Required Report - public distribution

**Date:** 9/13/2004

**GAIN Report Number:** GR4022

GR4022

**Greece**

**Fresh Deciduous Fruit**

**Annual**

**2004**

**Approved by:**

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

U.S. Embassy Rome

**Prepared by:**

Stamatis Sekliziotis

**Report Highlights:**

Apple production in 2004/2005 is expected to be 283,000 T or 70% higher
than last year's weather-damaged crop. Exports are channeled to Balkan
countries buying on price. Apple imports, at 28,000 T in 2003, were high
due to the poor crop. However, apple imports are expected to continue
and U.S. apples, helped by the weak dollar and superior quality, have
made inroads into the Greek market. Domestic apples lack adequate post
harvest handling. Pear production is estimated at 46,000 tons for
2004/2005. Table grapes are predominantly Sultanas and Victorias
exported to EU partners. Greek table grape production is estimated at
322,000 T in 2004/2005.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Rome \[IT1\]

\[GR\]

Table of Contents

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

[Production 3](#production)

[Fresh Apples and Pears 3](#fresh-apples-and-pears)

[Prices 5](#prices)

[Profit Margins 6](#profit-margins)

[Consumption 6](#consumption)

[Fresh Table Grapes 7](#fresh-table-grapes)

[Market/Competitor Statements 7](#marketcompetitor-statements)

[Fresh Apples and Pears 7](#fresh-apples-and-pears-1)

[Table Grapes 9](#table-grapes)

[PS&D Table, Fresh Apples 10](#psd-table-fresh-apples)

[Export Trade Matrix, Fresh Apples
11](#export-trade-matrix-fresh-apples)

[Import Trade Matrix, Fresh Apples
12](#import-trade-matrix-fresh-apples)

[PS&D Table, Fresh Table Grapes 13](#psd-table-fresh-table-grapes)

[Export Trade Matrix, Fresh Table Grapes
14](#export-trade-matrix-fresh-table-grapes)

[Import Trade Matrix, Fresh Table Grapes
15](#import-trade-matrix-fresh-table-grapes)

[PS&D Table, Fresh Pears 16](#psd-table-fresh-pears)

[Export Trade Matrix, Fresh Pears 17](#export-trade-matrix-fresh-pears)

[Import Trade Matrix, Fresh Pears 18](#import-trade-matrix-fresh-pears)

# Executive Summary

# 

# Production

# 

## Fresh Apples and Pears

# 

As a result of favorable weather conditions, which prevailed in most of
the apple producing regions of Greece during the blooming stage, coupled
with normal weather conditions during fruit development, fresh apple
production in Greece for marketing year (MY) 2004/05 is expected to be
higher by almost 70% over that produced in (MY) 2003/04. There were
extreme weather conditions in 2003 making production suffer a 30 percent
reduction compared to the 2002 crop. Presently, a total amount of
283,000 MT of apples is predicted to be produced commercially in (MY)
2004/05 compared to 165,000 MT in (MY) 2003/04 (figure slightly revised
from that reported in GR 4001). According to farmer organizations,
central Greece was favored mostly by good weather, while in west
Macedonia (the region most affected by frost in 2003) slightly
unfavorable weather conditions prevailed this year, degrading red apple
varieties in quality only. Smaller size of fruit is the problem this
year in West Macedonia, which may have been the result of stress caused
by extreme weather a year before.

As cited in GR 4001, a large amount of apples were downgraded in 2003
after they were hit by hail. Reportedly, this year hailstorms in apple
producing regions were negligible. In general, average quality and
quantity of the (MY) 2004/05-apple crop is considered to be at normal
levels, after an almost three year period of relatively short harvests.

Acreage of apple orchards does not show an increase over the past years.
On the contrary, some gradual decrease is reported, particularly in
regions severely hit by adverse weather conditions, prevailing since
2001. These acreage reductions are of negligible importance from the
point of view of fruit output because most of the trees lost or uprooted
due to age, are frequently replaced by new improved varieties. In the
late 80s and the 90s, the Greek Ministry of Agriculture promoted and
supported expansion of red varieties (Red Delicious in particular) and
incentives were offered for farmers to uproot trees from the plains and
use hilly and mountainous soils for such crops. The plan was to improve
fruit quality, which finally was not as successful as expected. This is
mostly because of lack of know how in implementing modern cultivation
practices. Greek farmers have not learned to specialize in apple crop
production. Most of them are dealing with more than one crop on
relatively small sized farms.

According to a German study prepared in the early 90s, Greece ranked
8^th^ according to an evaluation of the fresh fruit sectors of 9
countries, based on flexibility, technology, quality, consistency and
innovation. First came Spain with 9.2 points, while Greece got 3.6
points. Trade sources report that since then, the Greek apple sector
(cultivation, variety composition, storage and marketing) has improved a
lot, but still many things have to be done in order to be able to
compete with EU or third country imports of similar products (from
Italy, Germany, New Zealand, Chile and USA) domestically and abroad.
Currently, most Greek fresh products, including apples, are sold to
former Eastern bloc countries where quality is not the key criterion,
but price. Albania and Bulgaria absorb the bulk of Greek apples.

Reportedly, Greek apples (mostly the red varieties) appearing in the
market after the month of February are of unacceptable quality, a fact,
which has to do with a lack of satisfactory production and preservation
practices, a lack of facilities, poor facilities, packing methods and
marketing procedures. This quality problem becomes a key issue for those
amounts destined to European markets, where distance is an additional
problem. Apples are transported mostly by trucks through Yugoslavia and
on car ferries through Italy.

Because of this quality problem, Greek apples although cheaper than
similar imported apples, have faced stiff competition from other apples
purchased from Chile, US and elsewhere (i.e. Washington Red Delicious).
Greek consumers and tourists prefer better quality products and imports
of better quality products have shown a spectacular increase since 1998.
A number of attempts have been made by individual Greek farmers and
farming groups to improving quality, but these are limited. In fact,
Greek apple farmers complain that they do not receive enough support
aimed at improving quality. Greek apples are famous for their taste, but
this is not enough. Farmers report that integrated Orchard Management
methods and modern preservation practices have to be implemented in the
sector, because consumers buy by the eye and not by taste.

The apple variety of Zagora (the most preferred by Greek consumers)
produced only in Central Greece (on the mountain of Pilion) has its own
EU-protected name "Zagorin", a denomination of origin, according to EU
Regulation 1107/96. This local Red Delicious apple variety makes up such
a high percentage of domestic consumption that they affect the price
level of fresh apples in Greece, provided that they are available. In
2003, due to adverse weather, availability reached a minimum level. When
adverse weather conditions prevail in Greece, consumer prices for fresh
products are prohibitive for the average income consumer. A detailed
description of these developments is given in GR 2021, GR 4001 and GR
3019. Such developments result in higher farmer and retail market
prices, and as a result consumption of imported apples in the Greek
market is high. Due to lower domestic output in 2003, apple imports in
CY 2003 reached 30,772 MT compared to 18,173 MT a year earlier. Actual
domestic consumption exceeds 200,000 MT of apples.

Recently, apples of Italian origin (almost 50% of total imports in CY
2003) dramatically entered the Greek fresh apple market through an
extensive advertising campaign in the Central Markets of Athens and
Thessaloniki, followed by German, Chilean, Spanish, Austrian and US
apples. Some U.S. apples also reach Greece through Germany and other
European member states. U.S. apples are gradually but steadily, gaining
ground among Greek consumers. This caused a stiff competition in the
domestic market and Greek producers and traders realize that the future
of Greek apple sector must focus on crop restructuring, better
certification of fresh products, improved quality, and promotion and
packing methods. At orchard level, the introduction of more popular
varieties and lower production costs are necessary. Also, it has to be
noted that consumer awareness of chemical residue levels is growing and
Consumer Organizations ask for strict implementation of all the
requirements regarding safety, hygiene and traceability controls for
both domestic and imported fresh fruit and vegetables. It is well known
that over-use or improper usage of chemicals by many farmers, in both
timelines and in quantities applied, cannot be fully controlled,
compared to imported ones which have to fulfill certain standards. This
is connected to the fact that legislators at both national and EU levels
have still not managed to provide producers and traders with a set of
harmonized directives regarding the use of plant protection chemicals
and the maximum quantities to be applied (see also GR-4011 of July 2004,
Vol. Report on MRLs).

On average, about 15% of Greek apples produced are kept under
refrigeration until February 1 each year. This percentage varies from
year to year, according to crop quality, amounts of imported apples and
consumer demand. The key factors that determine the amounts kept under
refrigeration are imports and domestic apple availability after a
certain harvest. Due to large quantities of imported fresh apples, Greek
apples are kept in stock to enter the fresh market later in months of
shortage (usually in July), while some quantities may be utilized in
other ways. Some will probably be exported to Balkan countries at lower
prices due to relatively lower quality. As cited above, ways of
preserving fruit (as well as all factors connected to good preservation
practices) are to be considered by the Greek industry, because large
amounts of apples entering the market later in the marketing year are of
lower quality, or are priced down and are less preferred by consumers
who buy imported apples of higher quality at any price. However, because
of the low dollar value against the Euro, prices of imported fruit from
third countries are highly competitive. These amounts of preserved (in
cold storage) apples do not appear in the attached PS&D in a category of
"stocks". They are part of the Fresh Consumption category. Withdrawals
are within the 10% of the marketable amounts allowed by EU regulations.

Due to the same favorable weather, Greek pear production for (MY)
2004/05 is estimated at 45,000 MT, a much higher output (pear crop
almost recovered) after the weather damaged 2003 crop, which is finally
estimated at 31,000 MT (figure revised from that reported in GR 4001).
Due to labor intensive practices required by the pear crop, compared to
other deciduous fruit crops, pear production acreage-wise is limited,
while high production costs make them less demanded and less competitive
in the Greek Market, compared to imported pears. Consequently the final
market prices for pears are higher. The supply of fresh pears in the
Greek Market depends on imports, mostly from Italy.

Most of the problems pertaining to apple production, as described in the
preceding section, affect pears as well. There are problems in the
production stage and at the post harvest stage (required treatments that
are needed prior to reaching the fresh markets). Significant new
plantings are not reported, but there are a large number of young
orchards, which gradually enter production every year. There have been
some attempts in central Macedonia to restructure fruit crops and a
slight shift is observed from peach crops to other crops, pears
included. Another, but secondary reason, for proceeding with new
plantations is fire blight (Erwinia amylo-vora disease) which has forced
farmers to uproot trees and replace them with new ones, particularly of
the Krystalli local variety. Williams variety (produced under EU quota)
is the best managed variety in Greece (Palmettos --hedges- are common,
with more trees per area unit, facilitating better orchard management).
Williams are destined for processing and production of fruit cocktails
and salads. Other common domestically produced fresh table varieties are
cited in the previous AgAthens reports (see also GR 3019 and GR 4001).

# Prices

Producer prices for apples this year (farm gate) are expected to
fluctuate between €0.28-0.48/Kg compared to €0.30-0.52/kg last year, due
to higher output, with Red Delicious and Granny Smith varieties always
being the higher priced fruit. As cited above, the dollar value against
the Euro, has affected prices of imported apples downwards and
reportedly, this year Chilean apples (Red Chief) are imported at prices
of €0.88/kg (CIF Basis port of Piraeus). US apples (average weighted
price) in 2003 were purchased at €0.89/kg (CIF Basis). Producer prices
for domestic apples are not to be compared with import prices, although
after a rough calculation by adding wholesalers (7%) and retailers (25 -
27%) profit margins, retail prices of imported apples are close to those
of domestic fruit at consistently higher quality and also are available
to the consumer off-season. Consumer prices for apples this year have
fluctuated between €0.90/Kg -- €1.80/Kg according to season, variety and
quality. Central Fresh Fruit Market Organization of Athens has
classified fresh fruit to three quality grades, EXTRA, N0 I and No II.
EXTRA quality apples are the most expensive and available in limited
amounts, most of which are imported, as well as a few well-known
domestic varieties of high quality.

Pear prices follow the same trends with apples. In periods of shortage,
both farm and consumer prices are increased. MY 2003/04 farm prices for
pears, per variety produced, are reported in GR 4001 and have fluctuated
between €0.40/Kg -- €0.90/kg according to variety and quality. Farmer
prices for the new crop of MY 2004/2005 are expected to drop slightly
due to higher fruit output.

The most popular pear varieties are the Passacrassanas (or Passi
Crassana), Abate Fetels, Kristallis and Kontoulas, with retail prices
this year fluctuating between €0.97/Kg -- €1.90/kg according to variety,
season and quality grade. Imported pears from Italy (Abate and Passi
Crassana pears) and Spain (Blanquillas) are priced between €1.90-2.00/kg
and €1.40-1.45/kg respectively, according to season and quality (retail
basis). Turkish and Italian Santa Maria pears are priced between €1.28
-- 1.35/kg (retail basis). The Santa Maria pears cover market needs
during the summer period from July until late September.

# Profit Margins

These prices above are just indicative prices as reported by farming
organizations and the Central Fruit and Vegetable Market in Athens. In
reality, in grocery stores and open city markets, these fluctuations may
differ and be wider, according to location (down town Athens or the
suburbs), season and supply/demand trends. The frequent and in most
cases, totally unjustifiable fresh fruit and vegetable consumer price
fluctuations (upwards) have caused serious complaints from consumers and
have alerted GOG authorities to proceed with stricter market police
controls in the marketplace.

Since 2002, GOG Ministry of Commerce has enforced a number of
Ministerial Decisions in an attempt to control fraud in the Central
fresh fruit and vegetable wholesale and retail markets. Traders and a
number of farmers who bring their produce to the city markets with the
usual justification of fruit shortage due to adverse weather conditions
and increase of production and transportation costs, ask for extremely
high prices for their fresh products and frequently cause unusual
complaints (through the media) from consumer organizations. Market
police and EFET (the Greek government food control organization) are
instructed accordingly to control and check selling prices in major
markets around the country. Reportedly, for some basic fruit and
vegetable products, at times Greek consumers have to pay 10 or 20 times
the grower price at retail level, particularly in the open markets.
Normally, the wholesale profit margins should range between 7-10% over
the grower price, while the allowable retailer margin should not exceed
25% or 27% according to the type of product, in compliance with the
effective legislation and market police orders (these profit margin
percentages revise those reported in GR 4001).

Besides these consumer complaints, the farm community is also
complaining because they see their products reaching the urban
consumer's plate at extremely high prices, with all the intermediaries
making very large profits. The intermediaries are the local buyers of
fruit who buy from the farmer and take the fruit to the city wholesaler
and lastly, the grocer/retailer who sells the fruit to consumers.
Sometimes, farmers take the fruit to the central open markets and prefer
to exploit the system themselves and sell at slightly lower prices from
those of the grocer/retailer. More on GOG's measures to rationalize
prices in the wholesale and retail market of fresh fruits and vegetables
are reported in the semi-annual Fresh Deciduous Report No. GR 4001.

# Consumption

Increased demand for high quality fresh products was observed during the
Athens 2004 Olympic games this summer, with the increased number of
visitors. GOG controls were intensified, after a number of incidents of
fraud reported in grocery stores, restaurants and open city markets.
Large availability of apples in MY 2004/05 and a more increased domestic
demand, revise predictions of domestic apple consumption upwards. The
same picture is expected for the fresh pear consumption trends. It has
to be mentioned that fresh fruit consumption figures cited in attached
PS&Ds, include large amounts of on farm consumption, plus wastage and
losses, which are not categorized in PS&D tables. The largest output,
the higher on-farm consumption and losses are expected although
difficult to quantify. All these amounts are reflected in the domestic
fresh consumption category.

## Fresh Table Grapes

Unlike apples and pears, the Ministry of Agriculture reports that table
grapes this year will show a slight drop in output, about 5% compared to
that of 2003, due to fungi (Phytofthora). affecting Sultana vineyards in
North of Peloponnesos. The volume of commercial production is estimated
to reach approximately 276,000 MT, and the average quality of grapes is
good to excellent. The grape harvest began two weeks late, due to normal
temperatures but relatively wet summer conditions, which prevailed in
most grape producing regions.

The sultana variety for dried and table use, is the most important crop
of Crete. In MY 04/05 sultana output is estimated between 28,000 -
30,000 MT which is considered satisfactory. Sultanas produced in
Peloponessos are oriented mostly to the fresh market, while those in
Crete are mostly destined for dried fruit production. The region of
Kavala (eastern Macedonia) is expected to give a rich harvest of table
grapes mostly due to greater numbers of vines planted in recent years
and better weather, compared to other regions.

Indicatively, farmers will receive this year €0.30 - 0.50/kg for fresh
table sultanas in Peloponessos, €0.17 -- 0.70/kg in Crete and €0.40 --
0.42/kg for the Victoria variety grown in Kavala. Farmer prices
fluctuate according to variety, quality, location, appearance and month.
Consumer prices also fluctuate accordingly, between €0.78 - 2.25/kg.
Import prices for Italian and Spanish table grapes are reported at €1.50
-- 1.55/kg CIF basis early this year.

Consumption figures stated in PS&Ds include amounts sold in regional and
central fresh fruit markets and also farm usage, losses, wastage and
amounts used for local (home made) wine production and distillation. The
processing category in PS&Ds is amounts, which include grape juice
production and table grapes, mixed with wine grapes utilized by
wineries. Limited amounts are dried and used in animal feeding. These
factors have been taking into consideration in revising and updating
attached PS&Ds. Most of the figures cited in PS&Ds are estimates made by
AgOffice due to lack of official data available. The only official data
available and used in PS&D composition is production and trade data, as
provided by the Ministry of Agriculture and NSS (National Statistical
Service). Production figures for 2004 crops are preliminary estimates,
subject to further revision later in the year.

# Market/Competitor Statements

## 

## Fresh Apples and Pears

## 

According to the Greek Ministry of Agriculture, as of July 16 2004,
19,164 MT of fresh apples were exported compared to 25,930 MT in the
same period last year of which 12,255 MT were destined for Albania;
5,443 MT to Bulgaria; and only 23 MT to EU countries.

The composition and quality of Greek fruit, as well as consumer
preferences in Central Europe for other types of apples and pears not
actually produced in Greece, are the factors prohibiting Greek exports
to expand within the EU markets. Greek exports take place to the Balkans
and only in periods after Greek domestic demand is satisfied first. The
average Greek consumer prefers local varieties, although in recent years
has become well acquainted with good quality imported fruit, including
US apples in particular. US apples in 2003 (CY Basis) imported to Greece
have exceeded, for first time, the amount of 1,000 MT. They are mostly
of the Washington Red Delicious type, which is gaining ground among
demanding consumers and in places where trade from tourism is gaining
strength (Crete, Aegean Islands and big cities and ports).

In CY 2003 the value of Greek apple exports reached €13.4 million while
the value of imports was at €22.9 million. The weighted average export
price was €433/MT while import price was at €819/MT, a good indication
of the quality difference between the imported and exported product. 26
percent of Greek exported apples are of the Golden Delicious type,
followed by another 7% of Granny Smiths and 67% of all other types. The
majority of imported apples are yellow varieties. Yellows dominate the
green ones among the imported apples, of which the majority come from
Italy (over 45%).

For the same year (calendar basis) the value of pear exports was at
€0.33 million, while the value of imports was at €14.0 million.
Corresponding weighted average prices were at €558/MT (export price) and
€832/MT (import price). Exports of Greek pears are of negligible
importance, while imports from Spain dominate the market (Over 40 %),
followed by Italy and South Africa.

Reportedly, US apples are well accepted by the Greek consumer and
further promotion will be beneficial, particularly in regions where this
US product of high quality has already gained popularity.

The GOG, in the framework of the EU funded Competitiveness Plans,
supports Export Trade Associations as well as Farming Organizations in
promoting exports of Greek Fresh Agricultural Products in to EU markets.
This funding is covered by 50% from EU funds and 50% from the national
budget. Priority is given to organic agricultural products. Plan
proposals are submitted every June to the Ministry of Agriculture, while
the EU gives final approvals. These plans are supported in the framework
of EU Regulations No. 2826/2000 and 94/2002 and implementation lasts for
about 3 years, including promotion, public relations & advertisement,
quality, hygiene and food safety programs. This plan started in
2001/2002 and Greece has supported programs of €1.6 million (€0.8
million were offered by the national budget) not exclusively for apples
or pears, but for the promotion of various fresh horticultural products
in general.

A larger Fresh and Processed Products Promotion Plan was announced by
the GOG Ministry of Agriculture this summer (2004) for a total
expenditure of €320 million in an attempt to support Greek agricultural
exports through quality improvement and promotion. Details of this
program will be published before the end of the year. The Greek
Agricultural trade balance is negative and is dramatically worsening,
reaching the record figure of (-) €2.017 billion in 2003 (a 336%
increase in a ten year period, since 1993). Fresh fruit and vegetables
play an important role in these developments.

This year, the GOG Ministry of Agriculture has intensified enforcement
of EU Reg. No. 1122/8.8.03 for obligatory packaging and standardization
of fresh fruit to be marketed in the domestic market. This regulation
applies for all fresh fruit and vegetables either imported or
domestically produced. In compliance with this Regulation and relevant
Ministerial Decision No. 257543/8.8.03, Quality grades must be
separated, as well varieties and place of origin. Products must be
priced accordingly, well visible to the consumer. Marketing of fresh
products, which do not comply with above legislation, must not take
place and/or to be withdrawn from markets. For imported products country
of origin labeling is required, while for those domestically produced,
the name of the region where it is produced must be cited.

## 

## 

## Table Grapes

The value of exported Greek grapes in CY 2003 is reported at €82.9
million with a weighted average export price at €1,200/MT, while the
value of imported grapes in the same period was at €1.79 million at the
price of €1,428/MT (CIF Basis), Italy being the key supplier for Greece.

The key buyers of Greek table grapes (mostly of fresh Sultanas and
Victoria variety) are Germany, UK and Poland. The introduction of
cheaper imported grapes from Egypt and Brazil in the U.K. market creates
a stiff competitive environment for Greek table grapes. According to
trade sources the German market seems to be more profitable for Greek
grapes.

Italian grapes reach the Greek market at a competitive price between
€1.20 -- €1.25/Kg (CIF basis), compared to imported grapes from third
countries and even compared to some domestic varieties. After almost two
bad exporting years for Italian grapes, this season a larger amount of
table grapes is expected to be purchased by Greek importers at,
comparatively, much better prices.

# 

In CY 2003, Greece imported 79,000 MT of bananas, compared to 68,000 MT
in CY 2002 and 67,000 MT in CY 2001. This increase is observed in years
of low domestic supply of fruit. In years of apple and pear shortages in
the Mediterranean basin, imports of bananas and other tropical fruit
show an increase. Greece imports about 3,000 MT --3,500 MT of other
tropical fruit per annum, mostly to satisfy tourist consumer demand.
There is a slight increase of such imports in recent years (mostly of
papayas, pineapples, mangos and coconuts). In CY 2003, a total amount of
2,263 MT was imported at a value of €3.7 million.

# PS&D Table, Fresh Apples

![](media/image2.wmf)

#  

# Export Trade Matrix, Fresh Apples

![](media/image3.wmf)

# Import Trade Matrix, Fresh Apples

![](media/image4.wmf)

#  

# PS&D Table, Fresh Table Grapes

![](media/image5.wmf)

#  

# Export Trade Matrix, Fresh Table Grapes

![](media/image6.wmf)

# 

#  

# Import Trade Matrix, Fresh Table Grapes

![](media/image7.wmf)

# 

#  

# PS&D Table, Fresh Pears

![](media/image8.wmf)

# Export Trade Matrix, Fresh Pears

![](media/image9.wmf)

# Import Trade Matrix, Fresh Pears

![](media/image10.wmf)