Pineapple Review of 2002   Published on February 21, 2003

There were many interesting developments in the Thai pineapple industry in 2001, and a collection can be seen in "The pineapple market: A review of the news in 2001" available at: http://www.foodmarketexchange.com/datacenter/industry/article/idf_pineapple_review.htm A lot of news focused on the oversupply of fresh pineapple, which directly affected the price. The price was low, at an average of only 2.02 baht per kilogram, according to the Office of Agricultural Economics (OAE). Another development was the imposition of an anti-dumping duty on Thai canned pineapple products by the US, Canada and Australia.

But in 2002, the Thai pineapple industry seemed quiet and there were fewer news reports than the previous year. This may have been because of the low volumes of fresh supplies.

Raw material situation

Anurat Tiamtan, chairman of the Thai Food Processors' Association's Pineapple Packers Group, revealed that the amount of fresh pineapple in Thailand in 2002 was very limited because of the oversupply in 2001. In March 2001, the pineapple price dropped to 1.32 baht per kilogram, the lowest level that year. The decreasing raw material price made a lot of pineapple planters stop cultivating their crops for a while. When the price of pineapple increases, planters start planting their crops again.

Weather was another dominant factor that damaged large amounts of fresh pineapple. There was also a report about the El Nino phenomenon at the beginning of the year.

According to the Office of Agriculture Economics (OAE), pineapple cultivating areas in Thailand were 610,552 rai* in 2000/01, but decreased 9.5 percent to 552,456 rai in 2001/02. And it is estimated that producing areas will drop a further 10.1 percent to 496,482 rai in 2002/03. The biggest pineapple-planting area in Thailand is Prachuap Khiri Khan, followed by Rayong and Chonburi. Cultivating areas in Prachuap Khiri Khan were 274,780 rai in 2001/02, but decreased 12.25 percent to 216,549 rai in 2002/03. Cultivating areas in Rayong and Chonburi also decreased in 2002/03 to 55,426 rai and 28,523 rai, respectively.

*One rai equals 2.5 acres.

The decreased growing areas have resulted in decreased supplies. Total pineapple production accounted for 2.2 and 1.9 million tons in 2000/01 and 2001/02, respectively. Fresh supplies in 2002/03 are expected to fall 1.64 percent to about 1.7 million tons. Yield per rai in 2002/03 is expected to fall 6.92 percent from 3,582 kilogram in 2001/02 to 3,334 kilogram in 2002/03.

Factory Price

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Average Price
AveragePrice (99-01)	3.20	3.40	3.26	3.22	3.01	2.81	3.07	3.33	3.02	2.77	2.26	2.20	3.60
2000	1.41	1.69	1.82	2.05	1.84	1.31	1.48	2.83	3.47	3.02	2.04	1.58	1.98
2001	1.47	1.32	1.28	1.44	1.53	1.96	2.75	3.00	3.04	2.95	2.97	3.09	2.02
2002	3.61	3.98	4.36	4.61	4.25	3.94	4.16	4.36	4.53	4.92	4.34	4.28	4.25

Source: Office of Agriculture Economics (OAE)

Pineapple prices in 2002 increased more than usual because of a scarcity of supplies throughout the year, according to OAE and one of our sources. The average price in 2002 was 4.25 baht per kilogram, up from 2.02 baht per kilogram in 2001. The highest price in 2002 was 4.92 baht per kilogram in October, compared with 2.95 baht per kilogram in October 2001. The lowest level in 2002 was 3.61 baht per kilogram, while the lowest price in 2001 was only 1.28 baht per kilogram. It is estimated that the price will decrease if a large amount of pineapple becomes available in the market next year.

Pineapple strategy

After the slump in 2001 prices, Industry Minister Suriya Juengrungruangkij urged exporters to form a cartel in an effort to support prices. The plan would see exporters working under a single holding company, with each member firm holding shares based on their share of the export market. The plan aimed to build cooperation between exporters and reduce competition, which could prove positive for the local industry.

However, there was no conclusion that year because some exporters and planters were not interested and thought that it was unworkable. The plan was a hot topic for a while, and then became quiet.

News about the single holding company came back again in 2002, with reports that the initial idea was that pineapple processors would hold 50 percent of the shares, with the Thai Food Processors' Association and the Thai Pineapple Industry Association each holding 25 percent. But Anurat Taimtan revealed to Foodmarketexchange.com that the meeting concluded that the share of the single holding company has been changed so that farmers and independent factories would hold 50 percent of the shares each. This single holding company was named Consolidated Pineapple Co Ltd. (or "Ruam Chai Sapparod" in Thai).

The objective of the plan was to buy and sell or export the pineapple surplus in the domestic market, as there is always an oversupply which fetches low prices, Anurat said.

However, at the end of last year, the government held a meeting with industrial pineapple processors and the Thai Food Processors Association to plan a " Pineapple Strategy" - a plan to form a single holding company, which would have responsibility for taking care of or controling production and marketing Thai pineapple.

The question is raised whether the Consolidated Pineapple Co. Ltd should be a single holding company as the Pineapple Strategy discussed. Some say it is unnecessary to establish another company when there is already a Consolidated Pineapple Co. Ltd and some are against the idea. However, Anurat told us that there has been no conclusion about this question yet and it is expected that there will be a meeting and conclusion about it early this year.





Export situation

In 2001, anti-dumping duties continued to act as a major obstacle to Thai pineapple exports, particularly in the US and Europe. Harsh duties meant that Thailand found it increasing difficult to compete with rival producers such as Indonesia, the Philippines and Vietnam.

However, Anurat revealed that exports to the US market are improving. There is a report that one Thai pineapple processor does not have to pay the anti-dumping duty anymore, while others pay a lower rate.

However, there continue to be reports that, in the EU market, Thai exports encounter tariff rates 3-5% higher following a repeal of the GSP (General System of Preferences).

Thai canned pineapple exports, 1997-2002

Year	Total
	Volume (Tons)	Value (Million Baht)
1997	279,513	5,901.86
1998	226,355	6,925.02
1999	475,404	11,432.75
2000	427,665	7,876.82
2001	394,887	8,364.86
2002	358,664	8,707.71

Source: Office of Agriculture Economics (OAE)

According to OAE, Thai exports of canned pineapple have decreased over the last two or three years because of lower fresh supplies. In 1999, Thailand exported 475,404 tons of canned pineapple valued at 114,432 million baht, up 52 percent from 226,355 tons in 1998 because of a large amount of fresh supplies available. However, the situation became more negative after 1999. Thailand exported 394,887 and 358,664 tons of canned pineapple in 2001 and 2002, respectively. It is estimated that the export quantity will decrease gradually because of the pineapple shortage in the country.

The main markets for Thai canned pineapple remain the US, the EU and Japan. According to the Thai Customs Department, Thailand exported 61,940 tons of canned pineapple to the US between January and November 2002, down from 80,962 tons in 2000 and 75,595 tons in 2001. In 2000 and 2001, Thailand exported around 30,000 tons of canned pineapple to Japan. In 2002, this figure fell 32 percent to 20,354 tons.

Major competitors

The Philippines and Indonesia have long been the dominant competitors for Thailand. The Philippines is a major producer of fresh and canned pineapple and is the second biggest producer after Thailand. Indonesia follows in third place. It seem that these two competitors are trying to improve the productivity and potential of their pineapple industries. Anurat Tiamtan revealed that there are interesting factors that make Thailand's competitors seem stronger, which Thai processors should be concerned about. First, the number of pineapple factories in these two countries is higher than in Thailand. They also cultivate fresh supplies, while most Thai pineapple factories have to buy raw materials or supplies from pineapple planters. The weather and quality of supplies are other factors which put Thailand at a disadvantage.

The Philippines is responsible for about 17 percent of total world pineapple production, according to the Philippine Bureau of Agricultural Statistics. Planted areas decreased slightly from 43,663 hectares in 1995 to 40,233 hectares in 1998. However, cultivated regions increased to 43,256 hectares in 1999 and 44,042 hectares in 2001. Important production areas are Northern Mindanao, Southern Mindanao, Southern Tagalog, Bicol and Cagayan Valley.

Philippine pineapple production is increasing continually because of the expansion of cultivating areas. Production was 1.5 million tons in 1998 and increased to 1.6 million tons in 1999-2001.

There was a report that the Philippines is not only continuing to improve its production, but is also among the top exporters despite its difficulties in entering the Australian market. Total pineapple exports between January and June 2002 were valued at $16 million, including $9.4 million for canned pineapple, $1.3 million for pineapple juice and $2.8 million for pineapple concentrates. It seems that the future export situation would be positive if planters and processors continue to improve their productivity and supply quality.

The Export-Import Bank of Thailand (EXIM) reported that there are some new competitors that Thai processors should follow closely, such as China and Vietnam.

The report noted that China accounts for about 10 percent of world pineapple production. Moreover, it seems that the potential of the country is improving because harvested areas and production increases every year. Total harvested areas in China in 2002 were 60,000 hectares, up from 47,300 hectares, 53,000 hectares and 58,600 hectares in 1999, 2000 and 2001, respectively. In 1999 and 2000, total production was 1.2 million tons and increased to 1.3 million tons in 2001 and 2002.

The FAO (Food and Agriculture Organization of the United Nations) reported that China exported 26,567 tons of canned pineapple in 2001, up from 22,400 tons in 2000 but down from 52,871 tons in 1998 and 34,370 tons in 1999. However, the report noted that Chinese exports would increase in the future because of US anti-dumping duties on Thai pineapple. It is foreseen that China will become the world's main pineapple exporter in the near future after it become a member of WTO in the end of 2001.

There is also a report that the Vietnamese pineapple industry is booming. In 2001 and 2001, total harvested areas were 37,500 hectares, up slightly from 36,200 hectares in 1999 and 36,500 hectares in 2000. Production was 255,600 tons in 1999 and increased to 291,400 tons in 2000 and 284,500 tons in 2001 and 2002.

In 1999, Vietnam reportedly exported 10,000 tons of canned pineapple. This figure dropped severely to 2,600 tons in 2000 and increased again to 7,500 tons in 2001. But it seems that the situation could improve in the future as the volume of pineapple factories is increasing due to foreign investors.

However, Anurat said the only strength of Thai pineapple is the huge amount produced. If Thai planters improved their technology and the quality of their supplies, the Thai pineapple industry would be stronger.

Contract farming: a long-term solution

The Thai pineapple situation has been negative for several years. There are many factors which affect the industry, such as an oversupply in the domestic market which causes a slump in the price of raw material. This problem occurs almost every year. The main reasons are lack of information about the industry, weather and lack of unity between processors.

Anurat Tiamtan recommended that the only long-term solution to the problem is contract farming between pineapple planters and factories. Farmers would not have to worry about how to sell their crops and there would be no surplus in the market. Moreover, factories could help planters to take care of their crop, use new technology and improve breeding to increase productivity.

Unfortunately, it seems that no one wants to enter the contract farming arrangement, because planters are afraid the factories would take advantage of them. But Anurat disagreed. Many pineapple factories are not ready to employ contract farming because they do not believe that it will work.

Trend and Development in 2003

The overall outlook for the Thai pineapple industry in 2003 remains negative. It is estimated that the crop in the first six months would only be available in the market in small amounts because of unfavorable conditions and reduced cultivating areas. One of our industry sources estimates that the amount of summer crop this year would be lower than last year. However, large fresh pineapple supplies should be available in the market at the end of the year during the winter crop, and the situation for Thai pineapple is expected to be better.

Source: FoodMarketExchange.com