Voluntary Report - public distribution

**Date:** 2/16/2007

**GAIN Report Number:** CH7010

CH7000

**China, Peoples Republic of**

**Strawberries**

**Annual**

**2007**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy Beijing

**Prepared by:**

Mark Petry, Zhang Lei & Li Xueqing

**Report Highlights:**

China's fresh strawberry production is forecast to increase 35 percent
to a record 1.0 million metric tons (MMT) in 2007 thanks to a rebound in
planted acres. Frozen strawberry production is forecast to increase five
percent in 2007, to 89,300 tons, due to increasing domestic demand.
Exports of frozen strawberries are expected to decrease to 68,000 tons
due to the European Union anti-dumping duty applied to frozen
strawberries from China since October 19, 2006.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Consumption 5](#consumption)

[Trade 5](#trade)

[Marketing 7](#marketing)

[Statistics Tables 8](#statistics-tables)

# Executive Summary

China's fresh strawberry production is forecast at a record 1.0 million
metric tons (MMT) in 2007 thanks to expanding acreage. Frozen strawberry
production is forecast to increase five percent in 2007, to 89,300 tons,
driven by increasing domestic demand. Exports of frozen strawberries are
expected to decrease to 68,000 tons due to the European Union 34.2
percent anti-dumping duty applied against frozen strawberries from China
since October 19, 2006. This reduction in access to China's largest
export market means increased competition from Chinese frozen
strawberries in other markets, such as Japan.

# Production

After declining in 2006, China's fresh strawberry production is forecast
at a record 1.0 million metric tons in 2007. This represents a 35
percent jump from the previous year. The forecast is based on industry
expectations of expanding acreage in response to good returns in 2006
and a return to normal yields. Strawberry acreage is expected to
increase 25 percent in 2007 to 70,800 hectares. More inputs (labor,
fertilizer, and irrigation) from the strawberry farmers are also
expected to increase the yield. (Note: In the GAIN Production, Supply,
and Distribution tables the indicator year 2006 (column) for
strawberries corresponds to the marketing year beginning January 2007.
All references in the text of this report will use calendar year instead
of indicator year to avoid confusion.)

Average strawberry prices increased about 35 percent in 2006 due to a
production shortfall caused by weather problems (Please refer to GAIN
[CH5083](http://www.fas.usda.gov/gainfiles/200511/146131519.pdf) for
more information about production decline in 2006). Prices for
strawberries from open fields for processing experienced a larger price
increase than greenhouse strawberries. In Donggang, Liaoning Province,
one of China's largest strawberry producers, the price of processing
strawberry tripled to ￥5/kg (USD\$0.29/pound[^1]) in 2006 from the
average price of the previous three years. Therefore, despite the impact
of unfavorable weather on yield and inefficient field management, many
strawberry farmers experienced good returns in 2006.

![](media/image3.wmf)

> (Source: Ministry of Agriculture, China[^2])

Fresh strawberries are available in Chinese markets from late November
to June. Greenhouse (harvest period begins late November), plastic shed
(harvest period begins March), and open field (harvest period begins
May) account for 30 percent, 40 percent and 30 percent of total
strawberry acreage, respectively. The industry is very interested in
introducing summer varieties to fill the market gap from July to
October. The major strawberry producing provinces in China are Hebei,
Shandong, Liaoning and Sichuan Province.

In China, more than 95 percent of processing strawberries come from open
field production.

Industry sources indicate that acreage will expand in 2007 for field
strawberries because it will respond quicker to the high prices in 2006
and needs less investment than greenhouse strawberries. Looking into the
next three to five years, the industry believes that greenhouse
strawberry acreage will increase rapidly driven by good returns,
especially around big cities with higher income. In Beijing, for
example, there are about 1,000 strawberry greenhouses located in
Changping District (in the Beijing suburbs). Market intelligence
collected from Post's field visits to Changping revealed that the income
of one strawberry greenhouse (covering about 330 square meters) can
reach ￥30,000-40,000 (US\$3,850-5,130) and yields 2-2.5 tons. The
harvest season for greenhouse strawberries is November to March in
China, a time when very few fresh fruit are available in the market,
especially in North China. Although apples and citrus dominate the fruit
market in winter, strawberries are one of the very few other plants that
bear fruit during this period. People also enjoy the fun of picking
fresh strawberries in greenhouses, despite its relatively high price
(about ￥60/kg (US\$3.5/pound) in January).

Post forecasts frozen strawberry production at 89,300 tons in 2007, five
percent higher than 2006. This is not in tandem with the 35 percent
increase of fresh strawberry production because the European Union's
anti-dumping tax on frozen strawberries from China is expected to limit
China's frozen strawberry exports and deter processors from purchasing
more berries. About 80 percent of China's frozen strawberry production
is exported and the EU was the single largest market for China's frozen
strawberries.

# Consumption

In China, about 80 percent of total strawberry production is consumed
fresh and the other 20 percent is delivered to processors. Strawberries
are perishable and this limits their distribution. In China, the general
thinking is that fresh strawberries should be consumed within three to
five days after picking, though some distributors have the packaging and
transportation conditions to extend that period. The chart above briefly
describes the distribution channels for fresh strawberries.

Frozen strawberries are made into jam, jelly, juice, or used as an
ingredient for confectionary and diary products. Domestic consumption of
frozen strawberries is expected to increase steadily, because
strawberries are becoming more and more popular in China as an
ingredient, especially in foods targeting young consumers.

# Trade 

Exports: China's frozen strawberry exports are forecast to continue
declining to 68,000 metric tons in 2007. The EU placed an anti-dumping
duty of 34.2 percent on frozen strawberries from China effective October
19, 2006. Only one producer from Yantai (Shandong Province) is exempt
from the anti-dumping duty and one from Dandong (Liaoning Province) is
subject to a tax of 12.6 percent. Please refer to
[PL6067](http://www.fas.usda.gov/gainfiles/200610/146249316.pdf) for
more information on the EU's anti-dumping tax on Chinese frozen
strawberries.

China exported 70,206 tons of frozen strawberries in 2006, down 29
percent from the previous year. Higher domestic prices resulting from
the production decline and the EU's anti-dumping duty are the two major
reasons for the decline in exports. China's export price for frozen
strawberries reached 0.86US\$/Kg in 2006, up 56 percent from the
0.55US\$/Kg in 2005. The EU's anti-dumping duty made China's exports
decline sharply in the last quarter of 2006.

![](media/image5.wmf)

The EU was the largest market for China's frozen strawberries,
accounting for 44 percent of China's total frozen strawberries exports
in 2005. However, the EU's share of Chinese exports fell to 35 percent
in 2006, falling even further in the 4^th^ quarter of 2006 -- to only 13
percent of China's total exports.

###### China\'s frozen strawberry exports by destination

  ------------------------------------ ----------------------------------
  ![](media/image7.wmf)                ![](media/image9.wmf)

  ------------------------------------ ----------------------------------

  ------------------------------------ ----------------------------------
  ![](media/image11.wmf)               ![](media/image13.wmf)

  ------------------------------------ ----------------------------------

Industry sources indicate that the EU's anti-dumping duty will force
China to expand the market share in other markets, including
domestically. Critics suggest that the anti-dumping duty will not stop
China's frozen strawberries from flowing into the EU, but that third
country will serve as the bridge. The EU's anti-dumping duty on frozen
strawberries from China is good news for other suppliers to the European
market. However, in other markets the competition from China will become
fiercer, especially in Japan. Japan is the second largest market for
China's frozen strawberries, after the Netherlands, and is expected to
be the largest one in 2007 as Chinese frozen strawberries are redirected
there. This redirection is important because China is the major
competitor for the U.S. frozen strawberries in the Japanese market, in
which China maintained a 65 percent import market share in 2006. Low
prices make China's strawberries very competitive in Japan, so 2007 is
expected to see tight competition in the Japanese frozen strawberry
market. Please refer to
[JA6055](http://www.fas.usda.gov/gainfiles/200610/146249303.pdf) for
more information of Japan's frozen strawberry market.

China exports a very small amount of fresh strawberries due to
strawberry's perishability and China's low packaging technology and
inefficient distribution. In addition, pesticide residue issues also
limit fresh strawberry exports. China exported 2,279 tons of fresh
strawberries in 2006, of which 70 percent went to Hong Kong.

Imports: China's frozen strawberry imports are forecast to decrease to
7,200 tons in 2007. This is a ten percent decline from 2006 due to the
decreasing demand from the export market and sufficient domestic
production. A large percent of imported frozen strawberries were
reprocessed into frozen dried strawberries or repackaged and then
re-exported.

Chile, Argentina and Morocco are the major exporters to China,
accounting for 96 percent of China's total frozen strawberry imports in
2006. The United States is not a major player in China's frozen
strawberry market due to high prices. The average Chinese import price
increased to 1.24US\$/Kg in 2006, 2.4 times of the price in 2005,
because of the global production decline. An average U.S. strawberry
price of about 3.53 US\$/Kg is almost triple competitor pricing.

A lower import duty was applied to fresh strawberries in 2007. China
decreased its import duty for fresh strawberry (H.S. code 08101000) to
18.4 percent in 2007 from 19.8 percent in 2006. However, this has zero
impact given the fact that China does not allow fresh strawberry imports
at present due to phytosanitary concerns. No country has yet to
successfully complete a pest risk assessment and agreed to measures to
reduce the risk of pests of quarantine concern to China.

  ------------------ ------------ ------- ------ ------ ------ -------- ------
                     H.S. Code    Imp.           VAT           Rebate   
                                  Duty           (%)           (%)      
                                  (%)                                   

                                  2006    2007   2006   2007   2006     2007

  Strawberries       08101000     19.8    18.4   13     13              5
  (fresh)                                                               

  Strawberries       08111000     30      30     13     13              5
  (frozen)                                                              
  ------------------ ------------ ------- ------ ------ ------ -------- ------

# Marketing 

The demand for fresh strawberries in China continues to grow as consumer
purchasing power and the quality of life increases, particularly in
urban areas. It is estimated that more than 80% of Chinese strawberry
production is currently consumed domestically with large extra-sweet
strawberries popular with Chinese consumers. Fresh berries are normally
packaged in 400-500 gram plastic containers or paper boxes. In Beijing,
retailers were selling strawberries in the range of approximately
\$1.50-2.00 (RMB 12-16) per 500-gram package in January 2007. Holiday
seasons such as Spring Festival (Lunar New Year usually falling in
January or February) are peak times for strawberry sales. Chinese
consumers often purchase fruit baskets, including strawberries, as a
traditional gift for friends and relatives. The berry's red color is
considered lucky, and represents happiness and prosperity in Chinese
culture.

As noted above, the fresh strawberry market in China is regionally
focused. While in the United States most consumption is supplied by
California production, China's supplies usually come from nearby
production around urban centers. Thus, in Beijing and Tianjin fresh
strawberries come from nearby Hebei Province. This is largely driven by
the relatively short shelf life for local strawberries, coupled with
high transportation costs and limited cold storage.

Fresh strawberries imports are not currently allowed in China. However,
the market potential for fresh strawberries from the U.S. and other
suppliers is good during the domestic off-season, roughly from July to
November. The high cost of air shipment to China will limit the market
for exports to mid-high income consumers and upscale food service and
bakery operations such as hotels and restaurants.

China imported approximately 3,904 kg of frozen strawberries from the US
in 2006, down nearly 92.8% from the previous year. The majority of
imported frozen strawberries are used as an ingredient for jam and
yogurt production, and thus price is an important factor for local
manufacturers. China's domestic frozen strawberries have a strong price
advantage over U.S. and other imported products. In addition, the
Chinese frozen strawberry industry continues to grow significantly and
has become a major competitor against US product in third countries.
China is the largest supplier of frozen strawberries to Japan as a
number of Japanese companies have invested considerable resources in
training Chinese manufacturers how to meet production and safety
standards. This has enabled local manufacturers to meet both the rising
standards of the domestic and international marketplace. In addition,
frozen strawberries from major competitors such as Chile, Morocco and
Argentina are a serious threat to US frozen strawberry exports to China.

# 

# Statistics Tables 

**Table 1. Fresh Strawberry PS&D Table**

<table>
<colgroup>
<col style="width: 14%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><strong>PSD Table</strong></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><strong>China, Peoples Republic of</strong></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="6"><strong>Strawberries, Fresh</strong></td>
<td colspan="3">(HA)(MT)</td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td>Market Year Begin</td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
<td></td>
<td>01/2008</td>
<td>01/2008</td>
</tr>
<tr class="odd">
<td>Area Planted</td>
<td>53850</td>
<td>53850</td>
<td>56670</td>
<td>0</td>
<td>0</td>
<td>70800</td>
<td>0</td>
<td>0</td>
<td>70000</td>
</tr>
<tr class="even">
<td>Area Harvested</td>
<td>53850</td>
<td>53850</td>
<td>56670</td>
<td>0</td>
<td>0</td>
<td>70800</td>
<td>0</td>
<td>0</td>
<td>70000</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>646000</td>
<td>646000</td>
<td>750000</td>
<td>0</td>
<td>0</td>
<td>1010000</td>
<td>0</td>
<td>0</td>
<td>900000</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>646000</td>
<td>646000</td>
<td>750000</td>
<td>0</td>
<td>0</td>
<td>1010000</td>
<td>0</td>
<td>0</td>
<td>900000</td>
</tr>
<tr class="even">
<td>Exports, Fresh</td>
<td>2200</td>
<td>2200</td>
<td>2279</td>
<td>0</td>
<td>0</td>
<td>2500</td>
<td>0</td>
<td>0</td>
<td>2200</td>
</tr>
<tr class="odd">
<td>Fresh Dom. Consumption</td>
<td>452200</td>
<td>452200</td>
<td>597721</td>
<td>0</td>
<td>0</td>
<td>805500</td>
<td>0</td>
<td>0</td>
<td>717800</td>
</tr>
<tr class="even">
<td>For Processing</td>
<td>191600</td>
<td>191600</td>
<td>150000</td>
<td>0</td>
<td>0</td>
<td>202000</td>
<td>0</td>
<td>0</td>
<td>180000</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>646000</td>
<td>646000</td>
<td>750000</td>
<td>0</td>
<td>0</td>
<td>1010000</td>
<td>0</td>
<td>0</td>
<td>900000</td>
</tr>
</tbody>
</table>

**Table 2. Frozen Strawberry PS&D Table**

<table>
<colgroup>
<col style="width: 14%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 10%" />
<col style="width: 10%" />
<col style="width: 7%" />
<col style="width: 10%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10"><strong>PSD Table</strong></td>
</tr>
<tr class="even">
<td><strong>Country</strong></td>
<td colspan="9"><strong>China, Peoples Republic of</strong></td>
</tr>
<tr class="odd">
<td><strong>Commodity</strong></td>
<td colspan="6"><strong>Strawberries, Frozen</strong></td>
<td>(MT)</td>
<td></td>
<td></td>
</tr>
<tr class="even">
<td></td>
<td>2005</td>
<td>Revised</td>
<td></td>
<td>2006</td>
<td>Estimate</td>
<td></td>
<td>2007</td>
<td>Forecast</td>
<td></td>
</tr>
<tr class="odd">
<td></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
<td><p>USDA</p>
<p>Official</p></td>
<td><p>Post</p>
<p>Estimate</p></td>
<td><p>Post</p>
<p>Estimate</p>
<p>New</p></td>
</tr>
<tr class="even">
<td><strong>Market Year Begin</strong></td>
<td></td>
<td>01/2006</td>
<td>01/2006</td>
<td></td>
<td>01/2007</td>
<td>01/2007</td>
<td></td>
<td>01/2008</td>
<td>01/2008</td>
</tr>
<tr class="odd">
<td>Deliv. To Processors</td>
<td>87655</td>
<td>87655</td>
<td>94400</td>
<td>0</td>
<td>0</td>
<td>99200</td>
<td>0</td>
<td>0</td>
<td>103000</td>
</tr>
<tr class="even">
<td>Beginning Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Production</td>
<td>82500</td>
<td>82500</td>
<td>85000</td>
<td>0</td>
<td>0</td>
<td>89300</td>
<td>0</td>
<td>0</td>
<td>93000</td>
</tr>
<tr class="even">
<td>Imports</td>
<td>11200</td>
<td>14500</td>
<td>7966</td>
<td>0</td>
<td>0</td>
<td>7200</td>
<td>0</td>
<td>0</td>
<td>7500</td>
</tr>
<tr class="odd">
<td>Total Supply</td>
<td>93700</td>
<td>97000</td>
<td>92966</td>
<td>0</td>
<td>0</td>
<td>96500</td>
<td>0</td>
<td>0</td>
<td>100500</td>
</tr>
<tr class="even">
<td>Exports</td>
<td>86330</td>
<td>86330</td>
<td>70206</td>
<td>0</td>
<td>0</td>
<td>68000</td>
<td>0</td>
<td>0</td>
<td>70000</td>
</tr>
<tr class="odd">
<td>Domestic Consumption</td>
<td>7370</td>
<td>10670</td>
<td>22760</td>
<td>0</td>
<td>0</td>
<td>28500</td>
<td>0</td>
<td>0</td>
<td>30500</td>
</tr>
<tr class="even">
<td>Ending Stocks</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
<td>0</td>
</tr>
<tr class="odd">
<td>Total Distribution</td>
<td>93700</td>
<td>97000</td>
<td>92966</td>
<td>0</td>
<td>0</td>
<td>96500</td>
<td>0</td>
<td>0</td>
<td>100500</td>
</tr>
</tbody>
</table>

Table 3. Chinese frozen strawberry exports, by volume,

  -------------- -------------- -------------- -------------- --------------
  Country        1st Qtr 2006   2nd Qtr 2006   3rd Qtr 2006   4th Qtr 2006

  Japan          2,693          2,981          4,394          3,458

  United States  2,766          2,223          3,511          1,620

  Australia      1,058          741            1,016          1,105

  Netherlands    3,898          3,768          5,987          1,025

  Canada         939            752            1,852          834

  Saudi Arabia   345            436            410            621

  Korea, South   847            1,283          1,176          509

  Russia         729            194            545            470

  Germany        808            693            916            244

  New Zealand    123            161            118            203

  France         968            526            978            50

  United Kingdom 428            218            449            48

  Belgium        391            165            750            42

  Denmark        262            209            176            20

  Others         1,752          1,772          2,722          828

  Total          18,007         16,123         25,000         11,076
  -------------- -------------- -------------- -------------- --------------

Source: World Trade Atlas

Table 4. Chinese frozen strawberry imports, by volume

  -------------- ------------- -------------- -------------- --------------
  China                                                      Metric tons
  strawberries                                               
  imports,                                                   
  frozen, HS:                                                
  0811.1000                                                  

  Country        1st Qtr 2006  2nd Qtr 2006   3rd Qtr 2006   4th Qtr 2006

  Argentina      213           0              73             2,059

  Chile          2,092         846            25             529

  Peru           0             0              0              195

  Tunisia        0             0              0              77

  Poland         0             0              0              68

  France         0             1              2              2

  United States  0             1              2              1

  Morocco        0             478            1,302          0

  Total          2,305         1,326          1,404          2,932
  -------------- ------------- -------------- -------------- --------------

Source: World Trade Atlas

# 

[^1]: ^1^ An exchange rate of 7.8 Yuan per dollar is used in this
    report.

[^2]: ^2^ Fresh strawberries are not available in Chinese Market from
    July to October. That is why the prices of these months are the same
    as June.