Jan 2, 2014

China could be big market for blueberries

Speaking to a farm group in December, Michigan Gov. Rick Snyder said he learned from a recent trade mission to Asia that the Chinese people “love Michigan blueberries. That’s an example of the opportunities we can build on.”

“Overall, the opportunities are just fabulous in terms of selling more product,” Snyder said. “China could buy every blueberry we own; it’s really that balancing act.”

Findings from ongoing research by Michigan State University (MSU) personnel, conducted with help from Project GREEEN, indicate Snyder’s identification of a burgeoning market for U.S. blueberries in China is likely on target.

The research project looked at “The Impacts of Expanding Chinese Production on Michigan’s Blueberry Sector.” It was funded with $7,600 provided by Project GREEEN and another $87,701 in leveraged support from other sources.

The conclusion is encouraging for blueberry growers and processors from throughout the United States who are interested in marketing their fruit in China.

“This research has summarized the results of several years of in-country research in China, focusing on the production and demand potential in China for blueberries,” the Project GREEEN 2013 Legislative Report states. “In the short term, there seems to be a good opportunity for U.S. firms interested in exporting blueberry products to China; in the long term, Michigan and U.S. blueberry producers need to be aware of trends in prices and careful to respond accordingly.”

The report indicated that while China’s production capacity could one day be a major competitor on the world market, the bigger opportunity for U.S. and Michigan producers is Chinese demand for blueberry products. Between 2006 and 2011, exports of dried blueberries from the United States to China increased from zero to more than 393,000 pounds. In the same period, China imported over 550,000 pounds of frozen blueberries, though none in 2011. South Korea is showing even more growth in imports of U.S. blueberry products.

Mollie Woods, an MSU specialist in agricultural economics, said concerns about China’s intentions regarding the ramp-up of blueberry production are somewhat overblown.

“We went into it worried about China as a competitive threat, and I don’t downplay that because it can be, particularly in the east Asian markets, but it’s also an opportunity there for our exports,” Woods said.

While the project’s final report has been out for awhile, project researcher Mark Longstroth, an MSU Extension educator who has made numerous trips to China to detect trends in that nation’s fruit production efforts, is keeping a watchful eye, as apparently inflated market estimates continue to come from the Chinese agriculture industry.

“It’s exceedingly hard,” Longstroth said about getting a clear picture of China’s blueberry production – including what comes out of the growers’ own mouths. “Based on the numbers they gave me in 2008 and again in 2010, I don’t think their numbers are believable.”

Longstroth was told the Chinese planned to double or triple their acreage in blueberries in a few short years, but their market vision was primarily to export the product and not take advantage of a growing market within their own country.

“They only seemed to see the city of Bejing as one market, and export as high value beyond that. They didn’t think of their other large cities. They are fresh marketing into Beijing and using frozen or juice for export. I think it will change.”

He said there was a lot of emphasis being put on large subsidy investment for blueberry production in China. The payoff, however, doesn’t seem as bountiful in light of the lack of fertile ground in some of the regions where blueberry plantings are taking place.

“Blueberries are site-sensitive,” Longstroth stressed. “You really have to have acidic soils and maintain most soil all year round. They were planting blueberries on sites that don’t have that. Some people are doing a very good job, especially small producers who have some real nice sites. The real big ones are putting a lot of money in, but they’re not going to get the results.

“In the northern parts of China, I have my doubts. It gets so cold in the wintertime out of Siberia and down the seas. They literally have their blueberries die down to the ground. Riceland is being converted to blueberry. Everybody hears these tales of them planting thousands of acres. Everyone thinks they’re just going to shift to blueberries, but it’s not that easy. (Michigan’s) biggest competition is in Georgia and Oregon.”

“For some time I’ve said that, essentially – rather than being something to be afraid of – it’s more of a market opportunity for us,” Longstroth said of the Chinese market’s potential for U.S. blueberries.

A growing market for fresh blueberries in China is more likely to draw increased interest from West Coast growers and those in Chile than those marketing Michigan berries, he said.

“We don’t ship an awful lot to the Pacific Rim anyway,” Longstroth said. “Most of our blueberries go to the east side of the market here.”

Pricing of Chinese blueberries isn’t a significant factor here, as the industry currently faces more troubling realities at home.

With the currently “saturated” market in the United States, Longstroth said, “there’s a lot of downward pressure on the domestic industry. (The pricing) is pretty low. In China, when I talked with them about the last 20 years of prices received by Michigan growers, they couldn’t believe how it got so low. In the past, if we have a large stock of frozen blueberries going into the season, the price is depressed for everybody and that was the case this year.

“We’ve got more price pressure from new plantings from us and Mexico than someone shipping across the Pacific. We’re the biggest market and biggest producer – I just don’t see (China) being a huge threat. The economics aren’t there. They aren’t as pricey as they used to be.”

The MSU report stated that the commercial blueberry industry developed slowly in China. After 2006, however, blueberries became the fastest developing fruit industry in China due to investment from domestic and international companies.

China’s blueberry production area increased from less than 100 acres in 2001 to 2,334 acres in 2007. The average annual increase was 70 percent for the years 2001 to 2005, and 161 percent from 2006 to 2010 (based on expected production area in 2010).

So far, more than 10 provinces have begun commercial blueberry production, ranging from northeast to southwest China. Total production increased from 3 tons to 390 tons from 2002 to 2007.

The report stressed that high-value products like dried blueberries – which fit well with the Chinese supply chain, which often lacks a cold-chain component – should be emphasized. It stated that the Michigan blueberry industry could successfully target a dried blueberry export program to China and South Korea.

“The elasticity of supply for blueberries in the U.S. and Canada is inelastic,” the report concludes. “This means our growers in North America are slow to make planting decisions based on price. This is exacerbated by the long lag time present with a perennial fruit crop that requires four to five years to mature. There is a real danger of over-supplying the market when the signal is saturation. Current blueberry prices indicate strong demand, however the industry should be aware of the tendency and be as nimble as possible.”

– Gary Pullano