SOURCE: Rabobank

Rabobank

November 01, 2012 12:00 ET

U.S. Berry Market Continues to Boom

Rabobank's Latest Report Forecasts Continued Market Growth While Exploring Solutions for Growers and Shippers Facing Challenges to Profitability

FRESNO, CA--(Marketwire - Nov 1, 2012) - Following a recent growth trend, sales of U.S. fresh berries will continue to expand by seven percent per year over the next three years, according to a report released today by Rabobank's Food and Agribusiness Research and Advisory (FAR) group. Despite an upward sales momentum, the report finds that berry growers and grower-shippers will be challenged to maintain profitability due to a number of factors.

The report, titled "The U.S. Fresh Berry Boom - Who Will Profit from the Growth?" cites escalating production costs, resource constraints, import competition and the sheer market power of retailers as reasons why producer margins will continue to face pressure.

"While the near-term outlook for U.S. fresh berry sales looks good, producers are likely to continue to experience rising costs and constrained resources," said Karen Halliburton Barber, assistant vice president and senior agricultural analyst with FAR and the author of the report. "Successful players in the coming years will embrace growing demand with greater production efficiencies and innovation, taking advantage of new varieties and technology advancements."

California berry growers, most notably those in strawberries, are likely to face the biggest challenges as labor availability, crop protection, land resources and pricing all stand to adversely influence their profitability. Currently, 88 percent of the country's fresh strawberries and significant portions of fresh blueberries, raspberries and blackberries are grown in California.

Florida, another significant producer of fresh berries, faces challenges very similar to that of California with one key addition: import pressure. Florida has faced increasing pressure in recent years because of increases in imports of strawberries and blueberries from Mexico and Chile that compete directly with Florida's season. Chile now accounts for over fifty percent of imported blueberries. 

"There are many unique as well as shared challenges across the U.S. fresh berry sector, depending on the berry and the location of production," said Barber. "One example that is common for strawberry producers throughout the country is the elimination of methyl bromide for crop protection."

The report speaks directly to the use of methyl bromide, considered the 'silver bullet' of crop protection due to its ability to treat both weeds and pathogens. The phasing out of the soil fumigant has left strawberry growers without an equivalent alternative. The report cites some California growers experiencing crop losses of up to 70 percent after switching to a less effective, new fumigant.

The report concludes that given the likelihood of increased pressures on profit margins, industry consolidation is likely among less efficient U.S. berry producers. Smaller independent growers can however seek to create strategic production partnerships and niche market opportunities in an attempt to stay economically viable.

The most successful producers are keeping up with growing consumer demand while controlling costs through gains in efficiency and productivity. This has been possible because of breakthroughs in new varieties, which have increased yields, extended growing seasons, and resulted in improved product flavor and shelf life. New technology solutions and crop protection alternatives are also emerging, together with opportunities for growers to manage production risks through greater geographical diversification.

A full copy of the report is available to the media upon request. Please note that the report is for informational purposes only and may not be reproduced, distributed or published in whole or in part, for any purpose, except with prior written consent by Rabobank International.

About Rabobank, N.A.
Rabobank, N.A. is a California community bank and a leading provider of agricultural financing and full-service banking products to California consumers, businesses and the agriculture industry. With nearly 120 retail branches, we serve the needs of communities from Redding to the Imperial Valley through a regional structure that promotes local decision-making and active community involvement by our employees. 

Rabobank, N.A. is a division of the Rabobank Group, the premier lender to the global food and agricultural industry and a financial services leader providing commercial, retail and agricultural finance solutions in 48 countries around the world. From its century-old roots in the Netherlands, Rabobank has grown into one of the world's largest and safest banks. www.rabobankamerica.com

About Rabobank International Food & Agribusiness Research and Advisory (FAR)
The Rabobank International Food & Agribusiness Research and Advisory (FAR) group is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to gather key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and look at the megatrends that ultimately influence clients' capital strategy. These analysts are internationally respected experts in everything from protein to produce, inputs to oilseeds, and their knowledge is shared regularly with Rabobank, N.A. customers.

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