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American Bee Journal Extra
 

July 28, 2015

 
International Honey Market Update

 by RON PHIPPS
President, CPNA International Ltd.1
Co-Chairman,
Committee for the Promotion of Honey and Health

 
"I'd rather go fishing."

Introduction
In May and June there was a significant decline in international honey prices.  There is currently a search for a point of stability or a bottom to the market.

Because in past years Argentine honey contracts for January to June were renegotiated upward in price or shipments were substantially delayed, U.S. packers bought very aggressively from the domestic and Canadian crops during the 4th quarter of 2014 in order to avoid repeating previous 2012-2014 shipping problems during the first half of 2015. Accordingly, purchases of U.S. honey increased 13% in the period January to May 2015, compared to the same period in 2014, and prices were strong. The imports from Canada in the first 4 months of 2015 were nearly equal to the 12-month import volumes of the preceding year. Imports from Ukraine, especially Extra Light Amber, have increased dramatically in the past 18 months.

How a Point of Inflection was reached is an interesting story. Firstly, there was more aggressive purchasing of the North American crop in order to assure adequate supply, Secondly, there was a group of countries (A), including Turkey, Thailand and Taiwan, which were shipping at substantially lower prices during the first quarter of this year. The low prices and increased availability from those countries was used to compel South American honey prices to follow suit. After inventories of the crops grew, finally the South American exporters (B) began to reduce prices in the past 2 months. The availability of unsold and lower priced honey from countries B will undoubtedly serve to press down prices for US honey and Canadian honey.

In September, 2014, before a pan-South American Beekeepers meeting at the borders of Argentina, Brazil and Paraguay, I introduced the premise that after many years of continuously rising prices for honey, the international honey market was reaching a Point of Inflection. It is not only normal to have such transition points, which have been experienced sharply for petroleum, soybeans, corn, gold, copper and other commodities, but it is healthy. Consumers and manufacturers do not want to see prices inexorably rising. Argentine honey prices rose steadily for over 10 years, from 2005 to 2015 and were ripe for a correction.



The deeper danger is that if a Point of Stability balancing the incentives to produce and consume is not reached soon and by the time the North American honey crop is completed, the incentive to produce honey will weaken and some beekeepers will abandon honey production. The current emerging imperative is for the International Honey Market to reach a Point of Stability which will integrate and balance the incentives for production and consumption of honey. The old agricultural adage applies: “Low prices are their best cure and High prices are their best cure.”

The market is entrapped in a period of declining prices which paralyzes the willingness to purchase honey as buyers fear if they buy today and their competitors wait and buy some tomorrow at lower prices, their competitiveness will erode and their market share decline. Since packers accumulated significant inventories by June/July of this year, and consumption levels were at normal low summer levels, there is less risk in waiting and more risk in buying in what has been a declining market. Why has this situation developed?

Statistics and Causes
For reasons mentioned above, many packers bought the 2014 domestic and Canadian honey crops very early after the completion of the harvest. Then there was a surge of honey exports from several countries, including white honey from countries which typically ship Extra Light Amber (ELA) and ELA from countries that export Light Amber (LA). The prices of some of this honey were extremely low. For example, the import value of White and ELA from Taiwan dipped to $1.03/lb. and Thailand shipped ELA at $1.25/lb. This surge from a group of countries (Group A) affected South America, especially Argentina, where prices remained high.

The situation of high inventories and declining prices in South America (Group B) will inevitably create great pressure on the 2015 USA honey crop for dramatically reduced prices. Some statistics follow:

TOTAL HONEY EXPORTS DURING FIRST QUARTER OF MAIN 6 ASIAN AND MAIN 6
AMERICAN EXPORTING COUNTRIES (METRIC TONS)
Sources: UN COMTRADE statistics



TOTAL HONEY EXPORTS TO US DURING FIRST QUARTER OF MAIN 6 ASIAN AND MAIN 6
AMERICAN EXPORTING COUNTRIES (METRIC TONS)


Sources: USDA Data

In 2014-2015 Ukrainian honey has played a more important role in the US market, but the EU has also opened the door to increased imports from Ukraine.  The EU change reflects both geopolitical factors and the reduction of concerns about antibiotics which had been very acute in the past for Ukrainian honey.

When honey was at historic high prices, honey consumption in the U.S. remained strong, and even grew, as decades of marketing efforts bore fruit, along with a heightened appreciation for the bees and beekeepers and the increased fragility of the world’s pollinators and global ecosystems.

Argentina, Brazil and Uruguay
Four months after the completion of Argentina’s 2014/2015 harvest, 50% of the crop is estimated to be in the hands of Argentina’s beekeepers and exporters are reported to have their own warehouses of honey which are moving slowly, if at all. If neither honey exporters nor beekeepers can move existing inventories, or they have to endure heavy losses in selling below cost, many beekeepers will leave the business, putting considerable strain on the future of Argentina’s honey industry. Prices have declined 25% during the past 8 months from their historic highs. As inflation remains high and parallels the weakening of Argentina’s currency, the burdens faced by the Argentine honey industry, like that of other South American honey producers, are threatening the survival, not merely the health, of this major exporter of some of the world’s finest honey. The Argentine market has also been distorted by a peculiar government requirement (which may violate WTO rules) that says companies that import foreign goods must export Argentine products.

The internal political situation in Argentina remains fraught with uncertainty and conflict centered on unresolved debt issues, Falkland Island issues, etc. If and how these conflicts are resolved, and what happens in the upcoming election, will influence overall economic development, the value of the peso and import/export policies. Comparing the first half of the past two years, Argentine honey exports to the world and to the US declined dramatically:

Metric Tons

Brazil Honey Exports to World                                             14,524         11,779    


The Brazilian market has been very very quiet. Exports to the world have declined and there is some minor activity to Europe. The concern with market stability and uncertainty about the European crop has created a similar state of passivity and suspension of buying in Europe, as in the U.S. Prices have declined, but not as severely as in Argentina. Brazilian organic honey prices have declined about 15% from the historic highs reached in 2014. The new crop of organic honey will not begin until October, 2015, which means it will not reach the U.S. until December. Even though Brazil is a low risk country for circumvention, there are more honey exporters who have become True Source Certified.

In Uruguay, prices to beekeepers fell about 15% in the summer of 2015, and nearly reached the cost of production. The inventory of unsold, unshipped honey is very small.



Vietnam
Vietnamese honey prices initially rose in early 2015, with new crop, but as in other countries, the prices have been declining since May. About 39 million pounds were imported into the U.S. in the first half of 2015. A significant amount of that honey was from the 2014 crop.

Many packers throughout the U.S. have experienced great difficulties in handling Vietnamese honey ever since Acacia mangium became a predominant floral source presently accounting for an amazing 60% of the total production. As the industry knows, that honey rapidly darkens after production changing from Light Amber to Amber and Dark Amber.

The cold weather at the beginning of the year led to delays in production and the need to feed the bees.  The early crop as a result suffered from some quality issues. All of these tendencies have reduced the demand on Vietnam honey. Inventories in Vietnam are reported to be high and warehouses packed. The increases in production from Acacia m. and the high prices attracted many new exporters (non-professional) in Vietnam who have jumped into the honey business, but may jump out again as prices slide. The experienced and professional honey exporters have difficulty competing with those who entered the industry quickly and are now struggling to unload their honey. One friend said, “I’d rather have a long vacation with my children.”

Amber and Dark Amber honey will dominate supplies in the second half of 2015 and the first part of 2016, as production from litchee, coffee and rubber declined.

U.S. Honey
Current estimates of the 2015 crop indicate 160 million pounds plus or minus 5%. Bumper crops of 200 million pounds have become elusive, as have yields of 120 pounds/hive. The prized clover crop of the Dakotas looked promising as there was an abundance of flowers. But colder weather intervened, bees had to be fed and actual foraging by the bees was inconsistent. Similarly, beekeepers report that the yields per hive were inconsistent. For example, 6-8 hives could have a good yield, but 10-15 hives could be below normal. Yields per hive have lost their former uniformity. The condition of queens has weakened due to inconsistent and poor weather conditions during the early breeding period.

It is worth noting that the Class Action lawsuit brought by American beekeepers under the racketeering act (RICO) against Groeb Farms and Honey Holding, which were subjects of a Deferred Prosecution Agreement issued by the U.S. Department of Justice, Northern Illinois District, was settled in March, 2015, for $3 million. Details appear in the legal record.

The increased National Honey Board fee, which went into effect in February 2015, is being collected by Customs in stages, with the first increase at $.00555 and a similar increase scheduled for 2016.



Imports in 2015
At the end of June, 2015, indications were that imports from Asian countries were in the range of:

Vietnam       39,000,000 lbs.
India             29,500,000
Thailand      12,900,000
Taiwan           5,200,000

Imports from the Euro region were approximately:

Ukraine       17,600,000
Turkey          6,800,000

Please note the following import statistics for Jan-April 2015 compared to 2014:

                             4 months 2015       12 months 2014
                                 In pounds                   In pounds

White Honey
Canada                      9,798,881               11,364,238
India                           1,447,113               11,385,244
Thailand                        695,447                    280,251

Imports by Country
Burma                         1,753,334                    892,252
Taiwan                       1,173,808                    251,889
Thailand                     7,749,839                7,619,244
Turkey                       4,473,747                5,428,407
Ukraine                      8,559,091              19,353,993

Climate Change
The National Atmospheric and Oceanic Administration indicated that three of the world’s official climate agencies, with the greatest access to comprehensive global weather data, confirmed that 2015 was the hottest June on record and that this year portends to be the hottest year in recorded world history. Both NASA and the Japanese Meteorological Agency confirmed that the global weather from January to June 2015 was the warmest for any first half of the year on record since 1880. Four of the six warmest months in recorded history have occurred by June 2015. The meteorologist Jeff Masters indicated that a very powerful El Nino continues to intensify. The current El Nino is particularly worrisome in that there is an over 80% probability that it will last until May 2016. It is predicted that the strongest El Nino will assert itself this coming December to February, due to the warming of the Pacific.

The extensive drought in Australia has caused the early slaughter of cattle herds, which could not be sustained. As a consequence, Australia has increased its export of beef by 70% and prices have declined from a short term supply glut which foreshadows a coming shortage.

The deepest impact of climate change, within a planet where atmospheric, oceanic and land-based changes are so interactive, are increased severity and volatility of extreme weather events. The honey industry is rolling the dice if it de-incentivizes beekeepers in a context where agriculture is threatened by climate change. The international press is reporting data that makes a link between climate change and problems for agricultural production.

When we were in California’s Central Valley in mid June we witnessed the San Luis Reservoir at 89 feet below normal. The drought in California has reached historic proportions, the reservoir levels are far below normal and the roads and bridges are under stress.  In other parts of the world such as India and Pakistan, there is extreme heat or rain. Paris, London and Seattle experienced this summer their respective hottest days on record. We must find better ways to exercise responsible stewardship over our planet.

Honey Testing
From several conferences and meetings this year it is becoming clear that the issue of circumvention to avoid antidumping duties is being joined by growing issues of adulteration. Studies of the adulteration of honey have been extended.  The German labs have found 100% of samples from certain countries to be adulterated honey.

Interestingly, at the major scientific conference on honey which occurred in March in China, China’s consumption of honey was reported to be considerably larger than its production of honey.  For some time now the Chinese press has been writing about problems of food safety and food adulteration, including adulteration of honey within China, and consumer complaints have been posted on the web.

Chinese supermarkets have mobile apps so that consumers can immediately find out where, when and how the food offered for sale was produced.  This is taking the True Source mission to a much deeper and wider level.  These devices are to consumers because the problems of food safety and purity are deeper than before. Such technology is also being introduced in the U.S.

There is growing evidence that the resin technology developed in China for honey has been exported to numerous countries and has been utilized to remove antibiotics, pollen and lighten the color by removing those naturally occurring constituents that give honey its color. By lightening the color, the salability of that honey is increased. The use of resin technology is regarded by most definitions as adulteration, which can disguise the country of origin and thereby facilitate circumvention. While the nuclear magnetic resonance test (NMR) can help detect the use of this technology, the current data base is too weak to avoid both false positives for adulteration and false negatives for its absence.

The development of Nuclear Magnetic Resonance technology continues to make advances. The requisite global data base for conventional and organic honey is in an early stage. It is important that the database be properly established because the NMR technology was used 20 years ago in France and there were false positives for adulteration that involved American wines.  Nonetheless, the NMR testing is important because it can detect the use of resin technology which is used to remove antibiotics and lighten colors of honey.  Its successful use will require a global data base.

We need a more comprehensive data base and deeper scientific understanding of the variables that affect the characteristics of honey. The establishment of a fully public and scientifically authenticated database cannot be confined to for-profit entities, but must involve a collaboration of public, private, university and government laboratories. The lack of a comprehensive data base and knowledge of the variables that affect honey underlie the contradictory results of analysis and the lack of fully accredited methodologies. Dr. Joseph Bowden has reported Dr. Jonathan White’s initial test using carbon isotope analysis led to many false positives because there was inadequate data. To establish scientifically and legally credible results Dr. Bowden suggested we need to know where the honey was produced, when it was produced, what the weather and environmental conditions were, and the floral sources. Since efforts to prevent circumvention of honey, customs fraud and improve food safety have led to the establishment of more rigorous traceability regimes, it may be both helpful and necessary to include in the traceability reports data regarding the above four variables. We have learned there is no single profile of honey, but multiple profiles for honey produced in different regions and from different botanical sources. We can gather traceability information from producers and exporters and use that scientific information to assess the chemistry of honey and avoid false positives and negatives. To adhere to the principle science first, standards second, and to avoid both false positives and false negatives, a collaboration of the interntional honey industry may require knowledge of production variables for particular lots of honey to assess whether that particular lot conforms to the chemical profile of honey from that producing area and floral sources. This type of approach and collaboration between independent, academic, and government laboratories is consistent with the FDA Protocol for Honey.

Conclusion
The International Honey Market is poised between a rock and a hard place. Short-term and long-term interests are in a state of serious conflict. The imperative to understand the underlying causes of the steady and sharp decline in honey prices as different producing areas contend with each other is attracting the interests of beekeepers, packers, exporters and importers around the world.

If we are to avoid entering a stage of wild volatility and instead focus the industry’s energy and resources on creative marketing, we must find a Point of Stability that balances and integrates the incentives to produce and to consume honey. Otherwise, we will hear more beekeepers saying they’d rather go fishing and wait for the fish to bite than wait for the honey market to cease its corrosive decline. We must support the incentive to produce this wonderful product of nature while increasing, through creative marketing, the incentive to consume this charming and healthy product of nature.

1  CPNA International, Ltd.
    1043 Oyster Bay Road
    East Norwich, NY 11732
    Tel: (516) 935-3880
    Fax: (516) 628-3959
    e-mail: info@cpnaglobal.com
    Report distributed July, 2015

Mr. Phipps is president and founder of CPNA International, Ltd. and is currently on the National Honey Board. He is an importer of honey, natural foods and tea from various international producers. Ron is also the former personal research assistant to the president of the American Philosophy Association. He is a recipient of the National Science Foundation fellowship for philosophy of theoretical physics. Mr. Phipps is a founding member of the Tea & Health Committee, which organized three major scientific symposiums on tea and health and the role of antioxidants in the prevention of disease. He has worked with FDA to develop a research protocol for the global diversity of honey. Currently, Mr. Phipps is president of the Chamber Players International.

 

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