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Honey Market Report

 

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International Honey Market Report

Based upon presentations for the American Honey Producers Association and the American Beekeeping Federation

Ron Phipps

American Beekeeping Journal article

January 8, 2014

The two most salient features of our honey market are: 1) the production of honey in the US has become more costly, unpredictable and subject to factors leading to bee disease and bee loss, 2) the dynamics of the American honey market cannot be understood in abstraction from the international honey market. I want to make some brief comments about the current international honey market. The January 2014 issue of the American Beekeeping Journal provides a broad perspective to which today’s comments serve as supplement.

Argentina

In October-November 2012, a few importers caught in a competitive frenzy entered speculative contracts for large shipments January through June 2013 at low prices. For various reasons these speculations proved disastrous. Some beekeepers in Argentina still have not been paid for honey purchased in support of those speculations. Many contracts scheduled for 2013 deliveries had to be renegotiated to higher prices and/or shipments substantially delayed, creating considerable havoc for American packers. In 2013, about 102,264,555 pounds of Argentina honey were imported into the US.

In the early 4th quarter of 2013, Argentina’s crop again looked very promising and prospects good, especially for white honey. However, in the 2nd half of December, very high temperatures affected availability of electricity needed for air conditioning, which led to street protests. The wild prairie and pasture lands near Buenos Aires and Las Pampas, where a great deal of Argentine’s excellent alfalfa and clover honey is produced, suffered from the high temperatures and lack of rain. Temperatures, reaching 104˚ F (40˚C) during the 4 crucial weeks of the second extraction, were the highest in a century for Buenos Aires. The success of the total crop will depend upon the third extraction, largely from sunflower and wildflower sources. At this point we can say that Argentina will not have a "super” crop of honey, nor will it be as white as the preceding crop. Some people are projecting a 30% reduction in the crop. As of late January, 2014, offers shifted to colors ranging from 40-65mm.

There is also great concern about currency, economic and banking stability. Whether these problems will lead to lower or higher prices, remains to be seen. The sharp inflation rate of 25% per year, the failures of infrastructural development, the threat of a national default, and other economic and social problems have led to political changes in the central government. The combination of 1) the possibility of a weakening Argentine peso and 2) continuing inflation of about 25% or higher, has exerted a counterintuitive effect, namely making beekeepers reluctant sellers, realizing that the predicted weakening of the peso means that they will get more pesos the longer they wait to sell honey. Needing foreign exchange, the Argentine government instituted measures in December which would reduce the contradiction between the black market and the official currency market and give farmers incentives to sell their produce instead of holding back, on expectations they would receive more pesos in the future. The current controlled devaluation has moved in lock step with accelerating inflation. The disparity between the official and black market rates provided a premium of about 30 - 70% for those operating in the illegal black market. Argentine exporters, it should be noted, must exchange their earned dollars according to the official rate.

US Dollar/Argentine Peso Exchange Rate

12/22/2013 1/22/2014

1.00/6.38 1.00/6.90 $ up 8% in 30 days

Source: xe.com

It is clear that not only Argentina, but Brazil, Uruguay and Mexico have turned to the US as a preferred market. The weaknesses of both the European economies and the Euro relative to the dollar, which has developed since the financial crisis of 2008, have caused South America to turn to the US as a preferred export destination.

The European market, which was unconstrained in its import of Chinese honey in the last few years, has had a 2-tiered price market, one based upon cheap lower quality Chinese honey and the other based upon European and Argentine honey. Honey imports from China reached 39% of total honey imports by various members of the EU in 2012. Overall exports from China increased from about 150,000,000 pounds to over 250,000,000 pounds from 2009 to 2013. Norberto Garcia, President of the International Honey Exporters Organization, told AHPA members that "During the past few years, European honey packers have been facing rising import honey prices, a weakening of the Euro, and a resistance of supermarkets to increase the prices of honey on their shelves…and have opted to import cheaper honeys but of dubious quality.”

Interestingly, EU consumers responded by reducing their purchases of the lower priced honey and increased their purchases of higher quality, though more expensive, honey. This fact may cause European buyers to return to more aggressive purchases of Argentine honey, boosted by some strengthening in the Euro relative to the US dollar. In 2012, 19% of the EU’s honey imports were from Argentina.

The recent practice of European consumers confirms what marketers have long realized, namely, if an industry underprices its products, consumers’ perception of value is reduced, not enhanced. The correlative principle is that if you offer consumers an adulterated, poor quality product, their perception of value will similarly decline.


Brazil

Average prices for Brazilian honey were up significantly in the first 9 months of 2013, compared with the same period in 2012. Total U.S. import volumes from Brazil appear to be decreasing from their high in 2009. Brazil is a significant supplier for organic honey sold in the U.S.

The heavy snows in 100 cities in August, and extreme heat in December, have created problems for the current crop. Brazil’s northeast is recovering from 2 years of excessive drought which reduced the production of organic honey. Significant bee losses in the northeast have been reported. The crop in Maranhão state failed in 2013 and hopes are that honey can be found in Piaui state in 2014. The shipment of at least 30 containers of organic honey (about 1,250,000 pounds) scheduled for 2013 were significantly delayed or cancelled. Even with a good crop there will not be as much organic honey as the market demands, according to Brazilian reports. The weather so far in 2014 has been good.

Vietnam

Total US imports from Vietnam in 2012 fell about 25% relative to 2011. However in 2013, imports reached about 71,000,000 by year end. Vietnam continues to be a major source of industrial honey by offering reasonable prices for its light amber.

As its honey industry has developed, new floral sources such as Acacia Mangium have become important. This honey source may account for over 35% of the total Vietnamese crop. It tends to be on the dark side of light amber and darkens rapidly over time. This has made it difficult for Vietnam to ship honey for arrivals in the 1st four months for each of the past 3 years. Exporters are working on experiments for blending floral sources in a manner that will allow availability of the quantities, colors and color stability needed in the US industrial market. The Vietnamese honey industry is working closely with western scientists.

India

India was the 2nd largest honey exporter to the US in 2012 and US imports for 2013 were reported at about 54,327,000 pounds. Over 50% of the Indian honey imported is ELA in color, and falls into the lower price category for ELA. Prices averaged about $0.25/lb. less than Argentine ELA. From January to October 2013, India exported 8,328,500 pounds of white honey to the US at an average price of $1.29/lb. India’s honey export growth from zero about a decade or so ago is rather astonishing.

Canada

As of September 2013, 15,351 metric tons of white Canadian honey entered the US at prices averaging nearly $2.00/lb. This compares sharply to import values of $1.29/lb. for white honey imported as Indian, as noted above.

Imports from Canada in 2012 increased in volume significantly over the previous 3 years, and reached 21,400,000 pounds in 2013. Ontario beekeepers are reporting bee losses of 50% and neonicotinoids in the water and environment have been blamed as the cause of the losses. The production dilemmas faced in Canada are similar to those of their neighbor to the South.

Imports from all Countries

In 2013, the total volume of imported honey in the U.S. was 332,376,726 pounds (about 150,771 metric tons) and imports represented about 70% of the total US honey consumption. Accordingly, import assessments provide the major financial support of the marketing efforts of the National Honey Board.

 

 

 

US Honey Production

A number of us in the industry, with the assistance of scientists and economists, are looking to develop a deeper understanding of 1) what are the variables that are negatively affecting honey production and 2) how those conditions may be overcome and bee health and honey productivity increased. US honey production has declined from over 200,000,000 pounds to around 150,000,000 pounds, plus or minus 10%. Productivity declines per hive contribute to the overall reduction of the crop.

Recent studies indicate that bee losses may be linked to a mutating virus, related to the tobacco ringspot virus, that jumped from tobacco plants to soy plants to bees, according to researchers at the USDA laboratories in Beltsville, Maryland.

Dr. Dennis vanEngelsdorp, from the Department of Entomology at the University of Maryland, spoke to the ABF convention and summarized the problems facing bee populations as "the 3 Ps, that is, Parasites, Pesticides and Poor feeding.”

Steven Dwinell, Assistant Director, Division of Agricultural Environmental Services in Tallahassee, Florida, described for AHPA members the tense situation in protecting both the citrus plants and bees producing citrus honey. Citrus groves in Florida have experienced up to 40% tree losses and growers must protect their orange trees through use of pesticides. Those pesticides are devastating to bees. The Asian Citrus Psyllid threatens citrus groves in Florida, and is spreading to Texas and California. In Florida they are using internet mapping to alert beekeepers to move bee colonies in advance of pesticide applications. Maybe the growers and the beekeepers can be friends, just like the "farmers and the ranchers” in the song from the classic musical "Oklahoma!”

Circumvention and Legal Issues

The beekeepers and packers are monitoring new types of circumvention, and have their eye on Turkey as it expands honey exports. U.S. imports from Turkey reached 3,300,000 pounds between January and October, 2013, with an average import price of $1.18/lb. Turkey’s honey was exported to Germany at prices reaching $3.17/lb. and Turkish domestic sales averaged $2.00-2.70/lb. in recent years. As Eric Wenger of True Source Honey reported, "while Turkey’s exports to the world declined in the past 5 years, their exports to the US increased dramatically, clear evidence of circumvention, just as observed in Malaysia and Indonesia in 2010.” Traditionally Turkey has exported honey to Germany, whose post World War II population includes a large number of people from Turkey.

Attorney James Pizzirusso, of Hausfeld, LLP, reported to beekeepers attending the ABF convention in Baton Rouge in January 2014 that the beekeepers’ complaints for damages against Groeb Farms and Honey Solutions are ongoing and the scope of inquiry extends to those who allegedly were interlocked in complicity and co-conspiracy to commit customs fraud with those two companies. These class actions suits address the collusion of many players and diverse strategies to circumvent honey and avoid anti-dumping duties.

During the past decade and more there have been innumerable schemes of fraud ranging from false bills of lading, country of origin, quality inspection, invoices, wire transfers, corporate identity, product description, and audit information. Schemes of fraud led to deferred prosecution agreements, a march to monopoly and a bankruptcy. Those who genuinely seek a level playing field must be sobered by the difficulties in maintaining a fair playing field, and ensuring that honey trade is conducted according to U.S. and international law.

Global Weather Patterns and Agriculture

Unusual weather conditions, such as the most extreme drought in California in a century, heavy winter storms and extreme cold in parts of the U.S., Argentina’s most severe heat wave in a century in 2013-2014, Australia’s drought, and Brazil with 100 cities simultaneously suffering snowstorms, point to: 1) the volatility, severity and unpredictability of global weather patterns and 2) vulnerability of global agricultural production to global climate change. According to government statistics announced in mid January, 2014, 2013 was the 4th hottest year in recorded history. Fourteen of the hottest years since the 1890s occurred between 1998 and 2013. For the US, it was the 37th warmest year on record. But climate change is a global phenomena.

Recent international reports, including the UN global climate report, have linked global climate change with potentially devastating effects on global agricultural production, which is feeding the global population of approximately 7 billion people.

World honey production in 2011 was about 3.6 billion pounds, with about 1.6 billion pounds produced in Asia. Asia is the only world region reporting significant increases in honey production since the year 2001, when Asia produced 1 billion pounds.

The Hive and the Honey Bee

This year should see the completion of a new edition of The Hive and the Honeybee. The previous edition of this important publication was in 1992. A great deal has changed as the world’s economy has become more integrated, complex and in many respects, characterized by various forms of tension. Dr. Stan Daberkow, a former economist of the USDA, and I are writing a chapter on the marketing of honey in America.

Topics of Interest include, briefly:

· Changes in production and the emergence of new producing areas and the correlative loss of traditional areas.

  • Changes in the consumption and perception of honey.
  • Impact of global climate change on honey production.
  • The need for harmonized, integrated and reasonable tolerance and testing levels for honey residue testing, bringing it in line with other foods. If "honey is the soul of a field of flowers” we must scientifically investigate how the interaction between zoological and diverse botanical forms of life affects the complex and highly variable chemistry of honey.
  • Honey and health as part of the movement for healthy natural foods. Honey is in a competitive relation with natural and non-natural sweeteners. We need to improve the scientific understanding of the chemistry of honey, its appeal, and it health attributes and advantages relative to competitive sweeteners.
  • New products, new themes, learning from other nations and cultures in developing an international market for pure honey.
  • Export of American honey to the global marketplace. The percentage of U.S. honey that is exported has remained constant at 2% of production. The potential, however, may be expanding in coming decades.
  • Qualities and food safety issues. Some restricted substances include naturally occurring components. Non-tariff trade barriers in the context of the World Trade Organization’s mandate to reduce such barriers, changes in the antidumping regime.
  • Food Safety and Modernization Act for US food facilities and foreign food facilities. This act will increase the responsibility of companies acting as importers of food products. Traceability of honey and quality control from the producer to the processor are going to be monitored and verified by auditors.
  • Legal issues, international trade law, creation and maintenance of a level and fair playing field. We have seen penalties for circumvention, huge fees for avoidance of antidumping duties, jail time, loss of reputation, systematic deception and hypocrisy. Legal scrutiny of the honey marketplace will increase, not decrease, until the bad actors are unable to gain unfair competitive advantage.
  • Honey labeling is becoming a critical issue. Fraud in respect to honey’s country of origin, in respect to labeling where honey is prominently used as a primary ingredient when it is in fact a minor constituent among multiple sweeteners, and in respect to the purity and authenticity of honey being sold as bee’s honey. Non-American honey is being sold as American honey. If exporters continue to ship unsafe, mislabeled and fraudulent products, then their participation in the important North American and European markets will be diminished.
  • The issue of Non-GMO labels is becoming an issue in Europe and in US states.
  • Multinational ownership in the US food industry, including the honey industry, is to be expected, involving vertical and horizontal integration.
  • Marketing of Honey – incorporating honey into beverages and new food products.
  • Marketing to ethnic groups in the USA
  • The valuable role of the National Honey Board in expanding total and per capita consumption of honey and the consumer’s perception of honey’s value, quality and health benefits.

Industry members with information and suggestions regarding the above topics are encouraged to contact me by email with their comments.

The Bees, their Honey, and the Industry

Migratory bee practices are used in the US, Argentina, Canada and elsewhere. These practices are increasing the stress on the bees, as monodiets are doing. To protect bee populations and plants from disease and also to provide adequate feed throughout the year, the use of pesticides and external feeding regimens for pollinators are becoming increasingly imperative. Protection of both bees and the plants they pollinate, and the diversity of feeding parameters, are inevitably expressed in the diverse chemical profiles found in honey. Beefeeds change, and these changes affect the chemical profiles of honey itself. The international global honey market, if it is going to have adequate and continuous supply of honey, will have to develop standards that take these realities into account. If we could increase the creative marketing of honey, but do not establish reasonable and realistic standards for residues and the natural diversity of chemistry found in honey, our marketing efforts will represent a pyrrhic victory. It is essential that the international honey market, including the American honey market, moves to establish such standards.

The protection of vulnerable bees inevitably implies that, except for ultrafiltered honey, which is illegal to sell as honey, honey does not exist in a Mythical Realm of ultrapurity. The honey industry, like other food industries, must establish either or both realistic tolerance levels or testing limits that are based upon an assessment of ADI (average daily intake). This is essential for domestically produced and foreign imported honey. More and more members of the honey industry, whether producer, packer, importer or exporter, are facing this fact and trying to take a pro-active and pre-emptive measure to introduce some realism to guide the international and domestic flow of honey.

There are new forms of cooperation and collaborative efforts among scientists, beekeeper and farmers to protect the pollinators whose vigor is essential to agricultural production of anti-oxidant fruits, tree nuts and vegetables.

The National Honey Packers and Dealers Association has initiated consideration of a dialogue with the U.S. government to address the need for testing and/or tolerance levels. Such efforts typically require considerable expense, considerable time and the ears of thoughtful members of Congress. Since there is a broad coalition of shared interests, such efforts afford opportunities of effective collaboration among packers, beekeepers, importers, exporters and related trade associations. The sooner such efforts begin, the sooner positive results will be achieved. The broader the cooperation among all groups sharing common interests, the more likely the efforts will be successful.

Despite difficulties in U.S. domestic honey production in 2013, the total consumption and total value of the American honey industry has maintained a pattern of growth, irrespective of macroeconomic conditions, over the past decade. That is the good news.

CPNA International, Ltd.

1043 Oyster Bay Road

East Norwich, New York 11732

Tel: (516) 935-3880

Fax: (516) 628-3959

e-mail: info@cpnaglobal.com



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