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Brussels, 28.6.2006

SEC(2006) 838

COMMISSION STAFF WORKING DOCUMENT

Annex to the REPORT FROM THE COMMISSIONTO THE COUNCIL AND THE EUROPEAN PARLIAMENTon the situation of the sector of soft fruits and cherries intended for processing{COM(2006) 345 final} Review of the sector of soft fruits and cherries intended for processing in the EU

INTRODUCTION

In the Presidency conclusions concerning the simplification of the common organisation of the market for fruit and vegetables in November 2004, the Commission was requested to carry out an analysis of the new situation in the EU markets resulting from the enlargement and, if necessary, bring forward proposals to address specific problems.

The present document provides an analysis of the sector of soft fruits and other red fruits for processing. It is accompanied with a Report of the Commission to the Council and the European Parliament which summarises the major elements of the analysis presented in the present document and draws conclusions.

The present document is organised as follows: the first two chapters provide information of general nature. Chapter 1 elaborates on the major features of the sector in the EU. Chapter 2 provides the major features of the sector in Poland, the largest producing Member State with around two-third of the volume of EU production of soft fruits for processing. Subsequent chapters provide sectoral reviews of the most important products: strawberries (Chapter 3), blackcurrants (Chapter 4), raspberries (Chapter 5), sour cherries (Chapter 6) and sweet cherries (Chapter 7).

EXECUTIVE SUMMARY

CHAPTER 1 MAJOR FEATURES OF THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN THE EU

The significance of the sector is the highest in the Northern European countries with the exceptions of strawberries and sweet cherries. With a share of 1.1%, Poland is the country where the sector has the greatest weight. With the enlargement of 2004, the EU production of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries increased significantly: the cultivated area jumped from around 69 000 hectares in the EU-15 to 237 000 hectares in the EU-25 on average in 2002–2004, of which 141 000 hectares in Poland. At EU level, the area under soft fruits and sour cherries cover a limited share of total arable land: 0.25% only.

With the exception of currants and cherries for which the harvest can be mechanised, soft fruit production is labour intensive. Given that prices on the processing market are lower than on the fresh market, competitive pressure entails that the sector of soft fruit for processing is located mainly in countries with low labour costs.

Soft fruits are often part of a narrow range of possible crops in less-favoured regions (e.g. semi mountainous areas). In addition the possibility to produce soft fruit on a small scale entails that the sector is particularly suited to small farms that are often predominant in less favoured or semi mountainous areas. On these farms, soft fruits allow a better use of family labour force. They often provide additional income to part-time farmers.

While the sector has a limited economic size in the overall agriculture, it is often concentrated in specific regions in producing countries. Hence it can contribute significantly to the regional economy. The sector has often developed as a way to divert from production of other crops or to diversify production on farm.

In the last twenty years, the use of soft fruits and sour cherries by the food processing industry has increased significantly. Out of 1 639 000 tonnes of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries produced annually in the EU-25 in the period 2002–2004, around 700 000 tonnes were directed to the processing industry (43% of total production). The processing industry imported also almost 200 000 tonnes (frozen or pre-cooled) of the same products from third countries. These imports represented 22% of its total supply. Poland represented 67% of the EU production destined to the industry.

The major Community policies that can impact the sector are reviewed: the different measures of the common market organisation for fresh and processed fruit and vegetables; the single farm payment implemented with the CAP reform of 2003; pre-accession support measures (SAPARD); Rural development programmes; promotion of agricultural products; EU legislation on phyto-sanitary products.

CHAPTER 2 MAJOR FEATURES OF THE SECTOR OF SOFT FRUITS AND CHERRIES IN POLAND

Poland represents two thirds of all EU soft fruits and sour cherries produced for the EU processing industry.

In the last 15 years, the fruit orchard area has been rather stable in the range of 260–290 000 hectares. Out of this, around 15% are devoted to fruit bushes (currants, gooseberries, raspberries and other bushes) and 10% to sour cherries. Areas devoted to strawberries have fluctuated widely in the last 15 years (the lowest level was 38 000 hectares in 2002 and the highest was 65 800 hectares in 2001).

Soft fruit production is concentrated regionally. Its significance is the highest in three regions (also named voivodships, which are Nuts 2 regions) which represent around 55% of national soft fruit and sour cherry production in 2002–2004: Lubelskie (24.1% of total production in volume), Mazowieckie (20.9%) and Łódzkie (11.4%). The region of Lubelskie produces more than 70% of all raspberries.

In the context of a high level of unemployment in rural areas and small farm structures, the sector of soft fruit for processing represents an important source of labour and income. Polish sources estimate that the overall fruit and vegetable sector provides the equivalent of 250 000 full time jobs (production, marketing, processing). In the soft fruit and cherry sector only, this would amount to around 80 000 full time jobs.

Excluding farms with an area under soft fruits or sour cherries below 0.1 hectare, which are usually considered to be subsistence oriented, the agricultural census of 2002 indicates that there were 133 800 producers of sour cherries (with an average area under sour cherry of 0.22 hectare), 96 600 producers of strawberries (with an average area of 0.36 hectare), 82 400 producers of currants (with an average area of 0.42 hectare) and 50 100 producers of raspberries (with an average area of 0.21 hectare). Soft fruit and cherry production is therefore fragmented. However these averages mask that for blackcurrants and sour cherries, farms with an area higher than one hectare represent around two third of national production.

The fragmentation of production is compounded by a low level of organisation of the producers. For all fruits and vegetables, the organised sector represents only 2% of total marketed production.

The food industry is the largest branch of the manufacturing sector in Poland with a share of more than 20% of total sales value. The industry in the fruit and vegetable sector processes around 60% of all fruit production and 10–15% of vegetable production in Poland. In 2003 there were 1 200 fruit and vegetable processing companies.

Owing to the fragmentation of supply of most soft fruits, fruits are collected in collection centres which are disseminated in villages throughout production regions. Large farms usually sell directly to the industry. A minor share (estimated at 10–15%) of supply of soft fruits and sour cherries to the industry takes place within the framework of contracts between producers and processors.

CHAPTER 3 THE SECTOR OF STRAWBERRIES FOR PROCESSING IN THE EU

The sector in Poland

The sector of strawberry for processing has developed in Poland over several decades with output levels regularly above 200 000 tonnes. Already in the 1980s, the sector was specialised in the production for the processing industry with exports primarily to Western European markets against hard currencies. The main competitive advantages of the sector are: established business relationships with food processors, low labour costs, extensive domestic frozen fruit and vegetables industry, and finally, quasi-exclusive production of a hard sought strawberry, the cultivar ‘ Senga Sengana ’. This cultivar has features that make it particularly suited to the processing industry. This is why it is sought for by part of the European industry (part of jam production, for certain purees and for juice/drinks).

Due to relatively low investment costs, production of strawberry for the processing industry has become an additional source of income for numerous households in rural areas. From the social point of view, the sector plays a considerable role in rural areas.

Farm structures are fragmented and marketing to the processing industry is mainly done via the collection centres located in the villages. Large producers sell directly to the processing industry. Contracts between farmers and processors concern a minority of the delivered produce.

Due to the fragmentation of production, low input uses, the cultivation technique and the own features of the Senga Sengana cultivar, the average yield per hectare is rather low and production volume can fluctuate significantly depending on the weather. Additionally, the harvest period is short as it lasts for a period of three to four weeks.

In the medium to long term, production of Senga Sengana on large farms with hired labour may diminish for the following reasons: firstly, profitability of cultivation of Senga Sengana is constrained by the facts that the fruit cannot be sold on the fresh market and that it produces low yields. This may place Polish production at a disadvantage if prices in the processing industry remain low. Overall profitability for producers in competing countries depends partly on the fresh market which provides better prices. Therefore, they can afford lower profitability thresholds for the production they sell to the industry. Secondly, supplies to the EU from third countries have increased since the 1990s and are becoming a more permanent feature of the market. Therefore, it is less likely that similar producer price peaks in Poland such as those of 1998 or 2003 will ever happen in the future. The increase in imports at very low prices has had a significant effect on the sales and profitability of the Polish producers of Senga Sengana . Finally, in the long run, labour costs in Poland will increase alongside its economic catching up. In a historical perspective, labour costs have always conditioned the location of production of strawberries for processing in Europe.

Despite the lower yield, the Senga Sengana is key for the processing industry and, for a number of products, cultivars destined to the fresh market cannot substitute the Senga Sengana . The processing industry needs a diversified supply of strawberry cultivars in order to provide the full range of products currently on the market.

EU external trade and competition from third countries

The steady growth of EU demand for frozen strawberries could not be met only by supplies from Poland: EU imports grew from around 100 000 tonnes in the mid-1990s to more than 150 000 tonnes from 2001/2002, whereas exports by Poland never exceeded 100 000 tonnes.

Among the main producers of frozen strawberries, only China and Morocco have developed significant exports of frozen strawberries to the EU. In both countries, the strawberry sector has developed since the 1990s, in different contexts however: while in China strawberry production is primarily intended for domestic consumption, the sector in Morocco is almost completely export-oriented.

With limited availability of arable land and a large rural labour force, China benefits from important comparative advantages in labour-intensive crops such as fruits and vegetables. Production of strawberries in China has developed dramatically since the 1990s. The dynamic growth of the strawberry sector was triggered by an increasing domestic demand for the fresh market. Processing destinations play a modest role in comparison with the fresh market. Yet, production and export of frozen strawberries have developed strongly in the last ten years. Since 1997/1998, when Chinese strawberries started to be imported in the EU at sizeable quantities, the prices of frozen strawberries from China have often been the lowest in the EU market. Their average level in the marketing year 2004/2005 was extremely low (€520 per tonne) and even passed below €400 per tonne towards the end of the marketing year.

Production of strawberries in Morocco started in the beginning of the 1990s. From the outset the objective was to export fresh strawberries to the EU market taking advantage of low labour costs and the possibility to export fresh strawberries early in the EU marketing year. In order to extend the strawberry harvest season, Morocco developed also the production of frozen strawberries. Production of frozen strawberries has increased to reach 70–80% of total strawberry production in the last years. The significance of the freezing sector has contributed to maintaining the predominance of Camarosa due to its suitability for both the fresh market and the frozen fruit and vegetables industry.

EU supply in strawberries for the processing industry and uses

Total supply in the EU-25 of strawberries for processing amounts to around 300 000 tonnes annually on average in the period 2001/2002 to 2003/2004, of which around 220 000 tonnes are frozen strawberries and around 85 000 tonnes are processed directly into purees, jams and concentrates. The share of EU-25 imports of frozen strawberries from third countries in the total supply of strawberries to the industry increased from less than 20% until 2001/2002 to 25% in 2002/2003 and 38% in 2003/2004. In the supply of frozen strawberries, the share of imports was the highest in 2003/2004 (53%) and decreased to 38% in the following marketing year. In 2004/2005, EU production of strawberries for processing significantly increased (generating high levels of stocks of frozen strawberries in 2005), owing to a large harvest in Poland and in other European countries and imports which were maintained at a rather high level.

The main uses of strawberries by the industry are the jam industry, the fruit preparation industry and the juice and drink industry. EU demand for semi-processed strawberries has increased dynamically since the 1990s. However, growth has concerned to a large extent the fruit preparation industry and the juice and drink industry. The needs of the jam industry have remained stable.

Due to its own features (flavour, strong red colour) Senga Sengana is the preferred cultivar for part of the jam industry (mainly in Northern European countries) and for the juice industry. The fruit preparation industry is less dependent on a specific cultivar.

Major conclusions of Chapter 3

Senga Sengana has features that make it particularly suited to the processing industry. On the other hand, it is an old cultivar which is used exclusively by the processing industry, produces low yields with a short harvest season. These characteristics place pressure on its cultivation under the current conditions of low prices.

The conditions for growing Senga Sengana in larger commercial farms (i.e. farms that rely on hired labour) are getting less favourable under current producer prices. If current price levels are maintained, these farms may switch to products which offer better prices, including strawberries for the fresh market.

Poland has probably the potential to develop a sizeable strawberry sector oriented towards the fresh market if it can mobilise appropriate capital investment and technologies. The Member State benefits from an extensive experience in the sector and in particular active research and variety creation in strawberries. Low labour cost compared to other EU countries is an advantage. Poland is well endowed with sandy soils that suit strawberry production. It is located within short road distance from the main EU consumption locations.

While part of the large farms may withdraw from the sector of strawberries for processing in the medium to long term, medium-sized and smaller farms have a role to play. However, the development of this segment of the sector is constrained by the fragmentation of supply to the semi-processing industry and the lack of adequate facilities for post-harvest handling. The establishment of producer groups and producer organisations would help to streamline marketing relations with the processing industry, to improve post-harvest handling (e.g. with investment in cooling storage capacity) and product quality (by advising on cultivation techniques), and to improve procurement of inputs.

CHAPTER 4 THE SECTOR OF BLACKCURRANTS IN THE EU

Blackcurrant is mainly produced in Europe. The EU blackcurrant sector does not face major competition from third countries. In the present days, competition is essentially an internal EU matter. In 2003 and 2004, the EU-25 production of blackcurrants reached the record level of 200 000 tonnes. Poland represents around 70% of total EU production with more than 130 000 tonnes on average in the period 2002–2004.

European production of blackcurrants displays cycles over periods of around ten or twelve years which correspond roughly to the lifetime of a plantation. The cycle is generated by the fact that many producers create new plantations when prices of blackcurrants are high. High prices in the end of the 1990s and the beginning of the 2000s prompted producers to increase areas of blackcurrants in many Member States: between 1999 and 2004 the area under blackcurrant increased in the EU-25 from around 35 000 hectares to 49 000 hectares. In Poland only, the area increased from 23 000 to 30 000 hectares. The new plantations generated a sharp increase in production and a situation of oversupply.

Production in Poland is dispersed among numerous farms. However, since the 1990s, the development of production has concerned more the medium-sized and large farms. Producers are not organised and sell individually to the industry. By contrast, farms are in average larger in the other producing Member States and the level of organisation of producers is higher (between 50 and 90% depending on the country).

Annual and pluri-annual contracts with guaranteed price between the producers and the industry concern a minor part of the marketed blackcurrants in the EU, with the notable exception of the United Kingdom. Recent pressures on prices have in addition led a number of processors to discontinue some of the contracts that were coming to an end. Producers are therefore strongly exposed to the current low market prices without much buffer.

It is estimated that the needs of the industry stand around 120–130 000 tonnes annually whereas supply in 2003 and 2004 reached almost 170 000 on average. The sector was therefore in a situation of oversupply in 2003–2004 by a range of 40–50 000 tonnes.

Two thirds of all blackcurrants destined to the industry are used by the juice industry for the preparation of concentrate. As the consumption of blackcurrant-based drinks is stable in most EU markets, the increase in production has strongly affected prices of concentrate: they fell from more than €8 per kg in 2000 to around €2 in 2005. In some Member States, consumption of blackcurrant-based drinks has suffered recently from the development of other products (e.g. orange juices, cranberry juice).

The jam and fruit preparation industries use smaller quantities of blackcurrants than the juice industry.

Conclusions of Chapter 4

The blackcurrant sector is confronted with a situation of oversupply since 2003. It is an EU problem created by EU over-production. Production levels have reached records while the consumption of blackcurrant processed products has not shown similar dynamism and prospects for exports outside the EU are limited. Prices of raw material and semi-processed products have therefore reached very low levels.

An adjustment of areas under cultivation needs to take place, so that production comes back to more appropriate levels. Grubbing up of excess plantations is one of the tools usually applied by the farmers. It is not considered that an EU financed grubbing up scheme would be a satisfactory solution. Such a scheme could speed up a return to more normal levels of production but would not abolish the economic cycle of blackcurrant. Moreover, the availability of EU support for grubbing up would probably entail more planting in the expansion phase of the cycle.

Better organisation of the sector in Poland would improve its command on the growth of production and, in the long term, contribute to ensuring a better stability of the sector at the EU level. Increasing the role of producer groups and organisation in the sector should be assigned priority.

On the demand side, consumption of food products incorporating blackcurrants is stable. Blackcurrant products suffer from the competition of other products and the lack of product innovation. More communication would probably increase consumption of blackcurrant products. Such programmes have already been implemented in individual Member States. EU support can be mobilised to develop promotional programmes.

CHAPTER 5 THE SECTOR OF RASPBERRIES FOR PROCESSING

Production in the EU and Poland

In the EU, raspberry production is concentrated in the Northern and Central European countries. However, raspberries are also produced in Southern European countries (Italy, Spain and Portugal), often resulting from the diversification of production in the strawberry sector, targeting exclusively the fresh market. The level of production in the EU has jumped since the enlargement of 2004 from 28 000 tonnes in the EU-15 on average over 2002–2004 to 87 000 tonnes in the EU-25 with two new producers: Poland (with 48 000 tonnes) and Hungary (with 10 000 tonnes). The processing industry is the primary destination of the fruits in the two new Member States.

Raspberry cultivation is labour intensive. The fragility of the fruits and of the plants limits the possibilities to use machine harvesting. This explains why machine harvesting is implemented in few countries only, and mainly for the production of concentrate and puree. In Scotland, efforts to mechanise harvest in the 1990s did not prove successful. In all major countries supplying the EU market of frozen raspberries (Chile, Hungary, Poland and Serbia), harvesting is mainly done by hand. Given the importance of labour costs, production of raspberries for processing has diminished considerably in the EU-15 in the course of the 1990s. In these countries, the bulk of raspberry production is oriented towards the fresh market.

In Poland, the production of raspberries is very concentrated geographically: the region of Lubelskie alone represents more than 70% of the national production in 2003 and 2004. Production is fragmented: out of 13 400 hectares of raspberries in 2002, 20% (2 700 hectares) were cultivated on farms with less than 0.1 hectare of raspberries (20% of total area); 55% were cultivated on farms with an area of raspberry comprised between 0.1 and one hectare; only 10% (1 400 hectares) were cultivated in farms with an area with raspberry higher than two hectares.

As for other soft fruits, producer groups and organisations play a negligible role in the marketing of raspberries to the semi-processing industry in Poland. Both production and marketing of raspberries are therefore fragmented. Fruits are assembled in the collection points or directly delivered to the semi-processors. Nevertheless, the frozen fruit and vegetables industry maintains closer relations with the farmers than for other soft fruits due to the fragility of the raspberries. In particular, contracts play a more important role than for the other soft fruits. Two thirds of the raspberries delivered to the industry in Poland are semi-processed by the frozen fruit and vegetables industry, the other third is used for the preparation of concentrate and purees. Outputs of both industries have increased strongly in the last years.

Poland benefits from several advantages that could help it to capture a more important share of the EU IQF market in the near future: it has a strong industrial basis, promising cultivars, an active research on new cultivars, appropriate natural conditions and specialised farms in the region of Lubelskie. Exports by Hungary of frozen raspberries to the EU have declined in recent years indicating an eroding competitiveness. The country has indeed had to face increased competition on the market, whereas internally the sector faced increased costs. In addition, natural conditions in Hungary would imply the development of irrigation which is not profitable currently on the processing market.

In Scotland, the raspberry sector was oriented towards the processing industry. However, despite the implementation of an EU co-financed programme to enhance its competitiveness, the sector reduced steadily in the course of the 1990s and disappeared in the beginning of the 2000s. Since then, raspberry production in Scotland is oriented towards the fresh market. Efforts to mechanise the harvest, the only solution to lift the constraint of labour cost, were ruined by the fact that the most suited cultivar was highly susceptible to root rot.

International trade and major third countries exporting to the EU

EU imports of frozen raspberries have increased very dynamically since the 1980s: from 1983 to 2004, the average annual rate of growth in volume was 8.4%!

Currently, the major third countries supplying frozen raspberries to the EU are Chile and Serbia. In Chile, the sector of raspberries has developed since the late 1980s targeting export markets. Production reached 38 000 tonnes on average in the period 2001–2003 with an average area of 5 500 hectares.

Serbia is by far the major supplier of the EU, with a share of all EU supply in frozen raspberries above 50%. Raspberry plantations have stabilised in the last four years in Serbia at around 15 400 hectares. Serbia is the second-largest European producer of raspberries after Russia.

In Serbia, the sector consists mainly of small farms (of a total area of 8–10 hectares) with an average area of raspberry of 0.20 hectare. Plantations are usually open-field without plastic protection and are not irrigated. The production volume is therefore highly sensitive to weather conditions and can fluctuate heavily year-on-year. The assortment of cultivars is rather modest with the predominance of Willamette which represents more than 90% of total production. In volume, 90% of raspberry production is frozen and 10% is used by the processing industry (for the production of juices, purees and jams) or sold in the domestic fresh market.

EU-25 supply of raspberries and use by the processing industry

EU-25 supply of raspberries for processing has increased in the 2000s from around110–115 000 tonnes in 2000 and 2001 to more than 160 000 tonnes in 2004. Total supply amounted to 151 000 tonnes on average in the period 2002–2004, 54% in volume were imported from EU-25 third countries. Out of this total, frozen raspberries represented around two thirds of the volume with 101 000 tonnes in 2002–2004. Supply originating from Poland has increased from 20 000 tonnes on average in 1999–2002 to 30 000 tonnes in average in 2003 and 2004.

Raspberries are mainly used by the jam and the fruit preparation industries. Frozen raspberries are also used by the pastry industry, food catering services and consumed directly by households from the retail sector. Use by the juice and drink industry is relatively limited since, as a flavour, raspberry is not very popular in fruit-based drinks, ranking behind blackcurrant or strawberries.

Major conclusions of Chapter 5

Raspberry production has increased strongly in the world in the last two decades. The EU has proved a dynamic market for the industrial use of the fruit. Several countries have established as suppliers of frozen raspberries of the EU, Serbia, the world leader, Chile and more recently Poland.

Poland has succeeded to take an increasing share of the market in the last decade, reaching around 30% of all EU supply in frozen raspberries and seems poised to further improve its position owing to a number of advantages: tradition in growing raspberries; low labour costs; research on cultivar creation and promising cultivars; existence of a large semi-processing industrial basis. The improvement of production at farm level and of marketing to the semi-processing industry will be critical in this process of consolidation. As for strawberries, the establishment of producer groups and organisations would be one solution to lift the major constraints at production level. This would apply also to Hungary.

Research in the creation of cultivar, whether for the processing and/or the fresh markets, is critical in ensuring the long-term competitiveness of the sector. Research is necessary on a wide range of subjects: suitability of cultivars to processing; resistance to important diseases; meeting consumer demand, improving taste and other quality criteria for fresh consumption.

CHAPTER 6 THE SECTOR OF SOUR CHERRIES FOR PROCESSING

EU sour cherry production

The sour cherry sector in the EU is dominated by three countries: Poland (190 000 tonnes in 2002–2004), Hungary (51 000 tonnes) and Germany (31 000 tonnes). Together, these three countries account for 87% of total EU production. In the period 1998–2004, EU-25 production of sour cherries increased at the average annual rate of 5.0% to reach 340 000 tonnes in 2004. Most of this growth originated from Poland. Poland represents 60% of EU sour cherry production.

The recent increase in production in the EU-25 was triggered by the creation of new orchards in several Member States and in particular in Poland. In this Member State, the overall area under sour cherries has remained stable in recent years. However, this masks that the area in the commercial sector has increased from 25 700 hectares in 1998/1999 to 31 000 hectares in 2004/2005 whereas in the same period the area in non-commercial production has decreased by one third, from 12 200 to 8 000 hectares.

Farm structures are small in Germany and Poland, although the weight of large farms is increasing in Poland. By contrast, large farms dominate in Hungary (farms with ten hectares or more representing 50% of total area, against 3% in Poland). Owing to small farm structures, the cherries are harvested manually in Germany and Poland. In Hungary, mechanised harvest concerns 30% of the production. Therefore, labour costs play a decisive role in the profitability of production and Germany is at a disadvantage in relation to Hungary and Poland.

In Germany and Hungary, producer organisations and producer groups play an important role in the marketing of sour cherries to the processing industry: 40% of total production in Germany and 50–60% in Hungary. By contrast, in Poland they still play a marginal role.

EU supply of sour cherries and use by the industry

The analysis of price series of sour cherries sold to the processing industry shows that while prices have been at their lowest in 2004, they had been declining in the last ten years under the pressure of an increasing production.

Estimations for the last five years indicate that the supply of sour cherries to the EU-25 processing industry would have increased from around 230 000–240 000 tonnes in the period 2000–2002 to 275 000–280 000 tonnes on average in 2003 and 2004, the share of EU-25 imports from third countries in total supply remained stable at 11% in volume.

The three most important users of sour cherries are the juice industry, the canning industry and the frozen fruit and vegetables industry (for further processing into jam and fruit preparations mainly). Supply increased for the three major uses of the sour cherries, however, the increase would have been the highest for the juice industry.

Conclusions of Chapter 6

The analysis shows that, together with imports from third countries, the EU sour cherry sector has potentially the capacity to exceed the needs of the industry, which was the case in 2003 and 2004.

In Poland, the sour cherry sector is fragmented and, by contrast with Germany and Hungary, producer organisations still play a minor role in the marketing of the fruits to the industry. The establishment of producer groups and organisations in Poland and their strengthening in Hungary would contribute to lifting the major constraints at production and marketing level.

CHAPTER 7 THE SECTOR OF SWEET CHERRIES FOR PROCESSING

Production of sweet cherries in the EU amounts to 460 000 tonnes in 2002–2004, an estimated share of 15% is sent to the processing industry. Three Member States have a part of their sector oriented towards the processing industry: France, Italy and Spain. The main uses are canning (cherries in syrup and other products), preparations with spirit (partly for the confectionery industry) and sugar-preservation (sugar-preserved cherries).

Since the beginning of the 1990s, production of preserved sweet cherries has reduced in the EU, partly due to their substitution by preserved sour cherries imported from Central Europe or imported preserved sweet cherries. EU production of sweet cherries prepared with spirit has also faced the competition of imports from third countries of similar products. The sector has reduced considerably.

France and Italy are the largest producers of sugar-preserved cherries in the EU, followed by Spain. In France and Italy, the sector has developed along distinct paths since the 1990s. In Italy, the industry switched in the beginning of the 1990s from Italian produced raw material to imports from third countries (Bulgaria, Turkey and Romania). A significant part of the raw material (provisionally preserved cherries) imported from third countries is re-exported after minor processing (grading, sorting, etc.) to third countries. Part of the raw material is processed into sugar-preserved cherries. In France, the sector has followed a strategy based on a strong integration of the commodity chain and concerted approaches and actions within the inter-professional context. Different measures to foster the competitiveness of the commodity chain were developed within the inter-professional framework. This strategy has ensured that despite increased competition the industry still uses locally produced raw material.

TABLE OF CONTENTS

INTRODUCTION 2

EXECUTIVE SUMMARY 2

TABLE OF CONTENTS 14

LIST OF TABLES 14

LIST OF FIGURES 15

LIST OF TEXT BOXES 17

LIST OF MAPS 17

LIST OF ABBREVIATIONS 18

1. THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN THE EU 19

1.1. Importance of the sector in the EU 19

1.2. Community policies affecting the sector of soft fruits and cherries 22

1.3. Other important aspects of the sector 25

2. THE SECTOR OF SOFT FRUITS AND CHERRIES FOR PROCESSING IN POLAND 30

2.1. Economic significance of the sector of soft fruits and sour cherries in the Polish economy 30

2.2. Farm structures and sector organisation in fruit and vegetables sector 31

2.3. Impact of the implementation of pre-accession SAPARD programme and of rural development measures in the fruit and vegetables sector 32

2.4. Structure of the semi-processing industry (freezing and concentrate industry) 34

2.5. Marketing of produce to the semi-processing industry 35

3. THE SECTOR OF STRAWBERRY FOR PROCESSING IN THE EU 41

3.1. EU production of strawberries for the processing sector 41

3.2. Major third countries supplying frozen strawberries to the EU 56

3.3. EU trade in semi-processed strawberries 59

3.4. Use of strawberries by the EU food processing industry 67

3.5. Major conclusions and implications for the Polish sector 75

4. THE BLACKCURRANT SECTOR IN THE EU 81

4.1. Blackcurrant production 81

4.2. Marketing and semi-processing of blackcurrants 89

4.3. EU trade in fresh and semi-processed blackcurrants 92

4.4. Use of blackcurrants by the EU food processing industry 94

4.5. Conclusions 97

5. THE SECTOR OF RASPBERRIES FOR PROCESSING IN THE EU 102

5.1. Raspberry production in the world 102

5.2. Raspberries for processing in the EU 103

5.3. Marketing and semi-processing of raspberries in the EU 108

5.4. Major third countries supplying frozen raspberries to the EU 111

5.5. EU trade in semi-processed raspberries 114

5.6. Use of raspberries by the EU food processing industry 117

5.7. Conclusions 120

6. THE SOUR CHERRY SECTOR IN THE EU 127

6.1. Sour cherry production in the world 127

6.2. Sour cherry production in the EU 127

6.3. Marketing and semi-processing of sour cherries in the EU 135

6.4. Major third countries supplying sour cherries to the EU 137

6.5. EU trade in semi-processed sour cherries 138

6.6. Use of sour cherries by the EU food processing industry 141

6.7. Conclusions 146

7. THE SECTOR OF SWEET CHERRIES FOR PROCESSING IN THE EU 151

7.1. Sweet cherry production in the world and in the EU 151

7.2. Sweet cherry for processing in the EU 151

7.3. Cherries prepared with spirit 155

7.4. Preserved sweet cherry products (without spirit) 155

7.5. Sugar-preserved cherries 159

7.6. The cherry sector in the main third countries exporting raw material or processed products to the EU market 166

7.7. Conclusions 167

Annex to Chapter 7 168

REFERENCES 169

GLOSSARY 170

LIST OF TABLES

Table 1-1. Soft fruits and sour cherries in the EU-25 20

Table 1-2. EU production of redcurrants (in tonnes) 27

Table 1-3. EU production of gooseberries (in tonnes) 27

Table 1-4. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (tonnes) 28

Table 1-5. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (€ ‘000) 28

Table 1-6. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (tonnes) 29

Table 1-7. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (€ ‘000) 29

Table 2-1. Economic data in the three largest producing regions 31

Table 3-1. Main economic data of strawberry production in Poland 46

Table 3-2. Estimates of supply and use of fresh strawberries in Poland 50

Table 3-3. Extra EU-15 imports of frozen strawberries (July n / June n+1) (tonnes) 63

Table 3-4. Estimates of EU-25 supply of strawberries for processing (in tonnes), 68

Table 3-5. Production of jam, jelly and marmalade 70

Table 3-6. EU-25 production of fresh strawberries (in tonnes) 77

Table 3-7. Area under strawberry production in the EU-25 (hectares) 77

Table 3-8. Average production costs of strawberries in family farms in Poland 78

Table 3-9. Extra EU-15 imports of frozen strawberries by Member States (in tonnes) 79

Table 3-10. Share of EU-15 Member States in extra-EU imports of frozen strawberries (%) 80

Table 4-1. EU production of blackcurrants (tonnes) 81

Table 4-2. Evolution of prices of fresh blackcurrants in France, Germany and Poland 85

Table 4-3. Estimates of supply and use of blackcurrants and processed products 91

Table 4-4. EU-25 trade in fresh and frozen blackcurrants (tonnes) 92

Table 4-5. Member States’ imports of frozen blackcurrant (tonnes) 93

Table 4-6. Total dispatches of frozen blackcurrants by Member States (tonnes) 94

Table 4-7. Estimates of EU-25 supply to the industry of blackcurrants (‘000 tonnes) 95

Table 4-8. Average yields in major producing countries (tonnes per hectare) 100

Table 4-9. Area in blackcurrants in the EU-25 (in hectares) 101

Table 4-10. Major EU importers of pre-cooled blackcurrants and main suppliers (tonnes) 101

Table 5-1. EU production of raspberries (tonnes) 104

Table 5-2. Major economic variables of raspberry production in Poland 108

Table 5-3. Estimates of supply and use of raspberries and processed products in Poland 109

Table 5-4. Raspberries in Chile: area (hectares), volume produced and exported (tonnes) 112

Table 5-5. Raspberry production in Serbia 113

Table 5-6. EU-15 imports of fresh raspberries for processing 115

Table 5-7. EU-15 imports of frozen raspberries (marketing year: July n / June n+1) 117

Table 5-8. Estimates of EU-25 supply of raspberries for processing (in tonnes) 118

Table 5-9. Area under cultivation of raspberries in the EU (hectares) 122

Table 5-10. Average production costs of raspberries in family farms in Poland 122

Table 5-11. Major cultivars grown in Europe and third countries 123

Table 6-1.EU production of sour cherries (tonnes) 128

Table 6-2. Price of sour cherries sold to the processing industry (ECU or €/kg) 132

Table 6-3. Estimates of supply and use of sour cherries in Hungary (‘000 tonnes) 136

Table 6-4. Estimates of supply and use of sour cherries and processed products in Poland 136

Table 6-5. Major data of sour cherry production in Serbia 137

Table 6-6. Exports of sour cherries of Serbia (tonnes) 138

Table 6-7. Intra and extra EU-25 trade in sour cherry products (tonnes) 140

Table 6-8. EU-15 imports of fresh sour cherries and sour cherry products (tonnes) 141

Table 6-9. Production of preserved sour cherries in some EU Member States (tonnes) 144

Table 6-10. Areas cultivated with sour cherries in the EU (hectares) 147

Table 6-11. Average family farm production cost for sour cherries in Poland 147

Table 6-12. Major sour cherry cultivars (% of total production or area) 148

Table 6-13. Unit values of EU-15 imports of fresh sour cherries (€/tonne) 149

Table 6-14. Tentative estimates of EU-25 supply of sour cherries for processing 149

Table 7-1. EU-25 production of sweet cherries (tonnes) 151

Table 7-2. EU-25 trade in prepared cherries with spirit (tonnes) 155

Table 7-3. EU-25 trade in canned sweet cherries without spirit (tonnes) 156

Table 7-4. EU-15 trade in preserved sweet cherries (without spirit) (tonnes) 157

Table 7-5. Production of canned sweet cherries in selected 157

Table 7-6. EU-25 trade in provisionally preserved and in sugar-preserved cherries 161

Table 7-7. Extra EU-15 trade of provisionally preserved cherries (tonnes) 162

Table 7-8. EU-15 trade in sugar-preserved cherries (tonnes) 162

LIST OF FIGURES

Figure 1-1. EU trade (intra EU trade + extra EU imports) of frozen soft fruits 21

Figure 2-1. Simplified marketing chart of fresh and semi-processed soft fruit in Poland 37

Figure 3-1. Production of strawberries in Poland since 1980 (hectares, tonnes) 41

Figure 3-2. Distribution of strawberry area in Poland according to the size of plantations 46

Figure 3-3. Evolution of area and producer prices (hectares and PLN/kg) 47

Figure 3-4. Comparison of average production costs on family farm with producer prices 48

Figure 3-5. Price paid to strawberries according to destinations (PLN/kg) 51

Figure 3-6. Strawberries in Spain: total production and quantities sold for processing 56

Figure 3-7. EU-15 annual imports of strawberries from Morocco (tonnes) 58

Figure 3-8. Evolution of Extra EC/EU imports of frozen strawberries since 1976 (tonnes) 61

Figure 3-9. Imports of frozen strawberries of the EC (EC-10, EC-12, EU-15) from Poland 62

Figure 3-10. Share of Poland, China and Morocco as suppliers of EU-15 (%) 64

Figure 3-11. Monthly unit values of EU-15 imports of frozen strawberries (€/tonne) 65

Figure 3-12. Production of yoghurts in France (‘000 tonnes) 73

Figure 3-13. EU-15 Production of flavoured yoghurt (without Spain and Belgium) (tonnes) 74

Figure 4-1. EC/EU import unit values of pre-cooled blackcurrant 83

Figure 4-2. Number of blackcurrant bushes (million) and producer prices in Poland 84

Figure 4-3. Production of blackcurrant in Poland since 1980 (‘000 tonnes) 86

Figure 4-4. Distribution of the area of currants (black, red and white) in Poland 87

Figure 4-5. Price of blackcurrant juice concentrate in the EU (65° brix) in €/kg 96

Figure 5-1. Major producers of raspberries (tonnes, annual average 2002-2004) 102

Figure 5-2. World production of raspberries (tonnes) 103

Figure 5-3. Distribution of raspberry area in Poland according to size of plantations 106

Figure 5-4. Distribution of raspberry area in Hungary according to the size of plantations 107

Figure 5-5. Area under raspberry cultivation in Scotland (hectares) 111

Figure 5-6. Extra EU (9, 12, 15) imports of frozen raspberries (tonnes) 116

Figure 6-1. World production of sour cherries since 1990 (tonnes) 127

Figure 6-2. Comparison of structures of orchards in Hungary and Poland 130

Figure 6-3. Distribution of cherry area in Poland according to the size of the orchards 131

Figure 6-4. Area in sour cherries in Poland according to farm categories (‘000 hectares) 133

Figure 6-5. Poland: comparison of average production costs and producer prices 134

Figure 6-6. EU-15 imports from third countries of canned sour cherries without spirit 141

Figure 6-7. Estimates of EU-25 use of sour cherries for processing (‘000 tonnes) 143

Figure 7-1. Evolution of area and production of sweet cherries for processing in France 152

Figure 7-2. Extra EU-15 imports of preserved sweet cherries without spirit (tonnes) 157

Figure 7-3. Net imports and production of canned cherries in France (tonnes) 159

Figure 7-4. EU Member States dispatches of sugar-preserved cherries to the UK (tonnes) 163

Figure 7-5. France: production and exports of sugar-preserved cherries (tonnes) 164

Figure 7-6. Imports and exports of provisionally preserved cherries by Italy (tonnes) 165

LIST OF TEXT BOXES

Text Box 3-1. Extremely high producer prices in marketing year 2003/2004 53

Text Box 4-1. A measure to manage production level: non-harvesting 90

Text Box 4-2. Promotion campaign to boost consumption in the United Kingdom 96

Text Box 5-1. The sector of raspberries for processing in Scotland 125

LIST OF MAPS

Map 2-1. Strawberry production in Poland 38

Map 2-2. Currant production in Poland 38

Map 2-3. Gooseberry production in Poland 39

Map 2-4. Raspberry production in Poland 39

Map 2-5. Sour cherry production in Poland 40

Map 3-1. EU production of strawberries 78

Map 4-1. EU production of blackcurrants 100

Map 5-1. EU production of raspberries 125

Map 6-1. EU production of sour cherries 150

Map 7-1. EU production of sweet cherries 168

LIST OF ABBREVIATIONS

AFIDEM | Association des fruits et légumes transformés |

CAP | common agricultural policy |

CIF | Cost insurance freight |

CMO | common market organisation |

CN | Combined Nomenclature |

CNDP | Complementary National Direct Payment |

CSO | Central Statistical Office of Poland (also referred to as GUS) |

EAFRD | European Agricultural Fund for Rural Development |

EAGGF | European Agricultural Guidance and Guarantee Fund |

OEITFL | Organisation of European Fruit and Vegetable Processing Industries |

ECU | European Currency Unit |

EU | European Union |

FAO | Food and Agriculture Organisation of the United Nations |

FDI | Foreign direct investment |

GDP | Gross domestic product |

GSP | Generalised System of Preferences |

GUS | Główny Urząd Statystyczny (Central Statistical Office, CSO) |

HUF | Hungarian Forint |

IERiGŻ | Instytut Ekonomiki Rolnictwa i Gospodarki Żywnościowej (Institute of Agricultural and Food Economics) |

IQF | Individually quick frozen |

KUPS | Polish Association of Juice Producers |

MFN | Most Favoured Nation |

MIP | Minimum import price |

NFC | Not from concentrate (juices) |

PG | Producer group |

PLN | Polish Złoty |

PO | Producer organisation |

RDP | Rural development programme |

SAPARD | Special Accession Programme for Agriculture and Rural Development |

SAPS | Single Area Payment Scheme |

SCRI | Scottish Crop Research Institute |

SOP | Sectoral operational programme |

USA | United States of America |

USDA | United States Department of Agriculture |

VAT | Value Added Tax |

VMP | Value of marketed production |

The sector of soft fruits and cherries for processing in the EU

The present chapter has two major aims. The first one is to introduce the reader to the major features of the sector of soft fruits for processing. These include the importance of the sector in the EU agriculture and the economy, the economic characteristics of the sector, the evolution of uses of the fruits by the processing industry and the importance of international trade. In addition, the paper discusses briefly two other issues that are important for the sector: soft fruits and human health and the importance of breeding research. The second aim is to shed light on the Community policies that may have an impact on the sector.

Products covered by the analysis are cherries and the so-called soft fruits. The term soft fruit usually covers three groups of fruits:

- the berry fruits: blackberry, raspberry, loganberry and boysenberry (genus Rubus ) and mulberry (genus Morus );

- gooseberries and currants (genus Ribes ) and blueberry (genus Vaccinium ); and

- the achenes (false fruit, genus Fragaria , i.e. the strawberry).

Due to the variety of fruits, the analysis in the present document will focus on the most important soft fruits in the EU context: blackcurrants, raspberries and strawberries. Regarding cherries, analysis will be done separately for sour cherries ( Prunus cerasus ) and sweet cherries ( Prunus avium ).

Importance of the sector in the EU

Importance in the agriculture sector

As a rule berry and currant bushes and sour cherry trees prefer regions with a cold climate. Therefore, berry and sour cherry production is more important in Central and Northern Member States. With the exception of strawberries, berries and currants are not present to a similar extent in Southern Member States. In contrast with sour cherries, sweet cherry trees prefer milder climates than those of Central and Northern Europe. Sweet cherry production is therefore more present in Southern Member States[1].

At EU level, areas under soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries cover a rather limited share of total arable land: 237 000 hectares out of a total of 96 million, i.e. 0.25% only. The importance of the sector is the lowest in Southern European countries, while it is more important in Northern European countries. With a share of 1.10%, Poland is the country where the sector has the greatest weight.

With the enlargement of 2004, soft fruit and sour cherry EU production increased significantly: the cultivated area jumped from 69 000 hectares in the EU-15 to the above-mentioned 237 000 hectares in the EU-25 on average in 2002–2004, of which 141 000 hectares in Poland. Production in volume increased from 909 000 tonnes in the EU-15 (of which 770 000 tonnes of strawberries) to 1 639 000 tonnes in the EU-25, with 596 000 tonnes in Poland. While the EU-15 was a modest producer of currants, gooseberries, raspberries and sour cherries, the EU-25 is the world largest producer of these fruits and also of strawberries.

Economic characteristics of the sector

With the exception of currants for which the harvest can be mechanised, the soft fruit and sour cherry sectors are labour intensive. Given that prices on the processing market are lower or much lower than on the fresh market, competitive pressure entails that the sector of soft fruit for processing is located mainly in countries with low labour costs.

Soft fruits are often part of a narrow range of possible crops in less-favoured regions (e.g. semi mountainous areas). In addition the possibility to produce soft fruit at a small scale entails that the sector is particularly suited to small farms that are often predominant in less favoured or semi mountainous areas (e.g. raspberry production in semi-mountainous areas in France, soft fruit production in mountainous areas in Trento in Italy, etc.). On these farms, soft fruits allow a better use of family labour force. They often provide additional income to part-time farmers.

While the sector has a limited economic size in the overall agriculture, it is often concentrated in specific regions in producing countries. Hence, it can contribute significantly to the regional or local economy. One example is the region of Lubelskie in Poland which represents 24% of all Polish production of soft fruits and sour cherries.

The sector has often developed as a way to divert from production of other crops (e.g. tobacco) or to diversify production on farm (e.g. fruit farms, or cereal and other crop farms).

Importance for the EU food processing industry

In the last twenty years, the use of soft fruits and cherries by the food processing industry has increased significantly. Out of 1 639 000 tonnes of soft fruits (currants, gooseberries, raspberries and strawberries) and sour cherries produced annually in the EU-25 in the period 2002–2004, 700 000 tonnes were directed to the processing industry (42.6% of total production), see Table 1.1. Poland represented 67.2% of the EU production destined to the industry. On average in the period 2002–2004, the EU food processing industry used almost 900 000 tonnes of raw material (currants, gooseberries, raspberries, strawberries and sour cherries). Out of this, almost 200 000 tonnes were imported (frozen or pre-cooled) from third countries (22%).

Table 1-1. Soft fruits and sour cherries in the EU-25: total production and volumes directed to the industry, average 2002–2004

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There are no historic data regarding the use of soft fruits by the food processing industry, however a rough indicator of the evolution of use is the total trade in frozen soft fruits of the EU from 1988 to 2005. Total EU trade (extra EU imports and intra EU trade) of frozen soft fruit (all berries and strawberries), excluding frozen sour cherries (singled out in the combined nomenclature only since 1993), increased from around 200 000 tonnes in the late 1980s to more than 500 000 tonnes in the 2000s, at an average annual growth rate of 6.0%.

Figure 1-1. EU trade (intra EU trade + extra EU imports) of frozen soft fruits (in volume and value)

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Source: COMEXT

Significance of international trade

Until 2004, the largest part of the raw material used by the EU industry was imported from EU third countries. Since the enlargement of 2004, the largest part of EU supply originates from the EU itself with the exception of raspberries.

With the objective to understand the dynamics of EU trade with third countries, time series of EU-25 trade have been simulated since 1999 (see Tables in Annex to the chapter).

Analysis provided in the sectoral chapters indicates that imports from third countries represent 21% of the supply of EU-25 in 2002–2004 on average for frozen sour cherries, but 74% for frozen raspberries. While for these two products the importance of imports from third countries has been rather stable in recent years, this is not the case of frozen strawberries: imports of frozen strawberries from EU-25 third countries amounted to 27% of total EU supply in marketing years[2] 1999/2000 to 2001/2002 and to 42% in marketing years 2002/2003 to 2004/2005 (see sectoral chapters for details).

If one considers total EU-25 supply to the industry (including all forms of raw material in addition to frozen fruits), the share of imports from third countries amounts to 11% and 54% for sour cherries and raspberries respectively on average in 2002–2004. In the case of strawberries, the importance of imports has increased from less than 20% until 2001/2002 to 25% in 2002/2003 and 38% in 2004/2005.

In 2002–2004, EU-25 imports of fresh and frozen soft fruits from third countries amounted to €531 million on average. In the same period EU-25 exports to third countries amounted to €115 million.

Community policies affecting the sector of soft fruits and cherries

Measures of the common market organisation for fresh and processed fruit and vegetables

As other fruit and vegetables, soft fruits and cherries potentially benefit from the support of the common market organisation through the Producer Organisations (POs). This support consists in an operational fund that finances an operational programme set up by the PO of which 50% is financed by the Community. The EU support cannot exceed 4.1% of the value of marketed production (VMP) of the PO. Support is also provided to Producer Groups (PGs) that implement a recognition plan to meet the criteria to be recognised as a PO. This support is of special relevance to the new Member States where the level of organisation of the sector is often low and emerging groups of producers have a too limited size to qualify as PO in the first years of their existence.

On the other hand, only few products are covered by specific measures in the common market organisation for fresh and processed fruit and vegetables:

- the fresh soft fruits and cherries are not covered by the Community supported intervention regime (Annex II of Council Regulation (EC) No 2200/96). However withdrawals by Producer Organisations financed through the operational programmes are possible;

- on the fresh market, only cherries and strawberries are covered by a marketing standard;

- only provisionally preserved cherries and sugar-preserved cherries are eligible to export refunds. Processed fruit and vegetables that incorporate sugar can be eligible to an export refund covering the incorporated sugar;

- as regards imports from third countries, only cherries are covered by the entry price system. No minimum import price (MIP) applies to any soft fruit within trade agreements signed with third countries since the enlargement of 2004;

- there is no Community aid scheme for producer organisations supplying fresh soft fruits and cherries to the processing industry. A support measure for the processing of cherries by the canning industry was implemented from marketing years 1980/1981 to 1986/1987. This support was replaced by a system of minimum import price until the end of the 1999/2000 marketing year.

Direct aid payments in the framework of the CAP reform of 2003 and the Single Area Payment Scheme in the New Member States

The 2003 reform of the CAP introduced a new system of single farm payments (income support) and cut the link between support and production (decoupling). Single farm payments are implemented according to two models, the historical model and the regional model. In some countries, implementation is a hybrid between these two models.

In order to receive the single payment, two main conditions need to be respected. Farmers must have been granted entitlements to the payment. These are in fact rights to a certain amount of aid per hectare. Secondly, farmers must farm corresponding hectares of land in order to activate these payments.

In the historical model, as they did not generate direct payments in the past, all areas under fruit and vegetables were not included in the establishment of the reference area which set the initial allocation of payment entitlements for each farm. Areas under fruits and vegetables may not be used to activate payment entitlements. Nevertheless, areas that were previously used for fruit and vegetable production may under certain conditions activate the single payment, provided that they are no longer cultivated with fruit and vegetables[3].

However, this does not mean that the farmer receives additional direct payments for these areas since the initial allocation of entitlements of the farm itself does not change. It only means that the concerned (former fruit and vegetable) land can trigger payment of part of the allocated entitlements. Therefore, no additional direct payments would be allocated to farmers who, owing to adverse market circumstances, would withdraw from the berry sector and convert to another use of the land. However, Member States may use the national reserve in order to establish new reference amounts for farmers in areas subject to restructuring[4].

Besides the historical model, the Member States have the possibility to apply the single payment at the regional level. This is the regional model. In this case, areas cultivated during the reference period in fruit and vegetables, with the exception of permanent crops, were eligible for the establishment of payment entitlements and are eligible for the activation of these entitlement. However, farmers can activate payment entitlements with the cultivation of fruit and vegetables only up to the area that was cultivated with those products during the reference period. Under Community legislation, berry bushes are not considered permanent crops but multi-annual crops. Therefore they are included in the single payment system implemented in the regional model. Areas under cherry, a permanent crop, are not.

The New Member States have had the possibility to adopt the Single Area Payment Scheme (SAPS) for a transitional period of three years with a possibility to extend it for two years. This scheme applies in the form of a payment per hectare for all agricultural land, including the one cultivated with fruits and vegetables. The SAPS can be complemented with a Complementary National Direct Payment (CNDP) which is co-financed under the EU rural development programmes. However, areas under fruit and vegetables are not eligible to CNDP. A minimum area per farm can be set by the Member States. In Poland in 2005, in the fruit and vegetable sector, the SAPS amounted to €57.4 per hectare, it will increase in the future according to the phasing-in rates that apply to all direct payments. The scheme is implemented in all NMS except Malta and Slovenia who have implemented the standard CAP schemes. Eventually, all new Member States will apply the regional model, Slovenia and Malta as from 2007 and the other countries in 2009 at the latest.

Rura l development support and other structural measures

New Member States: pre-accession support measures (SAPARD)

In the framework of the accession process, support to agricultural and rural development in the candidate countries was provided through the Special Accession Programme for Agriculture and Rural Development (SAPARD) that applied from 2000. SAPARD offered support to a variety of areas. Among them, the following could have a direct impact on all sectors of agricultural production, including soft fruits: investments in agricultural holdings; improvement of marketing and processing of agricultural products; development and diversification of economic activities; setting up of producer groups.

Rural development

Rural development represents the second pillar of the common agricultural policy of the EU. A new regulation on rural development was adopted in 2005 (Council Regulation (EC) No 1698/2005) that will apply to community rural development support for the period 2007–2013. Within this new framework, EU support is organised around four major axes: Axis 1, improving the competitiveness of the agricultural and forestry sector; Axis 2, improving the environment and the countryside; Axis 3, improving the quality of life in rural areas and diversification of the rural economy; Axis 4, Leader (local rural development strategies).

Measures implemented through all four axes, and in particular Axis 1, are important for all agricultural sectors, including fruits and vegetables. This applies in particular to such measures as the setting up support to young farmers, the support to modernisation of agricultural holdings and the support to adding value to agricultural products (marketing and processing). Other measures should help operators of the agriculture and food sector to improve the competitiveness of their sector. That concerns in particular the measure for cooperation for development of new products (innovation) and the measure for participation of farmers in food quality schemes.

Under the same Axis 1, transitional measures apply in the New Member States which provide support to semi-subsistence agricultural holdings and to the setting up of producer groups. The former measure was already implemented in the rural development programmes of the New Member States in the period 2004–2006. The latter was already available under SAPARD programmes and subsequent rural development programmes.

Support measures under Axis 3 foster diversification of the activities in rural areas and, hence, strengthen the local economy and its capacity to cope with difficulties that can be faced in specific agricultural sectors.

Contributions of the European Agricultural Fund for Rural Development (EAFRD) is 75% of eligible public expenditures for Convergence Objective regions (regions with GDP per capita below 75% of EU average) and 50% for the other regions for Axis 1 and 3 and 80% for Convergence Objective regions and 55% for the other regions for Axis 2.

Promotion of agriculture products

In comparison with other fruits, soft fruit markets are of a limited size. This concerns both fresh and processed products. Promotional programmes seldom focus on products of the sector, as a consequence they are often not well known by the consumers. Initiatives have been taken by operators of the sector in some Member States to promote their products. In this context, the EU support to promotion of agricultural products can be an important tool to communicate on soft fruits.

In 2000 the Council decided that the EU could assist in financing measures that provide information on, or promote agricultural products and food on the EU internal market and in third countries. These measures can consist of public relations, promotional or publicity actions, in particular, those that highlight the advantages of EU products, especially in terms of quality, hygiene, food safety, nutrition, labelling, animal welfare or environmental-friendliness of their production. Participation in events and fairs are also covered. The EU co-finances these measures with an amount not exceeding 50%, the remainder being paid by the professional/inter-branch organisations that proposed them and by the concerned Member States. Programmes involving several Member States are also eligible. The EU can finance certain specific measures (for instance information on EU quality and labelling systems) at 100%. The annual total budget for programmes in third countries and on the internal market is around €42 million.

Reference to health in the messages disseminated through the promotion programmes is allowed provided that it is based on generally accepted scientific data. Messages referring to these effects must be acceptable to the national authority responsible for public health. This may concern soft fruits as recent scientific research carried out on soft fruits has shown that they are rich in nutrients that have a positive impact on health. On this subject, it is important to recall that new legislation is being prepared at the Community level on nutrition and health claims made on foods which aims at harmonisation at the Community level of health claims with the creation of a list of authorised claims.

EU legislation on phyto-sanitary products and the soft fruit sector

In 1992 a Community-wide review process for all active ingredients used in plant protection products within the European Union was launched. Council Directive 91/414/EEC states that active substances cannot be used in plant protection products unless they are included in a positive EU list. An EU programme of evaluation to create this list is underway. Once a substance is included in the positive list Member States may authorise the use of products containing them. However, given that at the moment of entering into force of the Directive more than a thousand active substances were already authorised in the EU, temporary derogations were foreseen to permit Member States to continue to apply the national rules for existing authorisations. The review programme for all the existing substances will be completed by 2008. In the review process, each applicant (phyto-sanitary product manufacturer) has to prove that a substance could be used safely regarding human health, the environment, ecotoxicology and residues in the food chain.

The agricultural sectors with a small economic size and representing limited business for the phyto-sanitary industry, such as the soft fruit sector, may face difficulties with the inscription of active substances. This potential problem was anticipated by Directive 91/414/EEC which includes provisions that apply to the so-called minor uses, i.e. uses which concern either minor crops or minor harmful organisms for major crops and which are not covered with authorised plant protection products. The Directive allows Member States to extend the field of application of plant protection products under certain circumstances. In addition, the possibility – so far seldom used – for a Member State to mutually recognise authorisations with another Member State could solve a minor use problem when there is a use gap in one of the two countries.

Other important aspects of the sector

Soft fruits and human health

Recent research carried out on various fruits indicates that red fruits and sour cherries are rich in different nutrients. In particular, they are an important source of anti-oxidants, for instance in vitamins (e.g. vitamin C) or anthocyanins (which gives to the fruits the red, purple and blue colour). The nutritional importance of antioxidants is now accepted. They would have positive effects in contributing to prevent important diseases. These positive features are often ignored by consumers who know less about the soft fruits than about other fruits that are consumed in larger quantities.

Breeding research

Breeding research plays a role in the overall competitiveness of the sector of soft fruits for both the fresh and the processing markets. Dynamism of the sector is often linked to the creation of new cultivars. In most sub-sectors (blackcurrants, raspberries, sour cherries, strawberries) the spreading of recently created cultivars has impacted the sector economically: for blackcurrants, this concerns the Ben cultivars created since the 1980s that are used in most European countries; in the raspberry sector, in Poland, recent cultivars like Polana and Polka have spread quickly; in the sector of strawberries, Camarosa , which is used for both the fresh and the processing markets, was created in 1993. Breeding research impacts both cost competitiveness (e.g. cultivar that require lower levels of inputs) and overall competitiveness (e.g. product innovation).

Several aspects increase the role played by breeding research in the sector since the 1990s and for the future. Firstly, the process engaged in the 1990s to reduce the number of active substances for pesticides implies that cultivars have better resistance to diseases. Secondly, in an increasingly competitive environment, consumer preferences and quality of the products have become more important preoccupations than in the past. Thirdly, global warming is already having an impact in some sub-sectors (e.g. blackcurrant in some countries) and needs to be taken into consideration in the breeding programmes.

Breeding research is a long-term effort, it usually takes more than 15 years to release a new cultivar. Therefore, breeding programmes need stable sources of funding. However, current budget constraints sometimes lead governments to diminish public funding. In this context, participation of both public and private institutions in funding can be important to maintain breeding programmes.

Annex to Chapter 1

Hereafter we provide EU production of gooseberries and redcurrants, for the other products, EU production is presented in the sectoral chapters.

Table 1-2. EU production of redcurrants (tonnes)[5]

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Table 1-3. EU production of gooseberries (tonnes)[6]

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Table 1-4. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (tonnes)

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Table 1-5. EU-25 imports of fresh, frozen and provisionally preserved soft fruits (€ ‘000)

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Table 1-6. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (tonnes)

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Table 1-7. EU-25 exports of fresh, frozen and provisionally preserved soft fruits (€ ‘000)

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The sector of soft fruits and cherries for processing in Poland

Poland represents two thirds of all EU soft fruits and sour cherries produced for the processing industry. This explains why a specific chapter is dedicated to the general features of the soft fruit sector in this Member State. In this chapter, attention is given to the significance of the sector in the fruit and vegetable sector and its contribution to the economy of concerned areas of production. Attention is also paid to rural development programmes, the level of organisation in the fruit and vegetable sector, the structure of the semi-processing industry and the marketing of soft fruit sold to the industry by the producers.

Economic significance of the sector of soft fruits and sour cherries in the Polish economy

Significance in the agricultural sector

Fruit and vegetables are an important branch of the agriculture sector in Poland. They amount to 12% of total agricultural sales and, with 640 000 hectares, represents 4% of total farmland. The area under fruit production (orchards with fruit trees and bushes and land under strawberry production[7]) has fluctuated in the last 15 years between 300 000 and 350 000 hectares. The orchard area has been rather stable in the range of 260–290 000 hectares. Out of this, around 15% are devoted to soft fruit bushes (currants, gooseberries, raspberries and other bushes) and 10% to sour cherries.

The sector of soft fruits and sour cherries itself has an important weight in the agricultural economy: it represents 5% of total plant production value (8% of commercial plant production value), 17% of total fruit and vegetables production and 35% of all fruit production value.

Regional and social importance of the soft fruit sector in Poland

Geographic location of the sector

Soft fruit production is concentrated regionally. Its significance is the highest in three regions that represent around 55% of national soft fruit and sour cherry production in 2002–2004: Lubelskie (24.1% of total production in volume), Mazowieckie (20.9%) and Łódzkie (11.4%). These regions are located in the centre East of Poland (see maps). Geographical concentration of production varies according to the different fruits: the share of the leading three regions is the highest for raspberries with 87.8% of national production in 2002–2004 (Lubelskie alone amounting to 69.7%). Sour cherries and currants follow with 58.8%. Regional concentration is lower for strawberries, where the three leading regions represent 47.0% of national production and is the lowest for gooseberries (42.0%).

Table 2-1. Area, production, average farm size and unemployment in the three largest producing regions

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The economy of rural areas and the importance of the sector

With 17.7% in 2005 (Eurostat), Poland is the Member State with the highest level of unemployment in the EU (average of 8.7%). Official unemployment is equally important in rural areas in Poland (16.4% in 2004 according to GUS, the Central Statistical Office), but actual unemployment levels are probably higher as there is a large hidden unemployment. Indeed, in the course of the 1990s, the agricultural sector played the role of a social buffer, absorbing part of the surplus of labour force in the economy. This explains why the share of agriculture in total employment in Poland, 17.5% in 2004, is one of the highest among the EU Member States (the EU-25 average is 5.2%). In comparison, the contribution of the sector to the GDP amounted to 5.6% in 2000, rather close to the EU average of 2.0%.

There are almost two million farms with an area higher than one hectare in Poland, with a high share of subsistence and semi-subsistence holdings. More than half of these farms have an area below five hectares and use around 20% of total agricultural land. Farms with an area between five and 20 hectares represent 35% of total holding numbers and use 46% of all agricultural land. Holdings larger than 20 hectares amount to only 6% of the farms but they use 35% of total agricultural land.

The lack of labour opportunities in the rest of the economy, given the high level of unemployment at national level, slows down the decrease in agricultural labour. This creates major difficulties for the agricultural sector as it constrains productivity increase and its consolidation.

In this context, the sector of soft fruit for processing represents an important source of income and labour in rural areas in Poland. It is estimated that the overall fruit and vegetable sector provides the equivalent of 250 000 full time jobs (production, marketing, processing). In the soft fruit and cherry sector only, this would amount to around 80 000 full time jobs (according to IERiGŻ, the Institute of Agricultural and Food Economics in Warsaw).

Farm structures and sector organisation in fruit and vegetables sector

Excluding farms with an area under soft fruits or sour cherries below 0.1 hectare, which are usually considered to be subsistence oriented[8], the agricultural census of 2002 indicates that there were 133 800 producers of sour cherries (with an average area under sour cherry of 0.22 hectare), 96 600 producers of strawberries (with an average area of 0.36 hectare), 82 400 producers of currants (with an average area of 0.42 hectare) and 50 100 producers of raspberries (with an average area of 0.21 hectare). Soft fruit and cherry production is therefore fragmented. However these averages mask that for blackcurrants and sour cherries, farms with an area higher than one hectare represent around two third of national production.

In the common market organisations for fresh and processed fruits and vegetables, the major actors targeted by the policies are the Producer Organisations created by producers to market jointly their produce. In the new Member States, the level of organisation[9] of the producers is often lower than in the other 15 Member States. This is because these countries have started to apply EU policies only recently and also for obvious historical reasons: the so-called agriculture production cooperatives, of which membership was often imposed and functioning was all but democratic, generated strong reluctance of farmers towards new groups since the collapse of the communist regimes in the late 1980s.

In the wake of the preparation for accession to the EU, Poland voted in September 2000 the Law on Agri-Producer Groups and their Unions which gave access to preferential loans and property tax allowances. In December 2003, Poland passed a new law on agricultural markets (including fruit and vegetables) to align the legal environment with the EU’s and ensure that producer groups and organisations recognised under this law would also be recognised under the EU framework as from accession.

In the beginning of 2006, there were 46 Producer Groups (PGs) and eight Producer Organisations (POs) in the country that sold around 2% of total marketed production of fruits and vegetables in Poland. There were still groups of producers that had been recognised under the law of September 2000 that are getting progressively recognition under the EU framework. POs and PGs are the most active in the sector of tomato for processing (21 PGs/POs in 2004, 23 in 2005). Soft fruits and sour cherries marketed via PGs or POs amounted to around 5 000 tonnes in 2004 only (around 7 000 tonnes foreseen for 2005). It is estimated that around 700 informal groups of producers exist in the agricultural sector, with 40% in fruits and vegetables.

Despite the advantages that producers would have in joining groups (that have been pointed out in the case of Poland in a publication by Lemanowicz, 2004), the level of organisation in Poland is among the lowest in the new Member States.

In January 2006, Poland adopted the legal framework for granting support to Producer Groups that implement a recognition plan. This aid will be granted in capital. Community support will cover 50% of eligible costs, Poland will cover 25% and the PGs will cover 25%.

There is no interbranch organisation functioning in the sector of fruits and vegetables in Poland.

Impact of the implementation of pre-accession SAPARD [10] programme and of rural development measures in the fruit and vegetables sector

SAPARD

In Poland, SAPARD was implemented from 2002. Projects were contracted with final beneficiaries until 30 September 2004. Regarding the fruit and vegetables sector, SAPARD support concerned mainly: a) investments on farms; and b) investment in marketing and in the processing industry. Poland did not apply the specific measure for the establishment of producer groups but provided more attractive conditions to farmer groups or farm associations applying for support to investments in marketing and processing.

With SAPARD, on-farm investments in the fruit and vegetable sectors were supported through the measure on “diversification and valorisation of agricultural production”. The objective of this measure was to assist farmers in generating income from non-traditional production. It is not possible to single out the amounts that were used by the fruit sector. In this sector, SAPARD co-financing could be used for investments in equipment (e.g. combined harvester, controlled atmosphere storage capacity). No support was provided to the establishment of new plantations. In total almost 12 000 projects were financed through this measure and all public funds available (PLN 489 million) were used. This measure was considered very successful[11].

Regarding investments in the processing industry, a specific measure provided “support for restructuring the processing and improving the marketing of fruit and vegetable products”. Producer groups were eligible to this measure and conditions for support were less restrictive for them than for other beneficiaries. However, due to the small number of registered groups, only one project was financed (in the dairy sector). This measure financed 241 projects and all public funds available (PLN 292 million) were used.

Overall, SAPARD measures attracted a high interest from operators of the sector. It made a contribution to the improvement of production and processing capacities and is regarded as a success (see for instance FDPA, 2004, which includes an assessment of SAPARD). In addition, farmers could acquaint themselves with the administrative procedures which made them better prepared for the use of support possibilities with rural development programmes that took over upon accession to the EU.

Rural development programmes

From accession to the EU in May 2004, EU co-financed rural development programmes were implemented, with a budget allocation covering the period 2004–2006. They consist in two major programmes: the Sectoral Operational Programme (SOP) financed by the Guidance section of the EAGGF and the Rural Development Programme (RDP) financed by the Guarantee section of the EAGGF. SOP finances twelve measures of which farm investments, support to young farmers, investments in food processing and marketing, and assistance to diversification of activities in rural areas. These measures are of special relevance in the framework of the red fruit sector. The RDP offers a set of instruments mainly concentrated on two priorities: the enhancement of the competitiveness of the farm holdings and the sustainable and multifunctional development with a special regard to environmental issues. It provides inter alia support through the early retirement measure, support to semi-subsistence farms undergoing restructuring, to less-favoured areas, to agri-environment and animal welfare, to farms to meet EU standards, to afforestation of agricultural land and to agricultural producer groups.

Rural development programmes are financed in Poland for the period 2004–2006 with a total public budget of €5.36 billion, of which €4.06 billion from the EU budget.

It is too early to assess the impact of the rural development programmes on the fruit and vegetables sector. However, it was reported that support to farm investment attracted a large interest from the farmers (26 114 applications received by 31 December 2005 for the measure “investment in agricultural holdings” of the SOP and 73 893 for the measure “meeting EU standards” included in the RDP).

250 projects are expected to be financed in the fruit and vegetables sector through the measure “improving the processing and marketing of agricultural products”. Access to the support for the sector is linked to the precondition that at least 50% (in value) of the raw material delivered to the beneficiary industrial plant is contracted with agricultural producers (there is however no obligation regarding price arrangements).

As a general rule, investment for the processing of raw material from third countries is not eligible to Community financing. However, as proposed by the Polish authorities, the Polish SOP provides that “in case of fruit and vegetables processing, and production of feeds for farm animals and fish, the support for plants, which process raw materials from third countries, is allowed provided that its share does not exceed 30% of the total volume of processed raw materials. As a consequence, the level of aid is reduced proportionally to the declared share of raw materials from third countries”.

Structure of the semi-processing industry (freezing and concentrate industry)

The food industry is the largest branch of the manufacturing sector in Poland with a share of more than 20% of total sales value (Maack, 2005). Most of the food industry was part of the socialised sector in the former regime, it was privatised in the course of the 1990s.

Processed fruit and vegetables account for 7–8% of total sales of the food industry. Frozen products and concentrated juices account for 20% and 3–4% of the structure of sales of the fruit and vegetables industry. The industry in the fruit and vegetables sector processes around 60% of all fruit production and 30% of vegetable production in Poland. In 2003 there were 1 200 fruit and vegetable processing companies, 90% of them with less than 50 employees (representing 33% of the employment and 29% of production in the sector). The industry is mainly located in Central Poland, which is the region with the highest fruit and vegetables production. It is also well developed in Southern and Eastern regions of Poland. Foreign capital dominates in all branches of the fruit and vegetables processing industry. The sector has attracted significant amounts of foreign direct investments (FDI). Until 2002, the value of FDI in the processing of fruit and vegetables had reached US$ 318 million (Wilkin et al. , 2004). Most European firms involved in frozen products, juice concentrates and other intermediary food products (e.g. fruit preparations) have established a subsidiary in Poland.

Support under SAPARD and EU rural development measures (the SOP programme) have facilitated new investments in the sector in the last few years.

The frozen fruit and vegetables industry

It is estimated that more than a hundred plants freeze fruit and vegetables in Poland. However, only around ten of them would work with volumes of around 20 000 tonnes or more of fruit and vegetables. All the other plants have a much smaller capacity. Although the number of small plants is decreasing, it is often considered by observers that the processing capacity of the frozen fruit and vegetables industry in Poland is too large and fragmented and contributes to price instability.

Small plants often carry out an initial processing (washing and freezing) and sell their output to larger plants that further work the products (grading, pitting, packing, preparation of puree, quality control, etc.). In order to maintain activity for the longest period possible, most plants, especially the larger ones, process a broad range of fruits and vegetables.

The storage capacity of the industry is considerable and provides operators with flexibility in the marketing of their produce. In particular, Poland is one of the few countries that can offer spread delivery contracts. Most other countries (e.g. Morocco, Serbia, etc.) have less storage capacity and deliver their products immediately.

Many plants are involved in the freezing of strawberries, especially in years of good prices. For other products, the situation can be different. For instance, freezing raspberries may involve more investments than for strawberries (necessity of static freezing for high quality individually quick frozen – IQF – raspberries), moreover, the process involves maintaining close relations with the farmers in order to ensure quality. Hence, the number of freezing plants that work raspberries is smaller and more stable than for strawberries.

Concentrate industry

Poland has had a powerful fruit juice industry since decades as it is one of the major producers of apple juice in the world. In the 1990s, the European fruit juice industry, which is primarily based in Germany and Austria, bought privatised companies or cooperatives in Poland. As is the case for the frozen fruit industry, most European fruit juice companies, including those specialised in the so-called coloured juices (cherry, blackcurrant, etc.), have settled operations in Poland. Usually, concentrate plants process primarily apple juice.

It is estimated that more than 45 plants can produce juice concentrate in Poland. The sector is specialised: usually enterprises producing apple juice concentrate do not produce concentrated juice from soft fruits. Some twelve companies would focus their activities on the soft fruit sector (coloured juices), out of them two would have a market share exceeding 60%.

The industry has created the Polish Association of Juice Producers (KUPS) which represents around 80% of the production of juices for direct consumption. One of the aims of the association is to improve the economic monitoring of the sector.

Marketing of produce to the semi-processing industry

The main common features of marketing the various soft fruits and sour cherries to the industry are presented in this section. Specific aspects relating to one or several products are discussed in the sectoral chapters.

Until the collapse of the communist regime, an important part of fruit and vegetables for processing where channelled via the horticultural cooperatives which also provided services like input supply, storage or agronomic advice (for details see Maack, 2005 and Wilkin et al. 2004). The cooperatives represented a 50% share of sales of fresh produce, producers marketed the other 50% directly. After 1990 the horticultural cooperatives disappeared and marketing of fruit and vegetables to the processing industry was done directly by the individual producers, often through intermediaries. The share of producer groups and producer organisations is still marginal. Intermediaries play an important role in the assembly of the products between producers and processors.

Delivery to intermediaries

Owing to the fragmentation of supply of most soft fruits, assembly of fruits is carried out in collection centres which are disseminated throughout production regions. These collection centres are either organised directly by the processors or by private individuals, which then play the role of intermediaries between the farmers and the processors.

Most often collection points have only basic infrastructure without storage capacity not to mention cooling storage. Their only function is assembly, sorting and daily delivery to the processing plants. The absence of a direct link between the producers and the processors is no incentive for producers to deliver high quality products. Altogether it is not considered that the best quality fruits are channelled through these intermediary collection points. Processors that demand good quality products establish their own collection points and/or deal directly with the farmers.

It is estimated that the margin of intermediaries represents around 10–15% of the price paid to the producers (sometimes in can reach 20%).

Direct delivery to processors

As a matter of fact, most often large farms deliver their soft fruits directly to the processing plants. In addition, many plants organise their own collection points in order to assemble the produce and regulate delivery at the plant (which the collection points supply twice a day to avoid raw material from spoiling). This also gives them a better control on the quality that is sold to them.

In general, large farmers that deliver to the processors receive better prices than through the collection points, not only to cover transport costs but also because they deliver better quality products (homogeneous, according to specifications of processor, etc.).

At the national level it is estimated that supply via contracts with producers would cover only 10–15% of all marketed soft fruits, however, visits in different plants would suggest higher levels for raspberries. Most contracts contain technical specifications and delivery quantities. They most often do not contain price specifications (or specify that the spot market price will apply). Sometimes they include premiums that are paid on top of the spot market price. In all cases the spot price remains the reference. These contracts are concluded with the large farmers.

A minority of processors have established such contracts that include guaranteed or minimum prices. This concerns processors working on premium or high-quality products that need raw material of very good quality. Due to the fragility of the fruit and the possibility to sell IQF fruits at relatively high prices, it is for raspberries that the contractual relations seems to be the most developed (see the chapter dealing with raspberries).

Figure 2-1. Simplified marketing chart of fresh and semi-processed soft fruit in Poland

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If processors are not in a position to offer fixed guaranteed prices, those that want to ensure at least a minimum level of supply and adequacy with quality requirements provide additional services to the farmers they work with in the form of technical advice to the producers (visits of agronomists, meetings ahead of the harvest, etc.) and sometimes with the provision of inputs in favourable conditions. These arrangements apply mainly to the large farmers as it has proved so far very difficult to work with groups of farmers.

The low level of contracting in red fruits for processing comes in contrast with the sector of vegetables for processing. In this sector, a majority of the production for the industry(60–80%) is contracted (delivery contracts, most often without price arrangements).

Annex to Chapter 2: maps of soft fruit and sour cherry production in Poland

Map 2-1. Strawberry production in Poland

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Map 2-2. Currant production in Poland

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Map 2-3. Gooseberry production in Poland

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Map 2-4. Raspberry production in Poland

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Map 2-5. Sour cherry production in Poland

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THE SECTOR OF STRAWBERRY FOR PROCESSING IN THE EU

EU production of strawberries for the processing sector

Strawberry production in the EU-25 stands at around one million tonnes per year. Spain is the largest producer with 280 000 tonnes on average on 2002 to 2004. Italy and Poland are second with 160 000 tonnes. Germany follows with around 110 000 tonnes. Among the large producing countries, Poland is the only one with a sector that is specialised in strawberries for the processing sector, with a share of around 60–70% of total production.

In Section 1.1 we first provide an analysis the situation of the sector in Poland. Other EU supplier countries, essentially Spain, are analysed subsequently (in section 1.2).

The sector of strawberries for processing in Poland

A highly fluctua t ing sector

The sector of strawberry for processing in Poland has developed over several decades with output levels regularly above 200 000 tonnes. In the second half of the 1980s, production reached its highest level with more than 300 000 tonnes[12]. Already in the 1980s the sector was specialised in production for the processing industry with exports primarily to Western European markets against hard currencies.

Figure 3-1. Production of strawberries in Poland since 1980 (hectares, tonnes)

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Source: GUS

In the course of the 1980s, evolutions of the sector were rather smooth although important fluctuations in volume of production could occur due to weather vagaries. This stability stemmed partly from the central command of the economy (administrative control of foreign trade, artificial exchange rates, trade monopoly), the absence of competition within the semi-processing industry (state-owned companies and horticultural cooperatives) and the role played by horticultural cooperatives in the marketing of fruits to the processing industry.

Fluctuations of both areas under cultivation and volumes produced have increased in the 1990s due to the dismantlement of the command economy and larger price variations that followed (see Figure 3.1). In addition, a very strong competition has developed between operators of the semi-processing industry to procure strawberries (see Chapter 2 of the working document) while agricultural supply has become more fragmented with the collapse of the horticultural cooperatives. In this environment, efforts to integrate production in order to stabilise supply of raw material and improve its quality have yet applied to a minor part of produced strawberries.

Variations in cultivated areas stem mainly from the anticipations of producers that increase or decrease the area devoted to strawberry depending on the situation on the market. Moreover, relatively low start-up investments make it easier for new producers to start strawberry production than other crops.

A cultivar grown specifically for the processing market: Senga Sengana

Strawberry production has a long history in Poland where it was traditionally grown in the open field as part of crop rotation with cereals, rapeseed, root crops, legumes and potatoes. The crop was more profitable than most other crops, especially on light sandy soils which abound in the Member State.

Poland is the only country in Europe where the cultivar Senga Sengana is grown in a large scale. Although the importance of the cultivar has steadily decreased in the last years, it would still represent around 50% of total strawberry production in the Member State and 80% of the strawberries delivered to the processing industry. Besides Senga Sengana , Honeyoe , another cultivar for the processing industry, is also cultivated, but at much lower levels.

Major features of the Senga Sengana

Senga Sengana was created in Germany in 1954. The cultivar grows in the cold climates of Northern Europe. It is particularly suited to Poland as it is very resistant to low temperatures and frost. The cultivar is a June-bearing type, i.e. it produces only one crop per year. The fruit is of small to medium size (usually of a calibre of 15–25 mm), with a conical shape and a dark red colour. It has a very short self life. These features make it particularly not suited to the fresh market. On the other hand, the cultivar has characteristics that make it particularly suited to the processing industry, of which the fact that its stalk is easy to remove, which is an important aspect for its semi-processing into individually quick frozen (IQF), is only one (see Section