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
Farm Gate Value (in $ Million)
for
Top 5 Fruit Crops
Fruit Crop
Total
Blueberries Low-bush
High-bush
Apples
Grapes
Cranberries
Strawberries
Total Fruits
2010
149
57
92
149
110
70
69
659
2011
203
86
117
162
128
88
72
771
2012
243
101
141
186
145
109
71
879
2013
187
80
107
197
154
94
70
843
5 Year
2014 Average
246
206
117
88
129
118
188
177
116
131
90
90
72
71
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%
15%
16%
13% 15%
23%
21%
21%
23% 22%
17%
17%
16%
18% 14%
11%
11%
12%
11% 11%
10%
9%
8%
8%
14%
8%
 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
2
Provincial Share of Apple Production
(by Volume)
2014
Nova Scotia
9%
Marketed 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
New
Brunswick
1%
Ontario
35%
British
Columbia
27%
Quebec
28%
2005
Nova Scotia
10%
New
Brunswick
1%
Ontario
41%
British
Columbia
29%
Quebec
19%
3
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.
500
450
446
400
409
435
395
376
350
Marketed
Volume
(Million kg)
427
387
371
374
300
274
250
200
150
100
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Marketed Volume
4
Source: Statistics Canada
Canadian Apple Production
Marketed Volume by Province
450
400
350
300
Marketed Volume
(Million kg)
250
200
150
100
50
0
Source: Statistics Canada
British Columbia
2005
117
2006
91
2007
77
2008
106
2009
93
2010
92
2011
97
2012
98
2013
81
2014
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
5
Canadian Apple Area (Planted Area) – 10 Year Trend
Planted area has fallen by about 3% per year for the last decade
and is starting to stabilize.
60
50
54
53
53
50
47
46
45
40
49
44
42
45
44
40
40
43
42
38
43
38
38
Area
30
(‘ 000 Acres)
20
10
0
2005
2006
2007
2008
Bearing and Non-Bearing
2009
2010
2011
2012
2013
2014
Bearing
6
Source: Statistics Canada
Canadian Apple Farm Gate Value & Average Price per Pound
250
32
29
26
200
197
Farm Gate
Value
(Million $)
164
150
188
186
182
172
20
162
149
148
23
17
139
Average Farm
Gate Price
(Cdn ¢/lb)
14
100
11
8
50
5
2
0
-1
2005
2006
2007
Farm Gate Value
2008
2009
2010
2011
2012
2013
2014
Average Farm Gate Price
7
Source: Statistics Canada
Canadian Apple Utilization
% of Total Volume
100%
90%
Processing
80%
70%
Volume 60%
(%)
50%
Fresh
40%
30%
20%
10%
0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
8
Source: Statistics Canada
Share (%) and Value of Marketed Apple Production
Destined for Processing
Province
Ontario
Québec
B.C.
Nova Scotia
New Brunswick
CANADA
2005 2006 2007
2008 2009 2010 2011 2012 2013 2014
40%
33%
21%
53%
27%
34%
40%
44%
6%
43%
15%
33%
34%
34%
15%
48%
22%
31%
30%
51%
9%
49%
1%
32%
30%
50%
6%
42%
33%
32%
27%
50%
23%
45%
12%
34%
23%
36%
8%
42%
7%
25%
25%
45%
7%
36%
15%
27%
26%
36%
12%
39%
NA
27%
17%
32%
15%
41%
21%
23%
200
180
176
160
168
140
141
120
Farm Gate Value
(Million $)
146
159
153
143
127
127
117
100
80
60
40
20
22
21
22
26
29
22
28
20
21
20
0
2005
2006
2007
Fresh Market
2008
2009
2010
2011
2012
2013
2014
Processing Market
9
Canadian Apple Varieties
Variety by Volume and Total Share of Production
2013
Apple Variety
McIntosh
Gala
Empire
Spy
Spartan
Red Delicious
Cortland
Honeycrisp™
Idared
Ambrosia
Golden Delicious
Paula Red
Fuji
Source: Provincial Producer Organizations
2004
Million
bushels
Share of Total
Production(%)
Million
bushels
Share of Total
Production(%)
6.38
2.22
2.08
1.73
1.18
1.20
1.07
0.74
0.73
0.55
0.41
0.22
0.18
30.6%
10.6%
10%
8.3%
5.7%
5.7%
5.1%
3.6%
3.5%
2.6%
1.9%
1.1%
0.8%
9.59
1.87
1.97
1.35
1.74
2.36
0.86
NA
1.06
0.14
0.71
NA
0.35
38.9%
7.6%
8%
5.5%
7%
9.6%
3.5%
NA
4.3%
0.6%
2.9%
NA
1.4%
10
Global Apple Production (in Million Metric Tons)
 2012 World Apple Production: 76.4 million metric tons
 Canada’s apple production: less than 0.4% of global apple production
Other Countries
(22 MMT)
United States
(4.1 MMT)
Italy (2 MMT)
France (1.4 MMT)
Poland (2.9 MMT)
China (37 MMT)
Turkey (2.9 MMT)
Iran (1.7 MMT)
Source: Food and Agriculture Organisation
of the United Nations (FAOSTAT)
India (2.2 MMT)
Canada
(0.3 MMT)
11
Global Fresh Apple Imports: Top 10 Importing Countries (2014)
Volume (Million kg)
Russia
1,050
Germany
631
United Kingdom
437
Value (Million Cd $)
Russia
685
Germany
656
United Kingdom
588
Netherlands
269
Netherlands
Spain
241
Mexico
Mexico
236
Canada
277
Canada
222
Taiwan
271
United States
208
United States
262
India
205
India
259
Taiwan
158
0
200 400 600 800 1,000 1,200
347
306
Spain
234
0
200
400
600
800
Canada: 7th top fresh apple importing country in the world by
volume! (with 82% of imports from the US) and 6th by value.
12
Source: Global Trade Atlas (GTA Navigator)
Global Fresh Apple Exports: Canada & Top 10
Exporting Countries (2014 Exports in Million kg)
Poland
1,062
Italy
975
United States
889
China
865
Chile
820
France
701
South Africa
382
New Zealand
308
Belgium
174
Netherlands
174
Canada
43
0
500
1000
1500
Canada’s exports of fresh apples represent only 0.5% of
global fresh apple exports
13
Source: Global Trade Atlas (GTA Navigator)
Canadian Balance of Trade for Fresh Apples
300
250
237
200
191
113
100
168
161
Volume 150
(Million kg)
145
158
154
145
135
115
96
50
0
04-05
05-06
06-07
07-08
08-09
Imports
09-10
10-11
11-12
Exports
Trade Balance
Source: Statistics Canada
12-13
13-14
13-14
May
14-15
May
Canadian Fresh Apple Imports
by Country of Origin
Source: Statistics Canada
Canadian Fresh Apple Imports
by Country of Origin (excluding the United States)
53.2
50
44.5
40.3
40
39.3
34.2
31.9
39.1
34.8
35.7
29.6
Volume
(Million kg)
27.3
30
18
20
10
0
04-05
Chile
Source: Statistics Canada
05-06
06-07
New Zealand
07-08
08-09
09-10
South Africa
10-11
China
11-12
12-13
France
13-14
13-14
May
Argentina
14-15
May
Canadian Fresh Apple Imports
from Washington State
300
100
90
250
80
70
200
60
Volume
(Million kg)
150
50
40
100
30
20
50
10
0
0
04-05
05-06
06-07
07-08
World
Source: Statistics Canada
08-09
09-10
10-11
11-12
12-13
13-14
13-14
May
Washington State Imports
14-15
May
Average
Import Price
(Cdn ¢/lb)
Canadian Fresh Apple Imports
from Washington State
Red Delicious (HS 0808.101.096)
3
0.8
0.7
2.5
0.6
2
0.5
Volume
(Million kg)
1.5
0.4
0.3
1
0.2
0.5
0.1
0
0
Aug
Sep
Oct
2012-2013
Source: Statistics Canada
Nov
Dec
Jan
2013-2014
Feb
Mar
Apr
May
2014-2015 May
Jun
Jul
Average
Import Price
(Cdn ¢/lb)
Canadian Fresh Apple Imports
from Washington State
Golden Delicious (HS 0808.101.092)
4
0.9
3.5
0.8
0.7
3
0.6
2.5
0.5
Volume
(Million kg)
2
0.4
1.5
0.3
1
0.2
0.5
0.1
0
0
Aug
Sep
Oct
2012-2013
Source: Statistics Canada
Nov
Dec
Jan
2013-2014
Feb
Mar
Apr
May
2014-2015 May
Jun
Jul
Average
Import Price
(Cdn ¢/lb)
Canadian Fresh Apple Imports
from Washington State
GALA (HS 0808.101.097)
8
1.2
7
1
6
0.8
5
Volume
(Million kg)
4
0.6
3
0.4
2
0.2
1
0
0
Aug
Sep
Oct
2012-2013
Source: Statistics Canada
Nov
Dec
Jan
Feb
2013-2014
Mar
Apr
May
2014-2015 May
Jun
Jul
Average
Import Price
(Cdn ¢/lb)
Canadian Fresh Apple Imports
from Washington State
Granny Smith (HS 0808.101.093)
3
0.8
0.7
2.5
0.6
2
0.5
Volume
(Million kg)
1.5
0.4
0.3
1
0.2
0.5
0.1
0
0
Aug
Sep
Oct
2012-2013
Source: Statistics Canada
Nov
Dec
Jan
2013-2014
Feb
Mar
Apr
May
2014-2015 May
Jun
Jul
Average
Import Price
(Cdn ¢/lb)
Northwest US Apple Market Snapshot
 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.
22
Source: Northwest Farm Credit Service
Common Factors in Key Apple Producing Countries
 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
23
Comparative Performance Measures of Production Efficiency
(2015)
Country
Austria
Belgium
France
Germany
Greece
Italy
Netherlands
Portugal
Spain
United Kingdom
Russian Fed
Hungary
Poland
Canada
Mexico
United States
China
India
Japan
South Korea
Turkey
Argentina
Australia
Brazil
Chile
New Zealand
South Africa
AVERAGE
% Change in
Relative Variability of
% of Acreage nonProduction, 2006-08 to Production, 2004-14
bearing, 2014
2012-14
(ratio)
14.6
1.45
13.5
-30.9
1.78
11.4
-7.2
1.36
9.8
-9
1.33
12.2
-4.4
1.32
8.2
1.7
1.20
14.1
-18.5
1.43
9.7
-4.4
1.13
11.0
-20.5
1.68
8.6
3.5
1.40
10.2
-30.1
3.38
15.5
50.1
3.64
2.1
54.2
3.18
11.4
-19.2
1.65
8.6
24.8
2.29
6.2
8.5
1.15
12.0
43.8
1.88
15.2
3.9
1.90
3.4
-9.4
1.39
9.8
3.7
1.38
29.0
9.1
1.40
11.0
-7.9
1.45
5.6
8.5
1.27
7.4
11.3
1.86
3.0
32.1
1.56
10.0
18.9
1.30
1.2
16.7
1.54
7.0
3.3
1.84
10.1
Source: World Apple Review 2015 Edition
% of New
Varieties (2014)
35.4
65.7
41.0
39.0
11.9
33.7
42.4
26.4
24.0
43.0
6.5
22.8
16.1
26.2
8.2
43.0
75.3
0.0
64.6
72.0
3.4
35.4
79.5
95.0
79.1
92.5
56.5
38.6
Planting Density, #
Yield per hectareof trees per
2014 (in mt)
hectare (2014)
3,000
32.4
2,275
36.2
1,874
34.8
2,361
33.4
1,060
17.6
2,351
41.0
2,538
36.3
1,591
11.7
467
16.1
1,134
22.4
620
3.4
1,135
24.2
1,221
20.3
980
22.2
250
10.7
1,000
35.2
350
20.0
220
6.3
1,072
20.9
1,010
21.0
315
17.4
1,063
35.7
540
15.3
875
34.1
501
51.2
1,120
62.2
1,204
42.3
1,174
24.6
24
2015 Competitiveness Rankings for
Major Apple Producing Countries
2015
Overall Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Country
(2014 Overall Rank)
New Zealand (3)
United States (2)
Chile (1)
Italy (4)
Austria (8)
Belgium (9)
France (5)
Netherlands (10)
Japan (6)
South Korea (7)
Germany (12)
Canada (11)
South Africa (14)
United Kingdom (13)
Australia (16)
Brazil (15)
Spain (18)
Portugal (21)
China (17)
Poland (20)
Source: World Apple Review 2015 Edition
Production
Efficiency
Austria
Italy
Chile
South Korea
New Zealand
China
South Africa
Belgium
Netherlands
Germany
United States
France
Brazil
Japan
United Kingdom
Argentina
Portugal
Australia
Poland
Canada
Infrastructure
& Inputs
United States
Chile
New Zealand
Canada
South Africa
Brazil
Austria
France
Italy
Turkey
Argentina
Japan
South Korea
Belgium
Netherlands
Germany
Australia
Spain
United Kingdom
China
Financial &
Markets
Belgium
Netherlands
France
Japan
Italy
Austria
New Zealand
Germany
United Kingdom
South Korea
Spain
United States
Canada
Portugal
Poland
Australia
Chile
Slovakia
Mexico
Slovenia
25
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:

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)
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.
26
Who/What Are You
Competing Against?
How to Compete Better?
 Other Fruits &
Healthy Snacks
Better promote & position apples
through collective promotional efforts
 Other Jurisdictions
such as the U.S.
and particularly
Washington State
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
27
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]
28