The berry industry has seen rapid growth, but the future can be a fragile thing. With input costs for growers rising, weather extremes affecting the whole chain, and inflation impacting consumers' expenses, the market is challenging. However, with input costs stabilizing and the consumers' appetite not decreasing, there are bright spots to be seen.
This was discussed at the opening of the Global Berry Congress, which takes place today in Rotterdam, Netherlands.
The day kicked off with Cindy van Rijswick from Rabobank showing the developments in the market. Global trends affecting the berry industry include weather extremes impacting the entire supply chain. While container freight rates continue to drop, these extremes cause freight reliability to be an issue. The same goes for the significant historical drop in the purchasing power of consumers due to inflation. Now that wages have adjusted, this is recovering a bit. Interestingly in the fruit market, the fruit inflation at the consumer level has not been as spectacular as the general increase, but it affected the purchases. After a positive spike during the pandemic, the purchases came down to levels compared to 2019 again. "Is that positive or negative?" Cindy wondered, putting the numbers in perspective. "If you look at the longer terms, consumption remains rather flat, so it depends on your perspective."
Up until 2020, the European berry demand saw a huge increase, and putting the generally high price level and overall negative sentiment, this might not be too bad, as Cindy's numbers showed. She added that the availability of berries was affected as well, with a low strawberry supply and a low blueberry supply in September and October. "This had an effect on the purchases, not caused by appetite – we still believe the appetite is there."
The availability of berries was affected by climate extremes all over the world. "Or is this the new normal?" Cindy questioned, adding that at Rabobank, they also look into the climate risks in their loan portfolio, as they have to report it to the Central Bank. Her map showed there is no risk-free region available, with droughts in the main growing season affecting all growing regions. "Climate risks can be an opportunity for some," she added, referring to Belgian growers taking advantage of the climate risks affecting Italian production. "New fruits become available, or dealing with these extremes can be a way to stand out from competitors."
With blueberry exports growing for many years, currently with 248,000 hectares planted, several new countries have emerged as big players, resulting in a more stable supply throughout the year. However, 2023, for the first time, showed a drop in production, mainly caused by the 30% production decrease in Peru, as numbers from Colin Fain with Agronometrics showed. He said globally, the yield per hectare has decreased, with new hectares coming into production still resulting in an average growth of the production. The market is also characterized by general price pressure, although Colin added that prices have been stable despite the growth in production. Yet, the increased pressure on margins is caused by higher input costs and non-harvest costs.
The future of the blueberry industry will be more spread around the world – which, according to Cindy, is not the case for blackberries and raspberries, as labor is a significant issue for these crops. The same goes for the strawberry market, which is looking into higher quality and fewer labor inputs, resulting in open-field production decreasing at a rapid pace. And finally, the change in varieties is another topic that will affect the industry in the upcoming years.
"We are moving towards a more consistent quality and quantity, which, because of the weather extremes, is becoming more difficult. However, companies are looking for more controllable production, spreading outsourcing areas, and applying techniques. With the costs of inputs remaining a big theme moving forward and weather extremes, companies need a financial buffer more than ever."
More to come in the next few days!