2015 Silva Spring Crop Report

April 24th 2015 Comments
Spinach Spring Crop Report

With spring arriving in the northern hemisphere, our growers are preparing for the harvest of spinach, planted this winter. Our partners are also active in planting the summer crops, such as celery, leek, and peas. Plantings of bell peppers and tomatoes will follow later this spring.

Many of our raw-material partners in China just finished the winter production of carrot. With a plentiful autumn crop and an average winter crop, the spike in pricing seen in 2014 has been largely reduced. We expect to see a return to a more balanced cost level. We also expect pricing to remain fairly stable through the early summer crop. The large fall crop experienced in China in 2014 is not expected to repeat itself in 2015. Low returns has discouraged farmers from planting. We therefore expect pricing to start rising in late summer as current stocks are reduced. The short term outlook is thus for stable pricing with steady increases as we move into the fall and winter months.

Our main planting areas have had mild weather this winter. In general, we don’t see any adverse conditions affecting our main crops. The milder winter weather experienced in China and Europe over the last few years increases pest activity in our fields. Our global quality control team is busy working with our growers on non-chemical methods to combat pests. This is part of our work on integrated pest management, which is a fundamental part of the education we provide to our farmers.

In South America, fruit harvest is starting with apples this month, after having completed the harvest of capsicums earlier in the year. We expect fair qualities with stable pricing without any major issues to report.

We expect healthy harvests of spinach in both China and Europe. Early indications also suggest planting areas of green summer crops (celery, leeks) are going to be similar to last year. Pricing should remain stable. The recent strengthening of the U.S. dollar, less notable vis-à-vis the Chinese Yuan, provides for a certain softening in pricing. Yet continued competition for farmland for other cash crops reduces the majority of the gain. Tightening in environmental policies in many provincial governments in China require investments in cleaner energy sources as well as better treatment of waste water. This will, over time, drive producing costs higher.

Halfway through the crop year on red bell peppers, we see price levels of raw-material at origin returning to levels seen last spring. Pricing on bell peppers from 2014 crop remained 10-15% higher compared to 2013 crop up until early 2015. With healthy stock levels at origin approaching the May planting season, pricing has fallen back to levels not seen since early 2014. We expect stable pricing over the next few months until a better assessment of the 2015 planting area can be done. Both weather related factors and actual planting area can have a big impact on raw material costs for bell peppers. We expect a more volatile market starting June, with sharper market reactions from the above mentioned factors.

Green bell peppers and tomatoes had a better crop year in 2014 than in 2013. Yet, the tight market in early 2014 led to only small gains in pricing from new crop during second half of 2014. We expect pricing on tomatoes to remain stable until onset of new crop in August while green bell peppers are becoming increasingly more expensive as stocks at origin are being depleted.

In our next newsletter we will provide an outlook on the upcoming year on bell peppers and tomatoes, as well as an update on the spring harvest.