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Potential for exports to India

India offers promising export growth prospects for U.S. agriculture with a large and rapidly expanding middle class, rising disposable incomes and shifting consumption patterns toward higher-value agricultural commodities.

Thanks to its large and rapidly expanding middle class, rising disposable incomes and shifting consumption patterns toward higher-value agricultural commodities, India offers promising export growth prospects.

It has one of the world’s fastest growing large economies and, by some estimates, is projected to become the world’s third largest economy by 2025.

It is also one of the youngest countries in the world, with a median age of 27.6 years, and its population of 1.27 billion makes it the world’s second most populous country after China.

Furthermore, its modern retail sector is expanding, food processors want access to a global supply chain, and food service chefs want to innovate and attract young and higher income consumers who are ready to try new products and global cuisines.

But exporters hoping to tap this potential should start small and comply with specific labeling and packaging requirements – that’s also among the advice in a new GAIN exporter guide to India.

Food purchasing behaviour changing

While the vast majority of Indians hold to traditional food purchasing behaviors, changes are being seen, particularly for upper income consumers, with the emergence of cafes, fast food restaurants, supermarkets, processed foods, larger refrigerators, 24-hour television food channels, easier access to imported foods, women working outside the home, and the introduction of foreign cuisines, the report says.

Imported food items often spotted in retail stores include dry fruits and nuts, cakes and cake mixes, chocolates and chocolate syrups, seasonings, biscuits/cookies, canned/packaged fruit juices, canned soups, pastas/noodles and sauces, popcorn, potato chips, canned fish and vegetables, ketchup and other sauces, breakfast cereals, fresh and dried berries like cranberries and blueberries, as well as fresh fruits such as apples, pears, grapes and kiwis.

In nominal terms, the total spend on food rose 64% over 2009-2014 to an estimated $365 billion.

Despite much ado in the media about the rise of the India’s middle class, in reality incomes in India continue to be quite low, and it is generally considered that opportunities for value-added imported foods are currently limited to higher income consumers in large metros and emerging city markets.

Products with the best prospects

Among products listed in the report as having good sales potential in India are table grapes, apples and pears.

In the case of fresh or dried grapes, it says imports grew 21% in value over five years to reach a total of $66 million in 2015 from a volume of 202,259 tons.

Constraints on market development for grapes are listed as competition from domestic and foreign suppliers, such as China, Afghanistan and Peru. But in terms of market attractiveness for the US, it observes that there are “seasonal shortages and high prices, diverse fruits among India’s middle income population and growing retail industry.”

As for fresh apples, pears and quinces, there’s been 10% growth to a value of $236 million and 215,676 tons in 2015.

On the minus side for American exporters of these products are the competition from domestic and foreign suppliers, like China, Chile and New Zealand. But once again on the plus side are the fact that there are “seasonal shortages and high prices, increasing interest in quality fruits and growth of organized retail.”

Distribution challenges: Refrigerated warehousing and transportation facilities are limited and costly, but improving

India has a coastline of 7,600 kilometers and is serviced by 13 major ports in Kandla, Mumbai, Mundra, Cochin, Murmagoa, and New Mangalore on the west coast, and Chennai, Tuticorin, Vishakhapatnam, Paradeep, Ennore and Kolkata on the east coast, the report says.

Container handling facilities are available at most major ports and in several major cities. Mumbai, followed by Chennai, is India’s largest container port and the port where most containerized food enters India. Air shipments typically land at the Mumbai or Delhi airports.

Freezer and refrigeration facilities at the Mumbai and Delhi airport are limited and present a challenge for importers seeking to clear high-value food products with a short shelf life.

Source: India Exporter Guide, USDA Foreign Agricultural Service GAIN report IN6163, 12/29/2016
Image: Pixabay, CC0 Public Domain

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Argentina in line for slight drop in orange, tangerine exports

Argentina's citrus exports will remain relatively stable at 280,000 MT for lemons, 55,000 MT for oranges, and 45,000 MT for tangerines in 2017.

Production of citrus fruit in Argentina next year is forecast to fall to 1.37 million tons for lemons, 650,000 tons for oranges, and 280,000 tons for tangerines, due to a late frost in September this year (for lemons) and excess rain, strong winds and hail (for oranges and tangerines), according to a new GAIN report.

Another factor in the lower volumes is the lack of profitability for local producers, it says.

However, Argentina’s citrus exports will remain relatively stable at 280,000 tons for lemons, but slightly lower than 2015 levels for oranges, at 55,000 tons, and for tangerines, at 45,000 tons.

They will nevertheless continue to be below historic levels “due to lack of competitiveness of Argentine exporters in international markets.”

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) is publishing a final rule to allow the importation of fresh lemon fruit from northwest Argentina into the continental United States. The rule has been sent to the Federal Register for publication on December 23, 2016, and will become effective 30 days after it is published.

Source: Argentina Citrus Annual, GAIN Report published 12/22/2016

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Morocco’s orange exports continue their ascent

Morocco’s orange exports are expected to reach around 120,500 tons in the 2016/17 marketing year – up 29% from 92,246 tons in 2015/16 – as increased availability allows it to meet growing demand from Russia and the EU, according to a new GAIN report.

Morocco’s orange exports are expected to reach around 120,500 tons in the 2016/17 marketing year – up 29% from 92,246 tons in 2015/16 – as increased availability allows it to meet growing demand from Russia and the EU, according to a new GAIN report.

The report says the country will likely also benefit from an expected decline in citrus exports from Spain due to quality issues caused by overabundant, late rainfall there.

In 2015/16, the EU and Russia bought 73% of Morocco’s orange exports, which were mainly (66%) Maroc Late oranges.

Morocco’s orange production should increase by 4% over the previous year to 962,250 tons, according to estimates by a USDA post in the country.

Much of that rise in production will be due to increases in the area harvested, as younger trees begin to bear fruit, the GAIN report says.

Source: Gain report 1617, Dec 14, 2016, 2016 Morocco Citrus Annual Report
Orange image: Pixabay under CC0 Public Domain licence

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China’s orange imports could surge 35%

China's citrus imports are expected to continue to grow driven by consumer demand (especially in 1st tier cities) for high-quality and counter-seasonal fruit.

China’s citrus imports are expected to grow thanks to consumer demand and a 10% drop in its 2016/17 orange production.

According to a new USDA Gain report, the country is likely to import 300,000 tons of oranges in the 2016/17 marketing year, up over 35% on the previous year. Its orange imports in 2015/16 reached 220,000 tons, which was itself an increase of 50% on the previous year.

The report says that a key factor in this growth is increasingly strong demand for high quality imported oranges, including counter-seasonal oranges from Southern Hemisphere countries.

South Africa, with a 37% market share, continued to be the top supplier to China in 2015/16, with the US in second place with 28%.

Exports

China’s orange exports are forecast at 50,000 tons in 2016/17, down over 30% on the previous year, as a result of the expected decrease in supply. Southeast Asia remains its main export market for oranges.

Source of images and information: GAIN Report Number CH166037, Citrus Annual, Peoples Republic of China’s, December 2016  

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Australia set for 230,000 ton orange export record

Australia’s orange exports are expected to reach a record of 230,000 tons in 2016/17.

Australia’s orange exports are expected to reach a record of 230,000 tons in 2016/17, up 10.6% on the previous year.

Greater demand in North Asian markets and higher production in Australia are key factors in this rise, according to a new USDA Gain report.

Australia is a competitive counter-seasonal supplier to northern hemisphere markets such as Indonesia, China, Japan, Korea and the US.

Oranges account for around 80% of its citrus exports. Its navel orange exports run from June to October.

Australian exporters have benefited from lower tariffs in key markets such as Japan, Korea and China following bilateral free trade agreements, the report also says.

Imports

Australia imports fresh oranges, predominantly from the US, during its summer. It is estimated to have imported 30,000 tons in 2015/16 and a similar amount is forecast for 2016/17.

Production

Australia’s fresh orange production in 2016/17 is forecast by the USDA’s post to rise 4% to 470,000 tons due to good seasonal conditions and improved water access.

Domestic sales account for more than half of the total orange production and are usually made direct to large supermarket chains or through the country’s central fruit market system.

Over 20,000ha of orange orchards have been planted in Australia, of which 12,000ha are to grow Navel oranges for eating, and the rest Valencia for juice production. Many growers are moving away from the Valencia varieties, because of low prices for orange juice, and towards eating varieties such as Navels, which attract higher returns.

Another trend involves consumer preferences gradually moving away from older orange varieties and towards sweeter and easier to peel seedless citrus varieties and some new varieties of navel orange, the report says.

Source: Australia Citrus Annual, GAIN Report, December 2016

 

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Spain offsets drop in Italy for overall rise in EU citrus volumes

EU-28 citrus production in the 2016/17 marketing year is likely to reach 11 million tons, meaning growth of 3.3% on 2015/16, according to USDA Foreign Agricultural Service analysts.

EU-28 citrus production in the 2016/17 marketing year is likely to reach 11 million tons, meaning growth of 3.3% on 2015/16, according to USDA Foreign Agricultural Service analysts.

The small increase is expected despite an estimated 27% drop in production in Italy because favourable weather has made Spain likely to see a 20% boost in its citrus production, the new USDA report says.

However, due to lower Italian production, the EU-28 orange volume is forecast at 6 million tons, a 3% reduction on the 2015/16 marketing year (November-October). Notwithstanding, total EU tangerine production is predicted to rise 8% to 3.3 million tons, largely thanks to a 24% growth forecast in Spain.

And the lemon and grapefruit crops are forecast to rise 22% and 11.6% respectively, thanks to higher volumes expected in most EU-28 citrus producer countries.

Trade

A net importer of oranges, the EU-28 bought in 964,389 tons of oranges in 2015/16, up 4% on the previous season, though the value was down 1.8% to US $658.5 million.

South Africa and Egypt continued to be its top suppliers, followed by Morocco, Argentina and Uruguay.

The EU-28’s orange exports in 2015/16 totalled 319,080 tons, up 7.5%, and they went mainly to Switzerland, Serbia and Norway.

To compensate for the loss of the Russian market, the EU-28, led by Spanish producers, has reoriented their citrus exports to new markets such as Brazil, United Arab Emirates, Saudi Arabia or China.

Spain – the EU-28’s top orange producer and exporter – markets most (92%) of its oranges within the EU but its exports to China have undergone significant increases in the last three years, totalling 10,010 tons for October 2015 to August 2016, a 246% increase on the previous year.

Source: EU-28 Citrus Annual 2016, GAIN Report Number SP1634, December 7, 2016

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Russia’s 2015/16 apple imports fell 9% to 741,000 tons

The world’s largest apple importer, Russia, imported 741,357 tons of apples valued at $379.5 million in 2015/16, a 9% decrease in volume on MY2014/15, according to a new USDA Gain report.

The world’s largest apple importer, Russia, imported 741,357 tons of apples valued at $379.5 million in 2015/16, a 9% decrease in volume on MY2014/15, according to a new USDA Gain report.

And in the 2016/17 marketing year, Russian apple imports are expected to decline by 3% to 720,000 tons, it says.

Russia’s main apple suppliers in MY 2015/16 were Belarus (221,908 tons), Serbia (198,892 tons) and China (113,923 tons). Moldova became its fourth largest supplier, doubling its exports to 57,206 tons.

Officially, Russian importers are importing apples from suppliers that are not subject to its counter sanctions affecting agricultural products originating from the US, Canada, the EU, Australia and Norway.

“However, the Federal Veterinary and Phytosanitary Surveillance Service (Rosselkhoznadzor) has repeatedly detected shipments of fresh produce from various banned origins.

“Since August 2014, Rosselkhoznadzor has detected more than 1,085 illegal shipments. In many cases, these shipments transited through Belarus with counterfeit phytosanitary certificates from countries like Albania, Chile, Turkey, Israel, Tunisia, Morocco, Serbia, Bosnia and Herzegovina, Ecuador, Egypt and the Republic of South Africa,” the report says.

In November 2015, President Vladimir Putin issued a decree also banning imports of Turkish apples, grapes, pears and other agricultural products.

“Tighter border controls will increase the cost of imported apples, and with more locally produced fruit available on the market, budget conscious consumers are expected to curb spending on imported fruit, the report says.

Source: GAIN Report RF1666, 11/1/2016 Russian Federation: Continuing Countersanctions Propel Growth in Domestic Production (Annual Fresh Deciduous Fruit Report)

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Canada’s apple imports to dip 2%

For MY 2016/17, the USDA post forecasts an 11% increase in Canadian apple production, following an average growing season. Canada’s fresh apple imports are set to slip 2% to about 225,000 tons but the US should retain its 80% share of the total Canadian import volume.

Canada’s imports of fresh apples in the 2016/17 marketing year are set to slip 2% on the previous year to about 225,000 tons.

A recent GAIN report also says that based on forecasts from a USDA post in Canada, the US, Canada’s main supplier of fresh apples, will retain a stable market share of about 80% of those imports.

Canada’s fresh apple production for the 2016/17 marketing year (July to June) is expected to rise 11% to 375,000 tons.

“As the planted area remained unchanged from the previous year, this production increase is attributable to an overall good growing season in Ontario and British Columbia, two of the major apple producing provinces in Canada. However, a dry summer and blight have negatively impacted the production in Eastern Canada, particularly in Quebec and Nova Scotia.

“Over the past fifteen years, fresh apple production in Canada has slowly declined, consistent with reduced planted areas and reduced profitability of apple cultivation. However, data for the recent years seem to indicate that the sector has now stabilized, as growers have learned what production level is most economical and profitable,” the report says.

Canada’s apple industry was forced to downsize due to more affordable imports from the US, Chile and other low cost countries, as well as its high production costs and a strong Canadian dollar.

“Many apple growers responded to the evolving market situation by converting orchards over to new plantings of vinifera grapes (especially in British Columbia and Ontario) and other fruits, as well as by turning land over for new housing development projects,” the report says.

Growers planning to stay in the industry are turning to newer, more popular varieties such as Ambrosia and Honeycrisp and new, modern intensive planting systems.

Meanwhile, Canadian apple consumers are trending away from some of the more traditional varieties, such as the McIntosh, which was once the most popular apple variety there.

According to the Ontario Apple Growers Association, these days one in every three apples eaten in Ontario is a Gala, most likely grown in Washington state or Chile.

Canada’s fresh apple exports are expected to inch up 2% to 35,000 tons in 2016/17.

“In general, the export volumes of the past several years represent about one-third of what Canada used to export over a decade ago. Canadian exports of fresh apples have steadily declined over the last 10-15 years, reflecting the overall decline in production and reduced profitability and competitiveness in export markets.”

Source: Canada Fresh Deciduous Fruit Annual 2016, GAIN Report CA16051, 11/1/2016

 

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Taiwan’s apple imports to decline slightly, says USDA

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Taiwan’s apple imports for the 2016/17 marketing year are forecast to total 160,000 tons, down 5% on last year’s record 169,000 tons, reports the USDA.

“A decline in price competitiveness of imported apples, compared with other imported fruit, and weak economic growth, are reasons for the lower import estimate,” it says.

Furthermore, a “strong harvest in the state of Washington will help the United States to remain Taiwan’s leading apple supplier according to industry sources.”

Taiwan’s domestic apple production continues to decline and currently meets less than 1% of domestic demand.

Apples are Taiwan’s leading imported fruit, and the US is the leading supplier with about 31%  of the import market share.

Fuji remains the most popular variety accounting for nearly 90 percent of imports.

source: Taiwan’s Apple Imports Forecast to Decline Slightly

 

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Key role for greengrocers in Bulgaria’s retail market

Bulgaria’s retail market is seeing an emerging wave of small specialised stores for fruit and vegetables.

Bulgaria’s retail market is seeing an emerging wave of small specialised stores for fruit and vegetables.

Along with those for dairy and meat products, these stores focus on consumer convenience and the need for fresh, local, and organic food of high quality – something which so far has not been the strongpoint of the country’s modern retailers.

A USDA Gain report also says fresh produce grocery retailers seem to be the only category which was not heavily harmed by the economic crisis, thanks to the fact groceries are a necessity which can’t be cut from the family budget.

The report notes that the outlook in Bulgaria is for traditional retail to underperform compared to modern trade as large retailers plan to move towards densely populated town centers by opening convenient stores and smaller supermarkets. But it says one exception will be the small specialised stores for fruit, vegetables, and dairy and meat products, which focus on convenience and fresh produce.

Meanwhile, hypermarkets and discounters are forecast to keep growing fast in Bulgaria in 2016/17, with Kaufland and Lidl expected to hold leading positions and increase their market shares this year. Convenience stores are expected to be the third fastest growing channel for grocery retailers.

The retail sector’s leader is the German discounter Kaufland, which in 2015 held a market share estimated at 13.2%, followed by Metro with 7.1%, Lidl with 6.3%, and Billa with 5.5%. The only local player among the lead retailers is Fantastico, which currently operates 38 outlets situated only in the capital city Sofia.

A new player, the largest Macedonian food retail chain KAM, recently announced an ambitious plan to enter the Bulgarian market by opening 20-25 outlets by the end of 2016 and as many as 80 outlets by 2018. It will apply a ‘hard discount’ model. KAM’s current outlets import from Greece, Turkey, Germany, Italy, and other European countries. “KAM self-defines as the Macedonian version of Aldi and also aims to take as much of the share freed up after Penny’s withdrawal,” the report says.

Price consciousness dominates

Bulgarian consumers are known as traditionally price sensitive. The report says this is not surprising given Bulgaria is the EU country with the lowest GDP/capita. In recent years, retailers have thus striven to lower prices while maintaining quality in order to increase sales.

Consumer price consciousness is expected to dominate in the next few years due to projections for no significant improvement in job creation in medium term as well as negative predictions about the demographic situation and expectations for up to 3% decline of population, the report says. (The country’s population last year was around 7.2 million, according to tradingeconomics.com.)

Value of Bulgaria’s retail market

The report says Bulgaria has been on the path to recovery since 2014 and reached annual growth of 3% in 2015. In 2015 GDP was U.S. $51 billion with a GDP per capita of $6,960. Real GDP growth is forecast to slightly decelerate to 2.1% in 2016 before picking up to 2.5% in 2017.

According to Euromonitor data and local sources, in 2015 the retail market was estimated at nearly 10 billion leva (U.S. $5.7 billion).

At the time of the Gain report’s preparation, the number of modern grocery outlets in Bulgaria stood at 4,225, which accounted for just over a tenth of all grocery retail outlets.

Last year, the sales in modern grocery retail reached almost BGN 5.4 billion (U.S. $3.05 billion) and held a combined market share of 55%, which is likely to slightly increase to 56% in 2016, and 57% in 2017.

The remaining 45% or almost BGN 4.4 billion (U.S. $2.5 billion) was held by almost 35,900 traditional grocery outlets throughout the country.
 

Source: GAIN Report Number: BU1624, dated 7/14/2016, Bulgaria Retail Market Update
Main image: The Bulgarian city of Plovdiv, by Klearchos Kapoutsis from Santorini, Greece (Plovdiv) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons