1. FERENCE WEICKER & COMPANY Developing the Tree Fruit Industry in British Columbia Phase I Report

2. FERENCE WEICKER & COMPANY Presentation Overview of the Project Objectives Work Completed to Date Work to Be Completed Presentation of the Phase I Report Profile of the Tree Fruit Industry Key Trends Key Issues to be Further Reviewed How You Can Provide Input

3. FERENCE WEICKER & COMPANY Overview of the Project

4. FERENCE WEICKER & COMPANY Objectives The British Columbia Fruit Growers Association has commissioned development of a strategic plan for the tree fruit industry. Specifically, the project is designed to:  Identify and assess key issues that are strategically important to the overall long-term success of BC tree fruit industry  Identify specific strategies and meaningful actions that industry, government and others can pursue to assist the industry to enhance its competitive position and build a stronger industry future

5. FERENCE WEICKER & COMPANY Three Phases of the Project

6. FERENCE WEICKER & COMPANY Work Completed to Date Met with the Project Steering Committee Collected and reviewed available data and previous studies Developed a profile of the tree fruit industry in BC Established a website for the project (www.treefruits.ca) Reviewed characteristics of the tree fruit industry in other jurisdictions (Washington, Oregon, Ontario, California, and NZ) Conducted interviews with 50 industry stakeholders including growers, packers, marketers, retailers, wholesalers, institutional buyers, associations, processors, government, and researchers Identified strengths, weaknesses, opportunities and threats facing the industry Conducted a preliminary assessment of key issues and opportunities for development Prepared the Phase I Report

7. FERENCE WEICKER & COMPANY Next Steps Stage public meetings (August 24) Conduct an industry workshop to define the key issues and identify potential strategic directions (October 18) Participate in the BCFGA Horticultural Forum (November 15) Conduct further research into key issues and strategic direction (November – December) Prepare the Strategic Plan (to be released at the BCFGA Annual Convention – January 27, 2007)

8. FERENCE WEICKER & COMPANY Profile of the BC Industry

9. FERENCE WEICKER & COMPANY The BC tree fruit industry generated farm gate receipts of $68 million from about 18,000 acres of production in 2005

10. FERENCE WEICKER & COMPANY Farm gate receipts have risen at less than the rate of inflation over the past 35 years

11. FERENCE WEICKER & COMPANY Significant declines in production acreage have been largely offset by increases in production per acre

12. FERENCE WEICKER & COMPANY Turnover in the industry has been relatively high and is likely to continue

13. FERENCE WEICKER & COMPANY Nevertheless, tree fruits remain a significant economic driver for the region Approximately 1,800 growers (400 to 500 larger commercial growers) Industry employs about 5,000 people on farm, over 1,000 in packing houses, and about 1,000 more in support industries 40 to 50 BC companies involved in processing tree fruits, employing about 2,500 people Orchards serve as a major tourism draw and a defining feature of the Okanagan

14. FERENCE WEICKER & COMPANY BC accounts for less than 3% of combined Canadian and US apple production

15. FERENCE WEICKER & COMPANY While a small cherry producer, BC has benefited from strong prices for its late season variety

16. FERENCE WEICKER & COMPANY BC is a net importer of the tree fruits we produce

17. FERENCE WEICKER & COMPANY Key Trends

18. FERENCE WEICKER & COMPANY All countries are struggling to deal with the impact of increased world production and trade Over past 15 years, worldwide production has increased by about 60%:  China apple production increased six-fold, now accounting for over 40% of world production  Poland increased production three fold  Brazil doubled production  Chilean production grew by 90%. Trade liberalization and technological advances (e.g. storage) that allow more products to be delivered quickly to any market in the world have greatly heightened the competitive environment

19. FERENCE WEICKER & COMPANY Apple demand is stagnant or declining in many regions Per capita consumption of fresh apples in North America fell from 8.1 pounds in 1991 to 6.8 pounds in 2005 Only in China is there a significant rise in demand, driven largely by the ready availability of apples and rising household incomes

20. FERENCE WEICKER & COMPANY Production increases, which outpace increases in demand, have resulted in declining grower returns

21. FERENCE WEICKER & COMPANY One way industry has attempted to respond is through development and commercialization of new varieties New varieties, such as Ambrosia, can generate significantly higher prices than older varieties There is increasing emphasis on the protection of cultivars through plant patents and trade marking products We have seen the emergence of club varieties which promote demand through specialized marketing programs and limit production

22. FERENCE WEICKER & COMPANY There has been a shift in the varieties produced in BC over time

23. FERENCE WEICKER & COMPANY Other Trends Grower consolidation, particularly in the US and New Zealand Greater consolidation in other levels of the value chain (now dominated by large corporations who wield extensive market power) Crop management is intensifying (higher planting densities and improved cultural practices) Quality assurance, product traceability and food safety programs such as HACCP have become increasingly important

24. FERENCE WEICKER & COMPANY Strengths and Weaknesses of the BC Industry

25. FERENCE WEICKER & COMPANY Potential Issues Identified for Further Analysis

26. FERENCE WEICKER & COMPANY Fourteen issues were identified for further review  Fruit quality and grading  Structure of the industry at the packing house and marketing levels  Access to labour  Access to market, business and technical information  Productivity and costs at all levels of the industry  Opportunities in organic production  Development and commercialization of new varieties  Consumption of BC tree fruits in BC  Food safety  Long-term lease restrictions  Partnerships with other jurisdictions  Value-added products  Export markets  Anti-dumping trade actions

27. FERENCE WEICKER & COMPANY In addition, four items were selected for immediate review The CAIS Program Potential to establish an Agriculture Development Fund Opportunities for funding under ACT Now! Commercialization/marketing strategies for new varieties

28. FERENCE WEICKER & COMPANY How You Can Provide Input Visit the Website (www.treefruits.ca) Provide input through the website Contact the consultant, the Association or a member of the Steering Committee