John Hey

As you will probably noticed from our front cover, your bimonthly guide to what’s happening in Asia’s fresh fruit and vegetable business has just become monthly (more or less). With effect from this May edition, Asiafruit Magazine has moved from its traditional publishing schedule of six times a year to 10 times a year.

It’s now almost exactly 15 years since Asiafruit Magazine set out with a mission to provide you with news and information about the fresh fruit and vegetable markets in Asia. We’ve been pleased with how that mission has progressed, and it’s a reflection of how far this trade has come and how briskly the region’s markets have developed that we find ourselves ready to ramp up our publishing frequency.

The move to 10 editions will enable us to provide you with more regular and more relevant coverage of what’s happening in Asian markets and their key supplying sources. It will also mean more targeted and comprehensive reports on every major product, every major market. For instance, where previously we ran general features on Southern Hemisphere grapes, we’ll now be able to report in turn on prospects for Peru, South Africa, Chile and Australia in editions tailored to these countries’ seasonal timings. Similarly, individual markets around the Asian region will benefit from bigger spotlights in specific editions. To download a full copy of the editorial programme, visit www.asiafruitmagazine.com.

The fact Asiafruit Magazine is also now available online means that you can read the latest issue on the day it is published via our Digital Edition. At the click of a mouse, you can search for stories you want to read first or get in touch with our advertisers to source the products they’re promoting.

You will also see in this edition that we have updated our news and regulars sections to bring you fresher information and comment on what’s happening in the Asian business – and to synchronize Asiafruit Magazine with our online news services Fruitnet.com and Asiafruit Newsline.

We hope that you enjoy the more regular flow of news and information from Asiafruit Magazine, and we look forward to receiving more regular input to our pages from you, our readers.

John Hey

I’m looking forward to gaining a deeper understanding of the opportunities and challenges facing Malaysia’s fruit and vegetable business at Fresh Produce Malaysia on 15-17 March, but what is already apparent from our special report in the March/April of Asiafruit Magazine is that this market has evolved to a point where the spotlight is timely.

Only a few years ago, Malaysia’s fruit import market was often disparaged as a ‘dumping ground’ by suppliers who bemoaned buyers’ obsession with getting the lowest price. While still noting the need to trade with caution, those same suppliers are now identifying interesting opportunities for higher-quality lines in the upper end of the market. A few forces appear to be driving this change. Malaysia’s solid economic foundations have given rise to one of Asia’s most affluent populations, which, while not large, is nevertheless young, health-conscious and keen to try new imported products. Meanwhile, a phalanx of foreign-invested retail chains is reaching out to these consumers, and this ‘modern trade’ has the infrastructure and interest to bring in a broader range of produce.

As such, those suppliers who are prepared to make a concerted effort to develop the market and promote their produce are now reaping the benefits. For instance, the retail training seminars run last year by the Washington Apple Commission revealed the scope to partner with the emerging modern retail trade. Kiwifruit marketer Zespri has also made inroads over the past year with a programme of in-store and above-the-line activities, while Korean strawberries have scored similar success.

Malaysia’s own position as a supplier of fruit and vegetables to global markets also warrants fresh attention. Factors like lack of suitable farmland and higher labour costs compared with neighbouring tropical fruit-producing nations such as the Philippines or Thailand may have traditionally led big corporates to overlook Malaysia as an investment opportunity, but the growing support from government agencies for the sector has boosted prospects. Innovative new products like the Paiola papaya and premium varieties of greenhouse vegetables are putting suppliers on the right path to tap into high-end markets at home and overseas, and with the proper supply chain systems and marketing strategies in place, Malaysian produce can gain greater recognition worldwide. Fresh Produce Malaysia is a good platform to provide just that!

John Hey

Asia’s fruit import trade is gearing up for Chinese New Year (CNY) on 14 February, but as our in-depth preview reveals (Asiafruit Magazine January/February 2010), the year of the tiger looks likely to be ushered in with more of “a low growl than a triumphant roar”. Indeed, while it remains the high point of the fresh produce sales calendar in Asia, CNY these days fails to raise the same excitement levels among the trade that it once did. In certain more mature markets, such as Taiwan, there’s even a nostalgic tone among wholesale importers who reflect on how sales that once leapt 10-fold now increase only two-fold. Some of them attribute the decline to a generational shift, noting that younger people prefer to spend their money on other luxuries or on travelling abroad during CNY rather than the traditional custom of spending time at home with the family, and money on gifting fresh fruits.

While there is some credence to this argument, which is echoed in other places like Singapore, it also reflects a broader loss of lustre for those markets, and it does not hold true for every country in Asia. With a region so complex and diverse, the question of whether CNY is growing or depreciating in importance depends on the perspective. In mainland China for instance, consumers are more traditional in observing this major event. Trade of imported fruits into China is expanding at a healthy clip, and the gift-giving market is an integral part of this growth. It’s a similar story in Vietnam.

The timing of CNY, which can vary significantly from year to year, adds another twist to this difference of perspective. This year, it falls later than usual, and the longer build up may help to explain the current sedate mood among buyers. The variable timing conversely keeps a keen sense of anticipation among suppliers, some years falling favourably for their products, other years not. CNY happens to coincide with Valentine’s Day this year, and that could provide a further boost to sales of items like cherries and berries, at least for those who can supply product late enough. Interestingly it’s these kind of high-value products that have been enjoying increased demand in Asia, not just for gift-giving but for general consumption. And those in the trade who lament the lack of a spike in demand for CNY nowadays should also take heart from the way imported fruits have become more of a year-round purchase in Asian markets, not least for younger consumers.

John Hey

The fickle finger of exchange rates has rocked the produce trade over recent months, turning the tables for global suppliers. This time last year, Southern Hemisphere exporters such as Australia and New Zealand were buoyed by a slump in their currencies against the surging US dollar. With most deals in Asia done in US dollars, or in local currencies that mirror its movement, the strong greenback made these suppliers much more competitive in the region. Alas, such exchange rate relief appears to have been a short-lived result of the financial crisis, which saw the hot money flee to the relative safety of the US dollar.

The greenback has since reversed course, leaving these Southern Hemisphere suppliers to watch in dismay as their currencies climb again. The contrasting fortunes are underlined in the November/December edition of Eurofruit Magazine, with the weaker US dollar boding well for shippers of California navels or Washington apples, but signalling a tough season for key Southern Hemisphere exporters getting into stonefruit or grapes.

It’s easy for exporters to get despondent about exchange rate volatility. After all, there’s little they can do to mitigate the impact, but global suppliers should draw consolation from the more steady trends in Asia’s produce trade that stand out in this issue. The growing purchasing power of Asia’s twin engines of economic growth – India and China – is becoming clear. If we take apples, for instance, domestic shortages in India are fuelling impressive import growth, while China’s hungry domestic market is pushing up prices and hitting its exports. Although China’s supply footprint across South East Asia remains large, its internal demand and rising prices are creating opportunities for other global suppliers to the region’s markets where consumers are broadening their horizons.

In another encouraging trend, suppliers and buyers are now responding to these opportunities by building partnerships to ensure products are effectively promoted to the consumer. The modern retail trade is a good platform to introduce new items, but Asian retailers need supplier-support to realise the benefits to their bottom line of selling a high-value product like cherries for instance. Whether it be Zespri’s kiwifruit push in Malaysia, Australian stonefruit promotions in Thailand or a generic campaign for US fruits in Indonesia, a little supplier push can trigger the consumer pull that takes the game beyond a price contest decided by the fickle finger of exchange rates.

John Hey

These are tough times for China’s fruit export sector. Much of the pressure is coming from a hungry domestic market, which has in certain cases driven up prices to the point where export hardly seems like a risk worth taking. Throw in rising production and compliance costs, more price-conscious export markets and a strong currency that is squeezing returns – and you can see why fewer suppliers are taking that risk nowadays. It’s a far cry from a decade ago when China was leveraging its labour cost advantage to foray into some of the world’s most demanding markets, notably with its bagged Fuji apples to Europe. Back then, the export sector enjoyed strong government support, but the funding focus now appears to have switched to spurring domestic consumption.

Or has it? Just as China’s role in the international marketplace appears to be receding amid rising costs and lack of innovation, there’s a vast amount of work going on in research institutes across the country on plant genomics and varietal development that could redefine its direction as a supplier in the future.

With its diverse climate, low production costs and large agricultural base, China is often seen by international plant breeders as an opportunity to introduce their new and/or superior varieties to produce higher value products, but the most exciting varietal developments appear to focus on what could come out of China itself, rather than what might be brought in. China’s huge biodiversity and rich repository of germplasm make it an Aladdin’s cave for finding and developing new products. And China is ploughing remarkable resources into breeding and selection that are well funded, managed and targeted, reflecting the government’s policy to boost rural wealth.

At a time when varietal development in many parts of the world is stunted by lack of funding or resources, China’s major focus on this field, and the opportunity for commercialisation of new varieties, present good scope for foreign entities to engage with these research bodies for mutual benefit. Government support for initiatives that involve foreign funding tends to be strong, particularly when they’re designed to lift rural incomes. With their capacity to create wealth, new varieties fit the bill, and could replace low labour costs as one of China’s next great competitive advantages.