When it comes to fruit production and fruit consumption, the UK lingers in the lower leagues of Europe: we import close to 90% of the fruit we consume, and the further north one travels, the less likely fresh fruit is to be part of the diet… indeed, Scottish males are more prone to do needle point than munch an apple or pear.
Yet, within this veritable fruit desert, berry fruit domestic production and consumption has flourished, particularly over the past decade.
At around 3kg. per person, consumption of fresh berries is modest compared with the most frequently eaten fruit, bananas, followed by apples and citrus. However, the combined retail sales value*1 of fresh strawberries, raspberries, blueberries and blackberries is close to £700 million, only a snip behind the leader apples.
Fresh strawberries comprise 60% of berry sales value, with raspberries at 19%, blueberries at 17% and blackberries at 4%. Around 90% of fresh berries are sold via the top seven retail supermarket chains. Long gone are the days when ‘pick-your-own’ was a significant force in the market place.
Back in 2000, we produced 16,000 tonnes of strawberries in the UK, while by 2009 this had blossomed to 55,000 tonnes. Over the same period, raspberry production has multiplied seven times, from around 1,000 tonnes in 2000 to 7,000 tonnes in 2009.
Imports of fresh berries have increased, too, but at a more modest rate: in 2009, strawberry imports were 40,000 tonnes and raspberry imports 7,000 tonnes. Our home-produced market share for strawberries was 40% in 2000, rising to 58% in 2009. Back in 2000, there were virtually no imported raspberries but, now, we consume equal amounts of domestic and foreign fruit.
Marketing characteristics
Of the 4.5 million hectares of cropped land in the UK, a tiny 6,000 hectares (0.1%) is taken up by fresh berries, principally strawberries (4,500ha) and raspberries (1,500ha). Mind you, a 40ha fresh berry enterprise produces approximately the same farm sales value as a 4,000ha combinable crop farm.
Like other high-value horticultural crops, berry farming has a high proportion of total costs directly related to production. In technical parlance, variable costs can
account for 75-90% of all expenses, compared with 30-45% for a combinable cropping business*2. Thus, the opportunity for gaining economies of scale through spreading overhead costs over more turnover are limited in the fresh berry business.
Labour costs (crop establishment, picking, etc) range between 55-70% for strawberries. Over the past decade, labour costs have been increasing at a rate remorselessly greater than crop profitability, eroding net returns and causing growers to question the balance between risks and financial rewards. Clearly, there is a need to address picking productivity, and the trend towards using rig-based picking equipment on larger berry enterprises is indicative of this.
The impressive growth of domestic production for both strawberries and raspberries has been underpinned in no small part to the introduction of polythenecovered tunnels. More than 90% of the berry crop is now under high ‘Spanish’ tunnels, up from less than 50% in 2000.
In their absence, the production growth would not have happened. The British fresh berry season has been lengthened and, most importantly, there is much greater predictability of domestic supply, which has given retailers the confidence to replace imported fruit with home-grown berries.
The increasing technological sophistication of berry production has brought with it the need for better on-farm management and significant capital investment. For example:
• a three year June/July-bearing strawberry crop requires per hectare expenditure of £175,000 for crop establishment, husbandry, harvesting, marketing and overheads, and 40ha-plus farms are increasingly the norm… ie, bringing a total investment in excess of £7 million;
• and this figure pales vis-à-vis a table top system of production, which would require substantially more finance over the 10-year life of the investment. Fresh berry enterprise profitability is particularly sensitive to, first, farm gate price and, second, to yields. In real terms, prices have seen little or no growth over the
past few years, underlining the need for berry farmers to be strongly represented in
the tough UK retail market.
There are four principal supply and marketing groups channelling farmers’ produce through to the consumer in the main domestic season. BerryGardens Limited, a wholly-owned marketing company of the farmer co-operative KGG*3, is the leading supplier of strawberries and raspberries from May through to October.
Eligible for European Union Producer organisation (PO) funding, the farmer cooperative
provides its 78 members with, among other things:
• strong, but fair, representation with the tough, powerful supermarket firms that dominate the UK fresh produce retailing environment;
• quality control services and substantial technical support to improve on-farm productivity;
• a benchmarking service whereby members can check their own on-farm performance across a range of production activities with their fellow farmer owners;
• a comprehensive R&D programme aimed at producing market-winning varieties for members in the future;
• an exclusive link with the world’s leading fresh berry breeder to provide access
with unique varieties to the UK’s premium fresh berry market segments;
• in-depth understanding of consumer and customer requirements and trends through investment in market research;
• partnerships with overseas growers to provide retail customers with 52-week coverage for fresh berries;
• a share-holding in a grower-owned business that has increasing value to shareholders as the marketing business grows and prospers.
Key issues
Coping with recession. Fresh berries have shown market resilience during the difficult recessionary period. Retail sales value in 2009 was 6.5% above 2008, with blueberry and blackberry sales markedly strong. Fresh berries are seen as an ‘affordable treat’ by many consumers and, in the economic gloom, they have been a welcome ray of light at snack or meal times.
However, parts of the business have suffered, such as organic berry sales, which were lower year-on-year after a period of strong growth, and also sales of premium-priced produce. Late-2009 sales figures show, though, that premium product sales are making a welcome comeback.
The poly tunnels issue. The continued success of the fresh berry sector in the UK has been placed under threat by a wellorganised, influential lobby group campaigning against the use of poly tunnels, largely on the grounds of tunnels spoiling countryside views. However, expanding domestic production of fruit contributes towards meeting several key national objectives, namely:
• health-related and contributing towards national ‘5-a-day’ fruit and vegetable consumption targets;
• climate change/environment-related, to be simplistic, in reducing ‘food miles’, and being consonant with the ‘eat seasonally’ exhortations of the government;
• through crop coverage reducing pesticide usage and increasing the efficiency of water management;
• contributing to reduction in the food import bill through expanded domestic production.
It would be a classic case of the nation shooting itself in the foot if over-zealous planning regulations for tunnels were to stop high-value investment in fresh berries in its tracks and cause farmers to exit this buoyant sector.
Overseas labour usage. Almost all field labour used in establishing and harvesting fresh berries comes from offshore. The Seasonal Agricultural Workers Scheme has worked well and, in many other countries using seasonal workers is viewed as “best practice”.
In the longer-term, complete reliance on imported labour is unsustainable and, without doubt, will lead to a technological solution of which the emergence of picking rigs is just one small step.
Declining real returns in fresh berry production. As real prices for fresh berries decline and farm returns falter in the face of rising costs and higher investment risk, the challenge for berry farmers is the same as for all other sectors: to have a profound understanding of customer, shopper and consumer wants for our products; to drive down costs remorselessly; to increase productivity; to innovate not just with new products but, also, in finance and in supply chain management; and to remain a strong supplier in the face of increasing retail concentration.
EU financial support to the horticultural sector. Indubitably, the EU ‘PO’ programme for the berry producing sector has been influential in assisting expansion and the co-ordinated marketing of produce through producer organisations.
The increasingly restrictive rules and regulations governing participation in the PO scheme may cause POs and their members to re-evaluate the usefulness of the overall programme. This would be unfortunate as, in the past, the programme has been an unequivocal ‘winner’ for PO members, the EU CAP, and EU taxpayers.
Dr David Hughes is Emeritus Professor of Food Marketing, Imperial College London. He can be contacted by emailing profdavidhughes@aol.com
*1 The “at the till” value through all retail outlets in the UK, but not including sales through restaurants, sandwich shops, etc. (Source: TNS WorldPanel, November, 2009)
*2 John Pelham, Anderson Midlands, 2009 (jpelham@andersons.co.uk)
*3 Soon to be renamed BerryGardens Growers |