Review of Canadian Apple Market & Trends - hortcouncil.ca · Review of Canadian Apple Market &...

Review of Canadian Apple Market & Trends

2015 Mid-Summer Meeting- Canadian Apple Industry

Wolfville, NS – August 4th, 2015

Farid Makki

Sector Development & Analysis Directorate

Agriculture and Agri-Food Canada

Significance of Apple Production in Canada

2

Second most valuable fruit crop after blueberries (FGV of $188 Million in 2014)

Most significant fruit produced in Canada in terms of tonnage.

Largest tree fruit crop by volume and value.

Apples represent 22% of 2014 total fruit Farm Gate Value

Fruit Crop

Farm Gate Value (in $ Million) for

Top 5 Fruit Crops

2010 2011 2012 2013 20145 Year

Average

Blueberries

Total 149 203 243 187 246 206

Low-bush 57 86 101 80 117 88

High-bush 92 117 141 107 129 118

Apples 149 162 186 197 188 177

Grapes 110 128 145 154 116 131

Cranberries 70 88 109 94 90 90

Strawberries 69 72 71 70 72 71

Total Fruits 659 771 879 843 849 800

Share (%) of Total Fruit Farm Gate Value for

Top 5 Fruit Crops

2010 2011 2012 2013 2014

23% 26% 28% 22% 29%

9% 11% 12% 9% 14%

14% 15% 16% 13% 15%

23% 21% 21% 23% 22%

17% 17% 16% 18% 14%

11% 11% 12% 11% 11%

10% 9% 8% 8% 8%

Provincial Share of Apple Production (by Volume)

Ontario35%

Quebec28%

British Columbia

27%

Nova Scotia 9%

New Brunswick

1%

2014Marketed Volume in 2014: 374 M Kg

(19.6 million bushels)

• Ontario: 133 M Kg

• Quebec: 105 M Kg

• BC: 100 M Kg

• Nova Scotia: 33 M Kg

• New Brunswick: 3 M Kg

3

Ontario41%

Quebec19%

British Columbia

29%

Nova Scotia 10%

New Brunswick

1%

2005

4

409

376

446427 435

371395

274

387374

0

50

100

150

200

250

300

350

400

450

500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Marketed Volume

(Million kg)

Marketed Volume

Source: Statistics Canada

Canadian Apple Production - 10 Year Trend (based on Marketed Volume)

Canadian apple production has been stagnant over the last decade and has

been hovering around 400,000 metric tons (21 Million bushels). Although

planted area has been steadily declining, high density plantings have been

increasing.

5Source: Statistics Canada

0

50

100

150

200

250

300

350

400

450

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

British Columbia 117 91 77 106 93 92 97 98 81 100

Ontario 169 155 184 169 178 136 146 35 151 133

Québec 78 88 141 108 120 105 110 101 113 105

New Brunswick 5 4 4 4 4 4 4 4 4 3

Nova Scotia 39 39 41 39 40 34 34 38 37 33

Marketed Volume(Million kg)

Canadian Apple ProductionMarketed Volume by Province

53 54 53

50 49

45 4442 43 43

4746 45

4442

40 4038 38 38

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Area(‘ 000 Acres)

Bearing and Non-Bearing Bearing

6Source: Statistics Canada

Planted area has fallen by about 3% per year for the last decade

and is starting to stabilize.

Canadian Apple Area (Planted Area) – 10 Year Trend

7

139148

164172

182

149

162

186

197188

-1

2

5

8

11

14

17

20

23

26

29

32

0

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Average Farm Gate Price (Cdn ¢/lb)

Farm Gate Value

(Million $)

Farm Gate Value Average Farm Gate Price


Canadian Apple Farm Gate Value & Average Price per Pound

8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Volume(%)


Canadian Apple Utilization% of Total Volume

Fresh

Processing

Share (%) and Value of Marketed Apple Production Destined for Processing

9

Province 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Ontario 40% 34% 30% 40% 30% 27% 23% 25% 26% 17%

Québec 33% 34% 51% 44% 50% 50% 36% 45% 36% 32%

B.C. 21% 15% 9% 6% 6% 23% 8% 7% 12% 15%

Nova Scotia 53% 48% 49% 43% 42% 45% 42% 36% 39% 41%

New Brunswick 27% 22% 1% 15% 33% 12% 7% 15% NA 21%

CANADA 34% 31% 32% 33% 32% 34% 25% 27% 27% 23%

117

127

141146

153

127

143

159

176168

22 21 22 26 2922 20

2821 20

0

20

40

60

80

100

120

140

160

180

200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Farm Gate Value(Million $)

Fresh Market Processing Market

Canadian Apple Varieties Variety by Volume and Total Share of Production

10

Apple Variety

2013 2004Millionbushels

Share of Total Production(%)

Millionbushels

Share of Total Production(%)

McIntosh 6.38 30.6% 9.59 38.9%

Gala 2.22 10.6% 1.87 7.6%

Empire 2.08 10% 1.97 8%

Spy 1.73 8.3% 1.35 5.5%

Spartan 1.18 5.7% 1.74 7%

Red Delicious 1.20 5.7% 2.36 9.6%

Cortland 1.07 5.1% 0.86 3.5%

Honeycrisp™ 0.74 3.6% NA NA

Idared 0.73 3.5% 1.06 4.3%

Ambrosia 0.55 2.6% 0.14 0.6%

Golden Delicious 0.41 1.9% 0.71 2.9%

Paula Red 0.22 1.1% NA NA

Fuji 0.18 0.8% 0.35 1.4%

Source: Provincial Producer Organizations

11Source: Food and Agriculture Organisation

of the United Nations (FAOSTAT)

Iran (1.7 MMT)

India (2.2 MMT)Canada (0.3 MMT)

Turkey (2.9 MMT)

Poland (2.9 MMT)

France (1.4 MMT)

Italy (2 MMT)

United States (4.1 MMT)

Other Countries (22 MMT)

China (37 MMT)

2012 World Apple Production: 76.4 million metric tons

Canada’s apple production: less than 0.4% of global apple production

Global Apple Production (in Million Metric Tons)

11

12

158

205

208

222

236

241

269

437

631

1,050

0 200 400 600 800 1,000 1,200

Taiwan

India

United States

Canada

Mexico

Spain

Netherlands

United Kingdom

Germany

Russia

Canada: 7th top fresh apple importing country in the world by

volume! (with 82% of imports from the US) and 6th by value.

Source: Global Trade Atlas (GTA Navigator)

Global Fresh Apple Imports: Top 10 Importing Countries (2014)

234

259

262

271

277

306

347

588

656

685

0 200 400 600 800

Spain

India

United States

Taiwan

Canada

Mexico

Netherlands

United Kingdom

Germany

Russia

Volume (Million kg) Value (Million Cd $)

13Source: Global Trade Atlas (GTA Navigator)

43

174

174

308

382

701

820

865

889

975

1,062

0 500 1000 1500

Canada

Netherlands

Belgium

New Zealand

South Africa

France

Chile

China

United States

Italy

Poland

Global Fresh Apple Exports: Canada & Top 10

Exporting Countries (2014 Exports in Million kg)

Canada’s exports of fresh apples represent only 0.5% of

global fresh apple exports

0

50

100

150

200

250

300

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 13-14

May

14-15

May

Volume

(Million kg)

Imports Exports

Trade Balance

Canadian Balance of Trade for Fresh Apples

113

96

145

115

145

161 168 158

237

191

154

135


Canadian Fresh Apple Imports

by Country of Origin



by Country of Origin (excluding the United States)

0

10

20

30

40

50

Volume

(Million kg)

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 13-14

May

14-15

May

Chile New Zealand South Africa China France Argentina


29.631.9

40.3

34.2

39.139.3

34.8

53.2

35.7

44.5

27.3

18


from Washington State

0

50

100

150

200

250

300

04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 13-14

May

14-15

May

Volume

(Million kg)

0

10

20

30

40

50

60

70

80

90

100

Average

Import Price

(Cdn ¢/lb)

World Washington State Imports




0

0.5

1

1.5

2

2.5

3

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul

Volume

(Million kg)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Average

Import Price

(Cdn ¢/lb)

2012-2013 2013-2014 2014-2015 May


Red Delicious (HS 0808.101.096)



0

0.5

1

1.5

2

2.5

3

3.5

4


Volume

(Million kg)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

Average

Import Price

(Cdn ¢/lb)

2012-2013 2013-2014 2014-2015 May


Golden Delicious (HS 0808.101.092)



0

1

2

3

4

5

6

7

8


Volume

(Million kg)

0

0.2

0.4

0.6

0.8

1

1.2

Average

Import Price

(Cdn ¢/lb)

2012-2013 2013-2014 2014-2015 May


GALA (HS 0808.101.097)



0

0.5

1

1.5

2

2.5

3


Volume

(Million kg)

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Average

Import Price

(Cdn ¢/lb)

2012-2013 2013-2014 2014-2015 May


Granny Smith (HS 0808.101.093)

22

Northwest facing a downturn in prices for 2014-15 crop and a bearish outlook for 2015-16.

A record 2014-15 crop: 140.6 million boxes (21.6% higher than previous year and 9.2%

larger than the previous record of 128.7 million boxes set in 2012-13). Record levels of

apples remaining in storage represent a marketing challenge.

Lower Profitability: Northwest apple growers are experiencing profit margin compression

this year: prices for nearly every major apple variety are down from levels in the last 2 years.

As a result of low pack-outs and low prices for most varieties many growers will not be

profitable. However, following a string of profitable crops, most producers appear to be

financially well positioned to work through this down market.

2015-2016 Crop Outlook:

No expectation of back-to-back record crops. Initial reports suggest a fresh apple crop of

100-125 million boxes this season. Reduction in size driven by removal of apple orchards,

including R. Delicious , G. Delicious and other varieties that have lost favor in the domestic

market. Growers also impacted by spotty hail damage this year that reduced crop potential.

Harvest timelines are running 2 weeks earlier than normal, due to a mild winter and early

spring. The early summer heatwave may push timelines even further forward.

A smaller 2015-16 crop is positive, but sustained and intense heat this summer could be

detrimental to the quality of the crop.

Source: Northwest Farm Credit Service

Northwest US Apple Market Snapshot

22

23

Rising input costs (land, capital, labor, water, power, transportation and chemicals),

More challenging access to resources (labor shortages, limited land and water supplies).

Increased concentration along the supply chain with number of firms declining at every

level (grower, packer, storage, marketing).

More stringent fresh market requirements (quality, food safety, traceability, sustainability)

Static or declining demand for fresh apples in many developed countries due to intense

competition from processed snacks and other types of fruit (berries, tropical fruit..).

Potential for growth in demand has moved from developed world to the developing world.

The 2014-15 season has been a very challenging season for the world apple industry due to:

High crop volume (almost 71 million metric tons, despite declines in China and Turkey)

Slow global economic growth or stagnation (Brazil & Russia in recession, while Chinese

economic growth rate falling from above 10% to 7% in 2015)

Western sanctions against Russia and the closing of the Russian market to apples from

Poland and other European countries leading to market disruptions as far as in N. America

Common Factors in Key Apple Producing Countries

23

24

Austria 14.6 1.45 13.5 35.4 3,000 32.4

Belgium -30.9 1.78 11.4 65.7 2,275 36.2

France -7.2 1.36 9.8 41.0 1,874 34.8

Germany -9 1.33 12.2 39.0 2,361 33.4

Greece -4.4 1.32 8.2 11.9 1,060 17.6

Italy 1.7 1.20 14.1 33.7 2,351 41.0

Netherlands -18.5 1.43 9.7 42.4 2,538 36.3

Portugal -4.4 1.13 11.0 26.4 1,591 11.7

Spain -20.5 1.68 8.6 24.0 467 16.1

United Kingdom 3.5 1.40 10.2 43.0 1,134 22.4

Russian Fed -30.1 3.38 15.5 6.5 620 3.4

Hungary 50.1 3.64 2.1 22.8 1,135 24.2

Poland 54.2 3.18 11.4 16.1 1,221 20.3

Canada -19.2 1.65 8.6 26.2 980 22.2

Mexico 24.8 2.29 6.2 8.2 250 10.7

United States 8.5 1.15 12.0 43.0 1,000 35.2

China 43.8 1.88 15.2 75.3 350 20.0

India 3.9 1.90 3.4 0.0 220 6.3

Japan -9.4 1.39 9.8 64.6 1,072 20.9

South Korea 3.7 1.38 29.0 72.0 1,010 21.0

Turkey 9.1 1.40 11.0 3.4 315 17.4

Argentina -7.9 1.45 5.6 35.4 1,063 35.7

Australia 8.5 1.27 7.4 79.5 540 15.3

Brazil 11.3 1.86 3.0 95.0 875 34.1

Chile 32.1 1.56 10.0 79.1 501 51.2

New Zealand 18.9 1.30 1.2 92.5 1,120 62.2

South Africa 16.7 1.54 7.0 56.5 1,204 42.3

AVERAGE 3.3 1.84 10.1 38.6 1,174 24.6

Source: World Apple Review 2015 Edition

% of Acreage non-

bearing, 2014

% of New

Varieties (2014)

Planting Density, #

of trees per

hectare (2014)

Yield per hectare-

2014 (in mt)Country

% Change in

Production, 2006-08 to

2012-14

Relative Variability of

Production, 2004-14

(ratio)

Comparative Performance Measures of Production Efficiency (2015)

25

2015 Country Production Infrastructure Financial &

Overall Rank (2014 Overall Rank) Efficiency & Inputs Markets

1 New Zealand (3) Austria United States Belgium

2 United States (2) Italy Chile Netherlands

3 Chile (1) Chile New Zealand France

4 Italy (4) South Korea Canada Japan

5 Austria (8) New Zealand South Africa Italy

6 Belgium (9) China Brazil Austria

7 France (5) South Africa Austria New Zealand

8 Netherlands (10) Belgium France Germany

9 Japan (6) Netherlands Italy United Kingdom

10 South Korea (7) Germany Turkey South Korea

11 Germany (12) United States Argentina Spain

12 Canada (11) France Japan United States

13 South Africa (14) Brazil South Korea Canada

14 United Kingdom (13) Japan Belgium Portugal

15 Australia (16) United Kingdom Netherlands Poland

16 Brazil (15) Argentina Germany Australia

17 Spain (18) Portugal Australia Chile

18 Portugal (21) Australia Spain Slovakia

19 China (17) Poland United Kingdom Mexico

20 Poland (20) Canada China Slovenia

Source: World Apple Review 2015 Edition

Common Factors in Key Apple Producing Countries

2015 Competitiveness Rankings for

Major Apple Producing Countries

Canadian Apple Industry’s Current & Near Term Situation

Although Canadian apple growers operate in an increasingly competitive environment, with pressures in the marketplace due to the following major challenges:

26

There are a number of opportunities that the sector can explore to boost profitability and enhance its competiveness such as by:

Strengthening consumer appeal of apples through collective promotional efforts (health benefits, pleasure, fun)

Capitalizing on the buy local trend to displace imports

Investing in production and packing efficiencies (Increase orchard productivity ,yields and pack-outs)

Further altering the product mix with the introduction of “appropriate” varieties

Building stronger relationships with retailers sourcing Canadian branded apples

Building alliances with packers/marketers to help meet retailers and consumers’ needs

Exploring and creating new direct sales opportunities for Canadian apples.

World oversupply

Increasing production costs

Labor availability and cost

Increasingly competitive marketplace with pressures coming from low-cost producing countries

Stagnating/declining apple consumption

Increased pressure from retailers both on margins and expectations (more stringent requirements on quality, safety & traceability, sustainability)

Who/What Are You

Competing Against?

Other Fruits &

Healthy Snacks

27

Better promote & position apples

through collective promotional efforts

Increase Profitability

Replace old varieties with new varieties

Switch to high density plantings

Improve quality & consistency

Introduce labour efficiency measures/tools

Modernize infrastructure

Consolidate (# of growers & packers)

Value-added opportunities that you as

growers can directly benefit from

Focus on Quality, Service, Branding,

rather than on Price & Volume

Other Jurisdictions

such as the U.S.

and particularly

Washington State

How to Compete Better?

28

Farid Makki

Sector Specialist - Fruit

Horticulture and Cross Sectoral Division

Market & Industry Services Branch

Agriculture and Agri-Food Canada

Telephone: (604) 292-5868

Email: [email protected]

mailto:[email protected]

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