World lime market

  • Published on 26/01/2015 - Published by IMBERT Eric
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Still green!

More than twenty years of two-figure growth! There are few markets in the world of fruits and vegetables that can boast such a performance. And this momentum, which has enabled international trade to go from less than 50 000 t in the late 80s to more than 550 000 t in 2013, is showing no signs of weakening. As proof, the market has risen steeply in the past few years, with imports up by more than 100 000 t between 2011 and 2013. However, the lime market professionals have a very narrow operating base, working with a single variety, two supplier countries and two markets! FruiTrop offers you this review of a fruit that seems to have many fine days still to come.

Latifolia, for its size and seedlessness

The fruits of the most widespread lime tree, namely Citrus aurantifolia, also known as the Mexican, West Indian or Key lime, represent only a really minimal share of world trade. This variety is primarily sold on producer country markets, where it is prized for its aroma, to the point of it being dubbed the “subtle lemon” in Peru and Mexico! It is the variety Citrus latifolia, known commercially as the Persian, Tahiti or Bearss lime, which is preferred by international operators. Its fruits have the advantage of being considerably larger than the Mexican lime and being seedless, whereas there are often large quantities present in the fruits of its cousin. Furthermore, it is less demanding in terms of climate due to its lower cold sensitivity.

lime world trade
lime world trade

Two main supply centres

There are two heavyweights of world citrus growing which control the bulk of the international trade. Unsurprisingly, Mexico, the world’s fifth largest citrus producer and world’s number one lime producer, with a harvest of more than 2 million tonnes per year, is the main market supplier. It is no exaggeration to say that this source is carving out the lion’s share, since the 450 000 to 550 000 t exported in recent years represent between 80 and 90 % of world exports. The Persian lime has become a success story in this country, since producers were able to seize the opportunity, and build in record time an industry with a turnover fluctuating between 250 and 300 million USD per year.

A genuine success story in the Veracruz region

The Citrus latifolia variety was introduced late to Mexico, on the West coast where the frost risk prevents cultivation of the Mexican lime, which is favoured by local consumers but extremely cold sensitive. Its production only really started to develop from the 90s, after the neighbouring United States was struck by a stroke of fate. Indeed, Floridian production, on which nearly the whole country’s supply relied, never recovered from the consequences of Hurricane Andrew in 1992, which cut the lime plantations in this State to one third of their former area. On the back of this event, a hyper-specialised production/export centre was built around Veracruz, at the initiative of a handful of companies with an international outlook. This Mexican State now packs in the bulk of production (particularly near the city of Martinez de la Torre), while the States of Oaxaca, Tabasco and Yucatán also have significant cultivation areas. The relationship between the Mexican industry and the United States market remains very close to this day. The West Indian lime is mainly cultivated in the East Coast States (Michoacán, Colima, Oaxaca).

lime
lime

Large-scale Brazilian production, also geographically concentrated and recently developed

Brazil, the world number two citrus producer country behind China, contains the world’s other main lime export centre. The industry is not without points in common with its main competitor. As in Mexico, Brazilian citrus growers managed to develop between the 70s and the present day a major lime production centre, whose harvest is measured in millions of tonnes (1.2 million tonnes on average in recent years). Its production is just as geographically concentrated as in Mexico: approximately three quarters of volumes are from Sao Paulo State, with the zone situated around the city of Itajaubi on its own providing two thirds of regional production. There are also significant cultivation areas in the neighbouring State of Minas Gerais, as well as in more northern zones such as Bahia. Conversely, the varietal mix differs considerably from Mexico. The Tahiti lime has a much bigger presence than the West Indian lime, affected by major sanitary problems, and locally dubbed the Galician lime (Limao Galego). The Rangpur lime (Limao Cravo) is also very familiar in the country. 

lime brazil
lime brazil

Local outlook clearly predominating

Nonetheless, the volumes exported by Brazil are a long way behind Mexican volumes. They are seeing steady growth, but have not yet reached the symbolic 100 000 t per year threshold (probably 90 000 t in 2014). On the one hand, these two industries have different outlooks. While Mexico’s Persian lime industry was built to feed the United States market, and more widely international trade, the Brazilian industry has a clearly local outlook. The strength of the Brazilian market is not the only impediment to exports. The Brazilian lime cannot access the United States market for sanitary reasons. Furthermore, it also suffers from more less favourable customs conditions than its Mexican counterpart on the European market (8.75 % duty as opposed to complete exemption for Mexico).

lime mexico
lime mexico

Competitors, yet also complementary

Although clearly competitors, the two heavyweights of the world market are also cultivating some strong complementarities, the most obvious being the production calendar. While the big production centres of these two countries have year-round production, the monthly harvests are far from regular, yet they complement each other fairly well. For Mexico, production culminates from May to September, the greater rainfall during this period in the Gulf of Mexico boosting yields. In the Sao Paulo region, production is abundant during the first half-year, with large quantities set aside for industry in the very heavy period from mid-February to March. Nor should we omit the cultivation areas in the northern part of the country, especially in Bahia State. Though modest in size, their production calendar is approximately three months offset from the main zone. Thanks to them, Brazil can offer at least some supply ten months out of twelve.

Complementarity can also be observed in the qualitative characteristics. Brazilian fruits are renowned for their greater juiciness, and are considered by some more aromatic than Mexican fruits. As for the latter, their outward appearance is their strong point: the skin coloration is a more intense green. To fully capitalise on this asset, an air-freight supply has been set up from Mexico. These characteristics are often a selection criterion for customers, who, depending on the planned use or positioning of their range, will prefer to offer one or the other of these sources. The other suppliers to the world market represent only very minor volumes, and are primarily from Central or South America (Guatemala, Colombia, Honduras, etc.).

Lime, a product close to the United States in every sense

If the upstream segment of the market is narrow, the downstream segment is no less so: the United States is the beating heart of the world market. Close to the big production zones, consumers are also close to the product by virtue of the large population of Latin American origin, and the existence of local production in Florida until the 80s. Hence the United States absorb more than 80 % of international trade, with imports peaking at nearly 450 000 t in 2013. The dynamic has been particularly vigorous over the past few years, with volumes delivered to the country climbing by 200 000 t in ten years. This has been practically to the sole benefit of Mexico, which provides around 97 to 98 % of the supply. The only competitor that ships significant volumes, of around 5 000 t per year, is Guatemala.

Europe’s taste for the exotic

Europe is the other main consumption centre of “green lemon” imports. With just over 110 000 t imported in 2013, this market is much smaller-scale than its US counterpart. Nonetheless, the growth dynamic is just as present on the Old Continent, with imported volumes tripling in ten years. The lime is tending to replace the lemon in some of its uses (decoration of dishes, etc.). Above all it is harnessing the growing hunger and thirst for exotic cuisine and beverages from increasingly well-travelled consumers. Furthermore, while the lime is consumed all year round, there is a particularly pronounced craze during the high season: daily sales from early May to late September are 2 to 2.5 times greater than those recorded the rest of the year, excluding the weeks of exotic fruit promotions (Christmas, Chinese New Year and Easter). The giant night clubs of Ibiza apparently buy lime by the pallet during the summer period!

lime main suppliers
lime main suppliers

Supermarket sector playing the game, especially given how lucrative it is!

The supermarket sector has been able to surf this wave of Ti’ punch and other Mojitos. The lime has a year-round presence in all the chains, with a fairly wide segmentation. In France, you can always find the 500 or 750 g net bag (size 60 as a general rule), alongside the reference loose fruit (size 48 or 54). Certain chains even offer air-freight loose fruit and sea-freight loose fruit at the same time. Many of the discounters have entered the fray, offering a net bag supply all year round. Furthermore, the distribution sector has been able to take advantage of a less inflexible demand than for the lemon. Promotions really give a boost to sales, particularly those combining lime and alcohol, as commonly applied by the discounters. These efforts to promote the lime are of course not disinterested. While sales volumes are much greater than those of “small exotics”, retail prices remain typical of this range, with the consumer generally paying them little heed on this product, purchased a few items at a time.

A citrus with the characteristics of a “small exotic”

While the supply to the Community market is more diversified than to the United States, 95 % is still based on the two heavyweights of the world trade. Imports from Colombia, the number three supplier to the EU-28, barely exceed 1 000 t per year. It is Brazil, which is unable to export to the United States, which dominates the supply. Unlike the “big” citruses and the rest of the small exotics range, sea-freight lime prices are highly responsive, fluctuating within a wide range (very roughly 6 to 14 euros per 4.5 kg box at the wholesale stage, or even more in exceptional circumstances).

This volatility is of course due to the vagaries of supply and demand, but also to the trading difficulties with the product. While the lime is a citrus, it is traded like a small exotic, since it must be sold very quickly to preserve its characteristic coloration (one week max. for sea-freight merchandise). Furthermore, it is the exotic fruit specialists which are most involved in the trade, since it is a strategic product subject to regular orders, able to form the basis of pallet loads. Rates generally bottom out in March/April, when Brazilian production peaks and demand is still dormant. Mexican imports arrive bit by bit during this highly competitive period, with the US market a safer bet in a context of moderate production. When the fine days arrive, sales can pick up and prices rise. The end of this period generally heralds a slump until October. Some distributors seek to guard against these sometimes abrupt movements by imposing an annual contract on their suppliers. While this quest for convenience is understandable, it is incompatible with the seasonality of production which importers must handle. 2014, a chaotic year in terms of climate in Brazil and Mexico, demonstrated the extreme volatility in production and the extreme peril of proposing an annual price.

sea freight lime
sea freight lime
lime airfreight
lime airfreight

Toward continuing growth in the United States

So what of world growth over the coming years? Will the United States continue to play its driving role? More than 80 % of growth in international trade recorded over the past five years is attributable to this market alone. The consumption per capita reached 1.4 kg in 2013, a record for a non-producer country. It is even approaching the levels of the lemon, though without affecting this fruit, which has maintained a high level of 1.6 kg/capita. How much more can the market grow? It is hard to say, since there is no existing point of comparison. Nonetheless, some factors argue for the market continuing to grow. Firstly, the dynamic is not weakening, and has even accelerated in recent years. Secondly, the scale and growth of the population originating from high-consumption zones are an asset. The United States has approximately 20 million inhabitants of Asian origin, and 55 million Hispanics, of which 35 million people originating from Mexico, where consumption is approaching 10 kg/capita according to the USDA. Finally, the increasingly big breakthrough of Mexican cuisine is another strong point. According to a projection dating from 2012, the Mexican fast food market, which already amounted to 8 billion USD, should reach 11 billion USD in 2017, to exceed that of hamburgers and hot dogs. Canada, though its population is less close to the product, is registering similar consumption levels at approximately 1.5 kg/capita.

lime consumption
lime consumption

Potential in Europe still strong

Europe is a long way from reaching the same consumption levels as the United States. The volumes absorbed per capita per year are less than 300 g, i.e. one fifth those of North America. Although the ethnic component is less present than across the Atlantic, this gulf leads us to imagine that there is a big margin for growth, especially since Europe too has exhibited a very strong dynamic in recent years. Some big markets remain small consumers. France and Germany, with 200 and 150 g/capita respectively, are a long way behind the regional champions, Scandinavia and the United Kingdom, where consumption is 330 and 400 g/capita. The Eastern EU markets are starting to take an interest in the product (Poland, Czech Republic), and the margin for growth is enormous, with consumption no more than 60 g/inhabitant on average. The lime is also starting to break through in Russia.

lime consumption europe
lime consumption europe

Different dynamics

The volumes should be in place to feed demand. The upward trend in Mexico’s Persian lime production should continue unabated over the coming season. Driven by the good health of the international market, and by a tighter local market because of the impact of greening on the East Coast cultivation areas (especially Colima), producers have continued to plant significant surface areas over recent years in the Veracruz region. According to the latest figures from the Mexican Ministry of Agriculture, the rate of growth of the cultivation area was around 1 500 to 2 500 ha per year in this State between 2011 and 2013. 

The situation is more nuanced in Brazil. On the one hand, surface areas are stagnating in the Sao Paulo region, and productivity is tending to wane because of the impact of greening, already much discussed in these columns. On the other hand, the major drought ravaging the zone is in the short term intensifying the decline in production, since the orchards, generally in the hands of small producers, in the vast majority of cases lack irrigation systems. Although there is an enormous margin of volumes available in view of the scarcity of exports compared to overall production, this trend can only reinforce the already powerful braking effect of the local market. Conversely, a growth dynamic seems to be in place in the more minor production centres. This is in particular the case in the Minas Gerais region, less affected by greening, and especially the Bahia region, which already provides nearly 30 % of exports to the EU-28. Surface areas reportedly doubled between 2010 and 2013, reaching 5 700 ha.

lime planted areas
lime planted areas

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