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The sector of blackcurrant in the EU

Olive Oil and Horticultural Products

DG for Agriculture and Rural Development

European 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 utilised agricultural area (soft fruits and sour cherries)

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0,20

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E U - 2 5




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

66.1%44643.9%6751 538Total

61.5%14274.5%231310Sour cherries

68.1%4779.3%6987Raspberries

58.4%9082.4%154187Blackcurrants

75.6%16723.2%221954Strawberries

Share ofPoland in EUproductionforprocessing

Productiondirected toprocessingin Poland

Share ofprocessingin total EUproduction

Estimates ofEU productiondirected toprocessing

Total EUproduction




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

(except cherries)

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100.000

200.000

300.000

400.000

500.000

600.000

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

V o l u m e ( t o n n e

s )

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V a l u e ( ' 0 0 0 € )

Volume Value

Average annual growth rate in volume: 6.0%




Industry dependence on EU-25 imports from third

countries in total supply of raw material

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10

20

30

40

50

60

Blackcurrants Raspberries Sour cherries Strawberries

% in volume, av. 2002-2004, av. 2002/2003 and 2003/2004 for strawberries




Breeding research Breeding research is an important asset to maintain the

competitiveness of the soft fruit sector, both on fresh and

processing markets Several factors are becoming increasingly important that imply

breeding 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 toaffect some areas of production (e.g. for blackcurrants) Examples of recent cultivars that have impacted the economy

of 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 totalplant production value and 35% of all fruit production

value Soft fruit bushes and sour cherries represent 25% of

all orchard area

Three 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 fulltime jobs

Fragmented production structures: severalthousands of producers, few Producer Organisations(POs) / Producer Groups (PGs)




Fragmented marketing to the industry: collection centres, fewcontracts

Frozen fruits and vegetables and fruit juices account for

almost 25% of the sales of the fruit and vegetable industry More than 100 plants freeze fruits and vegetables, only

around ten process 20 000 tonnes or more

Considerable storage capacity (allowing exports under spread

delivery contracts) More than 40 plants can produce juice concentrate, some 12

companies focus on coloured juice and two have a 60%market share

Excellent breeding research in currants, raspberries,strawberries and sour cherries (Institute of Pomology andFloriculture of Skierniewice and Experimental Station ofBrzezna)




3

The blackcurrant sector




Issues covered on the sector of blackcurrants

I. General considerations

II. Economic cycle of production

III. Recent increase in production and pricecrisis

IV. Structures and marketing to industry

V. Utilisation of blackcurrant by industry andevolution of consumption

VI. Conclusions on the sector




General considerations

Ribes nigrum is a bushy perennial shrub growing1.5 m in height and develops mainly in colderregions of Europe

Plant maintained for 9-12 years, start production

from 3rd year. Plantations need constant care(pruning, pest and diseases) otherwise productionfalls

Fruit hardly consumed fresh (tart and strong flavour,

astringent), full of C vitamin and other antioxydants Few countries outside Europe produce

blackcurrant: 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 utilisations

Blackcurrant is a European product. EUtrade with third countries plays no role

Mechanisation (pruning, harvesting) highly

developed. Labour is not critical in cost andcompetitiveness issues.




Poland produces 132 000tonnes on average

in 2002-2004 (70% of allEU-25 productionof blackcurrant)

Other MS:

UK: 17 000 tonnesFR: 10 000 tonnes

DK: 7 000 tonnes

DE, LT: 6 000 tonnes




The blackcurrant production cycle

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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/EU

Unit values of EC/EU imports of pre-cooled blackcurrants from intra-EC/EU andPoland (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 plantations

4. Before end of the cycle, bushes planted before the previous

peak start to produce less

5. 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 exists

Delays for new plantations to enter into production

and decline at the end of plantation life accentuatethe cycle

Sector of limited size: variations in areas, that wouldbe considered modest in other sectors, have large

impact Mechanisation 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 noimports from third countries

Increase in area (EU wide) andmodernisation of production (Poland) haverecently boosted production

In 2003 and 2004 overproduction of around40-60 000 tonnes in comparison withindustry needs




Production and area of blackcurrants

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1996 1997 1998 1999 2000 2001 2002 2003 2004

EU-25 Poland

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10.000

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30.000

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60.000

2001 2002 2003 2004

EU-25 Poland

Production(tonnes)

Area (hectares)




Estimates of supply in blackcurrants

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1998 1999 2000 2001 2002 2003 2004

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t o n n e s

Total supply Total supply to industry Freezing

Concentrate 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 hawith farms 1-10 ha)

Large specialised farms (up to 400-500 ha of BC): 5000 ha with farms larger than 10 ha

Until 1990 BC developed in small farms, since then

modernisation of the sector and large farms havedeveloped. Farms with less than 1 ha of BC wouldstill produce 40-50 000 tonnes




Farm structures: other Member States

Denmark: fruit farms

France: farms with other crops such as fruits inRhone valley, vineyards or grains in Burgundy,

grains or fruits in Val de Loire Germany: BC minor crop on farms beside annual

crops (diversification)

Lithuania: rather large farms

United 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% inNL, very low in PL

In the UK individual producers directly contracted tothe industry

DK: mosts sales at market price (2/3 juiceconcentrate, rest IQF and purees). Future of

concentrate in DK? DE: major part concentrate. 2/3 through contracts

without 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 IQF

AFIDEM annual and pluriannual contractswhich apply to 25-35% of total production.Exports of pre-cooled BC at market price

Contracted quantities have diminished in2005 due to the crisis in the sector




Marketing to the industry (cont.)

LT: freezing main destination (80%), 50% ofproduction is semi-processed by four cooperatives

NL: 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



ENESAD 26 January 200728

Marketing to the industry (cont.): Poland

Small farmers sell through collection points

Sector not organised

Large farmers sell directly to industry

Always market prices

Around 30 000 tonnes semi-processed intoIQF. Use of BC for oroduction ofconcentrate has more than doubled: from 25000 to 65 000 tonnes




Location of the semi-processing at European level and implications

Traditionally BC grown in different MS with semi-processing industry in same or neighbouring MS

However significant evolution of the industry since

the 1990s: semi-processing capacity has increasedtremendously in Poland and some firms haveclosed plants in EU-15 MS

In 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 toconcentrate

In 2003 and 2004 over-supply of around 40-

60 000 tonnes




Industrial utilisations

Fruit juices, drinks, syrups, soft fruits utilising BCconcentrate (65°brix), single-strength and purees.around 80 000 tonnes

Jam and jellies, utilising IQF BC 15 000 tonnes?

Alcoholic drinks and liqueurs. Few ‘000 tonnes

Fruit 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 ofother drinks (e.g. orange juice in Poland,

cranberry juice and others in the UnitedKingdom)

Large product innovation in the fruit-based

drinks 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 2003

Around 4-5 000 tonnes of BC (Noir de

Bourgogne and Blackdown )

Moderate declining trend of the market

Increase of competition and hard discountwould entail lower levels of use of BC as araw material




The major cause of the difficulties faced bythe blackcurrant sector in the last years isclearly overproduction (since 2003)

Crisis amplified by dynamism of Polishproduction

Fragmented supply chain in Poland plays

also a role Sluggish consumer demand

Product 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 better

stability of the sector at EU level

Product innovation / fostering consumptionbetter communication on positive features of

the fruits




Existing tools:

– Support to Producer

Organisations/Producer Groups – Rural development measures

EU promotional programmes

Better monitoring of markets at EU level(regular expert meetings)

EU tools for strengthening the supply chains and supporting consumption

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