Required Report - public distribution

**Date:** 4/15/2004

**GAIN Report Number:** GR4006

GR4005

**Greece**

**Canned Deciduous Fruit**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Ann Murphy

U.S. Embassy Rome

**Prepared by:**

Stamatis Sekliziotis

**Report Highlights:**

The peach crop in Greece is expected to rebound to a level much higher
than the MY 2003/04 disaster-striken  crop of 114,00 tons. The estimate
for MY 2004/05 production is 925,000 tons. Deliveries to canners are
estimated to be 320,000 tons in 04/05. Exports last year were low at
11,738 tons. The poor quality and high price of 03/04 Greek peaches kept
them from being sold. Integrated pest management and certification of
IPM are improving product quality.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Rome \[IT1\]

\[GR\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Peaches 3](#peaches)

[Production 3](#production)

[Consumption 4](#consumption)

[Trade 4](#trade)

[Stocks 4](#stocks)

[Policy 4](#policy)

[Canned Mixtures 5](#canned-mixtures)

[Production 5](#production-1)

[Trade 6](#trade-1)

[Policy 6](#policy-1)

[Stocks 6](#stocks-1)

[Canned Apricots 6](#canned-apricots)

[Production 6](#production-2)

[Policy 7](#policy-2)

[Trade 7](#trade-2)

[PS&D Table, Canned Peaches 8](#psd-table-canned-peaches)

[Export Trade Matrix, Canned Peaches
9](#export-trade-matrix-canned-peaches)

[Import Trade Matrix, Canned Peaches
10](#import-trade-matrix-canned-peaches)

[PS&D Table, Canned Mixtures 11](#psd-table-canned-mixtures)

[Export Trade Matrix, Canned Mixtures
12](#export-trade-matrix-canned-mixtures)

[Import Trade Matrix, Canned Mixtures
13](#import-trade-matrix-canned-mixtures)

[PS&D Table, Canned Apricots 14](#psd-table-canned-apricots)

[Export Trade Matrix, Canned Apricots
15](#export-trade-matrix-canned-apricots)

[Import Trade Matrix, Canned Apricots
16](#import-trade-matrix-canned-apricots)

# Executive Summary

# Peaches

# Production

Weather conditions this season were favorable although, peach farmers
feel it is too soon to come to any conclusions about total production.
April is a critical month in the blooming stage which is vulnerable to
frost, and extreme weather. In the beginning of April 2004, peach trees
promise a rich crop. This is very encouraging for farmers and processors
taking into account last year's damaging frost. Predictions at this
point indicate that the 2004 peach production (both clingstone and
freestone) will be a high level, which is estimated to reach 925,000
tons.

  ----------------------------- ----------------- -----------------------
                                2003              2004

  Metric Tons                                     

  Peaches                                         

  Clingstone                    64,000            600,000

  Freestone                     44,000            325,000

  Total peaches                 108,000           925,000
  ----------------------------- ----------------- -----------------------

The utilization of the 2002 and 2003 peach crops, based on official
data, is as follows.

  ---------------------------- ------------------ ------------------------
                               2002 (MTs)         2003 (MTs)

  Processed for canned peaches 238,000            50,000

  Processed for other products 20,000             20,000

  Fresh Domestic Production    211,384            32,262

  Fresh Exports                76,474             11,738

  Total Marketed peaches       537,858            114,000

  Withdrawals                  5,551              \-

  Farm Use and Waste           52,595             \-

  Total                        596,004            114,000
  ---------------------------- ------------------ ------------------------

In MY 2003/04 frost damage left Greek processors with very little
product to sell internationally. Canned peach processors experienced the
worst season, ever reported in Greece.

For MY 2004/05 farmers and processors are cautions in their predictions
due to last year's failure, but the expected production is estimated to
increase significantly. Judging from the appearance of the peach trees
up to early April, the amount of clingstone peaches to be delivered to
processors for canned peaches is currently estimated to reach 320,000
tons. An additional 280,000 tons will be channeled to processing for
other products (puree, diced and frozen) as well as to the juice sector
(approximately 120,000 tons). Withdrawals will take place if the crop
continues to develop without frost, but it is too early to specify the
actual amount. According to the EU Regulation, withdrawals cannot exceed
10% of the total marketable amount.

In MY 2003/04 clingstone peach farmers received the record price of €0.6
/kg, which was extremely high due to the shortage of clingstone peaches.
This year the final price for farmers and processors has not been
decided but it is certain that it will fluctuate at much lower levels.
Farmer organizations and producers final price negotiations will start
in May 2004.

# Consumption

In 2003, the extremely high price for freestone peaches and their low
quality has led Greek consumers to switch to other fresh fruits. Despite
the low freestone peach crop, Greek consumers did not show any
preference for canned products.

According to processors, the low quality of canned peaches, in 2003/04
MY, has created an international consumer mistrust for Greek canned
products. For this season (2004/05 MY) processors are very confident
that the crop quality will be better and hope to regain the trust of the
markets.

Greek consumption of canned peaches is stable at about 400,000 boxes per
MY, but this year due to the forthcoming Athens 2004 Olympic games,
processors are hoping for an increase of consumption of canned peaches
and generally canned products. According to early estimates, domestic
consumption this year is expected to reach 730,000 boxes.

# Trade

In 2003/04 MY, there was a remarkable rise in export prices due to the
failure of the peach crop. Reportedly, standard quality prices have
fluctuated between €17.00-17.2/box and choice quality price was
€18.00/box (ex-factory price). Non-competitive export prices and low
quality meant that the majority of canned peach production remained
unsold. According to the industry, the absence of Greek canned products
from the international markets in MY 2003/04 has created instability in
the market and has allowed other competitors like Spain to sell canned
products at higher prices.

According to early estimates, export prices for MY 2004/05 will be much
lower assuming that this year the clingstone peach crop output will
follow the estimates explained above.

In regard to freestone peaches, in MY 2003/04, the total exported
quantity reached only 11,738 tons (3,274 was destined to EU countries)
compared to 76,474 tons, which were exported the previous year in
2002/03.

# Stocks

According to industry sources, due to high export prices and low
quality, sales for MY 2003/04 were extremely low and the amount of
stocks by the end of June 2004 will be 23,700 tons, which corresponds to
approximately 1,160,000 boxes. This amount of stocks is remarkable
considering the extremely short 2003 clingstone peach crop, but is
consistent with the product price and quality. Same sources report that
until the end of the current marketing season, it is very uncertain
whether these amounts will be sold, due to very bad quality.

In MY 2002/03, compared to a normal year, the drastic reduction of
sellable product of good quality causes anxiety to the industry, which
plan to intensify processing activity this year in order to reach a
desirable level in stocks and on the other hand to satisfy demand. By
the end of 2004/05 MY, processors are expecting to increase stocks
significantly compared to the previous year in order to become
competitive in the future.

# Policy

In MY 2003/04 farmers, according to measures taken by the Government of
Greece to compensate them (discussed in detail in GR3021) have received
the amount of €0.278/kg plus the EU support price of €0.048/kg and the
price paid by the processors, which was set at €0.5/kg. All compensation
payments have been carried out by March 2004.

Farmers and processors agree that last year was profitable for the
farmers despite the short peach crop mostly due to the package of
compensation measures taken by the Greek Government. On the other hand,
the Greek Government has not favored the industry which was the only
sector adversely affected by bad weather conditions this period. At the
same time, GOG measures taken to support the processing sector, such as
the delay of bank loan payments, were criticized severely by processors,
who believe that the bank system would have made similar concessions
considering the credibility of the peach industry.

According to early estimates in the MY 2004, the above situation seems
to reverse as there will not be any shortage of clingstone peaches and
farmers will not receive high prices. Farmers seem anxious for the
forthcoming negotiations with processors in order to decide on a fixed
farmer price and they feel insecure due to the lack of unity among
farming groups.

The processing sector considers the cost reduction as a very critical
issue in order to become more competitive after the recent crisis
despite the fact that farmers this year may face the danger of not
covering their production expenses. Another important issue is the
assurance of the peach quality, which is safeguarded by the integrated
pest management (IPM), plans set by the EU. At present, 1,000 ha of
orchards have entered the IPM system and according to farmers and
processors, peach certification is described as a very sufficient and
productive procedure ensuring the best quality of fresh peaches
channeled to processing. Farmers complain about increased costs of IPM
for certifications required but under the proper agricultural practices
they expect to see benefits in the long term. Due to some pesticide
residue problems in the past with Greek peach shipments to the USA and
other countries, processors are very willing to buy peaches grown using
the IPM management system. According to industry sources, processors
have recommended payment of EU support prices only to growers who
cultivate peaches under integrated pest management.

Clingstone peach cultivation in the north of Greece is considered to be
the best crop alternative available to farmers. If the goal is to keep
population remaining in these rural areas fruit trees are the answer.
Some farmers have chosen to replace other crops like asparagus, formerly
very profitable, with peaches. There no official data to estimate these
new plantings of peach trees, but according to farm sources, peach trees
increased by approximately 20% over the last two years with an upward
trend.

The MY 2004/05 support price, which is paid directly to growers, is
still set at €0,0477/kg.

# Canned Mixtures

# Production

According to industry sources there is an upward trend in canned fruit
mixtures production. This trend is mainly due to Italy's increased
competition and the parallel increased demand from the Japanese and US
markets.

In 2003/04 MY, canned mixtures production was reduced by 20% compared to
2002/03 MY, affected mostly by the short peach crop and a lack of pears,
mostly of the variety Williams. The production of canned mixtures
reached the level of 1,200,000 boxes (24x1) in 2003/04.

In MY 2004/05, canned mixtures production is expected to reach ordinary
levels at approximately 2,500,000 cases (24x1) and possibly more. This
figure is subject to further revision later in the year.

For the 2004 season, the volume of canned diced peaches utilized for
canned fruit mixtures is estimated at 8,500 tons. The corresponding
number of fresh pears is expected to reach approximately 5,500 tons. In
MY 2003/04 only 3,800 tons of fresh pears were channeled to the
processing sector.

Imports of fresh pears from China and Argentina covered pear shortages
for processing purposes. Farm price for MY 2003/04 reached €0.33/kg for
fresh domestic pears channeled to processing plants. For the 2004 season
this price is not expected to differ substantially.

# Trade

In MY 2003/04 indicative ex factory prices per box for good standard and
choice quality are €20.0 and €20.5 respectively. Export activity was
higher compared to canned peaches, although prices fluctuated at high
levels.

# Policy

The EU subsidy to pear producers is still set at €0.16/kg for MY
2003/04, but only for those pears delivered for processing. This period
farmers received the full amount of subsidy because they have not
exceeded the EU quota level.

# Stocks

Similar to the case of canned peaches, there is a drastic reduction in
the quantity of stocks for canned mixtures, which are estimated at about
95,000 boxes by the end of June 2003. Processors are hoping to increase
the amount of canned mixtures stocks this year.

# Canned Apricots

# Production

In MY 2003/04 fresh apricot production was not affected too much by
frost because of the larger percentage of apricot orchards located
mostly in Southern Greece where weather conditions through spring 2003
were not too severe.

The utilization of the 2002 and 2003 apricot crops, based on most recent
data available, is as follows.

  --------------------------- ------------------- -----------------------
                              2002 (MT)           2003 (MT)

  Processed for canned        14,000              18,000
  apricots                                        

  Processed for other         26,400              20,000
  products                                        

  Fresh Domestic Production   4,776               5,000

  Fresh Exports               6,750               5,810

  Total Marketed Apricots     51,926              48,810

  Withdrawals                 13                  10

  Farm Use and Waste          2,461               4,541

  Total                       54,400              53,361
  --------------------------- ------------------- -----------------------

In 2003, due to the shortage of peaches, a high percentage of the 53,361
tons was delivered for processed canned apricots and juice. The shortage
of clingstone peaches motivated processors to use apricots instead of
peaches in order to keep a number of processing plants under operation.

In the 2004 season, the apricot crop is expected to be reduced 20%
compared to last year, mostly due to frost prevailing in the southern
part of the country. The amount of apricots to be delivered to
processors is estimated at 17,000 tons. According to the industry, the
juice sector is expected to utilize lower amounts of apricots compared
to last year, due to the abundance of peaches.

# Policy

The short 2003 clingstone peach crop led to high farm prices for fresh
apricots, which reached the amount of €0.62/kg. In MY 2004/05, prices
for apricots for delivery to processors are expected to be lower.

Apricots are considered to be a very promising cultivation for the
processing industry, despite their sensitivity to soil conditions and
cold winter weather which dominate in Northern Greece. For the 2003
season due to lack of enough amounts of available peaches, processors
have preferred to use more apricots. This keeps their facilities in
operation.

On the other hand, the apricot crop is declining in the Southern part of
Greece as a result of spreading Sharka virus, which destroys the fruit's
skin and makes fruit unsuitable for processing.

Contrary to the processed products, exports of fresh apricots from
Greece are declining more and more due to low international market
prices. Fresh apricots are a product already seriously affected by low
prices.

Restructuring of the crop towards new varieties suitable for processing
seems to be the solution for both farmers and processors.

# Trade

Exports of canned apricots in the MY 2003/04 were increased by 16.6%
compared to a year earlier, mostly due to a slight increase in the
processed apricot production. An indicative export price for canned
apricots in the 2003 season was at €20 for 24x1 kg pack, mostly for EU
destinations. In MY 2003/04, export prices are expected to remain at
normal levels.

# PS&D Table, Canned Peaches

![](media/image2.wmf)

# Export Trade Matrix, Canned Peaches

# 

# ![](media/image3.wmf) 

# Import Trade Matrix, Canned Peaches 

![](media/image4.wmf)

# PS&D Table, Canned Mixtures

![](media/image5.wmf)

# Export Trade Matrix, Canned Mixtures

![](media/image6.wmf)

# Import Trade Matrix, Canned Mixtures

![](media/image7.wmf)

# PS&D Table, Canned Apricots

![](media/image8.wmf)

# Export Trade Matrix, Canned Apricots

![](media/image9.wmf)

# Import Trade Matrix, Canned Apricots

![](media/image10.wmf)