Structure and size of the market

Ontario and Quebec accounts for about 70% of the Canadian production of strawberries, with British Columbia growing the remaining 10%, Nova Scotia about 8%, and the other provinces growing small amounts. Total Canadian production is approximately 23,000 tonnes. Significantly, Canada consumes far more strawberries than it produces, importing about 75,000 tonnes of fresh strawberries in 2005. The bulk of fresh imports (96%) come from California with small amounts supplied from Florida and Mexico. Ontario is a fast-growing market for off-season and, increasingly, in-season production. Fresh strawberries are available almost year-round.

In addition, Canada imports about 20,000 tonnes of frozen strawberries. The main sources of frozen strawberries are Mexico and the U.S., which each supplying about 33%; China, supplies about 18%, and Chile supplies 11%. Canada processes about 3,500 tonnes of strawberries annually.

Statistics Canada 2006-Cat. 22-003-XIB; Census of Agriculture 2001 Table 95F0301XIE

Market Characteristics

Canadian production and sales are very seasonal in nature, with the main season occurring during a three- to four-week period in late June and early July. New ‘everbearing’ and day-neutral varieties have extended the season somewhat, but in Canada consumers anticipate, expect and buy strawberries in the early summer.

Strawberries are the first major domestic fresh fruit of the year. Berries grown later in the season must compete with other fruit. Strawberries are very perishable, having a shelf life of only a day or two. It is this factor that is most important with regards to marketing channels.

Growers have two main marketing options: (1) direct to consumer; and (2) the wholesale market. Due to the perishability factor, most strawberries in Canada are sold direct-to-consumer. This is the surest way for consumers to buy top-quality berries.

Direct channels - these include:

1. Pick-your-own – this channel has diminished in importance in recent years, but remains fairly popular.
2. Roadside retail outlets - the most popular way to sell strawberries. Many growers operate multiple locations, using small portable sales units. Growers may also supply other small roadside outlets.
3. Farmers’ markets - markets usually will rent space by the day to growers.

There is also a direct to consumer market for processed berries in jams and baked goods, but only a small amount is sold in this way.

Indirect Markets - rural independent grocery stores can buy from the grower or through their wholesalers. Some larger growers specialize in wholesale supply. Some grocery chains and wholesalers buy large quantities in season.

Processors Demand – strawberries for processing are usually sold frozen whole, sliced or as a puree. Some berries are packed whole, individually quick frozen (IQF) for retail uses. Some fruit is packaged in retail sized containers of up to 1 kilogram. Most berries slated for further processing are converted into jam, yogurt and ice cream flavourings, and other products are preserved frozen in larger containers.

Key Changes or Recent Issues

Growers face stiff competition from imported berries. California growers are constantly improving production, stretching their season, and marketing aggressively. California has an ideal climate for strawberries, and is able to supply from the south coast starting in January, with peak production centres moving north as the season progresses. Northern counties can produce strawberries into November. Florida growers concentrate on production during the California off-season.

In order for growers to retain their existing and/or expand their markets, new higher-yielding varieties for the fresh and processing markets are being developed. New production techniques are also being developed to extend the fresh market season and to reduce the per-unit cost of production. In order to minimize the use of pesticides, considerable research and development has gone into developing an integrated pest management (IPM) program which maximizes the use of naturally occurring biological control agents.

Price Discovery

Most strawberries are sold direct-to-consumer. There is no clear price setting mechanism. Prices are guided by historical prices and adjusted by changes in wholesale market prices, regional supply and larger grower (price setters) prices who sell based on volume. There can be a significant variation in price from one area to another. Thus there is considerable price risk from region to region and season to season.

Wholesale prices are largely set by supply-demand factors in the large U.S. markets.

Key Quality Issues

The first quality attribute is flavour. Canadian strawberries are typically more flavourful than imported berries, which are largely selected for long shelf life and capacity to withstand shipping and handling stresses. Fruit flavour may be compromised in this selection process.

Other quality issues are well-described by the grading standards. The only grade for strawberries is Canada No. 1. Strawberries not meeting these standards are severely discounted, if they can be sold at all. The grading process includes the following factors:

• Development - berries must be "well formed". This means the fruit is not misshapen due to poor pollination, frost injury, insect injury, etc. Cat faces at the blossom end are not permitted.
• Colour - berries must be "of good colour", which means the berries are of the colour characteristic of the variety when mature. Although not defined in the standards, the general rule is that at least 3/4 of the surface of individual berries should be "of good colour."
• Maturity - with respect to maturity, as well as being "of good colour" Canada No. 1 strawberries must be firm. Generally, firmness is treated as a condition factor.
• Cleanliness - Canada No. 1 strawberries must be "fairly clean", which means no dirt is readily apparent.
• Calyxes - the Canada No. 1 grade for strawberries requires that the calyxes be attached. Berries with calyxes missing should be scored against the general tolerances.
• Free from Bird and Insect Injury.
• Condition - there are a number of quality characteristics referring to condition. Condition is progressive, as strawberries ripen quickly. Condition is determined by firmness, degree and extent of bruising, decay, absence or presence of water, absence or presence of moisture from leaking and decaying berries. Due to strawberries’ high degree of perishability and that the ripening occurs fairly rapidly in transit, condition is critical.
• Tolerances - there are tolerances for defects in Canada No. 1 grade strawberries, which are applied by sample count.

Two additional factors warrant mention:

1. Cooling - fruit should be placed in on-farm coolers to remove field heat and preserve condition. Immediate cooling is critical for strawberry shelf-life.

2. Processing - processing strawberries are picked with the caps off, cooled, and delivered to the processors.

Risk Factors

Market/price risk is a perennial threat to the Canadian strawberry industry. Weather is always a concern. Excessive cold or heat can have a negative effect. Most growers have irrigation, so drought is not usually a concern. For the most part, pests are a manageable problem.

Securing adequate labour to harvest the berries when they are ready can also be a challenge.

Other Factors

There are two main types of strawberries, June bearing (short-day), and everbearing or day-neutral varieties. The June bearing varieties initiate their flower buds in the autumn when the days become shorter. These buds remain dormant until the following spring when they produce flowers in May and June. The fruit ripens 4 to 6 weeks after flowering and the harvest season lasts for most varieties only about 3 to 4 weeks.

Day-neutral varieties will initiate flower buds at any time during the growing season, regardless of the day length. Thus they will produce flowers and fruit throughout the growing season. Ever-bearing are slightly different, in that they tend to produce in flushes, as growing conditions become favourable.

It would seem that off season production should be more popular because of potential to capture a premium from off-season markets. However, day-neutral varieties are less hardy, lower yielding, and produce a lower quality fruit. Since in-season competition from the U.S. is brisk, competition for off-season berries is very challenging. This factor along with higher production costs for off-season berries, has limited their adoption in Canada.

Closing Comments

It is clear that the market for fresh strawberries exceeds the supply by a considerable margin. The major challenge facing Canadian growers is the seasonality factor. When locally grown fresh strawberries are available, the season is short and the supply for this period can easily exceed the demand. As a consequence, price variability becomes the biggest risk factor.

Major retailers prefer to deal with suppliers that can assure year-round supply. Thus the dominance of California and Florida based suppliers. Furthermore, growers in these regions are continuously improving their ability to supply throughout the entire season.

While there are clearly market opportunities for strawberries, successful markets will require very clear market strategies targeted at customers who value freshness, taste and who value locally produced produce. Further, marketing success will be increased if seasonal supplies can be extended. Others opportunities exist in the supply of frozen berries.