(Dec. 19, 3:00 p.m.) The global economic slowdown spells tough times in 2009 for U.S. grower-shippers, with exports and fresh-cut and value-added products stagnating, according to Rabobank International Americas, New York.

Analysts from The Netherlands-based bank’s International Food and Agribusiness Research and Advisory division presented the 2009 Rabobank North American Food and Agribusiness Outlook during a Web broadcast on Dec. 18.

The export market will be a challenge in the coming year for U.S. grower-shippers, said Marieke de Rijke, assistant vice president and produce analyst.

“The U.S. has done a great job of exporting in 2008, and it has benefited from the low value of the U.S. dollar,” she said. “But the dollar has appreciated.”

Some domestic marketing organizations did such a good job for exports that the foreign demand will continue, she said.

“In the past a lot of California produce has been a luxury food item in developing countries, but now those products are becoming almost a staple and more common,” de Rijke said.

While freight rates have dropped and some commodities, such as berries, almonds and pistachios, are popular among consumers in Europe and Asia, it will be more risky to export in 2009, she said.

“Some growers may decide to keep and sell domestically,” de Rijke said.

Domestic outlook

The long-range domestic outlook is positive, she said, because the U.S. population is projected to continue to grow for another three to four decades, particularly among Hispanics and Asians.

Those ethnic groups, she said, traditionally consume large quantities of fruits and vegetables.

The sagging economy will continue the difficult times in 2009 for retail and foodservice, said Steve Rannekleiv, vice president.

“Consumers are insecure about the future,” he said. “Retailers will have to work harder in 2009 to get them to spend.”

The outlook for foodservice is mixed. Fast food operators continued to show growth in 2008 though high-end restaurant sales fell off, Rannekleiv said.

With fewer Americans dining out, retail produce sales are increasing, de Rijke said. Meals consumed at home often include larger portions of fresh produce than are offered in restaurants, she said.

“So for the fresh produce industry in general, I think consumption will stay about the same,” de Rijke said.

The coming year may see a reversal in the demand for value-added and fresh-cut items such as bagged salads and cut broccoli crowns, she said.

“With this economic downturn, we may see a shift towards whole commodities or even frozen produce rather than fresh-cut,” Rijke said. “Fresh-cut is more expensive, and I think price will become more of a limiting factor in 2009.”

The short-term outlook globally for U.S. grower-shippers will depend greatly on exchange rates, de Rijke said.

“We are living in an uncertain world, and we don’t know which direction the economy will go,” she said.

Weighing sustainability costs

The pocketbook may dictate in 2009 how strongly shoppers embrace sustainability, Rannekleiv said.

“On the consumer side, price and value are going to become much more important, but I don’t think that consumers are going to become willing to sacrifice environmental sustainability in order to achieve a decrease in cost,” he said. “That could change if the downturn in the economy becomes prolonged or if prices really start to take off again.”

The growth of U.S. fresh produce sales in 2009 will likely not see the strong demand witnessed this year in developing countries such as China and India, said Michael Whitehead, vice president.

Growth in China in 2009 will slow by nearly half the 2008 rate, he said. Economic growth in China was 11.9% in 2008, but it is forecast at about 7% in 2009, Whitehead said. Rabobank sees more optimism for 2010, he said.