operational programmes of Producer Organisations would need to be discussed in the context of the reform of the common market organisation for fruits and vegetables. There is no single solution for solving the problems generated by the production cycle. Obviously planted areas would be more stable and the risk of over-supply would be reduced if contracting of blackcurrant production with the semi-processing industry would have a higher share in some Member States. However, the experience with the present cycle is that in all countries (with high or low levels of contracting) producers have increased plantations in response to the high prices. Unless strict area control measures were to be enforced, which is not envisaged, farmers are very likely to increase again their planted areas in the next price peak period. In this context, facilitating the knowledge and the monitoring of market evolutions at the European level could assist operators in better assessing the opportunities for investment in the sector. Better organisation of the sector in Poland (knowledge of the economy of the sector, less fragmented producers supply, higher rate of contracting with the industry) would improve its command on the growth of production and, in the long term, contribute to ensuring a better stability of the sector at EU level. Increasing the role of producer groups and organisation in the sector the cornerstone of the common market organisation in the sector of fruits and vegetables should be given a top priority. On the demand side, consumption of food products incorporating blackcurrants is stable. Blackcurrant products suffer from the competition of other products (orange juices, cranberry juices, etc.). Product innovation is often reported to be low in the sector. However, some features of the product are highly positive, in particular its high content in substances with positive impact on health. Blackcurrant ranks first or second among all fruits for content on C vitamin, anthocyanins, and other healthy substances. It should be possible to capitalise on these aspects to develop new products incorporating blackcurrants. It is probably the image of the fruit itself that should be rejuvenated. More communication would probably increase EN 98 EN

99 consumption of blackcurrant products. Such programmes have already been implemented in individual Member States. EU support can be mobilised to develop promotional programmes. EN 99 EN

100 Annex to Chapter 4 Map 4-1. EU production of blackcurrants Table 4-8. Average yields in major producing countries (tonnes per hectare) Denmark 2,7 3,5 2,7 3,5 3,5 3,5 3,5 2,7 4,2 3,0 France 3,2 4,6 3,3 3,1 3,3 3,3 3,3 4,0 4,1 4,5 Germany 5,4 4,2 4,6 4,2 Poland 3,6 4,1 4,0 4,9 3,5 4,8 4,8 United Kingdom 7,0 9,3 5,5 6,2 5,7 6,1 6,4 5,6 7,3 6,5 Source: on the basis of Eurostat, National statistics or European Association of Blackcurrant Growers EN 100 EN

101 Table 4-9. Area in blackcurrants in the EU-25 (in hectares) Average Austria Czech Republic Denmark Estonia Finland France Germany Ireland Latvia 456 Lithuania Netherlands Poland Slovakia Sweden United Kingdom EU EU EU Blank cells: not available Table Major EU importers of pre-cooled blackcurrants and main suppliers (tonnes) Average Austria Total Czech Republic Germany Hungary Netherlands Poland Belgium Total Netherlands Poland Denmark Total France Germany Netherlands Poland Sweden United Kingdom Germany Total Austria Czech Republic Denmark France Hungary Netherlands Poland United Kingdom Netherlands Total France Germany United Kingdom Source: COMEXT 77 For the sources see Table 4.1. EN 101 EN

102 5. THE SECTOR OF RASPBERRIES FOR PROCESSING IN THE EU 5.1. Raspberry production in the world The raspberry (Rubus idaeus) is a bush plant with perennial roots, biennial foliage and fruitbearing canes that produces red aggregate fruits used both fresh and processed. It grows in regions with cold temperate climate, mainly in America and Europe. It is estimated that world production of raspberries was on average tonnes in the period The largest producer is Russia with an annual production of tonnes in Serbia comes second with tonnes. The USA, Poland and Chile follow with respectively , and tonnes. With tonnes, Europe accounts for 77% of world production. Figure 5-1. Major producers of raspberries (tonnes, annual average ) Russian Federation Serbia USA Poland Chile Ukraine Canada Hungary United kingdom France Spain Other countries Source: 79 World production of raspberries has increased by an average annual rate of 4.1% in the period , from tonnes in 1992 to in Growth of production has even been higher since 1998, reaching 4.5% on average over the period (see Figure 5.2). Among the major suppliers of frozen raspberries on the international market the annual rate of growth of planted areas was the highest in Chile (9.9%, from hectares in 1992 to in 2003), followed by 3.8% in Serbia (9 900 hectares in 1992 and in 2004) and 2.8% in Poland ( hectares in 1992 and in 2004) According to the FAO, world production stands at tonnes in However, Chile s production is not reported. Data from the Chilean Association of Exporters of Frozen Fruits and Vegetables for Chile and FAO data for other countries lead to the figure of tonnes. No official figures exist for China, however, some sources report that hectares would be devoted to raspberry production. Data for Serbia are from the Ministry of Agriculture, Forestry and Water Management. European Commission for EU countries, Chilean Association of Exporters of Frozen Fruits and Vegetables for Chile, Ministry of Agriculture, Forestry and Water Management for Serbia, FAO for other countries. EN 102 EN

103 Figure 5-2. World production of raspberries (tonnes) Source: FAO and Chilean Association of Exporters of Frozen Fruit and Vegetables 5.2. Raspberries for processing in the EU In the EU, raspberry production is concentrated in the Northern and Central European countries although Southern European countries (Italy, Spain and Portugal) production has increased, often as a result of diversification of production into the strawberry sector, targeting exclusively the fresh market. The level of production in the EU has jumped since the enlargement of 2004 from tonnes in the EU-15 on average over to tonnes with two new producers: Poland (with tonnes) and Hungary (with tonnes). The processing industry is the primary destination of the fruits in the two new Member States. The industry plays a role also in the sectors of France and the United Kingdom (Scotland), although the largest part of production is directed to the fresh market. In France it is estimated that around 10% of production is delivered to the processing industry. The sector in Scotland used to be specialised in the processing market. However, it has reduced to a large extent due to insufficient competitiveness and nowadays targets the fresh market. In the other EU countries, only minor quantities are delivered to the processing industry. EN 103 EN

104 Table 5-1. EU production of raspberries (tonnes) Average Austria Belgium Czech Republic Denmark Estonia Finland France Germany Hungary Ireland Italy Latvia Lithuania Netherlands Poland Portugal Spain Sweden United Kingdom EU EU EU Sources: Eurostat and national sources (see footnote). Germany: only producer organisations. Blank cells: not available Types of raspberry plants and cultivation practices Raspberry plantations are maintained for several years (most often 7 8 years but plantations as old as 10 or 15 years are not that uncommon), yet raspberries are not considered a permanent crop and enters in the crop rotation system implemented at farm level. Raspberries grow in light, well drained and slightly acidic soils. Raspberry plants require an even supply of water during the vegetation period, this is why plantations are often irrigated. There are two major types of raspberry plants. Summer-bearing raspberries have biennial canes which grow one year (primocane), overwinter and produce fruits the following year (floricanes). They usually produce fruits in a period of around three weeks in the summer (around mid-may to mid-august depending on the cultivars). Autumn-bearing raspberries bear fruits on the top portion of the primocanes, i.e. in the first year of the cycle. These cultivars produce over a longer period, usually from late summer until the first frosts (late July to end October). The cultivation of autumn-bearing raspberries is simpler as after fruiting all canes are removed and destroyed. On the other hand, with summer-bearing raspberries, dead canes have to be removed after fruiting and canes that will fruit the following year have to be prepared to pass the winter. Production under a protected cropping system (plastic cover) is more and more popular for raspberries intended for the fresh market in the major EU producer countries. This allows extending the fruiting period and to increase yields (by 30-50%). It protects fruits from rain or other weather phenomena and thereby ensures constant quality. Cultivation under cover implies ferti-irrigation. 80 Sources: Eurostat for Denmark, Finland, France, Italy, Latvia, Lithuania, the Netherlands, Poland; Eurostat plus corrections or additional data from the Ministry of Agriculture for Ireland (2003 and 2004 only production for the fresh market), Sweden (Ministry for 2003) and United Kingdom (DEFRA for 2003 and 2004); Ministry of Agriculture for Belgium, the Czech Republic (only commercial production), Portugal and Spain; National Statistical Office for Austria (only intensive production) and Estonia; FruitVeB for Hungary (only commercial production); ZMP for Germany. Data for Germany cover only production of producer organisations. Overall commercial production in Germany was tonnes in 2002/2003 (ZMP). EN 104 EN

105 In general, cultivation of raspberries for the processing industry takes place in the open-field without plastic protection. Bushes are supported by post-and-wire systems to hold the canes upright. Only a minor part is irrigated (15 20% in Hungary). Raspberries are sensitive to a large array of diseases (fungal, bacterial and viral). Among fungal diseases, root rot (Phytophtora) and grey mould (Botrytis cinerea) are by far the most serious in Europe. Root rot is considered the most destructive disease for raspberries. This is a so-called soil-borne disease; contaminated soils are extremely difficult to disinfect. Fight against the disease includes the use of disease-free propagation material and use of non infected land. Raspberry fruits are also highly sensitive to grey mould (Botrytis cinerea) which causes significant post-harvest losses if control measures are not adequate. Prevention implies appropriate treatment of the plants and post-harvest handling of the fruits (in particular immediate cooling to temperatures in the range of 2 5 C) Major cultivars and research We provide in Table 5.11 a summary of the features of the major raspberry cultivars grown in the EU, Chile and Serbia. Most of the needs of the processing industry are covered by a limited number of cultivars, of which Heritage, Meeker and Willamette are the most important. In Poland, new cultivars, suited to processing and fresh markets, have recently been released: Polana and Polka. These are autumn-bearing types that have the advantage of extending the harvest season in Poland and of minimising agricultural production costs (no need to support bushes, less pests and diseases). In only a few years, these two cultivars have taken over a significant part of raspberry production in Poland at the expense of summerbearing cultivars. The recent introduction of cultivars in Poland that are spreading relatively fast in the sector shows that research plays an important role in the overall competitiveness of the sector. Currently the major research centres are in Poland (with the research station of Brzezna, with a breeding programme that started in 1979) and in the United Kingdom (with the East Malling Research in England and the Scottish Crop Research Institute in Scotland) Farm structures and location of production Poland Production of raspberries is very concentrated geographically: the region of Lubelskie represents more than 70% of the national production in 2003 and In Lubelskie, the district of Krasnik would represent around 15 20% of national production of raspberries. The second most important production area is the Mazowieckie region with 11%. Out of hectares of raspberries in 2002, 20% (2 700 hectares) were cultivated on farms with less than 0.1 hectare of raspberries (20% of total area); 55% were cultivated on farms with an area of raspberries comprised between 0.1 and one hectare; only 10% (1 400 hectares) were cultivated in farms with a raspberry area higher than two hectares. Usually, farms with an area of raspberries higher than one hectare are fruit farms of a total area of around hectares involved in several fruits, including other soft fruits (strawberries, blackcurrants), apples and cherries. Farms with and area below one hectare are often not specialised in the fruit production. If one takes the reference of IERiGŻ that indicates that areas per farm below 0.1 hectare is primarily for home consumption and that commercial production concerns areas above EN 105 EN

106 0.1 hectare, then there were around commercial producers of raspberries in 2002 and the average area devoted to raspberries per commercial farm was 0.21 hectare. Figure 5-3. Distribution of raspberry area in Poland according to size of plantations in 2002 (hectares) farms Hectares farms 396 farms Below 0,1 0, Over 2 Size of plantations (hectares) Source: GUS (Agricultural Census, 2002) Other EU countries In France, a significant part of raspberry production originates from fruit farms or diversified farms of rather small size. Production areas include an important part (estimated at more than 40% of national production) in semi-mountainous areas suited to the production of soft fruits and where alternative crops are particularly scarce. In this context raspberry production plays an important role by bringing additional income in less favoured areas and allowing the use of available family labour force. In Hungary, the traditional production area is located on the slopes of the Northern parts of the central mountains (Börzsöny, Cserhát and Mátra), i.e. in the counties of Pest, Nógrád and Heves which represent more than half of national production. There are two categories of farms. The first category concerns farms integrated with a semi-processing company. This type of organisation was inherited from the period under communism. This form of organisation has decreased since the beginning of the 1990s. The second category concerns individual farms whose raspberry plantations vary between one and five hectares for the professional ones and are below 0.5 hectare for part time farmers. Only 15 20% of areas under raspberries are irrigated. EN 106 EN

107 Figure 5-4. Distribution of raspberry area in Hungary according to the size of plantations in 2001 (hectares) Hectares Below 0,3 0, Over 10 Size of plantations (hectares) Source: Central Statistical Office (KSH), results of orchard survey of Yields and production costs In the period , yields per hectare vary in the EU between 3.5 tonnes in Poland and 8.5 tonnes in Hungary (only commercial production is counted for Hungary). France and the United Kingdom stand at 5.3 and 6.5 tonnes per hectare respectively. By comparison, in the same period, the average yield was 6.8 tonnes per hectare in Chile and 5.5 in Serbia. The above averages are rather low as they cover all production systems, including the low-input ones without irrigation (e.g. Poland, Serbia). The protected cropping system, which is becoming more and more widespread on the fresh market allows higher yields (13 15 tonnes per hectare or more, 30 tonnes per hectare in soil-less systems). Raspberry cultivation is labour intensive. The fragility of the fruits and of the plants limits the possibilities of machine harvesting. Considerable efforts were done in the United Kingdom in the 1990s to develop machine harvesting, in particular for the production of individually quick frozen (IQF) raspberries. However, this experience showed that several conditions need to be met to reach appropriate results: suitable natural conditions (in particular a drier climate than in Scotland), suitable cultivars (in the programme the cultivars used were Glen Prosen and Glen Moy 81 ) and excellent technical capacity of the farmers. This explains why machine harvesting is implemented in few countries only, and mainly for the production of concentrate and puree. In all major countries supplying the EU market of frozen raspberries (Chile, Hungary, Poland and Serbia), harvesting is done mainly by hand. Given the importance of labour costs, production of raspberries for processing diminished considerably in the EU-15 in the course of the 1990s. Standard picking productivity is around four kg per hour. Manual harvest cost in the EU therefore ranges from per kg in Poland to per kg in France. In Hungary, harvesting costs are estimated in the range of HUF per kg (around 0.50 per kg), around 70% of all production costs. In Poland, IERiGŻ calculates production costs for an average family farm. Calculations show that production costs stand at PLN per kg ( 0.4 per kg) in (see Table 5.10 in annex). In 2004, low prices rendered raspberry 81 In Scotland, Glen Moy was the most promising cultivar, however it was highly susceptible to root rot. EN 107 EN

108 production generally unprofitable. The recent increase in areas cultivated under raspberries in Poland has concerned partly the cultivar Polana which, as a primocane type, allows lower production costs. Table 5-2. Major economic variables of raspberry production in Poland Area of production ('000 hectares) 10,8 11,0 10,2 10,0 10,3 12,1 12,5 12,7 12,8 12,6 12,6 12,9 13,4 13,3 14,2 17,2 Production ('000 tonnes) Average Yield (tonne/hectare) 2,7 2,9 2,7 3,2 2,9 3,3 2,9 3,1 3,5 3,4 3,2 3,5 3,4 3,2 4,0 3,5 Producer prices (PLN/kg) 0,4 0,3 1,0 1,7 3,7 3,5 1,3 1,2 2,5 1,8 2,5 2 2,8 2,9 1,6 Production costs (PLN/Kg) 1,7 1,8 1,7 Producer prices ( /kg) 0,4 0,6 0,5 0,7 0,7 0,4 Production costs ( /kg) 0,4 0,4 0,4 Source: GUS, IERiGZ. Prices are for raspberries sold to the freezing industry. In Poland, cash-constrained farmers often face difficulties to procure the necessary inputs to maintain an adequate level of quality. This constraint is all the more important after a lowprice marketing year (such as the one of 2004) Marketing and semi-processing of raspberries in the EU France In France, around 20% of production is marketed through POs. POs produce dual-purpose raspberries, Meeker and Heritage (they represent around 85% of all PO production), and sell around 40 60% of their production to the industry, i.e. around tonnes per year. When prices on the fresh market are too low (e.g. during production peak), raspberries are directed to semi-processing. However, the high picking costs limit the processing outlet to the production of high quality semi-processed or processed products. The non organised sector focuses on the fresh market. Raspberries are semi-processed into IQF (around tonnes per year) or purees. They are delivered to the industry at around 4 per kg 82. At this price level, these raspberries cannot compete upfront with frozen raspberries from major suppliers (Poland, Serbia and Chile) but only when they are used for the production of very high quality products Hungary In Hungary, production of raspberries has steadily declined in the last ten years, from more than tonnes in 1996 to tonnes on average in It is estimated that almost all raspberry production is sold to the processing industry. Since the 1980s the country has been specialised in the export of frozen raspberries on Western European markets. For integrated farms, the semi-processor provides services to the farmers (sometimes rents out the land to them) and buys their produce (sometimes with a minimum guaranteed price). These close relations ensure a high quality of the fruits. Raspberries are frozen in stationery chambers to obtain the highest quality IQF. This explains why, in the European market, Hungary obtains the highest prices among all competitors. Another part of the sector consists in small producers that sell to collection points at market price conditions. Producer groups or organisations play a negligible role in the sector. Volumes produced are semi-processed into concentrate or puree and also frozen. In the last 82 Until several years ago, raspberries were partly marketed under contracts (so-called AFIDEM contracts, see chapter on blackcurrants). However, there were no contracts in the last marketing years. EN 108 EN

109 few years, demand for concentrate (and to a smaller extent puree) was extremely high which ensured profitability of raspberry production. However, this demand has decreased markedly due to the increased weight of Poland. The sector in Hungary is therefore more likely to focus on the production of IQF than in the recent years. Despite sustained EU demand, exports of frozen raspberries have declined in the last few years indicating an eroding competitiveness. The country has indeed had to face increased competition on the market, especially from Poland, while internally the sector faced increased costs. In addition, natural conditions in Hungary would imply the development of irrigation (the country is located on the Southern border of the raspberry growing area in Europe) which is not profitable currently on the processing market Poland Supply balance sheet Tentative balance sheets have been prepared by IERiGŻ on the basis of official production data and estimates of uses and outputs (Table 5.3). Given the lack of information on the economy of the sector, this exercise is to be considered with care. One of the difficulties stems from the fact that estimates of use by the industry lead to volumes of raw material higher than the official production figures. According to the calculations of IERiGŻ, production of raspberries in Poland could be under-estimated by up to 100% depending on the years. The discrepancies probably originate from the difficulties in estimating production of small farms and households which, depending on price conditions, will be marketed or used for home consumption. According to the calculations of IERiGŻ, the level of production of raspberries in the country would have exceeded tonnes in 2004/2005 with the record level of tonnes delivered to the processing industry and tonnes exported pre-cooled for processing use. Following a large supply of raspberries for processing in 2003/2004 (see Table 5.8 on EU-25 supply) which led to carry-over stocks of frozen raspberries in Europe, the large harvest of 2004/2005 in Poland contributed to the price drop in the country. Table 5-3. Estimates of supply and use of raspberries and processed products in Poland ( 000 tonnes) (marketing year July-June) 1998/ / / / / / /05 Supply of fresh raspberries (1) Production according to GUS 44,8 43,0 39,7 44,8 44,9 42,9 56,8 (2) Imports 0,3 0,1 0,1 0,3 0,2 0,1 0,1 (3) Exports 19,7 18,0 13,2 24,1 9,8 23,5 31,5 (4) Total supply: (1) + (2) - (3) 25,4 25,1 26,5 21,0 35,3 19,5 25,3 Utilisations of fresh raspberries (5) Processing industry 40,0 32,0 36,0 29,0 37,0 47,0 58,0 (6) Of which: freezing industry 29,0 21,0 25,0 18,0 20,0 30,0 37,0 (7) Of which: juice industry 9,0 9,0 9,0 9,0 14,0 14,0 18,0 (8) Fresh consumption: (4) - (5) 0,0 0,0 0,0 0,0 0,0 0,0 0,0 (9) Production revised (*) 80,0 65,0 75,0 65,0 72,0 90,0 110,0 (10) Fresh consumption revised: (9) - (5) 40,0 33,0 39,0 36,0 35,0 43,0 52,0 Outputs of the processing industry Frozen raspberries 27,0 20,0 24,0 17,0 19,0 28,0 35,0 Of which exported 15,6 18,7 12,9 14,0 22,6 29,4 Juice concentrates 1,0 1,0 1,0 1,0 1,5 1,5 2,0 Jams and marmelades 2,0 2,0 2,0 2,5 2,5 2,5 2,5 Of which exported 0,5 0,8 1,0 1,0 0,8 0,5 Other products (prov. preserved, etc.) 1,0 1,0 1,0 1,0 1,0 1,0 1,0 (*) calculated on the basis of estimations of fresh consumption and industry utilisations Sources: estimations prepared by IERiGZ. Trade data: IERiGZ (98/99), COMEXT (99/00 to 04/05) EN 109 EN

110 Marketing of raspberries As for other soft fruits, producer groups and organisations play a negligible role in the marketing of raspberries to the semi-processing industry. Therefore, both production and marketing of raspberries are fragmented. Fruits are gathered in the collection points or directly delivered to the semi-processors. Nevertheless, the frozen fruit and vegetables industry maintains closer relations with the farmers than for other soft fruits due to the fragility of the fruits. In particular, contracts (some including minimum prices) play a more important role than for the other soft fruits and sour cherries. No cooling facilities exist at farmer or collection point levels although the extreme fragility of the fresh raspberries (susceptible in particular to grey mould) implies immediate cooling at a temperature of 4 6 C. As for other fruits, this is one of the weak areas of the commodity chain in Poland. Semi-processing of raspberries The bulk of frozen raspberries in Poland currently stands in the lower price range in the European market. Most fresh material is indeed frozen in tunnels. Due to the fragility of the fruit, freezing in stationery chambers is necessary to produce high quality IQF raspberries. Development of stationery freezing in the near future will help the country to improve the quality of its frozen products. Improvement of the marketing relations between producers and semi-processors will also be necessary to increase the quality and the competitiveness of the sector. More generally, the country benefits from several advantages that should help it to capture a more important share of the EU IQF market in the near future: it has a strong industrial basis, promising cultivars (in particular Polana produces good quality IQF when properly frozen) and an active research on new cultivars, appropriate natural conditions and specialised farms in the region of Lubelskie. Two thirds of the raw material are semi-processed by the frozen fruit and vegetables industry, the other third is used for the preparation of concentrate and purees. Outputs of both industries have increased strongly in the last years United Kingdom Until the end of the 1990s, the sector in Scotland was specialised in raspberry for the processing sector, most producers (around ) were members of the cooperative Scottish Soft Fruit Growers (SSFG). In order to strengthen the competitiveness of the sector a multi-annual EU support programme was implemented in the period (the Special Scheme for Raspberries Intended for Processing, see a short assessment in Text Box 5.1 in Annex). Despite this programme the industry faced difficulties on several fronts. It was specialised in the production of raspberries for IQF, canning and puree 83 partly for export markets where it competed upfront with other suppliers that were more competitive. Part of the harvest was 83 In 1998, out of tonnes of fresh raspberries produced in Scotland, tonnes were semi-processed in puree (900 tonnes were exported), tonnes were semi-processed into IQF (half exported), tonnes were used by the canning industry, 300 tonnes were sold to the fresh market and the rest was block-frozen. EN 110 EN

111 mechanised. However mechanisation proved difficult in particular due to the wet climate and the fact that the most suited cultivar, Glen Moy, was also highly susceptible to root rot 84, which decimated plantations. These factors entailed a steady reduction of the sector in the course of the 1990s and an almost complete collapse in the beginning of the 2000s. In 1998, tonnes of pulp, tonnes of IQF and tonnes of canned raspberries were produced. In recent years, quantities directed to processing stood below tonnes. Most of the processing capacity has also disappeared (there used to be two plants producing IQF and three canneries). Figure 5-5. Area under raspberry cultivation in Scotland (hectares) Source: Scottish Executive Nowadays, most production in Scotland is intended for the fresh market. Planted area dedicated to the processing market is very limited. Small quantities are still frozen by producers or semi-processed into purees Major third countries supplying frozen raspberries to the EU Currently, the major third countries supplying frozen raspberries to the EU are Chile and Serbia. However, the sector is also developing in other countries. This concerns for instance Bulgaria with hectares. Raspberry production is reported to be increasing in several countries, but sometimes it is mainly directed to the domestic market (e.g. in China). Given the significance of labour costs, it is likely that in the long term the photography of raspberry production in Europe will change to some extent. Hereafter we cover only the two current major third countries that supply the EU in frozen raspberries: Chile and Serbia. In the medium term, it could be possible that production from Chile would be replaced by lower labour cost countries (a process that took place already in the asparagus sector). 84 Root rot is caused by several related species of soil-borne fungi belonging to the genus Phytophtora (in particular Phytophtora fragariae var. rubi). The disease is extremely difficult to fight once it has infected the soil. It is more prevalent in heavy and poorly drained soils. EN 111 EN

112 Chile In Chile, the sector of raspberries has developed since the late 1980s targeting export markets. Production reached tonnes on average in the period with an average area of hectares. In this period 85% of all production were exported and 15% were used in the country. Exports of frozen raspberries represent more than 55% of total production. Twothirds of the exports of frozen raspberries are destined to the EU, the other third goes to the USA. Table 5-4. Raspberries in Chile: area (hectares), volume produced and exported (tonnes) Average Planted area Production Exports fresh raspberries Exports frozen raspberries Exports concentrate Sources: planted area and production: USDA (2003); trade data: Chilean Association of Frozen Fruits and Vegetables Major cultivars are Heritage (83%) and Meeker (8%). Other cultivars include Tulameen, Chilliwack, Autumn Bliss, Willamette and Skeena. Manual harvesting represents 95% of total production Serbia As part of the process of association and stabilisation with Western Balkan countries, Serbia benefits from very open access to the EU market. This preferential access was granted by the EU on a unilateral basis. It entered into force with autonomous measures in September In this framework, exports of frozen raspberries (as of any fresh or processed fruit and vegetable products) are free from any duty. Serbia implements a system of export subsidies in the sector of raspberries, which applies to raspberry juices only 85 and exports to the EU are eligible. Raspberry plantations have stabilised in the last four years in Serbia at around hectares. Serbia is the second-largest European producer of raspberries after Russia. Raspberry production areas are located in the hilly mountainous regions of the Centre-West of the country which offer extremely favourable conditions (high quality soils and continentaltemperate climate), most plantations are located at metres above sea level. The most important areas are in West Serbia (Arilje, Požega, Užice and Ljubovija) with 55% of production, North-West Serbia (Valjevo, Šabac, Osečina) with 35% of production and South- West Serbia (Brus, Aleksandrovac and Kuršumlija). Other regions (such as the plains in the Vojvodina) have proved less suited (alkaline soils and severe winter winds) although they would have allowed larger plantations. The sector consists mainly in small farms (of a total of 8 10 hectares) with an average area of raspberries of 0.20 hectare. There are approximately producers. Few plantations of hectares exist in the central part of Serbia. Producers rely mainly on family labour. Machine-harvesting is implemented in few farms at most. Plantations are usually in open-field without plastic protection and are not irrigated, part of them are old and need to be replaced. Production volume is therefore highly sensitive to weather conditions and can fluctuate widely year-on-year (e.g tonnes produced in 2002 and only tonnes in 2003 due to the drought). Cash-constrained producers use low levels of inputs. 85 Taric code , the subsidy level is of 10% of the export price. EN 112 EN

113 Table 5-5. Raspberry production in Serbia Area (hectares) Production ('000 tonnes) Source: Ministry of Agriculture, Forestry and Water Management The assortment of cultivars is rather modest with the predominance of Willamette, a rather old cultivar, which represents more than 90% of total production. Among other cultivars grown, Meeker was introduced a few years ago and is pushed by the semi-processing industry, this cultivar fares well in hilly protected areas but needs irrigation. Due to the predominance of a single cultivar, all harvesting takes place over a short period of four to six weeks in the summer (from late June to July). This increases the risks of crop damage by the weather and pressures prices downwards. Producers market individually their produce through collection points. These collection points are either set up by the processors or work on an independent basis. They deliver to the semiprocessors twice a day. Producer prices are negotiated prior to the harvest season during a meeting that gathers producers and processors. However, prices during the harvest tend to depart from the agreed price and do take into account the market situation of frozen raspberries. Part of the farmers establish individual contracts with a semi-processor before the season, some are tied in longer term relations while others have no established link with any processor. In recent years, semi-processors have made efforts to re-introduce the grading system (grades A and B) that was abandoned in the 1990s when the preoccupations of the sector turned more around quantity than quality of the products. In volume, 90% of raspberry production is frozen, around 10% is used by the processing industry (for production of juices, purees, jams), or is sold in the domestic retail market. Production of juices has developed in the last years with important product innovation. The capacity of the frozen fruit and vegetables industry allows processing of all the harvest but storage capacity does not allow exports under spread-delivery conditions. Cold stores often freeze raspberries in stationery chambers. In 2003 there were more than 100 cold stores in the country. In 2002 and 2003, Serbia exported 84% of all its raspberry production, 93% of all exports were frozen and 7% were chilled (pre-cooled). In 2002 and 2003, Serbia exported an annual average of tonnes of frozen raspberries, out of which: tonnes of IQF whole, tonnes of crumbles 86, tonnes of IQF broken and tonnes of block-frozen raspberries. Europe is the largest market for Serbian raspberries. The sector faces the increasing competition of Poland, where Polana developed several years ago, which competes well with the Willamette, and of emerging producers (other countries of South-Eastern Europe). Among the challenges that face the sector, Phytophtora (root rot), to which Willamette is susceptible, started to spread in the country in 1999 and has become an important concern. Infected areas are increasing partly due to the fact that farmers often use their own material for new plantations or buy non-certified plants. The only solution is a strict sanitary control of propagating material and, in the longer term, propagation of certified plants 86 Frozen crumbles are the disaggregated parts of the fruit (separated drupelets). They are used mainly by the jam industry and the fruit preparation industry. Serbia exports the so-called yoghurt quality crumble prepared for the fruit preparation industry which is extremely demanding regarding the cleanliness of the product. EN 113 EN

114 and registration of all producers and importers of plants in order to avoid propagation of contaminated material. Consolidation of the sector and foreign direct investments could lead to increased product differentiation and development of new products with higher value added (e.g. innovative raspberry juices, retail frozen products, puree packs, etc.) EU trade in semi-processed raspberries In order to facilitate the use of time series, in the present section we consider the external trade of the EU-15 (see Tables 1.4 to 1.7 for EU-25 trade data). The analysis focuses on external EU trade given that intra EU-15 trade in pre-cooled and semi-processed raspberries was rather limited (and covered partly re-exports). Analysis focuses on fresh raspberries (CN ) and frozen raspberries (CN ). There are no trade data relating specifically to raspberry single-strength juices and concentrates EU tariff protection Ad valorem import duties are 8.8% for fresh raspberries and 14.4% for frozen raspberries. For fresh and processed raspberries, access without import duties is granted for the countries of South-Eastern Europe as part of the Association and Stabilisation Process. Bulgaria, Romania and Turkey have free access for both fresh and frozen raspberries. A number of developing countries are granted access at a duty level of 5.3% for fresh raspberries and 10.9% for frozen raspberries as part of the Generalised System of Preferences (the so called group GSP-L 88 ). As part of the EU-Chile free trade agreement, Chile is granted free access for fresh raspberries and the duty on frozen raspberries is being progressively reduced (it currently stands at 50% of the MFN duty, i.e. 7.2% and will be reduced to 0 as from 2010). Egypt is exempted from duties for an annual quota of tonnes of frozen raspberries and Morocco enjoys free access for the same products. The two countries are subject to the duty of 5.3% for fresh raspberries as part of the GSP (same group as above). Until the EU enlargement of 2004, a system of Minimum Import Price was implemented with associated countries of Central Europe and the Baltic. This system covered fresh raspberries for processing and frozen raspberries. It is no longer implemented (see the chapter on strawberries for more details) We do not cover the product CN (frozen raspberries, blackberries, mulberries, loganberries, currants and gooseberries with added sugar) whose trade is very marginal (total EU-15 imports in the last three years amounted to around tonnes only). This group includes China. EN 114 EN

115 EU-15 imports of pre-cooled raspberries Table 5-6. EU-15 imports of fresh raspberries for processing (marketing year: July n / June n+1) / / / / / / / / / /05 Volume (tonnes) Hungary Poland Serbia Total Value ('000 ) Hungary Poland Serbia Total Unit value ( /tonne) Hungary Poland Serbia Total Source: COMEXT EU-15 imports of fresh raspberries for processing amounted to around tonnes until the beginning of the 2000s. Poland is the major supplier of the EU-15 with volumes that have considerably increased in 2003/2004 and 2004/2005. The volume in 2004/2005 (almost tonnes) was due to a very large harvest. The major importers are Austria and Germany which together account for more than two-thirds of EU-15 imports. The imported pre-cooled raspberries are used primarily for the preparation of concentrates and purees. Unit values of imports from several origins dropped in 2004/2005 due to a large harvest EU-15 imports of frozen raspberries EU imports of frozen raspberries have increased very dynamically since the 1980s: from 1983 to 2004, the average annual rate of growth in volume was 8.4%! 89 It is not possible to distinguish fresh raspberries for the fresh market and fresh raspberries for processing (pre-cooled). It is assumed that in the Table most exports are for processing although for Hungary in 2002/2003 and 2003/2004, the high level of unit values (higher than per tonne) implies that some of the raspberries were destined to fresh use. EN 115 EN

116 Figure 5-6. Extra EU (9, 12, 15) imports of frozen raspberries (tonnes) Chile Hungary Poland Yugoslavia & successor States Extra-EU (9, 12, 15) Source: COMEXT Serbia is by far the major supplier of the EU, with a market share above 50%. Its exports dropped in the period due to the war but have recovered since then, although they dropped in the last two marketing years owing to smaller harvests and increased competition. Chile and Poland took advantage of the lower exports of Serbia in and since then their exports have continued to grow. By contrast, the exports of Hungary that were stable at around tonnes have declined since the beginning of the 2000s. Unit values of imports indicate that the different suppliers are not specialised in the same products. Hungary exports the highest quality frozen raspberries, Chile and Serbia stand in the same price range below Hungary and Poland s exports are concentrated in the lower end of the spectrum. The largest extra EU-15 importers of frozen raspberries are Germany ( tonnes on average in the last three marketing years), France ( tonnes), Austria ( tonnes), Belgium (8 000 tonnes), the Netherlands (6 000 tonnes), the United Kingdom (5 000 tonnes) and Sweden (4 000 tonnes). Imports from Hungary are destined mainly to Austria, Finland, Germany and Sweden. The largest customers of Chile are France and Germany, both with tonnes in the last three marketing years. Germany is the destination of half of the exports of Poland to the EU-15 (9 000 tonnes). The largest importers of frozen raspberries from Serbia are Germany ( tonnes), France ( tonnes) and Austria (8 000 tonnes). EN 116 EN

117 Table 5-7. EU-15 imports of frozen raspberries (marketing year: July n / June n+1) 1995/ / / / / / / / / /05 Volume (tonnes) Bosnia-Herzegovina Bulgaria Chile China Croatia Hungary Poland Romania Turkey Serbia USA Other Total extra EU Value ('000 ) Bosnia-Herzegovina Bulgaria Chile China Croatia Hungary Poland Romania Turkey Serbia USA Other Total extra EU Market share (%) in volume Bosnia-Herzegovina 0,0 0,2 0,0 0,3 0,3 0,7 1,2 1,2 1,3 1,3 Bulgaria 1,5 1,0 1,3 1,0 1,5 1,2 1,6 1,7 2,4 2,6 Chile 21,2 12,5 25,5 12,1 14,8 15,4 16,3 11,2 19,7 14,0 China 0,2 0,0 0,2 0,4 0,2 0,2 0,6 0,6 1,0 0,5 Croatia 0,1 0,1 0,0 0,0 0,0 0,6 0,7 0,1 0,1 0,2 Hungary 7,0 9,3 8,9 8,5 10,5 4,5 4,8 3,0 2,0 2,3 Poland 18,3 13,9 13,8 20,9 19,9 20,8 12,9 12,7 21,0 23,3 Romania 0,1 0,0 0,1 0,0 0,1 0,3 0,5 0,3 0,8 0,4 Turkey 0,4 0,6 0,8 0,2 0,5 0,2 0,2 0,1 0,1 0,1 Serbia 48,1 60,6 47,0 51,4 50,3 53,8 60,8 68,0 50,0 53,4 USA 0,2 0,0 0,2 1,4 0,2 0,2 0,0 0,0 0,0 0,0 Other 2,9 1,7 2,3 3,6 1,6 2,1 0,4 1,2 1,5 1,9 Total extra EU ,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 Unit value ( /tonne) Bosnia-Herzegovina Bulgaria Chile China Croatia Hungary Poland Romania Turkey Serbia USA Other Total extra EU Source: COMEXT 5.6. Use of raspberries by the EU food processing industry The objective of the present section is to analyse the major uses of semi-processed raspberries and understand the dynamics of the different uses and their prospects for development. Owing to the lack of information on the various uses, it has not been possible to come up with a comprehensive picture EN 117 EN

118 EU supply of raspberries for processing and semi-processed products Table 5-8. Estimates of EU-25 supply of raspberries for processing (tonnes) Average EU-25 production of fresh raspberries for freezing Hungary France Poland United Kingdom Total EU EU-25 supply in frozen raspberries France Hungary Poland United Kingdom Total EU production EU-25 imports from third countries of which from Serbia of which from Chile EU-25 exports to third countries Total EU supply in frozen raspberries Share of EU production (%) 30,5 22,6 20,4 27,9 30,7 26,5 Share of imports from third countries (%) 69,5 77,4 79,6 72,1 69,3 73,5 EU supply of fresh raspberries for concentrate, canning (or direct puree / jam) Poland: for processing in the country EU-25 pre-cooled imports from Poland Hungary Other EU countries EU imports of pre-cooled raspberries from Serbia (1) Total Total EU-25 supply of raspberries for processing Share of imports from third countries in total supply (%) 51,8 60,3 64,5 54,0 46,0 54,4 (1): under the assumption that all imports of fresh raspberries destined to the processing industry. The EU-25 supply of raspberries for processing has increased in the 2000s from tonnes in 2000 and 2001 to more than tonnes in Total supply amounted to tonnes on average over the period , 54% in volume were imported from EU-25 third countries. Out of this total, frozen raspberries represented around two thirds with tonnes in , the other third consisted in raspberries directly processed fresh (e.g. into jams) or semi-processed into concentrate and puree. Imports of frozen raspberries from third countries represent more than 70% of total EU supply of frozen raspberries on average in , but their share is decreasing Uses There are six major areas of use of raspberries ranked by order of importance: (1) production of jam, jellies and marmalades with the use of broken IQF raspberries and crumbles; (2) production of fruit preparations to be incorporated in fresh dairy products with the use of crumbles mainly and whole and broken IQF; (3) preparation of pastries (industrial and small bakeries) with the use of whole IQF raspberries (in particular Meeker which does not give out juice when defrosting); 90 Sources: Ministry of Agriculture for the Czech Republic; ZMP for Germany; FruitVeB for Hungary; balance sheets prepared by IERiGŻ for Poland; own estimates for France (50% of all organised production, i.e. around 800 tonnes, of which 400 tonnes for freezing, the rest for purees and concentrate, etc.). United Kingdom: around tonnes frozen until the end of the 1990s, currently very low quantities; canning has also stopped, less than tonnes processed mainly into purees. Other countries: ratio of total fresh production estimated to be sent for processing (concentrate or purees): 2% for Spain (source: Ministry of Agriculture, Fisheries and Food); 10% for all other countries. No estimate prepared for the outputs of the concentrate industry (no data except for Poland). Trade data: COMEXT. EN 118 EN

119 (4) important quantities of whole IQF raspberries are consumed directly by households (frozen punnets) or used by the catering industry; (5) production of fruit-based drinks (juices, syrups) and use as ingredient for the drink industry (e.g. soft drinks, flavoured waters, etc.). The main form used by the juice and drink industry is the concentrate (triple-strength at 65 of brix) but other forms such as single-strength juice and purees are also used. The raw material used for semiprocessing into concentrate and purees is either fresh/pre-cooled raspberries or blockfrozen raspberries; (6) use by the freeze-drying industry (lyophilisation) for incorporation in final food products such as breakfast cereals (the semi-processed material used by the freezedrying industry is whole IQF). Frozen raspberries are traded in the following categories: raspberries whole unbroken, with different sub-categories, e.g. 95% whole and 5% broken (Grade A of Serbian raspberries) or 80% whole and 20% broken (so-called Selected Original Serbia), the first is currently priced at around per tonne and the second 1 400; raspberries whole and broken (e.g. 50% whole and 50% broken), priced at around per tonne; raspberry crumble, so-called yoghurt quality (very clean in terms of foreign bodies), priced at per tonne; raspberry crumble, priced at around 900 per tonne; block-frozen raspberries Jams, jellies and marmalades Raspberry jam is not as popular as strawberry jam in Europe. In most countries raspberry flavour ranks behind strawberry and apricot and, depending on countries, before or behind cherry (before in France but behind in Germany). In France, production of raspberry jam amounts to around tonnes, i.e. 7% of total jam and jelly production in the country. In Poland raspberry jam production is estimated at around tonnes (IERiGŻ). At the EU level raspberry jam production is estimated in the range of tonnes 91. Assuming that the jam is prepared on average with 45% of fruit leads to the estimate of tonnes of raspberry used as a raw material. As the jam market is currently stable, it is not expected that the demand for raspberries will increase in the coming years Fruit preparations In the same way as for strawberries, we use the estimates elaborated in GEM (2003) to analyse the volumes of raspberries used by the fruit preparation industry for the dairy industry. In France, the study estimates that the industry uses tonnes of raspberries. In Germany, the estimate stands at tonnes. At the level of the EU-15, the volume of raspberries used is 91 Based on total jam production figures (see chapter on strawberries for processing) with the following coefficients applied for the countries for which no specific data exist: 9% for Austria, Germany and Hungary; 7% for Belgium, Italy, Ireland, the Netherlands, Spain and the UK; 16% for Denmark and Finland. This leads to tonnes. Given the margin of error for the coefficients (all assumed except Germany and Denmark), the actual level is probably between and tonnes. EN 119 EN

120 estimated at around tonnes. For ice-creams, the same study estimates the use of raspberries at the level of tonnes in France. In Germany, raspberry is not an important flavour for ice-creams. No estimate for EU-15 is provided in the study for ice creams. At the EU-25 level, taking into account the importance of the fruit preparation industry in the new Member States (see chapter on strawberries for processing), the quantities of raspberries used by the industry could be estimated at up to tonnes. Given the growth dynamics of fruit yoghurts and other dairy products incorporating fruits, it is likely that the industry will use increased quantities of raspberries in the coming years Retail sector, pastry sector and catering industry Frozen fruit consumption is around tonnes in Germany, around directly by households, the rest is consumed via the food catering services. Frozen raspberries are among the preferred fruit in retail stores. In Germany they rank first in single-fruit punnets, behind fruit mixes. It is estimated that households consume between and tonnes of frozen raspberries annually (source: ZMP-CMA). Assuming that the shares of the different fruits in the catering industry are the same as for households direct consumption, it is estimated that frozen raspberry consumption amounts to around tonnes in Germany. At the EU level, volumes of frozen raspberries consumed by the catering industry, the pastry industry or bought directly by households are probably large, although it was not possible to prepare an estimate Juice and drink industry As a flavour, raspberry is not very popular in fruit-based drinks: its share in volume for Western European countries is estimated at 0.1% (Döhler Market Research), far below strawberry (0.4%) or blackcurrant (1.2%). The largest markets in the EU are in France, Sweden and the Czech Republic. France is a growing market with around nine million litres of fruit-based drinks in 2004, with in particular the development of flavoured waters. Sweden and the Czech Republic are both declining at around 0.5 million litres. Outside the EU, Russia is a large growing market with around 15 million litres Conclusions Raspberry production has increased dramatically in the world in the last two decades. Several countries have established themselves as suppliers of frozen raspberries of the EU, Serbia, the world leader, Chile and more recently Poland. Third countries provide more than 70% of all EU supply in frozen raspberries in the period However, their share is decreasing in the last years to the benefit of Poland. Poland has succeeded in taking over a sizeable share of the market in the last decade and seems poised to further improve its position owing to a number of advantages: tradition in growing raspberries; low labour costs; strong research on cultivar creation; existence of a large semi-processing industrial basis. The improvement of production at farm level and of marketing to the semi-processing industry will be critical in this process of consolidation. As for strawberries, the establishment of producer groups and organisations would be one solution to lift the major constraints at production level. This would apply also to Hungary. EN 120 EN

121 In the other Member States that do have higher labour costs, the raspberry sector focuses on the fresh market with the exception of France. In this Member State, the organised sector has succeeded to work on both markets with the use of dual-purpose cultivars. This strategy implies the existence of high value added semi-processed products that can remunerate the raw material at a higher price than the frozen raspberries from the major EU supplier countries. The part of the sector that worked primarily for the processing market in Scotland has almost totally disappeared. Specialisation on the fresh market implies a strong reactivity and adjustments to consumer needs and, in the long term, needs to be supported by a strong research system on cultivar creation. In the framework of the works relating to the reform of the common market organisation for fruit and vegetables, it would be useful to include the examination of what could be done to improve the situation in Member States with a lower level of producer organisation. Rural development programmes could also be mobilised for the improvement of quality and of marketing (for instance investments in cooling storage). Strong research involved in cultivar creation, whether for the processing and/or the fresh markets, is critical in ensuring the long-term competitiveness of the sector. Research is necessary on a wide range of subjects: suitability of cultivars for processing; resistance to important diseases; meeting consumer demand, improving taste and other quality criteria for fresh consumption. New concerns may emerge in the coming years such as the impact of global warming. EN 121 EN

122 Annex to Chapter 5 Table 5-9. Area under cultivation of raspberries in the EU (hectares) Average Area Austria Belgium Czech Republic Denmark Estonia Finland France Hungary Italy Latvia Lithuania Netherlands Poland Portugal Spain Sweden United Kingdom EU-15 (1) EU-10 (1) EU-25 (1) Blank cells: not available. No data available for Germany and Ireland. (1): some countries missing, coverage not complete. Table Average production costs of raspberries in family farms in Poland Direct real costs (PLN / hectare) (1) Fertilisers Phytosanitary products Seasonal remunerated work Other direct costs Indirect real costs (PLN / hectare) (2) Machinery utilisation Taxes, credit reimbursement, rent Other indirect costs Total real cost (PLN / hectare) (1) + (2) Estimated indirect costs (amortisation) (3) Of which plantations TOTAL COSTS (PLN / hectare) (1) + (2) + (3) Commercial yields (kg / hectare) (4) Production cost (PLN/kg) 1,68 1,80 1,69 Source: IERiGZ 92 For the sources: see Table 5.1. EN 122 EN

123 Table Major cultivars grown in Europe and third countries Country Major cultivars (% of production) EU COUNTRIES Major features of the cultivars Belgium Tulameen See comment for the United Kingdom France Heritage (80% together with Meeker) Meeker Other Released 1969 (USA). Autumn bearing (AB) type (mid-august, end-september), considered as the standard for AB cultivars. Round, small to medium-sized, good colour and flavour, good firmness. Cultivar suited both to freezing and fresh markets. Favoured fruit for processors that prefer small calibre. Good resistance to diseases, including some to root rot. Not suited to machine harvest. Summer bearing (SB) type (mid-june, end-july), high yield. Flattened conical, medium to large-sized, medium-red, firm and attractive fruit. High sugar content. Very versatile cultivar that can be used for fresh and processing markets. Excellent behaviour as IQF: does not outjuice when defrosting, hence preferred fruit for decoration and cakes. Better resistance to root rot than Willamette. Suitable to machine harvest. Not winter hardy. Autumn bliss, Glen Moy, Malling Promise Germany Tulameen See comment for the United Kingdom Hungary Fertödi Zamatos (60 70%) AB cultivar (released 1982, Hungary, research station of Fertöd). Mid-late cultivar, round medium-sized fruit. Malling Exploit SB type (released 1949, East Malling research station, UK). Early cultivar (end June end July). Large fruit with a conical shape, very suited to processing market, area decreasing. Malling Exploit used to be the dominant cultivar (90%) in Hungary. Tulameen See comment for the United Kingdom Netherlands Tulameen See comment for the United Kingdom Poland Malling Seedling (estimate of 40%, decreasing) Polana (almost 30%) Veten (10%, decreasing) Polka (6%, increasing) Malling Promise (4%, decreasing) Other (10%) SB cultivar. Most widely grown in Poland. Good compromise between resistance to frost and quality. Firm fruit with good resistance to transport. Cone-shaped fruit of larger size than Polana. Good for freezing and quite universal, also suited to the fresh market. Another cultivar, Malling Promise, used to be rather important in Poland but producers have given it up as it is difficult to grow and the fruit are not of sufficient quality. Released 1991 (Poland). AB fruiting cultivar (from mid-end August until first frost). Easy to cultivate, high yields, low treatment needs (although susceptible to root rot and verticilium wilt). Cone-shaped fruit of average or large size. Fragile fruit that does not resist transport well. Suited to IQF. Considered better for IQF than AB raspberries currently produced in Poland. Cultivation of Polana increased strongly in the last five years. Now areas are stable or decreasing (to the benefit of Polka). SB fruiting cultivar, released 1961 (Norway), was an important cultivar in Poland years ago. Suited to processing. Sensitive to mould. AB fruiting cultivar. Cone-shaped and large firm fruit. For both fresh and processing uses. Good taste and flavour. Early (harvest starts end July). Good shelf life. Fruit considered of better quality than Polana. SB cultivar (released 1945, East Malling, UK). Large, conical fruit. Good taste and aroma, suitable for processing. Canby, Willamette, Norna, Beskid, Laszka, Pokusa, Poranna Rosa, Malling Jewel Spain Glen Lyon (80%) Early cultivar that bears well transport Tulameen (20%) See comment for the United Kingdom United Kingdom Tulameen Released 1990 (British Columbia, Canada). SB cultivar (end June beg. August). One of the standard cultivars for the fresh market throughout the world. Large size, coneshaped, glossy and firm fruit. Not suited to IQF. Suited to protected cropping system. Susceptible to root rot. EN 123 EN

124 Country Major cultivars grown in Europe and third countries (continued) Major cultivars (% of production) Glen Ample Glen Prosen, Glen Moy Chile Heritage (80%) See comments for France Meeker (8%) See comments for France Serbia Chilliwack and Tulameen (10%) Willamette (90 95%) Other cultivars: Meeker, Promise and Gradina OTHER COUNTRIES Major features of the cultivars SB cultivar (beg. July to mid-august), large fruits, high yields. Most widely grown cultivar in the UK, together with Tulameen. Initially developed for machine harvesting but was found also suitable for the fresh market. Not suited to IQF (tends to crumble). Two cultivars that were suited to machine harvesting in Scotland but the cultivation stopped since the sector converted to the fresh market. Glen Moy (released in 1981) was suited to machine harvesting and yielded well. However, it was highly susceptible to root rot and plantations were decimated by the disease. See comment for the United Kingdom for Tulameen. Chilliwack: large fruits of good colour, firmness and quality that suits both fresh and processing markets. Yields similar to Willamette, suited to machine-harvest; strong resistance to post-harvest fruit rot. SB cultivar (created in Oregon in the 1940s), mid-june to mid-july. Medium-size to large, conical nearly round and firm fruit, with deep red and good raspberry flavour, easily removed from the bush. Cultivar more suited to processing than fresh market. Low yields. Not suited to cold climates, more tolerant to heat and drought than other cultivars. Fruits early: mid-june mid-july. Susceptible to root rot. Suited to machine harvest. Compiled from various sources EN 124 EN

125 Map 5-1. EU production of raspberries Text Box 5-1. The sector of raspberries for processing in Scotland and impact of the EU special scheme for raspberries intended for processing In the late 1980s, under the increased competition from Eastern European countries, the situation of raspberries for processing in Scotland deteriorated through a sharp reduction of prices. In order to improve the competitiveness of the sector, the Community created the Special Scheme for raspberries intended for processing, a multi-annual programme that lasted from 1992 until 2000 (Council Regulation (EEC) No 1991/92 and Commission Regulation (EEC) No 2252/92). Measures covered by the programme involved a one-off flat-rate grant to recognised producer organisations who submitted a programme to improve the competitiveness. The aid was fixed at ECU 50 per tonne of raspberries marketed by the PO (50% co-financed by the EU). Measures implemented as part of the programmes designed by the POs were co-financed by the EU (40%), the PO (35%) and the MS (25%) and aimed at developing mechanisation of harvest, improving plantations and raspberry cultivars and providing technical advice. The total Community budget was ECU 9.1 million. The programme focused mainly on the agricultural production level, with the largest efforts devoted to the mechanisation of harvesting and to the creation of new cultivars or improvement of existing ones suited to mechanical harvesting, through the Scottish Crop Research Institute. The cooperative Scottish Soft Fruit Growers Ltd (SSFG) was created in 1992 with the purpose of implementing the programme. EN 125 EN