Working to enhance Canada’s apple competitiveness
By Dan Woolley
By Dan Woolley
Jul. 29, 2013 – Farid Makki, Agriculture and Agri-Food Canada’s senior market advisor for horticulture, pulls no punches – Canada’s apple industry’s competitiveness lags well behind other apple growing countries.
Makki defines competitiveness as the ability to sell a product, meet the demand for it, while ensuring profits from it. For the Canadian apple industry, it means being able to grow apples consistently and at sufficient profits to finance renewal of orchards and their production systems over time.
Makki says the George Morris Centre recently completed a bench marking study on Canadian apples for the Horticulture Value Chain Roundtable. The study revealed that over the last 10 years, the Canadian apple industry’s share of the domestic market and exports of fresh apples declined by more than 50 per cent. Canadian apple production over the last decade also remained “fairly stagnant” at around 400,000 tonnes annually, with a yearly acreage decline of about three per cent.
The Canadian apple industry is challenged by increased foreign competition, high production costs, stagnant consumption and competition from other processed fruits and snacks, says Makki, observing that total Canadian apple production is less than half a per cent of the total world harvest with China as the number one grower. As world apple production increases, China will lead, followed by the United States.
In 2009, Canadian apple growers established a steering committee, chaired by Michael Van Meekeren of Nova Scotia, to present terms of reference to the George Morris Centre for the study. The centre presented the completed paper last October to the committee.
The study found that over the last decade, the Canadian apple industry’s share of the domestic market declined from 80 per cent to 65 per cent, with the U.S. nearly doubling its share of the Canadian market by nearly 28 per cent.
The study shows Canada is the seventh largest importer of fresh apples in the world, with 80 per cent of the imports coming from the U.S., while Canada’s export of fresh apples declined by 62 per cent in the last 10 years. While competitors significantly increased their exports, the Canadian fresh apple trade deficit tripled in the past decade.
The study also shows the popularity of Canada’s older varieties are fading and there is a need to find the next new Honeycrisp or Ambrosia, which will take a lot of time and effort.
Canada’s older trees, plus the smaller size of Canadian growers also hinders the domestic apple industry’s competitiveness. According to the George Morris report, the Canadian apple industry is below average on fruit size and consistency, the number of varieties, and on internal support for the industry.
“We lag behind Washington State in all the categories that matter, as well as New Zealand and South America,” says Makki. “We lag behind every country but China in our ability to innovate.”
At the national level, he continues, there is no coordination or organization in the Canadian apple industry. Canadian apple suppliers are not as business-oriented as their leading competitors, Honeycrisp being the exception, and Canadian apples lack a value-added attraction.
Makki says the Canadian apple industry needs to focus on domestic market competition and a national marketing and development body is needed, as well as investment in production and packaging efficiencies. This is also reflected in the George Morris study, which also sees a need to collect and process market information.
The report cites the benefit of a National Promotional and Research Agency for apples, noting the money the Canadian cattle industry collected with a levy on beef cattle sales for market research and development. According to the George Morris Centre, a national apple PRA for apples would do the same thing for research, product development and public education in the apple industry.
It also states that a recent study on the beef checkoff found that for every dollar collected by the levy, $9 was returned to Canadian cattle producers. An apple PRA levy of three cents a bushel would raise almost $1 million.
Makki says there is a need for consensus within the industry to establish an apple PRA. If there’s a decision to go ahead, the industry would need to work with the Farm Products Council of Canada on the proposed agency with the council having to be satisfied the majority of Canadian apple growers agree to have it.