A supply shortage of large royal gala apples from New Zealand and Chile has put the North American market under strain, but the category as a whole is bucking the trend of stagnant produce sales. At www.freshfruitportal.com we speak with Oppenheimer Group apple and pear category manager David Nelley about what this volume deficit will mean, and the consequences of high costs in Argentina on pear supply trends.

Nelley says the severe shortage of size 90 and larger royal galas is a 'very big issue' for North American retailers right now, driven by sizing issues from New Zealand due to wet weather, and the impacts of a very hot December and January period in Chile.

"Prices have increased for sure, but we're at the point where there will be some guys that when we get to June and July, there simply may not be any fruit around for supply," says the New Zealander.

"There are some old crop storage apples and also there are other varieties that seem to be in good supply from the Southern Hemisphere like Fuji, Braeburn, Pink Lady and of course Jazz, which are all in good supply; they're coming on and they will fill the gap."

He says the pricing of Jazz apples is up between US$8-10 year-on-year right now, which is purely due to increased demand.

"The market is so competitive that when supply of one item falters, you see another item take its place."

Nelley says the first arrivals of Jazz apples were a 'step up' from last year, and overall apple quality has been good despite a few bruising issues with Chilean granny smiths.

He adds there has also been a little bit of substitution coming in with Argentine apples to make up for the shortfall.

Pear outlook

Nelley describes the pear situation in North America as 'problematic', with volumes of Argentine bartletts down 'dramatically'.

"Chile filled the gap admirably, but the New Zealand volume of Taylor’s Gold is down quite dramatically from last year, so there hasn't been a lot of pears to put promotional prices on from March through to May.

"It’s frustrating because a lot of retailers are looking to improve the pear category, but if there’s nothing really to sell they can’t step into it.

"On the bright side, supply of packhams out of Chile and Argentina seems to have been quite good, and that’s following a gap along with Anjous and winter Bartletts."

The reduced volumes will cut back the season significantly for some varieties, while Argentina's issues are unlikely to go away soon.

"The Argentineans are are finding with their rising costs it’s tough to get the money they need out of the U.S. market and that’s one trend that’s going to be around a bit. The poor Argentineans are facing a fairly desperate situation, so that’s one trend there.

"Another trend is that because of the reduced volume, the Taylor’s Gold and the Comice crop from New Zealand are going to be sold out very quickly.

"They could be sold out by the end of May, when typically they would extend to the end of July."

Buoyant sales following strong Northern Hemisphere season

Nelley highlights several factors that have led to good demand in the U.S. after a positive Northern Hemisphere season.

"It was a huge pear crop out of the Northwest, which seems to have really moved through nicely, while the apple and prices have been buoyant.

"I think the low U.S. dollar has helped exports into Asia a lot, so along with this relatively new trend of having apples available for slicing for food service outlets like McDonald’s, it all goes to give growers a viable option in terms of selling their crop, so it’s gone very well.

"The disturbing thing is that produce sales have been down a bit, but apples are one of the categories that are actually trending up in terms of gross sales, so that’s a good thing."

He says the shortage of pome fruit is perhaps for the best right now given the expected rise in cherry production this season.

"The Northwest is on track to have possibly the largest cherry production season ever.

"There are going to be a lot of cherries taking up shelf space in June, July and into August, so maybe it’s a good thing that apples are a little bit light because there’s a lot of shelf space that will go to cherries in the summer, if the weather and production holds as they are right now.

"Everything competes for shelf space in the summer time, so when it comes to the apples, they really have to punch above their weight so to speak; they have to provide something to the consumer that’s attractive, when the consumer has choices like fresh peaches, nectarines and cherries that are on promotion."

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