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 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.
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% 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 50% of imported blueberries. The report cites some California growers experiencing crop losses of up to 70% 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 US 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 flavour 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.
Source: Rabobank
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