Monitoring Agri-trade Policy The EU and major world players in Fruit and Vegetable Trade

Monitoring Agri-trade Policy The EU and major world players in Fruit and Vegetable Trade DG AGRICULTURE and RURAL DEVELOPMENT July 212 Contents: Trade in fruit and vegetables: balance sheet Trade structure of fruit and vegetables Destinations of EU exports of F&V Origins of imported F&V Closer look at : the EU and its competitors Closer look at China: top world F&V exporter and an important EU partner Introduction This MAP is a statistical snapshot on EU trade in fresh and processed fruit and vegetables. It also looks at trade developments of EU major trade partners such as, Turkey and China. Over the last decade the EU has been constantly recording a trade deficit in fresh and processed fruit and vegetables, totalling 9.8 billion in 211. The deficit grows to 11.9 billion, if trade in nuts is included. However, a closer look at the balance reveals that this figure is mainly due to the deficit in trade in the fruit sector, particularly in the tropical fruit group. In contrast, trade in vegetables, both fresh and processed is rather balanced. This MAP also shows that although EU exports of fresh fruit and vegetables have risen impressively over the last decade to our top partner,, the EU relative share in n imports is diminishing as Turkey and China are finding their way to the n market. Turkey's impressive expansion in tomato exports is highlighted as it seeks to look into former Soviet Union markets. In the context of trade with this MAP also finds that in spite of the ban on imports of fresh vegetables from the EU due to the E.coli crisis in 211, total EU exports of vegetables to were still higher than in the year 21. This is due to better sales in the 1 st half of 211 than in the 1 st half in 21. Trade in fruit and vegetables: balance sheet Over the last decade the EU has been constantly recording a trade deficit in fresh and processed fruit and vegetables, totalling 9.8 billion in 211. The deficit grows to 11.9 billion if trade in nuts is included. Since 1999 EU exports of fruit, vegetables and nuts have grown impressively by close to 16% to the level of 8.5 billion and continue the growing trend. In the same period, however, imports have picked up quite considerably as well. In absolute terms the gain in imports was greater than in exports imports went up by 8.4 billion (from 12 billion in 1999) while exports rose by 5.2 billion (from 3.3 billion). As a result, although on average exports grew at the rate of 8.2%, almost double the growth of 1

imports, the gap between exports and imports has widened, rising from a 8.7 billion deficit in 1999 to a 11.9 billion deficit in 211. In the most recent years, however, the trade deficit has gone down from the all-time high of 12.9 billion ( 11.1 billion with nuts excluded) in 28 to 11.9 billion in 211 ( 9.8 billion) (see Graph 1). Graph 1: EU27 trade in fresh and processed fruit and vegetables (in billion ) 25 2 that the deficit is deepening mainly on the tropical fruit group, in particular for bananas and pineapples. The deficit is naturally a result of growing imports uncompensated by exports as the EU production of tropical fruit is marginal. Imports of fresh fruit ( than tropical) are growing at a similar pace. Table grapes and oranges were the top import products of this group with the highest increases. However, with exports picking up, the trade deficit in the fresh fruit group is not as pronounced as in the category of tropical fruit. As can been seen below, since 25 exports of fresh fruit have doubled. This is mainly due to the improved sales of fresh apples and pears. 15 1 5 Table 1: Trade in fruit and vegetables in billion Note: the balance includes trade in nuts In our analysis we have broken down the categories of fruit and vegetables into tropical fruit, fresh fruit ( than tropical), nuts ( than tropical), processed fruit, fresh vegetables, potatoes, and processed vegetables 1. Table 1 provides a snapshot on trade in fruit and vegetables since 1999 with a detailed subdivision into selected categories of F&V. 2 It is noticeable that the trade balance is constantly worsening in the fruit sector, while in the vegetable and processed F&V it is more or less constant and even slightly improving. A closer look at fruit reveals 1 Note that the analyzed categories from chapter 7,8, 2 of the Combined Nomenclature with some exceptions. The exclusions in particular cover peppers for industrial use, dried leguminous vegetables and manioc from chapter 7, sweet corn, olives, yams, sweet potatoes, palm hearts, peanut butter, grape must from chapter 2. 2-5 -1-15 1999 2 21 22 23 24 25 26 27 28 29 21 211 EXPORTS IMPORTS BALANCE The subcategories for fruit and vegetables are the following: Fresh fruit and nuts a) tropical fruit: CN 81, 83, 84; b) fresh fruit CN 85-81; c) nuts CN 82 and 813531; 813539; Processed fruit: CN 811, 812, CN ex 813, 814, 26, 27,CN ex 28; CN ex 29; Fresh vegetables: a) fresh vegetables (excluding potatoes): CN 72-ex79; b) potatoes: CN 71; Processed vegetables: CN ex21, CN 22, CN 23, CN ex24, CN ex25, CN ex 71, CN ex711, CN ex 712. 2 Product category 1999 25 211 Compound annual growth rate EXPORTS Fresh fruit&nuts,8 1,5 3, 11,% Tropical,,1,2 1,2% Fresh fruit,7 1,2 2,6 11, Nuts,1,2,2 6,1% Processed fruit,7,9 1,4 6,3% Fresh vegetables,8 1, 2,1 8,4% Fresh vegs excl. potatoes,6,8 1,4 7,8% Potatoes,2,2,7 9,8% Processed vegetables 1, 1,3 2,1 6,4% TOTAL EXPORTS of F&V 3,3 4,7 8,5 8,2% IMPORTS Fresh fruit&nuts 7,5 1,7 12,3 4,2% Tropical 3, 4, 4,9 4,1% Fresh fruit 3,2 4,5 5, 3,8% Nuts 1,2 2,2 2,3 5, Processed fruit 2,8 3,2 4,6 4,2% Fresh vegetables,8 1,5 2, 7, Fresh vegs excl. potatoes,7 1,3 1,8 8,3% Potatoes,1,2,2 1,4% Processed vegetables 1, 1,2 1,6 4,4% TOTAL IMPORTS of F&V 12, 16,6 2,5 4, NET TRADE (exports - imports) Fresh fruit&nuts -6,6-9,3-9,3 - Tropical -3, -3,9-4,7 - Fresh fruit -2,5-3,3-2,4 - Nuts -1,1-2, -2,2 - Processed fruit -2,1-2,3-3,1 - Fresh vegetables -,1 -,5,1 - Fresh vegs excl. potatoes -,1 -,5 -,4 - Potatoes,1,,5 - Processed vegetables,,1,4 - TOTAL NET TRADE -8,7-11,9-11,9 - In the case of processed fruit the EU trade balance has always been negative and has particularly worsened in the last few years. Prepared or preserved fruit, frozen fruit, and juices recorded the highest import gains over the last decade. Juices such as apple juice or pineapple juice picked up the most after 25. See Graph 2 for the balance of trade in fresh and processed fruit (excluding nuts).

Graph 2: EU27 trade in fresh and processed fruit (in billion) 2 15 1 5-5 -1-15 1999 2 21 22 23 24 25 26 27 28 29 21 211 Fruit exports (fresh and processed) Balance (fruit) Fruit imports (fresh and processed) EU imports and exports of fresh vegetables have doubled over the last decade but their trade is more or less balanced. In 27, total imports of fresh vegetables peaked to a decade high level of 2.2 billion mainly in sweet peppers and tomatoes. In the last two years imports were close to the 27 level, but growing exports managed to keep the balance around zero or slightly positive in 211. The major contributors to growth on the export side were potatoes, tomatoes, onions, sweet peppers. Trade in processed vegetables has been rather balanced in the last decade, with a slight surplus observed in the most recent years. This is due to higher growth of exports of processed vegetables. See Graph 3 for the balance of trade in fresh and processed vegetables. Graph 3: EU27 trade in fresh and processed vegetables (in billion). 5 4 Trade structure of fruit and vegetables Fresh vegetables In 211, EU fresh vegetable exports reached around 2.1 billion. Since 1999 the value of vegetable exports has more than doubled. The gains were the greatest for such products as (seed, fresh or chilled) potatoes, tomatoes, onions and sweet peppers. Exports of potatoes rose threefold (up to.7 billion in 21), tomatoes twofold (up to 241 million), onions threefold (up to 197 million), sweet peppers twofold (up to 235 million). Other fast growing exports of vegetables included mushrooms (Agaricus type), cauliflower, cabbage, lettuce, carrots, and aubergines among s. The EU exports of fresh vegetables are currently dominated by potatoes (28% of total vegetable exports), tomatoes, sweet peppers, onions and shallots (see Figure 1). As for imports of fresh vegetables, in terms of value the EU supplies have increased by over 4% to 2 billion in 211. Two thirds of the import gains were for tomatoes, beans and sweet peppers. In value terms imports of tomatoes increased twofold (both in value and volume terms) to reach 349 million in 211 (with a peak of 433 million in 21), beans fourfold up to 345 million, sweet peppers six-fold up to 274 million. In the case of major products, the growth of imports was also quite significant. For example, asparagus saw a fourfold increase (up to 126 million), cucumbers threefold (up to 19 million), garlic - threefold (up to 131 million), onions (and shallots) near threefold (up to 173 million). The top imported vegetables are tomatoes, followed by beans, sweet peppers, potatoes, onions, and asparagus. Tomatoes alone now constitute the biggest share of imported fresh vegetables they make up for around one fifth of imports (see Figure 1 for the structure of imports of vegetables) 3 2 1-1 -2 1999 2 21 22 23 24 25 26 27 28 29 21 211 Veg exports (fresh and processed) Veg imports (fresh and processed) Balance (veg) Processed vegetables The import structure of processed vegetables is dominated by prepared or preserved tomatoes (tomato paste), mushrooms and asparagus. They make up almost half of EU imports of processed vegetables. Over the last decade processed tomatoes recorded the biggest gain in imports, their import value going up from 79.4 million in 1999 to 256.3 million in 211. 3

On the export side, processed tomatoes and potatoes take up the greatest share (over half of EU exports of processed vegetables). Processed potatoes gained the most over the last decade, having gone up six-fold up to the value of around.6 billion in 211. Figure 1: Structure of trade in fresh and processed vegetables onions and shallots 7% EU27 Import structure of fresh vegetables peas 3% garlic 21% asparagus potatoes 8% tomatoes 21% asparagus 2% cabbage lettuce 2% cucumbers 2% cauliflowers 3% mushrooms (agaricus) 4% onions and shallots 11% EU27 Export structure of fresh vegetables 24% potatoes 28% sweet peppers 13% beans 1 Average EU imports of fresh vegetables in 29-211: 1.9 billion tomatoes 12% sweet peppers 12% Average EU exports of fresh vegetables in 29-211: 1.8 billion EU27 Import structure of processed vegetables EU27 Export structure of processed vegetables 4 3 sweet peppers 3% cucumbers & gherkins asparagus 12% mushrooms 1 tomatoes 17% Average EU imports of processed vegetables in 29-211 : 1.5 billion cucumbers & gherkins 1% beans 4% potatoes 29% tomatoes 31% Average EU exports of processed vegetables in 29-211 : 1.9 billion Fresh fruit and nuts In value terms exports of fresh fruit and nuts have tripled since 1999 and show a continuously growing trend. In 211, they amounted to around 3 billion. More than a fourth of gains in exports since 1999 can be ascribed to apples and pears, which are the major fruit exported by the EU. In value terms, apples exports increased five-fold (from 149.5 million in 1999 to 76 million in 211), and those of pears seven-fold (from 42 million in 1999 to 277.2 million in 211). Imports of fruit and nuts have been steadily growing over the period. They were up over 6% compared to 1999, reaching over 12billion in 211. The largest import gains were observed for bananas, pineapples, oranges, table grapes, and sultanas. Other fruit, which showed quite a significant growth, albeit their individual share is small, include mandarins, melons, watermelons, and strawberries. See Figure 2 for the composition of exports and imports of fresh fruit and nuts. 4 Processed fruit Over the last decade exports of processed fruit have doubled and reached 1.4 billion in 211. In the fruit category the fastest to grow were jams, fruit jellies and marmalades (from 17 million to 274 million). Figure 2 shows that together with fruit juice they are dominating category of exports. Imports of processed fruit have also been on the up, exceeding the export sales by over 3 billion. Since 1999 important increases were recorded in particular for prepared and preserved fruit and frozen fruit. The outstanding products were frozen raspberries (imports up from 7 million in 1999 to 173 million in 211), frozen strawberries ( 68.2 million to 146 million), prepared or preserved nuts and seeds (imports up from 172 million to 435 million). Imports of juices gained the most in the second half of the last decade, where the value of total imports went up by half. In particular, imports of pineapple juice doubled both in value and volume (up to 25 million

or 232.4 thousand tonnes in 211). Apple juice also saw a significant increase in value (from 126 million to 261.5 million in 211) but this translated into a 2% increase in volume (up to 227.4 thousand tonnes). 27 was the record year for apple juice imports 419 thousand tonnes landed on the EU market worth some 393 million (over half being from China). Orange juice imports remain roughly the same and are apparently attractive price-wise. The import value has not changed much since 1999 (around 1 billion) but the volume of imports went up from 984 thousand tonnes to 1.2 million tonnes. Figure 2: Structure of trade in fresh and processed fruit and nuts EU import structure of fresh fruit and nuts EU27 export structure of fresh fruit and nuts 3 pears 2% sultanas 3% oranges 4% hazelnuts apples 39% pineapples bananas 23% table grapes 9% almonds Average EU imports of fresh fruit and nuts in 29-211: 11.8 billion peaches 4% nectarines oranges table grapes clementines kiwifruit apears 9% apples 22% Average EU exports of fresh fruit and nuts in 29-211: 2.6 billion EU27 Import structure of processed fruit EU27 Export structure of processed fruit pineapple juice fruit juices 9% apple juice 1% 33% prepared of preserved fruit 31% fruit juices 38% frozen fruit 1 frozen fruit 9% orange juice 24% Average EU imports of processed fruit in 29-211: 4 billion jams, jellies, marmalades 2% Average EU exports of processed fruit in 1999-211: 1.2 billion Destinations of EU exports of F&V The top destinations for EU exports of fruits and vegetables, both fresh and processed, are, the neighbouring EFTA countries (Norway, Switzerland), the US and Japan (see Table 2 ), the latter being mainly the destination for EU processed products. : the top destination for EU F&V exports is the leading destination for EU exports of fruit and vegetables. It buys roughly one third of EU fresh vegetables and fruit. EU exports of fresh fruit and vegetables to have sprang up almost eightfold since the beginning of the decade, and surpassed sales to Switzerland, the EU leading buyer of EU fruit and vegetables until 24-25. In 211, bought around 1.2 billion worth of fresh and processed fruit (of which 1 billion is for fresh fruit 5 only) and 886 million worth of fresh and processed vegetables (of which 682 million is for fresh vegetables). This means that it imports twice as much of F&V as Switzerland and four times as much as Norway. The fast growing sales to include fresh tomatoes (from 6 million in 1999 to 116.5 million in 211), fresh potatoes (from 7 million in 1999 to 198.5 million in 211), fresh apples (from 53 million to 284 million), and pears (from 19 million to 169 million), among s. The US: the only major buyer of F&V with declining imports from the EU As shown by Table 2 in absolute terms in the aggregate categories of F&V, exports to all of EU main destinations increased, except to the US. In all

categories a rather downward trend can be observed in the period from 1999, although in 211 a slight increase was recorded in trade of processed F&V as compared to 21. The biggest slump in exports to the US occurred in fresh vegetables (down 47% since 1999), mainly of tomatoes (from 72 million in 1999 to 1.8 million in 211), apparently due to the competition with Mexican exports. From among the processed vegetables some gains were recorded for processed tomatoes but processed artichokes suffered the most (exports down by 48 million). The US managed to remain the leading destination for the processed vegetables in 211 but is catching up quite fast. As for fruit sales to the US, the situation does not look better either a moderate decrease in exports of fresh fruit (down by 1%) due to the loss on clementines, the major product sold to the US (covering over half of EU fresh fruit exports), and a slight deterioration in the processed fruit (down 2%, although in 21 the drop was bigger 21%). It seems that the EU almost completely lost the US market for apple juice from some 4 million in 1999 (and peak of 87 million in 2) the export went down to 2.4 million in 211. This loss can be attributed to the rapid expansion of China on the US market (see further in the text). the amount is taken up by fresh onions. Other vegetables include potatoes and carrots. Graphs 4 and 5 show the top destinations for major fruit and vegetables exported by the EU. As can be seen, and EFTA countries are the leading buyers of EU tomatoes, sweet peppers and cucumbers, while in the case of onions, it is Senegal which ranks the highest: it receives around 2% of EU onion exports. EU apple and pear exports go not only to the traditional destinations ( and EFTA) but more and more to new markets. Apples find their recipients in the Middle East countries while pears reach even the Brazilian market. Graph 4: Exports of selected fresh vegetables by top destinations (average 29-211 in thousand tonnes) SWEET PEPPERS CUCUMBERS ONIONS Ivory Coast Senegal Norway Switzerland Switzerland USA 7 14 14 19 22 36 66 total exp: 718 k tonnes total exp: 43 k tonnes total exp: 12 k tonnes 131 135, Mediterranean and Middle East countries: the chief buyers of EU potatoes TOMATOES Switzerland Norway 23 21 total exp: 178 k tonnes 98 Mediterranean and Middle East countries are the chief buyers of EU potatoes, accounting together for around 4% of EU sales. Egypt and Algeria are the biggest buyers of this product in the region. Countrywise, however, again stands out as the top destination for potatoes, purchasing around 1/3 of EU potatoes. Amounting to 228 million in 211 (65 thousand tonnes), EU sales of potatoes to were record high the EU sold twice as much as in 21 in value terms (3% more in volume terms). It is also worth mentioning that Senegal rises as a quite an important market for the EU fresh vegetables. From 1999 EU exports sprang up six-fold to reach 46.2 million worth of fresh vegetables sold in Senegal in 211. It is still less than in 21, a year of record sales amounting to 6 million. Around 6% of 2 4 6 8 1 12 14 16 Graph 5: Exports of selected fruit to top destinations (average 29-21 in thousand tonnes) APPLES PEARS KIWIFRUIT CLEMENTINES Switzerland USA Ukraine USA Norway Brazil Saudi Arabia Algeria 18 12 28 2 32 33 39 51 51 93 218 total exp: 25 k tonnes total imp: 186 k tonnes total exp: 33 tonnes total exp: 1213 k tonnes 1 2 3 4 5 6 535 6

Table 2: Top buyers and top suppliers of F&V to the EU TOP SUPPLIERS of vegetables TOP BUYERS OF VEGETABLES (fresh and processed, incl. potatoes) (fresh and processed, incl. potatoes) 1999 211 1999 211 1999 211 1999 211 value (in m) % share value (in m) % share China 323,7 758,8 17,8% 2,9% 156,8 886,4 8,9% 21, Morocco 25,8 565,8 13,8% 15, Switzerland 249, 394,7 14,1% 9, Turkey 211,7 321,6 11,7% 8,9% USA 366,6 343,3 2,7% 8,3% Israel 16,2 291,9 5,8% 8,% Norway 76,1 222,4 4,3% 5,4% Egypt 93,9 267,6 5,2% 7,4% Japan 86,6 159,1 4,9% 3,9% Extra EU-27 1.816,8 3.627, 1,% 1,% Extra EU-27 1.767,4 4.131,5 1,% 1,% TOP SUPPLIERS of FRUIT (fresh, processed & nuts) TOP BUYERS OF FRUIT (fresh, processed & nuts) 1999 211 1999 211 1999 211 1999 211 value (in m) % share value (in m) % share Turkey 1.28,2 2.65,6 11,8% 12,3% 163,9 1.232,1 1,7% 28,% USA 1.13,6 1.678,8 1,8% 1,% Switzerland 292,6 576,8 19,1% 13,1% Brazil 1.32,5 1.412,2 1,1% 8,4% Norway 19,3 354,8 7,1% 8,1% South Africa 816,6 1.194,6 8,% 7,1% USA 249,9 236,4 16,3% 5,4% Costa Rica 56,4 1.9,8 5, 6, Ukraine 17,3 152,5 1,1% 3, Extra EU-27 1.222,8 16.831,9 1,% 1,% Extra EU-27 1.534, 4.41,8 1,% 1,% Origins of imported F&V Mediterranean region: key supplier of fresh vegetables to the EU Most of fresh vegetables are imported from four Mediterranean countries: Morocco, Israel, Turkey, and Egypt. Imports from the region are gradually increasing due to improved market access to the EU under preferential trade agreements with these countries. The leading supplier, Morocco, covers around 3% of EU fresh vegetable imports. Since 1999 imports from this country doubled and amounted to 534.4 million in 211. Half of Moroccan supplies is taken up by tomatoes. Other imported vegetables include sweet peppers, beans, courgettes and cucumbers. Graph 6 shows the volume of imports of selected fresh vegetables from the top suppliers. For tomatoes, sweet peppers and garlic the three leading suppliers cover around 9% of EU import needs, while in the case of onions their share is about 6%. As can been seen, China stands out as the EU top supplier of garlic (6 share), and Morocco is the unquestioned leader in tomato supplies (67% share). Graph 6: Imports of selected fresh vegetables by origin (average 29-211 in thousand tonnes) SWEET PEPPERS GARLIC ONIONS TOMATOES Chile New Zealand Egypt Egypt Argentina China Turkey Morocco Israel Israel Turkey Morocco 3 18 22 35 43 51 49 58 83 88 13 total imp: 36 k tonnes total imp: 78 k tonnes total imp: 218 k tonnes total imp: 493 k tonnes 5 1 15 2 25 3 35 332 7 When it comes to imports of processed vegetables, China comes on top with 674 million worth of products sold to the EU in 211, double of the value sold in 1999. One fifth of imports is taken up by prepared or preserved tomatoes (tomato paste); an fifth is constituted by processed mushrooms (Agaricus and ). Even though China does not enjoy preferential access to the EU market for processed tomatoes, in value terms imports of this product from China have sprung up eight-fold since 1999 (from 17.6 million up to 134 million) and over nine-fold in volume terms (from 24.6 thousand tonnes up to 232 thousand tonnes). In the case of mushrooms no particular growth was observed, mainly because of existing quotas for processed mushrooms. Other important suppliers of processed vegetables include Turkey (prepared or preserved cucumbers, sweet peppers), Peru (prepared or preserved asparagus), India (dried onions, cucumbers and gherkins) as well the USA (prepared or preserved tomatoes, dried onions). The Southern Hemisphere countries: key suppliers of fresh fruit to the EU As for fruit imports, 2% of the 5 billion worth of fresh fruit (i.e. excluding tropical fruit and nuts) supplies come from South Africa, followed by Chile, Turkey, Argentina and Brazil among s. Mediterranean countries (i.e. Turkey, Morocco, Egypt, Israel) are also responsible for around 2% of fresh fruit imports. It is worth noting that from among the Mediterranean countries the most impressive rise in fresh fruit imports in relative terms was observed for Egypt (from 12 million in 1999 to 187.5 million in 211), a supplier of fresh table grapes, sweet oranges, fresh strawberries. South Africa and Chile specialize in supplies of such fruit as table grapes and apples. Imports from the Southern Hemisphere countries,

rather complement the supplies of fruit on the EU market as there is only a limited overlap with the production season in the EU (e.g. apple exports take place mostly in April July, while the EU production season starts in September). Latin American countries (Costa Rica, Ecuador, Colombia) are major suppliers of tropical fruit to the EU (mainly bananas). See Graph 7 for the volume of imports of selected fruit and the leading suppliers. Graph 7: Imports of selected fresh fruit by origin (average 29-211 in thousand tonnes) APPLES ORANGES GRAPES BANANAS Costa Rica Colombia Ecuador Egypt Chile South Africa Morocco Egypt South Africa South Africa Chile New Zealand 45 94 121 122 167 17 146 176 361 795 total imp: 4.646 k tonnes total imp: 574 k tonnes total imp: 862 k tonnes total imp: 64 k tonnes 1.211 1.329 thousand tonnes) in 1999 to 66.9 million (67.7 thousand tonnes) in 211. It is also worth noting that with all the major suppliers of fresh fruit and vegetables, except for Argentina and Brazil, the EU has signed preferential trade agreements 3. For information regarding trade with EU leading buyers/suppliers see tables 2 and 3. The tables present the EU major trading partners in fruit and vegetables and the main traded products for selected partners. The list of buyers includes Saudi Arabia as it is an important buyer of EU processed fruit and vegetables. In 211 EU exports of processed vegetables and processed fruit to Saudi Arabia reached 99.6 million and 54.6 million, respectively (around 4% of the total exports of processed F&V), almost on a par with Australia the buyer of 129 million worth of processed vegetables and 39.9 million worth of processed fruit. 2 4 6 8 1. 1.2 1.4 The US is the biggest supplier of nuts (almonds, pistachios, walnuts) to the EU market. Over the last decade nut imports from the US doubled to reach around 1.1 billion. The US is followed by Turkey (549 million in 211) and Iran (around 136.8 million in 211). Brazil along with Turkey are the two leading suppliers of processed fruit. The bulk of Brazilian supplies is orange juice, while Turkey supplies mainly processed mixtures of nuts and seeds, as well dried apricots. These two countries are followed by China, which is gradually increasing its exports to the EU (fivefold increase since 1999) and relative import share. The outstanding products exported by China are apple juice and frozen strawberries. It's worth noting that in the case of apple juice China now covers around of EU import needs (a nine-fold increase since 1999 in value up to 113.3 million in 211 and seven-fold increase in volume up to 113.9 thousand tonnes), while in 1999 it had only a 1% share in EU imports. In the case of frozen strawberries the situation is similar now around half of EU imports of these fruit come from China, while at the beginning of the last decade, China had only a minor share in EU supplies. Frozen strawberry imports from China over the last decade went up from 7.9 million (9.7 3 Euromed Association Agreements (for Morocco, Egypt, Israel), Trade, Development and Cooperation Agreement (South Africa); EU-Chile Free Trade Agreement. Turkey forms a Custom Union with the EU, but generally agricultural products are excluded from the scope of the union (there are some limited exceptions). 8

Figure 3: Origin and destination of fruit and vegetables main partners Buyers Main products exported by the EU Suppliers Main products imported by the EU apples, pears, table grapes, peaches, nectarines, kiwifruit; mixtures of fruit prep. or preserved, frozen sour cherries, jams and fruit jellies, mixtures of fruit juices, fresh tomatoes, (fresh and frozen) potatoes, sweet peppers, mushrooms (Agaricus), prep. or pres. peas, prep. or pres. potatoes and tomatoes Turkey hazelnuts, sultanas, dried figs, fresh cherries, prep. or pres. nuts and seeds,, dried apricots, fresh tomatoes, sweet peppers, cucumbers, prep. or pres. cucumbers & gherkins, frozen and prep or pres. sweet peppers, dried tomatoes Switzerland table grapes, oranges, strawberries, clementines, melons, nectarines, frozen fruit, fruit juices, fresh tomatoes, sweet pepers, asparagus, cauliflowers, prep. or pres. mixtures of vegs, prep.or pres. tomatoes USA almonds, pistachios, walnuts, fresh or dried grapes, grapefruit, dried prunes, orange juice, grapefruit juice, prep. or pres. tomatoes, dried onions USA clementines, kiwifruit, chestnuts, almonds, jams, jellies, fruit or veg. juices, sweet peppers, fresh tomatoes,truffles, fresh or chilled vegs, prep. or pres. tomatoes Brazil melons, guavas, mangoes, table grapes, apples; orange juice Norway fresh apples, table grapes, fresh strawberries, pears, oranges, clementines, apple juice, orange juice, fresh tomatoes, sweet peppers, cauliflowers, cabbage lettuce, potatoes, South Africa fresh table grapes, sweet oranges, apples and (fresh and prep. or pres.) pears, prep. or pres. peaches, prep. or pres. apricots Japan fruit juices and jams & marmalades, prep. or pres. tomatoes Costa Rica bananas, pineapples, melons and watermelons, pineapple juice Ukraine Australia fresh apples, kiwifruit, peaches, mandarins, table grapes; fruit juices;(fresh) sweet peppers and tomatoes jams and marmalades, prep. or preserved potatoes; frozen cooked potatoes fresh and frozen potatoes, prep.or pres. Saudi Arabia tomatoes, apple juice Chile China Morocco table grapes, apples, pears, kiwifruit apple juice, frozen strawberries, frozen fruit and nuts, mandarins, garlic, prep. or preserved tomatoes, prep. or pres. asparagus, prep. or pres. mushrooms fresh tomatoes, beans, sweet peppers, courgettes Closer look at : the EU and its competitors is the EU's primary destination for the exports of fruit and vegetables. Although EU exports have grown impressively over the last decade, the EU relative share in 's imports is gradually diminishing as exporters such as China and Turkey are making their way to the n market. The EU's position in the fruit sector is still quite firm, but the competition on the vegetable market seems to be more intense. Diminishing EU relative share in n imports to the advantage of China and Turkey The EU's diminishing share in n's imports can be particularly observed in the fresh vegetable sector. Over the last decade 's imports from the world of fresh vegetables 4 increased nine-fold (from 217 million in 2 to 2 billion in 211). The EU share in these imports is still high (around 3% in value terms) but it is lower than at the beginning of the decade (around 4%). The EU still covers near half of n imports of potatoes, but at the beginning of the decade, nearly all 's imports were coming from the EU. By contrast, Turkey's relative share in n imports sprang impressively from just 3% in 2 to over 2% in recent years. With potatoes excluded from the picture as they are exported by Turkey in negligible amounts, in absolute terms Turkey's exports to are catching up with the EU (and in 29 were even higher). In 2 imported around 6.2 million 4 Including potatoes 9

worth of fresh vegetables (less potatoes) from Turkey and 57.1 million from the EU. However, in 211 Turkey sent 37 million worth of fresh vegetable supplies, whereas the EU sold vegetables for nearly 4 million (in 21 Turkey's sales were almost on a par with the EU see Graph 8). Graph 8: 's imports of fresh vegetables (the figure does not include potatoes) from its top suppliers (in million ) 45 4 35 3 25 The flagship products from Turkey responsible for this impressive performance were tomatoes and cucumbers. In 2, imported 4.8 million worth of tomatoes (2.3 thousand tonnes) from Turkey, while the EU sold 3.8 million (9 thousand tonnes). In 211, Turkey supplied 296 million worth of tomatoes (375 thousand tonnes), outstripping the EU 3.5 times, which only managed to sell 85.7 million worth of tomatoes (82.7 thousand tonnes). Thus, in value terms the Turkish share in 's imports of tomatoes sprang from just 1% in 2 to over in 211, while the EU share went up from 8% to just 1 (see Graph 9). On top of that, China is also advancing on the tomato market: in 211 its sales of tomatoes to were worth 62 million (72 thousand tonnes), up from 3.9 million (12 thousand tonnes) in 2. 2 15 1 5 2 21 22 23 24 25 26 27 28 29 21 211 See box no.1 on Turkish impressive expansion to and former Soviet Union tomato markets. Source: GTA EU China Turkey BOX no. 1: Turkish expansion to and former Soviet Union markets 4, 35, 3, 25, 2, 15, 1, 5, Source: GTA Turkey's tomato exports to and former Soviet Union countries in tonnes 2 21 22 23 24 25 26 27 28 29 21 211 EU27 Ukraine Moldova In 211: 335 k tonnes or 183.9 million According to FAOSTAT Turkey is the world's 4 th producer of tomatoes (behind China, USA and India), producing some 1 million tonnes worth $3.2 billion in 21 and 4 th major exporter (behind the Netherlands, Mexico and Spain). For Turkey tomatoes are a highly important agricultural commodity as they rank second in terms of the value of Turkish agricultural production. Over the last decade Turkey's (fresh) tomato exports to the world have sprung impressively from 12 thousand tonnes in 2 to 576 thousand tonnes in 211, which corresponds to the eightfold increase in value (from 41 million to 38 million in 211). This reflects Turkey's impressive expansion to and former Soviet Union countries. is Turkey's top destination for tomato exports, taking a 58% share in total Turkey's tomato exports. EU27 comes second with a 14% share in Turkish exports. At the beginning of the last decade Turkey supplied with some 35 thousand tonnes of tomatoes while in 211 the volume sold went up to impressive 335 5 thousand tonnes. Ukraine is also seeing more Turkish tomatoes on its markets than a decade ago. From almost null sales in 2, Turkey now is supplying Ukraine with over 4 thousand tonnes. See graph on the left. 5 The discrepancy in figures is that imports (as declared by ) do not equal exports (as declared by Turkey) as the periods of registration of the incoming and outgoing amounts may differ. 1

Graph 9: Turkey's increasing share in n imports of tomatoes (value terms) 1% 8% 6% 4% managed to outstrip EU sales of this product in the middle of the decade. At present China accounts for about half of n tomato paste imports, while in 2 its share was a mere 2%. EU though is still doing quite well its share in that product over the last decade has been hovering between 2 and 3%. In absolute terms, n imports of tomato paste from the EU (China) increased from 8.7 million ( 1 million) in 2 to 24 million ( 56 million) in 211. 2% % Source: GTA 2 21 22 23 24 25 26 27 28 29 21 211 Turkey China EU27 Others As for cucumbers, the situation is quite comparable. In 211, Turkey sold near 2.5 times more cucumbers than the EU (in 21: 5.5 times more), jumping from only 1.2 thousand tonnes in 2 (valued at some 3 thousand), i.e. from less than what the EU used to sell at the beginning of the decade to 48 thousand tonnes ( 38.8 million) in 211. The EU has also been surpassed by China which in 211 earned 24 million on the sales of some 28 thousand tonnes of cucumbers (see Graph 1) while the EU managed to sell some 19 thousand tonnes worth 22.5 million. It's worth noting also that not only the EU, China and Turkey are competing on the n market: it is Iran which rises now as the leading supplier of cucumbers on the n market. From negligent sales at the beginning of the decade it now supplies around 6 thousand tonnes of cucumbers to. Graph 1: EU diminishing share in 's cucumber imports (value terms) As for fruit, the EU position on the n market of its top fruit apples and pears seems rather firm the EU is covering more than half of n import needs. An important import product, however, fresh grapes, faces competition with Turkey. Starting with a similar import share at the beginning of the decade (4%), the EU managed to increase its exports to cover around 1% of n import needs while Turkey has now expanded to make up for around 4% of n imports in the recent years. The EU is still holding quite a strong position on processed fruit (responsible for around one third of n imports). It is China, however, which managed to win the n market of apple juice. Over the last decade China has made an impressive surge from barely 341 thousand worth of apple juice exports in 2 to 61.4 million in 211 ( 41.2 million in 21), thus accounting for over half of n imports of apple juice. In the same period the EU increased its exports of this product from 1.4 million to only 3.6 million in 211. Exports of F&V an easy target for non-tariff barriers relating to SPS concerns. 1% 8% 6% 4% 2% % Source: GTA 2 21 22 23 24 25 26 27 28 29 21 211 EU27 China Turkey Others The EU is still 's top supplier of processed vegetables accounting for around half of its imports, although at the beginning of the last its share in n imports stood at 7%. China is lagging behind but is gradually expanding (taking up now over 2% of n imports from just 2% in 2). With its growing exports of tomato paste (HS 22) to it 11 The perishable nature of fresh fruit and vegetables and their suitability for direct consumption make them an easy target for the imposition of non-tariff barriers due to sanitary and phytosanitary (SPS) concerns. These barriers may disrupt the flows of trade considerably. Last year saw major perturbations of trade with, the EU primary destination for fresh vegetables, when imposed an import ban on fresh vegetables from a number of EU countries, following an outbreak of the E.coli (EHEC) crisis in the EU. This had an effect on monthly exports of a number of vegetables, including tomatoes, onions, white and red cabbage, aubergines, sweet peppers. However, due to good export performance in the first half of 211, annual trade statistics show that exports of fresh vegetables to in 211 were higher than in 21. Box no. 2 provides some statistics on the effect of the E.coli crisis on export sales of fresh vegetables to.

BOX no. 2: Impact of the E.coli crisis on the exports of fresh vegetables to The year 211 saw major perturbations of trade with, the EU primary destination for fresh vegetables, when imposed an import ban on fresh vegetables from a number of EU countries, following an outbreak of e-coli crisis in the EU. Effective temporarily in June, the measure caused a dramatic drop of EU exports of fresh vegetables (excluding potatoes) from 54.7 million in May to 13.9 in June 211. Sales in June 211 were also more than two times lower than in June 21. However, despite this major drop in June sales, the measure had no particular effect on the annual performance of EU exports. In fact, export sales in 211 ( 454 million) were 8% higher than in 21. Moreover, the total figure for 1 st half of 211 also shows a significant growth as compared with the 1 st half of 21 ( 281 million and 227.4 million respectively). As the graph below shows, exports in 211 followed a pattern similar to that in 21 (more impressive sales in the first half of the year than in the second one), except that sales in 211 started off at a much higher level than at the beginning of 21 ( 4.8 million in Jan 211 compared to 23.6 million in 21). After a drop in June, exports rebounded in the following months to reach at the end of the year a level comparable with that of the previous year ( 5.1 million in Dec 21 and 48.6 million in Dec 211). The vegetables which suffered the biggest slump in June sales as compared with the 8. 7. 6. 5. 4. 3. 2. 1. preceding month and June 21 included tomatoes, onions, white and red cabbage, aubergines and sweet peppers. EU27 monthly exports of fresh vegetables to (in thousand ) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 21 211 Closer look at China: top world exporter of F&V and important EU partner Graph 11: China's trade balance in F&V (fresh and processed) China is the unquestionable leader in world exports of fruit and vegetables. It is no. 1 exporter of fresh vegetables (followed by Mexico, the US, and the EU) and the 5 th exporter of fresh fruit (behind the US, EU, Turkey and Chile). Graph 11 shows the impressive development of Chinese exports 6 of both fresh and processed vegetables reaching a record high of 12.8 billion in 211, three times more than in 22. Exports of processed fruit and vegetables contribute to more than 6% of that figure. Exports of fresh vegetables reached 2.7 billion in 211, i.e. 3% more than EU exports in that year, while fresh fruit sales amounted to near 2 billion. 7 of imports in the whole F&V sector are fresh fruit (including nuts). China, however, seems to be self sufficient when it comes to the supplies of fresh vegetables. Its global imports (some 3.2 million in 211) are insignificant compared to the total value of imported fresh fruit ( 2 billion). 6 The figures do not include products under headings HS 713 and 714 for comparison purposes. 12 million EUR 14, 12, 1, 8, 6, 4, 2, Source: GTA 22 23 24 25 26 27 28 29 21 211 TOTAL IMPORTS TOTAL EXPORTS BALANCE Although Chinese export offer is quite wide, Chinese export performance in each of the F&V categories is reliant on a limited number of products. The leader in fresh vegetable exports is garlic with an over share in fresh vegetable exports. In 211, China managed to sell some 1.7 million tonnes of that vegetable to world markets worth some 1.5 billion (only 4% of the volume went to the EU). Exports of fresh fruit are dominated by apples, pears and mandarins, while apple juice, processed tomatoes, dried and prepared or preserved mushrooms stood out in the processed products category. See Graph 12 for details regarding the structure of Chinese exports.

Graph 12: Structure of Chinese exports of F&V (fresh and processed) strawberry(frozen) 1% pears 1% onions 2% citrus fruit (processed) 2% mandarins 3% Source: GTA (chapter 7, 8 and 2 excluding HS 713 and 714 51% apples apple juice tomato paste garlic 13% mushrooms (processed) 9% Avg (29-11) = 1.6 bn It's worth noting that China is the world's biggest producer of apples and tomatoes. According to FAOSTAT, in volume terms Chinese production of apples in 21 increased by more than half from 2 (up to 33.3 million tonnes), while the tomato production almost doubled in that period (up to 41.8 million tonnes). To achieve this outstanding performance, China has substantially reformed its agricultural policy. The reforms included abolition of agricultural tax on farmers, thereby encouraging farmers to specialize in higher profit crops such as fruit, provision of agricultural subsidies for the first time in history directly to farmers (also to the apple and tomato industry). Developing the tomato processing industry was also set as priority by the Chinese government. 7 China's impressive expansion into n and American apple juice market Chinese impressive rise as an apple producer and the development of the processing industry made it a key supplier of apple juice to and the US. From barely 341 thousand worth of apple juice exports to, it went up to 61.4 million in 211. In the same period the EU increased its exports to from 1.4 million to only 3.6 million in 211. As a result, at present China covers over half of n imports of apple juice while at the beginning of the decade its share in 's apple juice imports stood at barely 3%. Chinese expansion into the US market is equally impressive. At the beginning of the last decade the EU share in the US total imports of apple juice was around 3%, while China only covered around 13% of US imports. In 211 the situation reversed the EU share shrank to less than 1% while the imports from China soared impressively to cover over 7% of US import needs in 211 (from 4 million in 2 to 36 million in 211). The EU share in US total juice imports went down from 14% in 2 to 4% in 211. At the same time, China increased its share in US imports from almost to nearly 3% in 211. EU and China: F&V trade balance overwhelmingly negative for the EU The EU is China's main destination for exports of major products such as tomato paste, frozen strawberries, and apple juice (the US being the top buyer of the latter). China has become the EU's major supplier of processed fruit and vegetables, covering altogether around 18% of EU processed F&V imports. It stands out as number one in EU imports of processed vegetables. On the whole, however, China's share in total EU fruit and vegetable imports is not particularly impressive: it covers only around of EU imports of F&V. As shown by Graph 13, the gap between EU imports and EU exports to China has widened considerably over the last decade and is now oscillating around 1.2 billion. This is due to increased imports of processed fruit and vegetables (in particular tomato paste, apple juice and frozen fruit) from China. Although China is increasing its supplies from the EU (EU exports rose from just 7 million in 2 to some 88 million in 211), their share in the total Chinese imports is rather negligible (around 3%). Graph 13: EU-China trade in fresh and processed fruit and vegetables (in million ). 1.5 1. 5-5 -1. -1.5 1999 2 21 22 23 24 25 26 27 28 29 21 211 EU EXPORT EU IMPORT EU BALANCE WITH CHINA 7 See LEI report of May 21,"Apple and tomato chains in China and the EU", 13

China imports mostly processed products from the EU, the majority being processed fruit (frozen fruit, fruit juices). Imports of fresh vegetables from the EU are rather negligible. However, some opportunities seem to exist for fresh fruit. From around 731.4 thousand in 21, EU sales rose to 2.6 million in 21 and jumped impressively in 211 to the level of over 6.7 million. The gain was recorded mainly for kiwifruit. It's worth noting that a country which got a much better position on the Chinese market is the US supplying China with around 5 million worth of fruit and vegetables (around 2% of total Chinese imports of F&V). The US is providing China mainly with fresh fruit (7% of US F&V supplies to China), such as mandarins, grapes, apples as well as nuts. CONCLUSIONS Over the last decade the EU has been constantly recording a trade deficit in fresh and processed fruit and vegetables, totalling 9.8 billion in 211. The deficit grows to 11.9 billion, if trade in nuts is included. This figure is mainly due to the deficit in trade in the fruit category. However, the deficit has been mainly deepened in the tropical fruit group, in particular due to increased imports of bananas and pineapples. Other fresh fruit, such as table grapes and oranges from the Southern hemisphere countries have also seen growth on the import side but it was compensated by increased exports of fresh fruit such as apples and pears. In contrast, trade in vegetables, both fresh and processed is rather balanced as a surge in imports of vegetables from Mediterranean countries, in particular Morocco, has coincided with a boom in exports of fresh vegetables to. However, although exports of fresh fruit and vegetables have risen impressively over the last decade to our top partner,, the EU relative share in n imports is diminishing as Turkey and China are finding their way to the n market. Turkey's expansion in tomato exports into former Soviet Union countries, in particular into, has been particularly impressive. Turkey is currently supplying with three times as many tomatoes as the EU. The EU also faces competition from Turkey and China on the n cucumber market. Sales from the two countries to in the most recent years surpassed the EU sales, although a decade ago the EU was the dominant supplier of cucumbers to. In the context of trade with this MAP also finds that in spite of the import ban on imports of fresh vegetables from the EU due to the E.coli crisis in June 211, total EU exports of vegetables to were still higher than the 21 exports. This is due to good EU performance in the first half of 211. The vegetables which suffered the biggest slump in June 211 sales as compared with the preceding month and June 21 included tomatoes, onions, white and red cabbage, aubergines and sweet peppers. China, a world leader in exports of fruit and vegetables which has tripled its exports of F&V to the world in the last decade, deserves particular attention. On the world scene it excels in the sales of apple juice. From a negligent share at the beginning of the last decade it now covers more than half of the US and n imports of apple juice. It also accounts for around half of EU imports of apple juice. China is also the EU top supplier of processed fruit and vegetables, in particular of processed tomatoes and mushrooms. It is worth noting that in spite of lack of preferential access to the EU market, imports of processed tomatoes over the last decade have grown considerably. This newsletter does not necessarily represent the official views of the European Commission Contact: DG Agriculture & Rural Development: Agricultural Trade Policy Analysis unit. Tel: +32-2-2991111/ email: agri-trade-analysis@ec.europa.eu. http://ec.europa.eu/agriculture/publi/map/index_en.htm European Communities, 212 Reproduction authorised provided the source is acknowledged 14