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PMA Research: Who supplies the Middle East’s increasing demand for fresh produce

Monday, 14 August 2017 | Posted in Global Trade by Renee Harrison

According to The Economist, the growing populations of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, also called the Gulf Cooperation Council (GCC), point to increased dependence on imported food staples. Food imports are projected to grow to US$53.1 billion by 2020. Major factors driving the GCC market include growing domestic and expat population, rising health consciousness among the population, changing tastes and preferences, and growing disposable income leading to higher consumption of nutritional foods as part of a stable diet. The United Nations’ figures reveal themiddle east imports population of GCC countries jumped by 18.9 percent in the last five years. In countries like Saudi Arabia the birth rate has topped 20 percent consistently in recent years. According to a report published by the Economist Intelligence Unit, by 2020 the GCC population is forecast to reach 53.5m, a 30 percent increase over the level in 2000.

PMA reports that consumers with changing tastes are willing to pay a premium for an assortment of produce offering freshness, quality, flavor, safety and convenience. “Young and affluent Western food-loving consumers are driving the growth and demand for imported goods and foods in the Middle East,” states an analyst from Mintel. In addition, there are healthy eating efforts toward purchasing more fruits and vegetables.

Falling groundwater and aquifer levels in the Arabian Peninsula, limited rainfall, arid climate, overreliance on imports and rising soil salinity are affecting the fruits and vegetables market. The region’s dependence on desalinated water means that meeting more of its food needs through domestic production is not an option in the long term.  

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PMA Research: How suppliers will capitalise on China’s small retail formats

Monday, 14 August 2017 | Posted in Global Trade by Renee Harrison

China’s retail environment is evolving as convenience, specialty, and online are growing by leaps and bounds. Hypermarkets, which redefined China’s retailing environment over the past decade, registered their first-ever drop in 2015, losing 0.2 percent value in the urban FMCG market as traffic dropped by 4.6 percent and volume per household sank by 4.7 percent (Bain Kantar Worldpanel 2016), due to competition and high market saturation in Tier 1 cities.

According to Euromonitor, a growing number of Chinese retailers are shifting away from large store formats such as hypermarkets andGrowth of Small Store Formats in China supermarkets to concentrate more on smaller store formats, like convenience stores. This move aims to not only meet consumers changing shopping emphasis on convenience, but to also follow an omnichannel strategy to maintain competitiveness. Convenience stores generated 13.2 percent growth in value in 2015 and had 8.5 percent penetration growth across all city tiers, catering to cash-rich, time-poor urban consumers (Bain Kantar Worldpanel 2016). Some of the leading players, such as Carrefour and Yonghui, aimed to segment the market even further, by launching Easy Carrefour and Yonghui Membership Stores, providing more premium products and in particular increasing the share of imported products.

Fruit specialty chains such as Pagoda are driving growth. This chain owns more than 1,000 outlets. It recently acquired Beijing-based Guoduomei’s share and is aggressively opening new stores in Beijing and Shanghai in 2017 (USDA FAS Annual Retail Foods Report – China).

Additionally, competition is increasing as China’s online sales continue to grow rapidly. China is the world’s largest e-commerce market, and online sales surpassed $670 billion in 2015. One of the main drivers of this exponential growth was sales of online fresh fruit. The online purchase of fresh produce is quickly becoming a preferred purchase channel for Chinese consumers, especially among young professionals in Tier I cities. 

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Market Entry Strategies for Importing Fresh Produce to China

Thursday, 14 July 2016 | Posted in Global Trade by Renee Harrison

For foreign fruit and vegetable exporters looking to gain access to Chinese markets, three factors must be considered for market entry:

  • the permissibility of the fruit and vegetable product to be imported into China
  • distribution channels
  • Chinese importing partners

It is advised that exporting parties contact their respective government departments and officials (country embassies), hire a consulting company or law firm for intellectual property concerns, or seek other such external advice in addition to conducting their own research before settling on an entry method.

For fresh produce exporters considering the Chinese market, this article details information about gaining market access in China, distribution channels and options for import partners.

Numerous market entry strategies exist for foreign fruit and vegetable exporters looking to gain access to Chinese markets. The most suitable method of entry is dependent on numerous factors, such as the permissibility of the exporter’s fruit and vegetables to be imported into China, which distribution channels the exporter plans to operate, and the exporter’s choice of Chinese importing partner.

Market Access

Pre-market Access Procedures

The first, and most important, step in obtaining market access for foreign exporters of produce to China is to determine whether the product and country of origin is included among the list of permitted imported fresh fruit and vegetables into China.

As of February 2016, 39 countries have been granted market access to import specific fresh fruit and vegetable categories or items. An official listing of all permissible fruits and countries of origin is maintained by AQSIQ on its website, which is only available in Chinese. Here is the latest list in English.

If both the intended fruit and vegetable export item and country of origin are listed, then technical market access has been achieved and the exporter can begin to explore their options concerning distribution channels and importers/import partners. If either the country of origin or specific fruit product are not listed by the AQSIQ as allowed import into China, technical market access has not been achieved and the exporter must initiate bilateral discussions between their own government and Chinese officials. 

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A Fresh Produce Export Guide to China: Chinese Governing Bodies Overseeing Imports

Thursday, 14 July 2016 | Posted in Global Trade by Renee Harrison

There are various Chinese governing bodies involved in the authorization of imported fresh produce:

  • AQSIQ
  • CIQ
  • CIQA
  • GACC

This article provides information about each of the governing authorities for companies exporting fresh produce to China.

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Horticulture values on the up

Thursday, 3 March 2016 | Posted in Global Trade by Renee Harrison

Trade deals and a weaker Australian dollar have been credited with the positive forecasts projected for Australia's horticulture industries. The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES)'s Outlook 2016 agricultural commodities report released today shows strong potential for further sector growth on the back solid 2014-2015 figures.

There are few forecasts within the report that fruit, vegetable and nut producers would sigh at, with the report painting a glowing future for the horticulture sector. The gross value of horticultural production is expected to increase from $9.3 billion in 2014–15 to $10.2 billion in 2020–21. Exports of horticultural products are expected to expand from $1.1 billion in 2014–15 to $2.2 billion in 2020–21.

While Australia may be set to send more overseas, it also seems poised to import more. In recent years about 30 per cent of horticultural imports by value have been fresh produce, with the remaining 70pc processed. However, around 80pc of Australia’s horticultural exports are fresh produce. Since 2003–04 the total value of imports of horticultural products has exceeded the value of exports, and the gap has widened over time. In 2014–15 total fruit, nut and vegetable imports were valued at $2.7 billion, $834 million more than the value of exports.

It's a different story for the fresh sector specifically though, with the value of fresh horticultural exports continuing to exceed the value of fresh imports. Fresh horticultural exports were valued at $1.1 billion, twice the value of fresh imports. ABARES reports both exports and imports of fresh horticultural produce are expected to grow in the medium term, with the value of exports exceeding the value of imports.

Nudging this export growth along was a weakened Australian dollar in the three years to 2015-2016. The assumed low value of the Australian dollar is expected to support a projected rise in the value of horticultural exports over the medium term (to 2020–21). "New trade agreements with China, Japan and the Republic of Korea have resulted in reduced import tariffs on several Australian horticultural products, and further reductions are scheduled over the coming years," the ABARES report said. "The Trans-Pacific Partnership Agreement, once it comes into effect, is expected to provide further trade benefits to Australian horticultural exports."

One of the determining factors as to exactly how much horticulture expansion takes place is water availability which ABARES said will "continue to be a major factor affecting horticultural production over the years to come. The Bureau of Meteorology’s current outlook for the next few months is for average to above average rainfall in much of eastern Australia, so horticultural production in the remainder of 2015–16 is not likely to be constrained," the report said.

"The gross value of horticultural production is expected to increase from $9.3 billion in 2014–15 to $10.2 billion in 2020–21" - ABARES Outlook 2016

Australia's ability to tap into counter-seasonal demand for its products will be key to further industry development, according to ABARES. Breaking it down, the gross value of Australian fruit and nut production, excluding wine grapes, is forecast at around $3.7 billion in 2015–16. This follows a rise from the low of $3.2 billion in 2013–14 to $3.5 billion in 2014–15.

The overall value of Australian vegetable production increased from $3.2 billion in 2000–01 to $3.6 billion in 2013–14. "Capsicum, mushroom, sweet corn and zucchini production contributed most to this increase, while the real value of carrot, potato, cabbage and lettuce production declined," ABARES said. "Vegetable production is projected to continue to expand to meet domestic market requirements, and some increase in export demand, to reach $4.2 billion by 2020–21."

Strong competition in both the fresh and processed arenas from other countries in recent years has seen a significant slide in vegetable exports however. Where in 2000-2001 they drew some $478 million, that slipped back to $278 million in 2012–13. Exports increased to $299 million in 2014–15.

Vegetable exports have shown further vigour in the first half of 2015–16 with the value of vegetable exports projected to increase by 10pc to $325 million and to increase steadily to around $350 million in 2020–21. Almost 60pc of Australia’s vegetable exports in 2014–15 were fresh. Carrots, potatoes, onions, asparagus and vegetable seeds contributed most to the value of vegetable exports in 2014–15. New Zealand, Japan, Singapore and the United Arab Emirates were the major destinations. Vegetable imports increased to $962 million in 2014–15, a whopping 80pc more than in 2000–01. New Zealand provided 20pc of Australia’s vegetable imports in 2014–15.

The value of fresh vegetable exports in 2014–15 was $173 million, more than twice that of fresh vegetable imports. In 2014–15 asparagus was Australia’s largest fresh vegetable import and the second-largest fresh vegetable export. 

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Article writen by Ashley Walmsley, Good Fruit and Vegetables
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