Forces Impacting the Future of the Central Coast ... › wp-content › uploads › 2018 › 02 ›...
30
Roland Fumasi Vice President & Senior Analyst RaboResearch Food & Agribusiness Forces Impacting the Future of the Central Coast Strawberry Industry EconAlliance – Growing Possibilities Ag Forum Santa Maria, CA February 2, 2018
Transcript of Forces Impacting the Future of the Central Coast ... › wp-content › uploads › 2018 › 02 ›...
Roland FumasiVice President & Senior Analyst
RaboResearch Food & Agribusiness
Forces Impacting the Future of the Central Coast Strawberry Industry
EconAlliance – Growing Possibilities Ag ForumSanta Maria, CA February 2, 2018
Mexico
1
US
19
Brazil
4
UK
6
Netherlands
33
India2
New Zealand
2
Australia
7
Singapore
4
Hong Kong and China
7
Team of 85 professionals in 10 different countries
The definition of “quality” is now more complex
Product & Process Matter
Strawberries tick some important boxes
AffordabilityConvenienceTaste + + =My Values
Health
Environmental Sustainability
Information
Social Good
Consumer Purchasing Decision
Source: Produce Marketing Association (PMA), Rabobank 2017
+Appearance
Value-AddedFruits
Value-AddedVegetables
All PackagedSalads
All F&V
16%
All Fruits
15%
All Vegetables
16%
39%52%
33%
A SOCIETY OF SNACKERS
Source: United Fresh Produce Association, Nielsen Perishables Group, Rabobank 2017
% Changes F&V Retail Spend, USA 2012-2016
Importance of convenience cannot be overstated
Strawberries contribute to rise in fruit consumption
Annual change in per capita use 2002-06 vs 2012-16 averages
Source: USDA/ERS, Rabobank 2018
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
All Fruit Apples Oranges Bananas Strawberries Avocados
CAGR %
Still not enough rise in price to cover cost increases
Source: USDA/AMS, Rabobank 2018
U.S. strawberry shipping-point data – 2007-09 vs 2015-17 averages*
*Domestic & imported production
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
0.00
3.00
6.00
9.00
12.00
15.00
18.00
21.00
CAGR %
Week
USD/8-lb Flat
CAGR Q (lhs) CAGR P (lhs) Weekly Avg Price 2007-2017 (rhs)
Sal-Wat Santa Maria Oxnard Florida Baja Central MX
Only Santa Maria & Central MX gaining volume share
Source: USDA/AMS, Rabobank 2018
2007-09 Avg Share
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 5 9 13 17 21 25 29 33 37 41 45 49
Week
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 5 9 13 17 21 25 29 33 37 41 45 49
Week
2015-17 Avg Share
Santa Maria supply a bit overdone
Source: USDA/AMS, Rabobank 2018
Santa Maria district strawberry shipping-point data
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
-
50
100
150
200
250
300
350
400
450
500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb TrayMill lb
Santa Maria Conv Q (lhs) Santa Maria Conv Wtd P (rhs)
A pullback in supply needed to restore some balance
Source: USDA/AMS, Rabobank 2018
Santa Maria district strawberry shipping-point data
*Prices represent the average weekly shipment-weighted price in each year
-15%
-10%
-5%
0%
5%
10%
15%
% Change
Santa Maria Conv %ΔQ Santa Maria Conv %ΔP
Value-AddedFruits
Value-Added
Vegetables
All Packaged
Salads
All F&V
16%
All Fruits
15%
All Vegetables
16%
39%52%
33%
OrganicFruits
84%
OrganicVegetables
75%
OrganicPackaged
Salads
64%
All Organic
F&V
78%
% Changes F&V Retail Spend, USA 2012-2016
THE ORGANIC TRAIN HAS LEFT THE STATION
Growth rate of organics is outpacing everything
Source: United Fresh Produce Association, Nielsen Perishables Group, Rabobank 2017
Late-year timing was a big boost for Santa Maria
Source: USDA/AMS, Rabobank 2018
Santa Maria district organic strawberry shipping-point data
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
-
5
10
15
20
25
30
35
2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb TrayMill lb
Santa Maria Org Q (lhs) Santa Maria Org Wtd P (rhs)
Late-year aside, be careful generally speaking
Source: USDA/AMS, Rabobank 2018
Santa Maria organic strawberry shipping-point data
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb Flat% Org Premium
% Organic Premium (lhs) Santa Maria Conv Wtd P (rhs) Santa Maria Org Wtd P (rhs)
Labor constraint will continue to tighten
Source: Washington State University, World Bank, Pew Research Center
Change in the 15-35
age cohort in Mexico
-200,000
-100,000
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Annual Change
20076.9 Mill
20165.6 Mill
Undocumented Mexican residents
in the U.S. in decline
The future of NAFTA???
Source: Twitter 2017
A thought on regulation/policy & messaging
Modesty is not working
& science gets trumped by social media
Contact Details
Rabobank N.A.
Roland Fumasi
Vice President, Senior Analyst
RaboResearch Food & Agribusiness
DISCLAIMERThis presentation has been prepared exclusively for the benefit and internal use of RABOBANK (“COMPANY”
or the “Company”), and does not carry any right of publication or disclosure other than to COMPANY.
Neither this presentation nor any of its contents may be used for any other purpose without the prior
written consent of the Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank” or “Rabobank
International”).
The information in this presentation reflects prevailing market conditions and our judgement as of this date,
all of which may be subject to change. This presentation is based on public information. The information
and opinions contained in this document have been compiled or arrived at from sources believed to be
reliable, but no representation or warranty, express or implied is made as to their accuracy, completeness
or correctness. The information and opinions contained in this document are wholly indicative and for
discussion purposes only. No rights may be derived from any potential offers, transactions, commercial
ideas et cetera contained in this presentation. This presentation does not constitute an offer or invitation.
This document shall not form the basis of or be relied upon in connection with any contract or commitment
whatsoever.
“The financial link in the global food
chain”™
Appendix / Additional Slides
But always in-touch with roots
Strawberries – give the people what they want
Per capita “use” – 5-year rolling average
Source: USDA/ERS, Rabobank 2018
0
20
40
60
80
100
120
0
5
10
15
20
25
30
Pounds/CapPounds/Cap
All Fruit (rhs) Bananas Apples Oranges & Temples Strawberries Avocados
Santa Maria biggest gainer in fall-planted acreage
Source: California Strawberry Commission 2018
2005 2017
So Cal, 8.5%
Oxnard, 28.1%
Santa Maria, 20.5%
Sal-Wat, 41.9%
SJV, 1.1%
So Cal, 1.3%
Oxnard, 23.5%
Santa Maria, 29.6%
Sal-Wat, 45.6%
Santa Maria now dominant in “summer” plantings
Source: California Strawberry Commission 2018
2005 2017
So Cal, 0.7%
Oxnard, 82.3%
Santa Maria, 10.7%
Sal-Wat, 6.3%
Oxnard, 48.6%
Santa
Maria, 51.1%
Sal-Wat, 0.3%
Maturity of category makes price sensitive
Source: USDA/AMS, Rabobank 2018
U.S. strawberry shipping-point data – domestic & imports*
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb FlatMill lb
Total Conv Q (lhs) Conv Wtd Price (rhs)
A pullback in supply needed to restore balance
Source: USDA/AMS, Rabobank 2018
U.S. strawberry shipping-point data – domestic & imports*
*Prices represent the average weekly shipment-weighted price in each year
-10%
-5%
0%
5%
10%
15%
% Change
Conv %ΔQ Conv %ΔP
Changing attitudes – Does it matter whose?
Source: USDA/ERS, Organic Trade Association, Rabobank 2017
U.S. organic food sales 2005 – 2020f
0
10
20
30
40
50
60
70
2005 2008 2011 2014 2017f 2020f
Billion USD
Total US Organic Food Sales
11.2% CAGR
Organic strawberry premiums relatively stable
Source: USDA/AMS, Rabobank 2018
U.S. organic strawberry shipping-point data – domestic & imports*
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
0%
10%
20%
30%
40%
50%
60%
70%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb Flat% Org Premium
Wtd Premium % (lhs) Conv Wtd Price (rhs) Org Wtd Price (rhs)
Organic prices relatively stable in-light of Q growth
Source: USDA/AMS, Rabobank 2018
U.S. organic strawberry shipping-point data – domestic & imports*
*Prices represent the average weekly shipment-weighted price in each year
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
-
20
40
60
80
100
120
140
160
180
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
USD/8-lb FlatMill lb
Total Org Q (lhs) Org Wtd Price (rhs)
Organic demand continues to shift outward
Source: USDA/AMS, Rabobank 2018
U.S. organic strawberry shipping-point data – domestic & imports*
*Prices represent the average weekly shipment-weighted price in each year
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
% Change
Org %ΔQ Org %ΔP
Organic prices are much more robust
Source: USDA/AMS, Rabobank 2018
Santa Maria organic strawberry shipping-point data
*Prices represent the average weekly shipment-weighted price in each year
-40%
-20%
0%
20%
40%
60%
80%
% Change
Santa Maria Org %ΔQ Santa Maria Org %ΔP
Convenience, yes, but did he say “relationships?”
Source: Nielsen Perishables: *E-commerce survey conducted by Harris Poll®
online between June 17 & June 21, 2016, among 1,995 adults ages 18 and older.
Americans do buy produce sight-unseen
Retail Volume
Up51% +
31%
Bought Food
Online
52%
of those
BoughtFresh
Produce
Six Months Ending June 2016*
16%Bought Fresh
Produce
Ag water availability will continue to diminish
Global developed water demand to increase 50%(does not include water left to environment)
-
1
2
3
4
5
6
7
8
9
10
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2005 2010 2015 2020f 2025f 2030f 2035f 2040f 2045f 2050f
BillionsKm3
Agriculture Domestic Energy Manufacturing Population (RHS)
Source: OECD 2008, UN, Rabobank 2016
