Export Markets for Pomegranates

The market price for pomegranates based on the fruit's quality and size determines profitability for the grower. Cutting production and distribution costs will increase profits further. An analysis of seasonal market trends leads to increased revenue for the Israeli farmer.
May 13, 2016
Export Markets for Pomegranates (Enlarge)
When many pomegranate producers  review and analyze their crop's profitability it is the crop outlays that serve as the basis for that analysis.  The growers begin with the initial investment in the orchard and end with the farm gate revenue but for all exporters it is only the price of the fruit sold at the final market that determines profitability. Differences in this ultimate price attained by the various suppliers reflect factors linked to the fruit being sent from individual orchards: Size, color, the buyer's appraisal of the fruit's appearance, seasonality in supply, the reputation of the producer-supplier etc. The ultimate price can enable the producers to "backtrack" to the farm gate by deducting the costs from there to the market, thus enabling them to decide whether exports are cost-effective.

 

The wholesale price serves as a base, reflecting – in a broad sense – the market's evaluation of the fruit. From that point it is possible to calculate the profitability of production in the orchard and consider ways to cut costs, thus increasing the grower's share of the ultimate price. The grower can then consider how to reduce the production outlays as well as check to see whether savings can be made between the farm gate and the wholesale market.

 

In this short note, we intend to examine these aspects. We possess ten years of monthly statistical observations from key wholesale markets in Europe . Our source, the ITC – International Trade Council, surveys 13 wholesale markets in Europe . Here we present the average pomegranate prices derived from those observations.

 

The monthly price observations appear in two series:

a. A series of monthly wholesale prices, expressed as Euros per kilogram (€/kg) for each of the years reviewed. The average annual price for each year was calculated to observe long-term price trends.

b. A series of monthly wholesale prices (€/kg), based on the calculation of average monthly prices from the data observed. This series gives us an idea of the seasonality of pomegranate prices, i.e. price movements from month to month.

  1. Figure 1 - Annual wholesale pomegranate price trends in €/kg
  2. Figure 2 - Monthly distribution of wholesale pomegranate prices in €/kg

Summary and Conclusions . The following conclusions are general and a particular analysis of an individual pomegranate producer's data is required because obviously, each orchard has its own specific production data and outlays.

  • The annual data appearing in Figure 1 indicate relative price stability over the past decade, excluding the sharp decline caused by the global economic crisis in 2008 and the recovery observed in the following year. Some minor annual fluctuations of about 5 percent around the long-term average were evident.
  • The price decline in recent years is less than a few percent per year; the general opinion is that yield increases and/or a reduction in production costs (due to increased efficiency) compensate for this trend. Growers of fruit orchards are expected to take a long-term approach to the economics of their production, which are at least partially due to random effects.
  • An especially significant conclusion should be drawn from the monthly wholesale price distributions (Figure 2). For Israeli pomegranate growers there are no new developments, except perhaps, for the quantitative values appearing within the series: Wholesale pomegranate prices during Israel 's harvest season – and immediately following it – fluctuate around 2 €/kg. During the months of January to March they increase by roughly €0.3/kg (January), € 0.75/kg (February) and by more than € 1.5/kg (March). Even allowing for the increased storage costs and spoilage, which result from keeping the fruit in storage for several months after picking, the higher prices definitely justify the storage of high quality fruit, enabling the producer to obtain a higher season-long return than might be expected if the entire crop was marketed at harvest time.

 

In summary – Each producer should calculate the profitability of their own orchard based on the approach outlined above, taking into account production costs on the farm as well as distribution and marketing outlays. This note offers the growers the additional information needed to facilitate the task.

 

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