Year 2014 in Review - Second Half - FreshFruitPortal.com

Year 2014 in Review - Second Half

By Fresh Fruit Portal editor Matthew Ogg

I'm sure there were a fair few readers who wished they were Chiquita shareholders this year. The Charlotte-based multinational was on track to joining forces with the polite and experienced Irish company Fyffes, when all of a sudden a cavalier Latin American group flush with cash came on the scene. The combined Brazilian companies of orange juice giant Cutrale Group and investment house Safra Group would not accept 'no' for an answer, wooing away with proxy statements and press releases in a bid to win at all costs.

Russian President Vladimir Putin arguably sparked the biggest changes in the global produce industry during 2014.

Russian President Vladimir Putin arguably sparked the biggest changes in the global produce industry during 2014.

So much attention, Chiquita may as well have been Carmen Miranda.

On the day of the initial merger announcement, Chiquita shares rose by almost 11% and Fyffes shares shot up by almost 43%. All was going swimmingly, but clearly Fyffes was way more into it.

On Aug. 11, the Brazilians came along offering a fragrant takeover sum of US$611 million, which they claimed represented "an 11.8x multiple of Chiquita's last twelve months reported Adjusted EBITDA". If sweet words like that don't blow you away, I don't know what will.

The offer put both Fyffes and Chiquita into scramble mode, and two weeks later they told shareholders about US$20 million in pre-tax cost synergies; words that didn't quite have the same allure as that 11.8x EBITDA multiple; the share price hardly budged. Taking stock of the situation, Fyffes acknowledged the suitor and gave Chiquita a waiver to engage in discussions with Cutrale-Safra.

Meanwhile, the Irish were considering what might be needed to tip Chiquita shareholders in their favor. On Sept. 26 they gave in, offering Chiquita shareholders almost 10% more of a stake in the proposed entity; a move that was met with ridicule from the Brazilians who upped their offer by US$1 per share in mid-October, and a further US$0.50 on Oct. 23.

The luck was not with the Irish the following day as Chiquita shareholders rejected the Fyffes deal, and the next week Chiquita agreed to the takeover from Cutrale-Safra. I wouldn't be surprised if we see more news involving Syrian-born Brazilian billionaire Joseph Safra, who also purchased London's iconic 'Gherkin' building in November.

In the Year 2013 in Review I noted the common complaint of sanitary and phytosanitary (SPS) measures as barriers to entry for fruit traders. This was an issue that propped up again in 2014 from Russia's Federal Agency for Veterinary and Phytosanitary Supervision (Rosselkhoznadzor), banning a range of agricultural products from Poland, Moldova the Ukraine and Lithuania, while threatening similar actions against the Netherlands and Greece. But after the West placed sanctions on the world's biggest nation in the wake of the MH17 tragedy, the Kremlin no longer needed plant diseases or pests to justify this kind of pressure.

On Aug. 6, Russian President Vladimir Putin signed a decree to ban imports of "certain" agricultural products from the European Union, Norway, the U.S., Canada and Australia. Members of sanctioning countries awaited anxiously to hear what this exactly would mean the next day.

"Russia has completely banned the importation of beef, pork, fruits and vegetables, poultry, fish, cheese, milk and dairy products from the European Union, the United States, Australia, Canada and the Kingdom of Norway," Russian Prime Minister Dmitry Medvedev said on Aug. 7, highlighting the restrictions would apply for a period of 12 months.

"But, if our partners display a constructive approach towards cooperation issues, then the Government would be willing to revise the specific implementation deadlines for these measures," Medvedev said.

"The Ministry of Industry and Trade and the Ministry of Agriculture will start monitoring the commodity markets and price levels on a daily basis, and they shall report their findings to the Government."

Our team of journalists was at full tilt in the aftermath of the announcement to ascertain what this decision might mean for the produce sector. A vast amount of coverage can be found on our Russian Ban tag page here.

Polish, Dutch and Spanish growers were amongst the worst hit, but the entire European Union produce industry was set back by the oversupply that ensued. Authorities continue to tackle a gray trade that has emerged for re-exports through countries like Belarus and Kazakhstan, and even exporters from non-sanctioning countries have been affected due to the sometimes suspicious treatment of their fruit that is re-exported via Rotterdam. Alternative routes through the Middle East are not always possible due to conflict in the region.

The European Commission has pumped hundreds of millions of euros into supporting the union's growers, which at times have been mismanaged, but hopefully a diplomatic solution to the problem will be found in 2015 so that the country's retail leaders like Magnit CEO Sergey Galitskiy - GQ Russia's Businessman of the Year - can stock a broader range of fruits and vegetables on their supermarket shelves once more.

On a more positive trade note, agricultural trade relations improved between the U.S. and China. In terms of commodity crops, China recently approved Syngenta's GM corn trait MIR 162 that is present in much of the U.S. crop, while the market was also re-opened for Californian citrus in August.

"It's important to emphasize the job APHIS [Animal and Plant Health Inspection Service] did by being proactive and how they worked together with the authorities from China, their partners at AQSIQ [General Administration of Quality Supervision, Inspection and Quarantine]," said California Citrus Quality Council president Jim Cranney.

Interest piqued in mid-September when Chinese authorities published a list of approved produce items for import which included Red Delicious and Golden Delicious apples from Washington State. Such a decision had not been officially approved at the time, but in late October the crop was finally allowed in. The Asian country also gave the green light to South African apple imports this month.

China's free trade agreement (FTA) with Australia was another popular news item in the second half, which is expected to be a boost for key export crops like cherries, grapes and citrus through tariff cuts. Australia has also made trade progress elsewhere in East Asia, with the Korea-Australia FTA now in force and an economic partnership agreement with Japan set to start in January.

Oceania was also home to two of many stories we published this year about breakthroughs in science and innovation. One of these was the "Ladybird" farm robot developed by researchers at the University of Sydney in collaboration with Horticulture Australia Limited (HAL); the latter has now been transformed structurally and in name to become Horticulture Innovation Australia.

"We have a combination of different sensors on the new Ladybird robot platform – different cameras lasers and so on to map the color and also the 3D shape of the entire farm really down to the resolution of every individual leaf," said the university's Australian Centre for Field Robotics (ACFR) Dr. James Underwood.

"Then in addition to that we have a robot manipulator arm on the platform so we're not just limited to sensing information passively but we can actually start to take action on the farm which could include things like contact sensing soil probes, and sensors that need to come into contact with specific vegetables."

Across the Tasman Sea in New Zealand, OA-Global saw "staggering" results through the implementation of ozone technology on a Hort16-A gold kiwifruit farm in Katikati on the North Island. Looking at the orchard's historical data, it reached an export percentage peak of 88% before Psa damages forced a gradual fall down to 77.5% in 2013. After ozone technology was introduced, this year’s harvest yielded an export percentage of 93.51%.

"We never held out any hope that ozone would cure Psa and I don't believe that it does, but what it does do is it enables the plant to suppress Psa and its effects to the point where the plant becomes healthier, leaf size is bigger, there is absolutely no outward appearance of Psa, and when the fruit was picked it was in better condition, less undersized than in previous years, and there were larger export percentages," said director Brendon Spencer.

The defamation case against human rights campaigner Andy Hall in Thailand was one of the most relevant social issues in 2014, and one that readers would know I personally took issue with as I see it as a reprisal against a professional academic for simply doing his job through his reports with NGO Finnwatch on the Natural Fruit Company. A petition of support for Hall reached 300,000 in late August prior to his trial.

The first case was dismissed on a technicality, but there are still charges against him with the next case scheduled to start on Feb. 2. Thanks to all our readers who gave their support for Hall and our coverage of the matter. The Briton still needs help, and a successful outcome for him would not only be a win for the most basic of human rights, but would also help put an end to an unfair advantage the Thai pineapple industry gains through a legal system that can allow the intimidation of independent investigators.

During the Produce Marketing Association (PMA) Fresh Summit in Anaheim, Bolthouse Farms senior director for brand engagement Pamela Naumes told us companies needed to start reading from the 'do good' playbook.

"I think the biggest thing that consumers, especially young consumers, care about today is the power of doing good," she said, after the PMA’s Bryan Silbermann and Cathy Burns touched on the issue in an inspiring State of the Industry address.

"They've grown up and they've seen a lot of change in their parents and they’ve seen a lot of companies do bad things," she said of younger buyers.

This is evident as well in the Los Angeles Times' latest exposé on examples of exploitation, indentured servitude and child labor that exist on some Mexican farms. While the report may not be representative of the industry's advances, it is out there whether we like it or not and it will influence buyers' decisions.

A good first step to mitigate its impacts would be to take further action to ensure ethical practices from independent company stores on Mexican farms, ensuring that workers have access to buy affordable household items and food with the wages they earn picking fruits and vegetables. As I said when I wrote a column on this issue, I'd like to receive more press releases about progressive social projects in 2015, as I believe that 'transparency' in the supply chain will be the next 'food safety' factor for the industry to shape shoppers' food choices; perhaps I'm incorrect, but as a Gen Y buyer myself this is the inkling I have.

It's been a pleasure working with all produce industry professionals I've been in contact with this year, and I'd like to wish you a very successful and happy 2015. Be sure to keep us in the loop with feedback, news ideas and press releases by sending emails to news@freshfruitportal.com.

July

Hydroponic farming will flourish in the U.S., says grower. Click here

Russia whacks temporary ban on a raft of Polish produce items. Click here

New South African avocado variety 'piggybacks' on Hass success. Click here

Organic industry reacts to comparative nutrition study. Click here

U.S.: leafy greens first, then cannabis for NYSE-listed company. Click here

Opinion: it’s time to drop the charges against Andy Hall in Thailand. Click here (Or here for ongoing reports on the case)

Spain: Driscoll's 'learning a lot' about Drosophila control methods. Click here

Australian researchers develop intelligent 'Ladybird' farm robot. Click here

August

Russia: Putin signs decree to ban ag products from sanctioning countries. Click here (Or here for our extensive coverage of the ban's widespread effects)

Brazilian groups make US$611M bid for Chiquita. Click here (Or here for more on the takeover)

Russian govt announces list of banned food products. Click here

Inside the world's first seedless mango. Click here  

California: grower body expects ‘renewed emphasis’ on food safety. Click here

Farmworkers versus unions, a new fight in California. Click here

China re-opens market to California citrus. Click here

Thailand: 300,000 sign petitions to drop charges against Andy Hall. Click here

September

China publishes new produce import approval list. Click here

Total Produce buys in to California avocado deal. Click here

T&G teams up with Unifrutti Chile in Peruvian grape JV. Click here

Thailand: first Natural Fruit v. Andy Hall case draws to a close. Click here

Fyffes raises the stakes in proposed Chiquita merger. Click here

Northern Peru’s productive potential. Click here

Bayer CropScience to invest close to US$1B in U.S. businesses. Click here

Vegetable pre-breeding vital for global food security. Click here

October

Chiquita announces Brazilian takeover. Click here

Cancer-fighting properties of Australian berry revealed. Click here

Chilean frosts 'nothing like last year', say industry leaders. Click here

Disney to take the Mickey to Chinese grape consumers. Click here

U.S. citrus giants announce alliance to expand Wonderful Halos brand. Click here

Zespri's five-year plan for New Zealand kiwifruit. Click here

Fairfood International calls for change in Philippine pineapple industry. Click here

U.S. revokes Canada reciprocity agreement. Click here

November

U.S.: ILWU accused of 'illegal slowdowns' in West Coast ports. Click here

Californian court makes landmark order against UFW, ALRB. Click here

Del Monte opens new Canadian fresh cut facility. Click here

Hail hits NZ apple and kiwifruit orchards. Click here

Q&A: California attorneys "suing farmers as fast as they can". Click here

U.S.: Marketing Washington State’s "monster" apple crop. Click here

Chilean fruit industry expects highest returns ever in 2015. Click here

Aussie produce industry welcomes China FTA. Click here

December

Chilean cherry crop falls 15% after heavy rainfall. Click here

U.S.: West Coast exporters 'substantially delayed', says Western Growers. Click here

Spain: Laser Food signs global deal with US$900M equipment group. Click here

Chilean avocado exports could drop by half this season, says Cabilfrut. Click here

Hapag-Lloyd and CSAV finalize shipping merger. Click here

NZ fruit growers embrace ozone tech for healthy orchards. Click here

Olmos: Inside Peru's gigantic precedent for large-scale irrigation. Click here

China green lights South African apple imports. Click here

Photo: The Presidential Press and Information Office

www.freshfruitportal.com