Required Report - public distribution

**Date:** 2/23/2005

**GAIN Report Number:** BR5606

B

**Brazil**

**Fresh Deciduous Fruit**

**Brazilian Apple and Pear Production and Trade**

**2005**

**Approved by:**

![](media/image1.wmf)William W. Westman, Agricultural Minister Counselor

U.S. Embassy

**Prepared by:**

Elizabeth Mello, Agricultural Attaché

**Report Highlights:**

Brazil\'s apple crop for 2005 is projected to be 850,000 tons, down 13%
from the previous year due to weather problems. With the drop in
production, increase in domestic demand, and increasing supply of apples
on the global market, apple exports will decrease by 40 percent in 2005.
Apple imports are likely to rise 6% in 2005 due to the shorter crop,
although increased demand for national varieties and difficulties with
the Argentine inspection system continue to hinder imports. Pear imports
in 2005 are expected to maintain at 2004 levels.

Includes PSD Changes: No

Includes Trade Matrix: Yes

Unscheduled Report

Brasilia \[BR1\]

\[BR\]

Table of Contents

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

[Production 3](#production)

[Production Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206935)

[Consumption 4](#consumption)

[Consumption Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206937)

[Trade 5](#trade)

[Trade Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206939)

[Stocks Error! Bookmark not defined.](#__RefHeading___Toc44206940)

[Stocks Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206941)

[Policy 5](#policy)

[Policy Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206943)

[Marketing 5](#marketing)

[Marketing Subcategory **Error! Bookmark not
defined.**](#__RefHeading___Toc44206945)

# Executive Summary

This report provides an update on Brazilian apple production,
consumption, and trade. Trade sources estimate that apple production
during the 2005 crop will total 850,000 tons, down 13 percent from the
previous crop year due to weather problems. Although quality of the 2005
crop so far is very good, Brazilian apple exports will likely decrease
by 40 percent in 2005 due to the drop in production and increase in
internal demand. Apple imports are likely to rise 6% in 2005 due to the
shorter crop, although increased demand for national varieties and
difficulties with the Argentine inspection system continue to hinder
imports.

Note: For pears, this report provides only import data, since pear
production is insignificant and Brazil is a major importer of pears. In
2004, Brazilian imports of pears increased by 21 percent and reached
nearly 76,000 metric tons. In 2004, Argentina and Chile accounted for
nearly 90 percent of the market share of Brazil's imports of pears,
followed by the United States with 6 percent.

# Production

The harvest of the Brazilian 2005 apple crop began in early January,
earlier than usual this year, and it is expected to be complete by May
2005. Our trade sources reported that, while Fuji production has yet to
begin, 90 percent of the current Gala crop has been harvested, and
estimate production at 850,000 metric tons, 13% percent lower than the
2004 crop. The decrease in production is attributed to poor weather
conditions and many trees are in alternate years of production. The
quality of the apple crop in 2005 is reportedly very good. The apple
market in Brazil is considered volume-sensitive, but the industry has
balanced supply and demand, and succeeded somewhat in stabilizing
prices. The Brazilian economy has also recuperated in the last few
months, which has had a positive impact on fruit sales. Brazilian apple
varieties (Gala and Fuji) have grown in popularity with local consumers,
winning loyalty over imported varieties in the past few years, and
domestic apple prices have continued to rise. Increases in exports have
also boosted the domestic price.

Total area planted to apples in Brazil is estimated at 32,927 hectares,
of which 32,000 hectares are under production. The state of Santa
Catarina remains the main apple producer in Brazil and increased its
share to 60 percent this year, followed by the state of Rio Grande do
Sul with 36 percent. The two most important varieties cultivated in
Brazil are \"Gala\" (normally harvested Jan-Feb, accounting for 59% of
total production), and \"Fuji\" (harvested during Mar-Apr with 35%
percent of total production). Other apple varieties produced in Brazil
include Golden Delicious, Braeburn, and Pink Lady (remaining 6%). The
number of apple growers in Brazil is estimated at 2,352, of which 70
percent are located in the state of Santa Catarina.

Cold storage capacity is estimated at 550,000 tons supplementing
additional conventional storage. The state of Santa Catarina accounts
for most of the apple storage capacity in Brazil, holding 54 percent of
the cold storage and 43 percent of the conventional storage capacity. It
is reported to be sufficient for the entire crop.

In 2004, production reached a new record of 978 thousand tons, an
increase of 17% over the previous year. There were several factors
contributing to this increase. The Brazilian apple industry is becoming
better organized and increasing its marketing efforts to achieve higher
productivity, increase its quality controls via certification, and has
increased its export marketing efforts. In 2004, favorable climatic
conditions included a sufficient dormancy period, sufficient cold
weather, and adequate rainfall. Uniform pollenization and an increase of
trees in the production stage attributed to a 6% increase in area over
2003, to 32,981 hectares.

In the Spring of 2004 producers battled with some adverse weather
conditions including excess rain, hail, insufficient hours of sunlight,
and unseasonable cold weather, which increased producers' difficulties
with apple scab (Venturia inaequallis).

## TABLE I -- Brazil: Area Harvested and Production of Apples, by state, 2004 crop year

+---------------------+--------------------+---------------------------+
| State               | Area Harvested     | Production                |
|                     |                    |                           |
|                     | (Hectares)         | (Metric Tons)             |
+---------------------+--------------------+---------------------------+
| Santa Catarina      | 17,644             | 583,205                   |
+---------------------+--------------------+---------------------------+
| Rio Grande do Sul   | 13,447             | 353,140                   |
+---------------------+--------------------+---------------------------+
| Parana              | 1,740              | 39,643                    |
+---------------------+--------------------+---------------------------+
| Others              | 150                | 1,875                     |
+---------------------+--------------------+---------------------------+
| Brazil              | 32,981             | 977,863                   |
+---------------------+--------------------+---------------------------+

Source: IBGE, ICEPA

## 

# Consumption

Apple consumption is expected to decrease by 13 percent in 2005 due to
lower domestic supply, higher prices for domestic apples, and problems
with imports, in particular from Argentina. In 2004, domestic demand
increased by 3 percent due to an increased supply and lower prices of
domestic apples on the market combined with improved economic conditions
and greater purchasing power of Brazilian consumers. The average
wholesale price for gala apples in the Sao Paulo market decreased by 8
percent in 2004 and reached US\$10.44 per 18-kilogram box.

Consumption of apples in Brazil is mostly fresh, although production of
apple juice is increasing slowly. Large apple processors in the state of
Santa Catarina are developing new strategies to increase the domestic
use of apples. In addition to apple juice, primarily an export product,
companies are developing new products and uses such as frozen pulp,
dehydrated apples, cider, aromas, and apple cakes and pies.

## Table II -- Brazilian Apple Market (in metric tons):

  ------------- --------- --------- --------- ---------- ---------- ----------
  Year          2000      2001      2002      2003       2004       2005 F

  Production    967,063   705,515   857,340   842,300    970,000    850,000

  Imports       43,651    80,374    53,487    42,363     42,478     45,000

  Exports       64,480    35,786    65,927    76,466     153,043    90,000

  Estimated     946,234   750,103   844,900   808,197    830,000    720,000
  Consumption                                                       
  ------------- --------- --------- --------- ---------- ---------- ----------

Source: Office of Agricultural Affairs (OAA), based on interviews with
trade sources.

# Trade

Trade sources estimate that apple exports will decrease by 40 percent in
2005 due to the increase in domestic demand, drop in production, and
increasing supply of apples on the global market. Apple imports are
expected to increase slightly to 6% but will not reach historical levels
(53,487 in 2002) due to Argentina's difficulties with Cydia pomonella
and other suppliers face costs that make it difficult to compete in
Brazil.

In 2004, apple exports doubled from the previous year, and the European
Union accounted for 90 percent of all Brazilian apple exports, against
89 percent in 2002. The Netherlands accounted alone for 38 percent of
all Brazilian apple exports, followed by the United Kingdom with 12
percent and Germany with 10 percent. For 2004, Brazil achieved an apple
trade surplus of \$60 Million.

Apple imports stayed the same in 2004, mostly due to increased demand
for national varieties and difficulties with the Argentine inspection
system. An insect called Cydia pomonella (Coddling moth) caused Red
Delicious imports from Argentina to increase in price, in part due to
the added cost of sending Brazilian inspectors to Argentina to
pre-inspect product in areas with this disease. Argentina was the major
supplier of apples to Brazil with 80 percent of the total imports,
followed by Chile with 19 percent. These two countries benefit from
preferential import tax rates and the MERCOSUL agreement.

# Policy

There is no national policy for increasing apple production in Brazil.
Production policies are limited to the two southern states of Santa
Catarina and Rio Grande do Sul, and are designed to improve
infrastructure in the sector, such as increasing cold storage capacity
and agricultural research. Recently, the government of Santa Catarina
began an assistance program to small apple producers by providing
support to form producer cooperatives in order to be able to market
their products, since apple production in that state is concentrated
among few large companies.

Since September of 2002, Normative Instruction Number 50 provides the
Technical Regulations for the Identity and Quality of Apple for Grading
purposes. This is a federal regulation issued by the Ministry of
Agriculture, Livestock, and Food Supply (MAPA).

# Marketing

Brazilian apple exporters through the Brazilian Fruit Institute (IBRAF)
in partnership with the Brazilian Export Promotion Agency (APEX) have
doubled funds to conduct market promotion activities for Brazilian
apples in selected markets, mostly in trade shows in the European Union.
The funds are estimated at US\$1 million.

Joint trade missions (federal government and major apple exporters) are
also working overseas to open new markets for Brazilian apples. The
overall goal of the Brazilian market promotion for apples is to enter
the Asian market, followed by market promotion in the European Union to
increase sales of Fuji variety in addition to Gala.

# STATISTICAL TABLES

## 

## Table III -- Brazil: Imports of Apples by Country of Origin, 

## 2001-2004, in metric tons:

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------
  **Brazil:                                                                                                            
  Imports of                                                                                                           
  Fresh                                                                                                                
  Apples**                                                                                                             

  **Commodity                                                                                                          
  (HTS):                                                                                                               
  080810**                                                                                                             

  **Import Duty                                                                                                        
  (Ad Valorem),                                                                                                        
  effective Jan                                                                                                        
  2004: 10                                                                                                             
  percent                                                                                                              
  assessed on                                                                                                          
  the CIF value                                                                                                        
  of the                                                                                                               
  product**                                                                                                            

  Year To Date:                                                                                                        
  January --                                                                                                           
  December                                                                                                             

  **Partner     **Unit**   **Quantity**                                    **%                                         **% Change**
  Country**                                                                Share**                                     

                           **2001**       **2002**   **2003**   **2004**   **2001**   **2002**   **2003**   **2004**   **2004/2003**

  World         T          647738         53487      42363      42478      100%       100%       100%       100,00%    0,27

  Argentina     T          57696          39283      27615      33869      8.91%      73.44%     65.19%     79,73%     22,65

  Chile         T          587702         13314      13408      7897       90.73%     24.89%     31.65%     18,59%     -41,10

  Uruguay       T          109            11         545        468        0.02%      0.02%      1.29%      1,10%      -14,13

  France        T          1792           707        424        98         0.28%      1.32%      1%         0,23%      -76,89

  Spain         T          40             18         161        75         0.01%      0.03%      0.38%      0,18%      -53,42

  United States T          230            0          118        0          0.04%      0%         0.28%      0,00%      -100,00

  Portugal      T          20             136        92         53         0%         0.25%      0.22%      0,12%      -42,39

  Italy         T          149            19         0          19         0.02%      0.03%      0%         0,04%      0,00
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------

## 

## 

##  

## Table IV -- Exports of Apples by Country of Destination, 

## 2001-2004, in metric tons:

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------
  **Brazil:                                                                                                            
  Exports of                                                                                                           
  Fresh                                                                                                                
  Apples**                                                                                                             

  **Commodity                                                                                                          
  (HTS):                                                                                                               
  080810**                                                                                                             

  Year To Date:                                                                                                        
  January -                                                                                                            
  December                                                                                                             

  **Partner     **Unit**   **Quantity**                                    **%                                         **% Change**
  Country**                                                                Share**                                     

                           **2001**       **2002**   **2003**   **2004**   **2001**   **2002**   **2003**   **2004**   **2003/2002**

  World         T          35786          65927      76466      153043     100%       100%       100%       100,00%    100,15

  Netherlands   T          19618          25343      30312      57360      54.82%     38.44%     39.64%     37,48%     89,23

  United        T          3760           8119       7953       17859      10.51%     12.32%     10.4%      11,67%     124,56
  Kingdom                                                                                                              

  Germany       T          2880           5408       6254       15396      8.05%      8.2%       8.18%      10,06%     146,18

  Sweden        T          342            2963       5909       9782       0.96%      4.49%      7.73%      6,39%      65,54

  Portugal      T          550            106        4159       6154       1.54%      0.16%      5.44%      4,02%      47,97

  Belgium       T          2477           6397       4099       5657       6.92%      9.7%       5.36%      3,70%      38,01

  Italy         T          533            3620       3528       7608       1.49%      5.49%      4.61%      4,97%      115,65

  Ireland       T          1784           2198       2336       3918       4.99%      3.33%      3.05%      2,56%      67,72

  Spain         T          1462           4457       2156       462        4.09%      6.76%      2.82%      0,30%      -78,57

  Finland       T          663            1258       2048       4948       1.85%      1.91%      2.68%      3,23%      141,60

  Denmark       T          0              0          1660       1949       0,00       0,00       2.17%      1,27%      17,41

  France        T          374            620        1137       4944       1.04%      0.94%      1.49%      3,23%      334,83

  Philippines   T          0              1871       1000       2288       0,00       2.84%      1.31%      1,50%      128,80

  Bangladesh    T          0              86         666        3073       0,00       0.13%      0.87%      2,01%      361,41

  Norway        T          869            1163       553        788        2.43%      1.76%      0.72%      0,51%      42,50

  Singapore     T          0              169        519        760        0,00       0.26%      0.68%      0,50%      46,44

  Hong Kong     T          0              340        471        218        0,00       0.52%      0.62%      0,14%      -53,72

  Netherlands   T          0              0          279        22         0,00       0,00       0.36%      0,01%      -92,11
  Antilles                                                                                                             

  United States T          21             281        271        2284       0.06%      0.43%      0.35%      1,49%      742,80

  Barbados      T          42             148        198        230        0.12%      0.22%      0.26%      0,15%      16,16

  Malta         T          255            192        192        296        0.71%      0.29%      0.25%      0,19%      54,17

  Russia        T          0              0          150        171        0,00       0,00       0.2%       0,11%      14,00

  Others        T          156            1188       1135       6876       0,00       0.02%      0.01%      4,49%      505,81
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------

## 

## Table V -- Brazil Imports of Pears by Country of Origin, 

## 2001-2004, in metric tons:

  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------
  **Brazil:                                                                                                            
  Imports of                                                                                                           
  Fresh Pears**                                                                                                        

  **Commodity                                                                                                          
  (HTS):                                                                                                               
  080820**                                                                                                             

  **Import Duty                                                                                                        
  (Ad Valorem),                                                                                                        
  effective Jan                                                                                                        
  2004: 10                                                                                                             
  percent                                                                                                              
  assessed on                                                                                                          
  the CIF value                                                                                                        
  of the                                                                                                               
  product**                                                                                                            

  Year To Date:                                                                                                        
  January -                                                                                                            
  December                                                                                                             

  **Partner     **Unit**   **Quantity**                                    **%                                         **% Change**
  Country**                                                                Share**                                     

                           **2001**       **2002**   **2003**   **2004**   **2001**   **2002**   **2003**   **2004**   **2004/2003**

  World         T          117736         92503      62908      75944      100,00%    100,00%    100,00%    100,00%    20,72

  Argentina     T          108317         81336      51102      61716      92,00%     87,93%     81,23%     81,27%     20,77

  Chile         T          2392           6043       4611       3212       2,13%      1,08%      6,44%      4,23%      -30,34

  United States T          2509           995        4051       4144       2,13%      1,08%      6,44%      5,46%      2,30

  Portugal      T          3755           3531       2283       4002       3,19%      3,82%      3,63%      5,27%      75,30

  Spain         T          262            394        589        1091       0,22%      0,43%      0,94%      1,44%      85,23

  Uruguay       T          475            144        271        1779       0,40%      0,16%      0,43%      2,34%      556,46

  France        T          19             60         0          0          0,02%      0,06%      0,00%      0,00%      0,00

  Italy         T          6              0          0          0          0,01%      0,00%      0,00%      0,00%      0,00
  ------------- ---------- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------

## Table VI -- Wholesale prices for fresh apples, 2001-2004:

+-------+-------+-------+-------+-------+-------+-------+---------+
| ##### |       |       |       |       |       |       |         |
| # Tab |       |       |       |       |       |       |         |
| le -  |       |       |       |       |       |       |         |
| São P |       |       |       |       |       |       |         |
| aulo: |       |       |       |       |       |       |         |
|  Whol |       |       |       |       |       |       |         |
| esale |       |       |       |       |       |       |         |
|  pric |       |       |       |       |       |       |         |
| es fo |       |       |       |       |       |       |         |
| r fre |       |       |       |       |       |       |         |
| sh ap |       |       |       |       |       |       |         |
| ples, |       |       |       |       |       |       |         |
|  2004 |       |       |       |       |       |       |         |
+-------+-------+-------+-------+-------+-------+-------+---------+
|       |       |       |       |       |       |       |         |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Va    | Gala  |       | Fuji  |       | G     |       | Average |
| riety |       |       |       |       | olden |       | Monthly |
|       |       |       |       |       | Deli  |       |         |
|       |       |       |       |       | cious |       |         |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Month | R\$   | US\$  | R\$   | US\$  | R\$   | US\$  | E       |
|       |       |       |       |       |       |       | xchange |
|       |       |       |       |       |       |       | Rate    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Jan   | 1.85  | 0.65  | 1.79  | 0.63  | 1.51  | 0.53  | 2.85    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Feb   | 1.78  | 0.61  | 2.46  | 0.84  | 1.65  | 0.56  | 2.93    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Mar   | 1.40  | 0.48  | 2.17  | 0.75  | 1.47  | 0.51  | 2.91    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Apr   | 1.38  | 0.48  | 2.03  | 0.70  | 1.32  | 0.45  | 2.91    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| May   | 1.35  | 0.44  | 1.88  | 0.61  | 1.23  | 0.40  | 3.10    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Jun   | 1.38  | 0.44  | 1.81  | 0.58  | 1.27  | 0.41  | 3.13    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Jul   | 1.48  | 0.49  | 1.83  | 0.60  | 1.35  | 0.44  | 3.03    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Aug   | 1.49  | 0.50  | 1.84  | 0.61  | 1.34  | 0.45  | 3.00    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Sep   | 1.70  | 0.59  | 1.91  | 0.66  | 1.35  | 0.47  | 2.89    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Oct   | 1.92  | 0.67  | 1.87  | 0.66  | 1.40  | 0.49  | 2.85    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Nov   | 2.22  | 0.80  | 1.90  | 0.68  | 1.42  | 0.51  | 2.79    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Dec   | 2.39  | 0.88  | 1.99  | 0.73  | 1.45  | 0.53  | 2.72    |
+-------+-------+-------+-------+-------+-------+-------+---------+
| Av    | 1.70  | 0.58  | 1.96  | 0.67  | 1.40  | 0.48  | 2.93    |
| erage |       |       |       |       |       |       |         |
+-------+-------+-------+-------+-------+-------+-------+---------+

Source: Sao Paulo Wholesale Market (CEAGESP)

## Table VII -- Brazilian Apple Production by State from 1999 to 2004

  ------------- ------------ ------------- ------------- ------------ ---------
  **Harvest**   **Brazil**   **Santa       **Rio Grande  **Paraná**   **São
                             Catarina**    do Sul**                   Paulo**

  1999          726,083      384,758       304,545       26,780       9,000

  2000          968,063      500,142       427,036       36,000       4,885

  2001          709,815      378,748       304,447       23,800       2,820

  2002          857,340      474,516       346,314       33,800       2,710

  2003          835,322      475,095       329,460       28,397       2,370

  2004          977,863      583,205       353,140       39,643       1,875
  ------------- ------------ ------------- ------------- ------------ ---------

Source: IBGE