The sector of blackcurrant in the EU -...

The sector of blackcurrant in the EU

Olive Oil and Horticultural ProductsDG for Agriculture and Rural DevelopmentEuropean Commission

Marc Duponcel

ENESAD 26 January 2007 2

Organisation of the presentation

1. Soft fruits for processing in the EU

2. Soft fruit production in Poland

3. Blackcurrants


1

The soft fruit sector in the EU


Significance in EU agriculture: % of utilisedagricultural area (soft fruits and sour cherries)

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1,20A

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BE CY CZ

DK EE FI FR DE EL HU IT LV LT LU NL PL PT SK SV ES SE UK

EU-2

5


Few production figures on the sector for the EU-25, average 2002-2004 (‘000 tonnes and percents)

66.1%44643.9%6751 538Total61.5%14274.5%231310Sour cherries

68.1%4779.3%6987Raspberries

58.4%9082.4%154187Blackcurrants

75.6%16723.2%221954Strawberries

Share of Poland in EU production for processing

Production directed to processingin Poland

Share of processingin total EU production

Estimates of EU production directed to processing

Total EU production


High growth rate of the sector as measured by total EU imports (intra + extra) of frozen soft fruits (except cherries)

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1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

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Volume Value

Average annualgrowth rate involume: 6.0%


Industry dependence on EU-25 imports from thirdcountries in total supply of raw material

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Blackcurrants Raspberries Sour cherries Strawberries% in volume, av. 2002-2004, av. 2002/2003 and 2003/2004 for strawberries


Breeding researchBreeding research is an important asset to maintain the competitiveness of the soft fruit sector, both on fresh and processing marketsSeveral factors are becoming increasingly important that implybreeding research: necessity to adapt to the trend of reductionof use of active substances for pesticides; necessity to paymore attention to consumer and industry preferences; emerging issues such as global warming which is starting to affect some areas of production (e.g. for blackcurrants)Examples of recent cultivars that have impacted the economyof the sector in recent years: Ben types for blackcurrants(released in the last two decades) used in most European countries, Polka and Polana for raspberries in Poland(released in the 1990s), Camarosa for strawberries (releasedin 1993)Breeding research is a long term effort, therefore breedingprogrammes need stable sources of funding.


2

The soft fruit sector in Poland


Soft fruits and sour cherries represent 5% of total plant production value and 35% of all fruit production valueSoft fruit bushes and sour cherries represent 25% of all orchard areaThree voivodships produce 55% of all soft fruits and sour cherries: Lubelskie (21.1%), Mazowieckie (20.9%) and Łódzkie (11.4%)The soft fruit sector would provide around 80 000 full time jobsFragmented production structures: several thousands of producers, few Producer Organisations(POs) / Producer Groups (PGs)


Fragmented marketing to the industry: collection centres, few contractsFrozen fruits and vegetables and fruit juices account for almost 25% of the sales of the fruit and vegetable industryMore than 100 plants freeze fruits and vegetables, onlyaround ten process 20 000 tonnes or moreConsiderable storage capacity (allowing exports under spreaddelivery contracts)More than 40 plants can produce juice concentrate, some 12 companies focus on coloured juice and two have a 60% market shareExcellent breeding research in currants, raspberries, strawberries and sour cherries (Institute of Pomology and Floriculture of Skierniewice and Experimental Station of Brzezna)


3

The blackcurrant sector


Issues covered on the sector of blackcurrants

I. General considerationsII. Economic cycle of productionIII. Recent increase in production and price

crisisIV. Structures and marketing to industryV. Utilisation of blackcurrant by industry and

evolution of consumptionVI. Conclusions on the sector


General considerations

Ribes nigrum is a bushy perennial shrub growing1.5 m in height and develops mainly in colderregions of EuropePlant maintained for 9-12 years, start production from 3rd year. Plantations need constant care (pruning, pest and diseases) otherwise production fallsFruit hardly consumed fresh (tart and strong flavour, astringent), full of C vitamin and other antioxydantsFew countries outside Europe produceblackcurrant: hardly grown in the USA, developingin NZ and reported to develop in China as well


Specific features of the economy of the blackcurrant sector

Fresh market marginal. Juice industryaccounts for two-thirds of the utilisationsBlackcurrant is a European product. EU trade with third countries plays no roleMechanisation (pruning, harvesting) highlydeveloped. Labour is not critical in cost and competitiveness issues.


Poland produces 132 000 tonnes on average

in 2002-2004 (70% of all EU-25 production of blackcurrant)

Other MS:

UK: 17 000 tonnesFR: 10 000 tonnesDK: 7 000 tonnes

DE, LT: 6 000 tonnes


The blackcurrant production cycle

0200400600800

1.0001.2001.4001.6001.8002.000

76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

Poland Intra EC/EUUnit values of EC/EU imports of pre-cooled blackcurrants from intra-EC/EU and Poland (ECU/€ per tonne) in period 1976-2005


Phases of the cycle

1. Producers plant when prices high. Important new plantations before and during price peak. Enter in production gradually(from third year) leading to price decrease

2. Prices still favourable and induce further planting leading…3. To a period with very low prices and no new plantations4. Before end of the cycle, bushes planted before the previous

peak start to produce less5. Lower production created by stop in new plantings, aging of

plantations and possible uprooting (or less care to plantations) lead to a new price peak


Major causes of the blackcurrant cycle

Fruits only utilised by the industry, fresh market(that could smooth evolutions) barely existsDelays for new plantations to enter into production and decline at the end of plantation life accentuatethe cycleSector of limited size: variations in areas, that wouldbe considered modest in other sectors, have large impactMechanisation in Poland would be responsible for the shortening of the cycle in the 1990s


Crisis situation

The crisis is an EU matter since there are no imports from third countriesIncrease in area (EU wide) and modernisation of production (Poland) have recently boosted productionIn 2003 and 2004 overproduction of around40-60 000 tonnes in comparison withindustry needs


Production and area of blackcurrants

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EU-25 Poland

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Estimates of supply in blackcurrants

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1998 1999 2000 2001 2002 2003 2004

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Total supply Total supply to industry FreezingConcentrate Other processing


Farm structures: Poland

Small scale production (15 000 ha in 2002 < 1 ha)Fruit farms with up to several ha of BC (10 000 ha with farms 1-10 ha)Large specialised farms (up to 400-500 ha of BC): 5 000 ha with farms larger than 10 haUntil 1990 BC developed in small farms, since thenmodernisation of the sector and large farms have developed. Farms with less than 1 ha of BC wouldstill produce 40-50 000 tonnes


Farm structures: other Member States

Denmark: fruit farmsFrance: farms with other crops such as fruits in Rhone valley, vineyards or grains in Burgundy, grains or fruits in Val de LoireGermany: BC minor crop on farms beside annualcrops (diversification)Lithuania: rather large farmsUnited Kingdom: large specialised farms that growalso other crops such as soft fruits, industrial crops, etc. Sector concentrated around about 50 farms


Marketing to the industry

Level of organisation of the sector: 60-70% in DK, 50-70% in FR, two-thirds in DE, 50% in LT, >90% in NL, very low in PLIn the UK individual producers directly contracted to the industryDK: mosts sales at market price (2/3 juiceconcentrate, rest IQF and purees). Future of concentrate in DK?DE: major part concentrate. 2/3 through contractswithout guaranteed price, rest spot market


Marketing to the industry (cont.): France

Three major uses: a) for liqueur industry; b) juice concentrate; c) preparation of purees(ice-creams) and bit of IQFAFIDEM annual and pluriannual contractswhich apply to 25-35% of total production. Exports of pre-cooled BC at market priceContracted quantities have diminished in 2005 due to the crisis in the sector


Marketing to the industry (cont.)

LT: freezing main destination (80%), 50% of production is semi-processed by four cooperativesNL: All production concentrated in one cooperative. 2/3 concentrate, 1/3 IQF. Most production contracted. Contract with juice industry willterminate in 2008 and not be renewed (concentrateline closed in NL)UK: largest part processed into concentrate and contracted to a single processor. Multi-annualcontracts area- and tonnage-based with guaranteedprice. Non contracted areas have diminished


Marketing to the industry (cont.): Poland

Small farmers sell through collection pointsSector not organisedLarge farmers sell directly to industryAlways market pricesAround 30 000 tonnes semi-processed intoIQF. Use of BC for oroduction of concentrate has more than doubled: from 25 000 to 65 000 tonnes


Location of the semi-processing atEuropean level and implications

Traditionally BC grown in different MS with semi-processing industry in same or neighbouring MSHowever significant evolution of the industry sincethe 1990s: semi-processing capacity has increasedtremendously in Poland and some firms have closed plants in EU-15 MSIn addition, current low prices make it unprofitableto export pre-cooled blackcurrant for semi-processing in another MS


Levels of industry needs

Balanced production at EU level with 140-160 000 tonnes and total supply to industryat around 120-130 000 tonnes: 35 000 tonnes to freezing and 80 000 tonnes to concentrateIn 2003 and 2004 over-supply of around 40-60 000 tonnes


Industrial utilisations

Fruit juices, drinks, syrups, soft fruits utilising BC concentrate (65° brix), single-strength and purees. around 80 000 tonnesJam and jellies, utilising IQF BC 15 000 tonnes?Alcoholic drinks and liqueurs. Few ‘000 tonnesFruit preparations for incoroporation in ice creams(and little in fresh dairy products): 5 000 tonnes?Minor part of IQF BC utilised by households and catering industry


Evolution of products: drinks

BC juice consumption (UK, DE, PL) stagnant of decreasing to the benefit of other drinks (e.g. orange juice in Poland, cranberry juice and others in the United Kingdom)Large product innovation in the fruit-baseddrinks industry: smoothies, etc.BC-based drinks appear as old products(« of my GrandMa »)


Evolution of products: crème de cassis

Production of crème de cassis down from165 000 hl in 2000 to 145 000 in 2003Around 4-5 000 tonnes of BC (Noir de Bourgogne and Blackdown)Moderate declining trend of the marketIncrease of competition and hard discount would entail lower levels of use of BC as a raw material


The major cause of the difficulties faced by the blackcurrant sector in the last years isclearly overproduction (since 2003)Crisis amplified by dynamism of PolishproductionFragmented supply chain in Poland playsalso a roleSluggish consumer demandProduct innovation reported low in the sector

Summary of major problems of the sector


Possible solutions?

Better organisation of the sector in Polandwould improve its command on the growthof production and contribute to a betterstability of the sector at EU levelProduct innovation / fostering consumptionbetter communication on positive features of the fruits


Existing tools:– Support to Producer

Organisations/Producer Groups– Rural development measures

EU promotional programmesBetter monitoring of markets at EU level(regular expert meetings)

EU tools for strengthening the supplychains and supporting consumption

The sector of blackcurrant in the EU -...

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