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The Retail View: Study shows berries will continue to prosper

Rabobank, which is a major player in agricultural lending, has forecast that the current booming trend for berry sales in the United States will continue at a 7 percent annual growth rate over the next three years. And that view has support within the industry.

On Nov. 1, Rabobank’s Food and Agribusiness Research and Advisory group released a report, titled “The U.S. Fresh Berry Boom — Who Will Profit from the Growth?”

The report stated thatRaspberries05(Photo courtesy of Wikipedia Commons) while sales will continue to trend upward, there are mitigating factors that will make it challenging for growers and shippers to remain profitable. On that list, the report mentions escalating production costs, labor and land issues, import competition and the sheer market power of retailers as reasons producer margins will continue to face pressure.

“While the near-term outlook for U.S. fresh berry sales looks good, producers are likely to continue to experience rising costs and constrained resources,” said Karen Halliburton-Barber, assistant vice president and senior agricultural analyst for Rabobank and the author of the report, in a press release. “Successful players in the coming years will embrace growing demand with greater production efficiencies and innovation, taking advantage of new varieties and technology advancements.”

The report noted that California will continue to be the leading producer of fresh berries, but that the state does have specific issues relating to labor shortages, restrictions on crop protection tools and limited land resources.

Douglas Ronan, vice president of marketing for Driscoll Strawberry Associates in Watsonville, CA, said the report mirrors his firm’s assessment of the berry deal in the near future. He said the growth of the category has been very strong in recent years and Driscoll expects that trend to continue. “On the flip side, the constraints the report notes are real and will be challenging.”

He said all four berry varieties — strawberries, blueberries, raspberries and blackberries — will face the same issues but both the challenges and rewards will be more acute for strawberries and blueberries. Those are the two items that have registered the sharpest gains in recent years.

The Rabobank report noted that California produces 88 percent of the country’s fresh strawberries and significant portions of fresh blueberries, raspberries and blackberries. Florida is also a significant producer of fresh berries, and faces similar challenges to that of California. The report said Florida also has to deal more directly with import pressure as increases in imports of strawberries and blueberries from Mexico and Chile compete directly with Florida’s season. Chile now accounts for more than 50 percent of imported blueberries.

Mr. Ronan said berry production in both this part of the world and Europe will continue to see a north-to-south shift. In Europe, he said production is moving south from northern Europe to Spain and northern Africa including Morocco, where Driscoll does have growing deals. In this area of the world, production of berries is also moving south from British Columbia and continuing all the way south along the coast to Chile. This shift will continue following seasonal patterns, but also seeing increased volume in the more southern regions.

Carolyn O’Donnell, communications director for the California Strawberry Commission, said California has shown tremendous growth in strawberry production over the last five years but it has been fairly stable the last three. In 2008, the state produced 114 million cartons of strawberries, which grew to 181 million cartons in 2010. In 2011, volume actually slipped to 178 million cartons but this year, when the calendar flips to 2013, the total volume should be in the 190 million carton range. While that is good growth, it still only represents a 5 percent increase over the past two years. Most of those gains have come through increased yields as California’s strawberry acreage was listed at 36,519 acres in 2008 and only 37,732 acres this year, which represents only about a 3 percent increase in five years.

It is a different story for blueberries. Worldwide statistics show that total world acreage of blueberries has grown significantly over the years. In fact, it has quadrupled in the past 15 years and now sits near 200,000 acres with most of that being in North and South America. The Americas represent close to 80 percent of the world’s blueberry acreage and production.