US Berries—Increasing Consumption is Not a Silver Bullet
Demand for fresh berries at US retail stores continues to climb. Flavour, healthfulness, convenience, and year-round availability contributed to strong berry consumption, which helped make berries the highest-value fresh produce category at retail stores, at over USD 5.6 billion.
While berry demand is strong, it is not enough to insulate supply chain participants from downward pressure on profits and ongoing fundamental shifts in industry structure. Increasing costs of labour, land, and water- driven by scarcity and changing governmental requirements- are widening the gap between those producers who will succeed and those who may not.
Tightening production constraints—especially for strawberries and raspberries in California—have also impacted the need for imports. Increasing costs, lack of additional natural resources, and ongoing consumer expectation of year-round availability continue to drive dependence on imports, particularly from Mexico, to meet growing demand. Blueberries appear to be an exception, as growth in domestic production has begun to outpace growth in imports.
The role of imports is not the only thing being impacted by production constraints. Continued tightening of environmental regulations on chemical use, coupled with growing consumer demand for organic produce, has continued to drive the expansion of organic berry production.
Due to changing demographics and continued development in Mexico, as well as stricter immigration enforcement in the US, labour-intensive crop producers in the US continue to face rising labour costs, and in, some cases, lack of labour to finish harvesting crops.
US regulatory pressures will continue to mount, and production costs will continue to rise. Constraints on land, labour, and water – especially in California- will limit any further expansion of acreage in that state.
Larger growers—particularly those who can minimise yield and price risk, and spread costs by producing in multiple growing regions—have an advantage. Increased organic production also offers an opportunity for growers as regulatory constraints increase.
In the face of ongoing consolidation and increasing market power among retail food outlets, coupled with increasing production costs, berry growers will have greater success by ensuring that they are strategically aligned with berry marketers who can best differentiate themselves in the marketplace.
Find more details about the US Berries in the Rabobank Food & Agribusiness Research report, ‘US Berries¬¬—Increasing Consumption is Not a Silver Bullet’.
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Roland FumasiSenior Analyst - Fruit, Vegetables, Floriculture Read more