Nov 2006
Asian produce trade develops apace in 2006
10 November 2006 11:58 | Asia Pacific
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John Hey
As 2006 draws to a close, it’s worth reflecting on a year in the Asian fresh produce trade that has thrown up some interesting developments.
Unsurprisingly, China remains the driving force in the region. Fruit and vegetable prices in China have shown a double-digit upturn during 2006 over the previous year, reflecting both rising production costs and increasing consumer demand (and incomes). In particular, an “off-year” for Chinese apple crops in 2005/06 saw domestic prices scale heights that made export a far less attractive option. In contrast to the familiar image of China as a marauding, low-cost exporter, such examples signal that the country may struggle to satisfy demand from its own consumers in the future. Indeed, while low prices continue to drive China’s export expansion, volume growth has slowed down this year, while values have risen. Its export mix is also changing – traditional bulk likes such as garlic remain important, but new speciality lines are coming to the fore as China turns its labour-cost advantage to value-adding and innovation. China’s increasing production costs should not be overlooked however, and rising fuel prices are a key issue, especially as so many of the country’s best growing-regions are located some distance into the interior.
Food safety issues also continue to trouble China’s export trade, with Japan’s Positive List System (PLS) for maximum chemical residue levels (MRLs) impacting heavily on the vegetable industry. While the PLS has caused confusion and upheaval for Japan’s import trade, it could benefit consumers in the long-term as it brings Japan’s MRLs into line with EU and US standards.
Meanwhile, South East Asian countries have been facing an influx of low-priced Chinese produce under regional free trade deals, with farmers in Thailand and Vietnam feeling the heat. Nevertheless, some good opportunities are clearly developing for high-value items in these markets.
The shift from tariff- to quarantine-based import restrictions in Asia has continued, with Indonesia introducing new rules, Taiwan toughening its stance on pests and Thailand mulling a move towards market regulation.
The modern retail trade has also made further inroads across the region. Even India, the final frontier for global retailing, now appears to be poised for a retail revolution led by local corporate giant Reliance. This market will be ‘one to watch’ in 2007, as will Vietnam, whose entry to the WTO is set to create new opportunities for retailers and the fresh produce trade alike.
As 2006 draws to a close, it’s worth reflecting on a year in the Asian fresh produce trade that has thrown up some interesting developments.
Unsurprisingly, China remains the driving force in the region. Fruit and vegetable prices in China have shown a double-digit upturn during 2006 over the previous year, reflecting both rising production costs and increasing consumer demand (and incomes). In particular, an “off-year” for Chinese apple crops in 2005/06 saw domestic prices scale heights that made export a far less attractive option. In contrast to the familiar image of China as a marauding, low-cost exporter, such examples signal that the country may struggle to satisfy demand from its own consumers in the future. Indeed, while low prices continue to drive China’s export expansion, volume growth has slowed down this year, while values have risen. Its export mix is also changing – traditional bulk likes such as garlic remain important, but new speciality lines are coming to the fore as China turns its labour-cost advantage to value-adding and innovation. China’s increasing production costs should not be overlooked however, and rising fuel prices are a key issue, especially as so many of the country’s best growing-regions are located some distance into the interior.
Food safety issues also continue to trouble China’s export trade, with Japan’s Positive List System (PLS) for maximum chemical residue levels (MRLs) impacting heavily on the vegetable industry. While the PLS has caused confusion and upheaval for Japan’s import trade, it could benefit consumers in the long-term as it brings Japan’s MRLs into line with EU and US standards.
Meanwhile, South East Asian countries have been facing an influx of low-priced Chinese produce under regional free trade deals, with farmers in Thailand and Vietnam feeling the heat. Nevertheless, some good opportunities are clearly developing for high-value items in these markets.
The shift from tariff- to quarantine-based import restrictions in Asia has continued, with Indonesia introducing new rules, Taiwan toughening its stance on pests and Thailand mulling a move towards market regulation.
The modern retail trade has also made further inroads across the region. Even India, the final frontier for global retailing, now appears to be poised for a retail revolution led by local corporate giant Reliance. This market will be ‘one to watch’ in 2007, as will Vietnam, whose entry to the WTO is set to create new opportunities for retailers and the fresh produce trade alike.
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