""

Required Report - public distribution

**Date:** 9/25/2003

**GAIN Report Number:** SP3029

SP3027

**Spain**

**Canned Deciduous Fruit**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Lloyd J. Fleck

U.S. Embassy

**Prepared by:**

Diego Pazos

**Report Highlights:**

Spanish peach and pear orchards largely escaped the effects of the
August heat wave, which decimated the crops elsewhere in Europe. With
the combination of abundant fruit for processing and reduced competition
from other EU countries, Spanish canners are looking for record exports
-- and profits -- in MY 2003/04

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Madrid \[SP1\]

\[SP\]

**Table of Contents**

[Executive Summary 3](#executive-summary)

[Production 4](#production)

[Production-Canned Peaches 4](#production-canned-peaches)

[Production Canned Pears 5](#production-canned-pears)

[Consumption 5](#consumption)

[Consumption Canned Peaches 5](#consumption-canned-peaches)

[Consumption Canned Pears 6](#consumption-canned-pears)

[Trade 6](#trade)

[Trade Canned Peaches 6](#trade-canned-peaches)

[Trade Canned Pears 7](#trade-canned-pears)

[Stocks 8](#stocks)

[Stocks-Canned Peaches 8](#stocks-canned-peaches)

[Stocks-Canned Pears 8](#stocks-canned-pears)

[Policy 8](#policy)

[Policy Canned Peaches 8](#policy-canned-peaches)

[Policy Canned Pears 9](#policy-canned-pears)

[Marketing 9](#marketing)

[Marketing Canned Peaches 9](#marketing-canned-peaches)

[Marketing-Canned Pears 9](#marketing-canned-pears)

# Executive Summary

The peach and pear crops were in good shape -- and well advanced \--
when the heat wave struck Spain in August. Most orchards have some
irrigation and should produce good crops.

Canned Peaches

The Spanish Ministry of Agriculture has forecast the MY2003/04 peach
crop at 1,329,000 tons, up six percent from the previous year. This
abundant crop should make more fruit available to canners, whose output
of canned peaches should be significantly higher than last year.

Spanish canners say that the 2003/04 marketing year could be a replay of
last year's scenario. Spain is enjoying an up-tick in production, while
its main European competitor, Greece is having a very poor crop. Indeed,
some Spanish sources say that Greece could be a net importer of peaches
this marketing year. Perhaps the one dark spot in the picture is the
U.S. market, where shipments have dropped due to the strength of the
euro.

Farmers received about 320 euros per ton for peaches delivered to
canneries. EU subsidies for canned peaches total 47.70 euros per ton.
Since Spanish canned peaches are subsidized by EU aids, U.S. exporters
have limited potential in this market.

Canned peach exports should increase significantly in MY2003/04, due to
reduced competition, especially in the EU. Canned peach imports are
minor when compared to exports and should drop due to shorter crops in
competitor countries, such as Italy and Greece.

Canned Pears

The total pear crop for MY 2003/04 is expected to be about 640,000 tons,
or some 6 percent higher than in the previous year. Output of the
*Williams* variety - the main one used for processing- is forecast at
44.224 tons, or 5 percent higher than last year. Output of *Williams*
has risen dramatically during the last five years. Canned pear exports
are expected to increase in MY 2003/04 due to higher domestic production
and to lower crops in other EU countries.

Canned pears are even more heavily subsidized than canned peaches.
Farmers receive about 190 euros per ton of pears delivered to canneries,
while EU subsidies for canned pears total 158 euros per ton.

Spain's exports of canned pears fell by 25 percent in MY 2002/03, due to
a large production in other EU countries. Shipments to the United States
dropped off sharply, to 377 tons.

Note: Current exchange rate: 1 euro = \$0.92

# Production

## Production-Canned Peaches

  --------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------
  **PSD Table**                                                                      

  **Country**     **Spain**                                                          

  **Commodity**   **Canned                                     (MT)(MT,              
                  Peaches**                                    Net                   
                                                               Weight)               

                  2001        Revised    2002       Estimate   2003       Forecast   UOM

                  USDA        Post       USDA       Post       USDA       Post       
                  Official    Estimate   Official   Estimate   Official   Estimate   
                  \[Old\]     \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year               06/2001               06/2002               06/2003    MM/YYYY
  Begin**                                                                            

  Deliv. To       113000      113000     151729     136657     140000     155000     (MT)
  Processors                                                                         

  Beginning       22000       22000      3833       3833       3735       1000       (MT, Net
  Stocks                                                                             Weight)

  Production      125000      125000     166902     150322     154000     170500     (MT, Net
                                                                                     Weight)

  Imports         3361        3361       4000       4979       4000       4000       (MT, Net
                                                                                     Weight)

  TOTAL SUPPLY    150361      150361     174735     159134     161735     175500     (MT, Net
                                                                                     Weight)

  Exports         75528       75528      100000     87703      87000      103500     (MT, Net
                                                                                     Weight)

  Domestic        71000       71000      71000      70431      71000      71000      (MT, Net
  Consumption                                                                        Weight)

  Ending Stocks   3833        3833       3735       1000       3735       1000       (MT, Net
                                                                                     Weight)

  TOTAL           150361      150361     174735     159134     161735     175500     (MT, Net
  DISTRIBUTION                                                                       Weight)
  --------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------

Spain's MY2003/04 canned peach production is expected to reach a record
170,500 tons, which will require an input of about 155,000 tons of fresh
clingstone peaches. Poor crops in competitor countries have pumped up
prices, which will pull more peaches to processing

## 

## 

## 

## Production Canned Pears

  --------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------
  **PSD Table**                                                                      

  **Country**     **Spain**                                                          

  **Commodity**   **Canned                                     (MT)(MT,              
                  Pears**                                      Net                   
                                                               Weight)               

                  2001        Revised    2002       Estimate   2003       Forecast   UOM

                  USDA        Post       USDA       Post       USDA       Post       
                  Official    Estimate   Official   Estimate   Official   Estimate   
                  \[Old\]     \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]    

  **Market Year               06/2001               06/2002               06/2003    MM/YYYY
  Begin**                                                                            

  Deliv. To       44700       44700      42451      37731      40000      43000      (MT)
  Processors                                                                         

  Beginning       3000        3000       12600      12600      12595      13481      (MT, Net
  Stocks                                                                             Weight)

  Production      48300       48300      45545      40480      43200      46400      (MT, Net
                                                                                     Weight)

  Imports         454         454        450        900        450        450        (MT, Net
                                                                                     Weight)

  TOTAL SUPPLY    51754       51754      58595      53980      56245      60331      (MT, Net
                                                                                     Weight)

  Exports         20782       20782      22000      14499      21000      28200      (MT, Net
                                                                                     Weight)

  Domestic        18372       18372      24000      26000      24000      25000      (MT, Net
  Consumption                                                                        Weight)

  Ending Stocks   12600       12600      12595      13481      11245      7131       (MT, Net
                                                                                     Weight)

  TOTAL           51754       51754      58595      53980      56245      60331      (MT, Net
  DISTRIBUTION                                                                       Weight)
  --------------- ----------- ---------- ---------- ---------- ---------- ---------- ---------

The total pear crop is expected to rise to 640,000 tons in MY2003/04,
compared to 603,300 tons in the previous season. Production of the most
popular canning variety, *Williams*, should expand another 5 percent.
During the last five years, supplies of *Williams* have increased over
ten-fold \-- from 4,190 tons in 1999 to about 44,224 in 2003.

The amount of pears delivered to processors totaled 37,731 tons in
2002/03, which exceeded Spain's quota by 2,523 tons. Consequently, the
direct payment was reduced by 2.24 percent to 158.08 euros per ton. For
MY 2003/04, farmers will received a price of about 190 euros/ton for
pears delivered to processors. Deliveries to processors should rise
given the shortage of supplies in other EU countries. The Spanish
canning industry is expecting very profitable prices for MY 2003/04.

# 

# Consumption

## Consumption Canned Peaches

Higher prices for canned peaches should keep consumption flat in MY
2003/04. Canned peaches are mainly consumed in the food service sector
during the winter. The varieties of peaches used for canned production
are also sold for fresh consumption.

## 

## Consumption Canned Pears 

According to trade sources, Spanish consumption of canned pears has been
growing due to the popularity of fruit cocktail. In addition, the
*William*s variety has been used this summer for fresh consumption and
for export due to the shorter crop of pears in other EU countries.

# Trade

## Trade Canned Peaches 

Canned peach exports in MY2002/03 rose by 16 percent due to lower
availability in Greece. For MY 2003/04, exports should set a record due
to the dramatic drop in production in other EU countries. Exports to the
United States may rise due to lower availability from competitors.

  --------------------- -------------------- ------------- ---------------
  **Import Trade                                           
  Matrix**                                                 

  **Country**           Spain                              

  **Commodity**         Canned Peaches                     

  Time Period           MY/Jun/May           Units:        MT

  Imports for:          2001                               **2002**

  U.S.                  0                    U.S.          

  Others                                     Others        

  Italy                 439                                2069

  Greece                479                                1029

  Portugal              538                                770

  South Africa          484                                504

  Germany               481                                353

  France                878                                132

  Total for Others      3299                               4857

  Others not Listed     62                                 122

  Grand Total           3361                               4979
  --------------------- -------------------- ------------- ---------------

  --------------------- -------------------- ------------- ---------------
  **Export Trade                                           
  Matrix**                                                 

  **Country**           Spain                              

  **Commodity**         Canned Peaches                     

  Time Period           MY/Jun/May           Units:        MT

  Exports for:          2001                               **2002**

  U.S.                  8779                 U.S.          4223

  Others                                     Others        

  France                11160                              16108

  Germany               9513                               14530

  Portugal              9738                               9917

  Mexico                9054                               7940

  Italy                 410                                4443

  UK                    6158                               3917

  Saudi Arabia          75                                 2746

  Korea, South          1459                               2561

  Total for Others      47567                              62162

  Others not Listed     19182                              21318

  Grand Total           75528                              87703
  --------------------- -------------------- ------------- ---------------

## 

## Trade Canned Pears 

During MY 2002/03, Spanish exports of canned pears declined due to
strong competition from other EU countries. Shipments to the United
States fell to 377 tons in MY 2002/03 (from 2,379 in MY 2001/02). The
market should be reversed in MY 2003/04, as Spain fills the shortages
caused by lower production in other EU countries. Shipments to the U.S.
may expand for the same reason. Spain\'s total canned pear imports
doubled in MY 2002/03, to about 900 tons. Imports from China reached to
218 tons.

  ----------------------- ----------------- ------------- ----------------
  **Import Trade Matrix**                                 

  **Country**             Spain                           

  **Commodity**           Canned Pears                    

  Time Period             My/Jun/M          Units:        Metric tons

  Imports for:            2001                            **2002**

  U.S.                    0                 U.S.          0

  Others                                    Others        

  Germany                 286                             451

  China                                                   218

  Netherlands                                             30

  Belgium                                                 18

  Total for Others        286                             717

  Others not Listed       168                             183

  Grand Total             454                             900
  ----------------------- ----------------- ------------- ----------------

  --------------------- ------------------- ------------- ----------------
  **Export Trade                                          
  Matrix**                                                

  **Country**           Spain                             

  **Commodity**         Canned Pears                      

  Time Period           MY/Jun/M            Units:        Metric tons

  Exports for:          2001                              **2002**

  U.S.                  2379                U.S.          377

  Others                                    Others        

  Germany               4683                              4185

  France                4627                              3696

  Italy                 696                               1068

  UK                    1891                              717

  Netherlands           902                               549

  Austria               495                               604

  Denmark               451                               563

  Total for Others      13745                             11382

  Others not Listed     4658                              2740

  Grand Total           20782                             14499
  --------------------- ------------------- ------------- ----------------

# 

# Stocks

## Stocks-Canned Peaches

Trade sources say that stocks of canned peaches declined to about 1,000
tons at the end of MY 2002/03. With ready demand expected in MY 2003/04,
ending stocks should remain at low levels.

## 

## Stocks-Canned Pears

Trade sources say that MY 2002/03 ending stocks of canned pears rose due
to lower exports. With larger exports expected in MY 2003/04, stocks
should drop sharply by the end of the year.

# Policy

## Policy Canned Peaches

On August 30, 2003, the EU Commission published Regulation 1535/03,
which provides detailed rules for applying the aid scheme for products
processed from fruits and vegetables. The EU also set Spain's processing
thresholds for peaches at 180,794 tons.

Farmers will receive a price of about 320 euros/ton for peaches
delivered to processors in MY 2003/04, up 50 percent from the previous
year. In addition, the EU Regulation set the amount of aid paid for
peaches for processing at 47.70 euros /ton. Farmers' organizations now
receive the aid directly, which amounts to a bonus of over 15 percent of
the cost processors pay for the fruit. If the amount of peaches
delivered to processors is over the Spanish threshold and total EU
production is over the EU quota, the amount of aid is reduced. No
penalties are expected for the next few years.

## 

## Policy Canned Pears 

On August 30, 2003, the EU Commission published the regulation 1535/03,
which provides detailed rules for applying the aid scheme for products
processed from fruits and vegetables. The EU also set Spain's processing
threshold for pears at 35,199 tons.

In MY 2002/03, the amount of pears delivered to processors totaled
37,731 tons, which was 2,523 tons over the EU production quota
established for Spain. Consequently, the direct payment for MY 2003/04
was reduced by 2.24 percent to 158.08 euros per ton. In addition,
farmers will receive a price of about 190 euros/ton of pears delivered
to processors in MY 2003/04. The subsidy thus represents a bonus of 83
percent of the price paid by processors.

In MY 2003/04, the quantity of pears delivered to processors will likely
again exceed Spain's EU threshold. However, with the expected decline in
the total quantity of pears processed elsewhere in the EU during MY
2003/04, Spanish producers do not expect a reduction in the subsidy
during MY 2004/05.

# 

# Marketing

## Marketing Canned Peaches 

No opportunities for the U.S. peaches in the Spanish market due to both
EU subsidies and to the large production.

Marketing Canned Pears

## Marketing-Canned Pears

Given the high subsidies received by the Spanish canning industry, U.S.
exporters have a very limited potential in this market.