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Counter-season melons rekindling the fire

  • Counter-season melons rekindling the fire

    by Market Insider

    Monday, 07 Apr. 2014

    The situation remains difficult for operators trading in the counter-season melon since, on top of the economic crisis still greatly holding back purchases in European households, there are now great climate uncertainties destabilising consumption and causing big production losses.

    The response to these constraints varies between operators, depending on their specialisation and their customer portfolio. Latin American countries are further expanding their outlets, while the French West Indies are capitalising on their strong links and their presence on the European market. But it seems to be Morocco and Costa Rica which are paying the heaviest toll, destabilised by the competition from other sources (Honduras, Senegal) and the beginning of the European production seasons.

    The 2012-13 season was gruelling for all the sources. The season got off to a very slow start due to the deferral of the European season confirming the lack of opportunities for imported melons before November. Conditions were particularly difficult for Brazil which, besides a late start, also suffered a considerable rise in production costs (+20%) and a fall in potential due to the drought in 2012.

    The decrease in its shipments to the European market however was limited (-4%). The same was true for Honduras (-8%), while Costa Rica saw a steep fall (-29%). Yet Senegal, Morocco and the French West Indies also struggled in 2012-2013 due to a particularly cold spring which slowed consumption considerably. Although import volumes held up, prices were lower than expected boosting the production trends. Conversely, Panama and also Israel are further cutting back their presence every year.

    In spite of the difficulties encountered on the European market in 2012-13, Brazil confirmed the consolidation of its overall sales at around 180.000 to 190.000 t (approximately 184.000 t in 2012). The European market, which still represents 82 % of its shipments and remains essential for exporters (150.000 t in 2012-13) should continue to fall gradually (88% in 2009-10) in favour of other destinations such as the United States and the various countries with which Brazil has recently signed agreements: Singapore and Hong Kong in Asia, the United Arab Emirates and Saudi Arabia in the Middle East, and Turkey.

    The diversification should even continue, since following on from the United States in 2012, now Chile has recognised Brazil as disease-free and is now allowing Brazilian melon imports across its borders. The 2013-14 season could confirm this trend, since like last year it began in poor shape, with a slight production delay, with the first volumes only received in around mid-September in Europe.

    Most of all, it has been hindered by a very late market entry in the autumn, given the persistence of local European produce (delayed production) as well as by the increase in customs duties from 5.3 to 8.8% because Brazil is no longer considered by the European Union (EU) as a developing country as of this season. In addition, the potential has been reduced by the high sanitary pressure and the lack of rain, leading to very low plant yields in late autumn with losses of around 30 to 40%.

    On top of this is the competition from Latin American sources. This applies particularly to Honduras, whose productivity gain in recent years has enabled its exports to broaden and which is forecasting a further 5% increase in its potential this season, after the 9% rise registered last year, primarily due to the growth of varieties such as Honeydew. Nonetheless surface areas for this source are stable or even slightly down.

    Present primarily on the United States of America (US) market, Honduras is now targeting outlets other than traditional destinations (USA and Europe), particularly Asia (Japan and Taiwan) and Latin American countries. Costa Rica should again have a fairly strong presence this season but the rise in production costs and real estate pressure are eating into its exports every year. They reportedly fell further in 2013 down to 119.700 t (-3% on 2012), as opposed to 153.000 t in 2008. Shipments to the North American market (62.000 t in 2013) are holding up but those aimed at the EU are continuing to shrink, now representing just 48 % of shipped volumes.

    The 2012-13 season was complicated also for Senegal, Morocco and the French West Indies due to very poor weather conditions in spring which slowed down the flow. However, it did confirm the upward surge of Senegal, with exports to the European Union rising a bit more, to 12.081 t (+8% on 2011-12) due to certain importers switching to this source to the detriment of other production zones. This trend should be reconfirmed this year with a slight increase in surface areas, especially since this source enjoys financial support from Europe.

    Hence, surface areas were already up slightly at the end of 2013 for the main operators in place and should further expand in 2014. Weather conditions have for now been favourable and the spring season should start around mid-February for a production peak which should fall around week 12 or 13. Conversely, surface areas should continue to shrink in Morocco, although its exports last year ended up at the same level as in 2012, which had been characterised by major production losses (hail).

    The 2013-14 season could even see another considerable reduction in surface areas, not only in the Agadir and Marrakech areas, but also in Dakhla, given the poor price levels obtained last year in France. Hence surface areas could fall to approximately 500-600 ha for Dakhla and Agadir following a reduction in surface areas for certain operators but primarily due to the shutdown of one of the region's operators (greenhouses converted for the tomato), although other facilities are conducting trials in the area. Similarly, another fall in production is expected in the Marrakech area, where surface areas could fall below 1.000 ha for Charentais. However, weather conditions in Morocco have so far been favourable and the season should reach its full potential in March.

    Moroccan operators could enjoy a small respite at the end of the season, due to the uncertainties weighing down Spanish production following the emergence of New Delhi virus (ToLCNDV) in the Almeria area. This virus, propagated by the whitefly, already hit Spanish courgette production hard in the autumn and could have consequences on the Spanish 2014 season. Indeed, given the losses caused, producers are hesitating to plant melons, another plant highly sensitive to this virus, and are contemplating switching their land to other produce such as maybe the tomato or aubergine.

    The Murcia area, where production should be slightly up again, has not so far been affected. In any case, we will need to wait rising temperatures to see whether the first tangible signs of infestation appear.

    In this highly competitive context, the French West Indies producers could continue to capitalise on the renown of their produce to emerge unscathed. In particular, they hope to be able to finally boost their produce's value using the GPI, as last year's poor climate conditions in Europe (cold) prevented them from taking full advantage of this title.

    In 2013, this certification related to 1.300 t out of the 2.000 to 2.200 t of Guadeloupe melons exported annually. Operators are hoping to be able to certify 1.600 t in 2014. As a reminder, this procedure officially recognised by the European Commission, involves 23 producers and a potential of 1.800 t. At the moment, the season is set to be promising, with the weather conditions so far favourable. The first volumes were received in late January and should quickly get moving, with further volumes from Martinique in February before reaching full potential in late March-early April.

    Yet the source is also set to celebrate its thirtieth anniversary this year as it was in 1984 that the first Guadeloupe melons were sold in France. Along with the tonnages from Martinique, its shipments should remain stable, nearing at least 3.500 t. This should also be complemented by small volumes from the Dominican Republic.

    Source: Fruitrop

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