Feeling the heat from climate change
01 May 2007 15:11
John Hey
On a recent world trip, I visited a UK basking in its warmest April on record and a New York nipped by cold wind and rain (no spring in sight), before returning to a drought-stricken Australia via Beijing, which was enjoying the earliest arrival of summer in 35 years. While ‘global warming’ is all too easily cited today when we experience weird weather patterns, there is a growing body of evidence to link the unsettling meteorological scenes of the modern age with climate change.
The fresh produce trade in Asia has been affected by a series of extreme weather events in recent years, ranging from a record number of typhoons in Japan in 2004 to the hard freezes that hit citrus growers in Australia and California in 2006/07.
While such weather events look set to strike more frequently as the world gets warmer, another mounting issue facing farmers is that of water shortages. Australia’s devastating drought now heralds a crisis for its fresh produce growers, who may not have water to irrigate their crops in the coming months (see p8). Such dry conditions, while part of an El Niño weather pattern, are set to become more common with global warming – and other countries should pay heed. China’s Yangtze River is running at record-low levels for instance, with drought hitting the country’s citrus crop in 2006/07. Indeed, a recent major Chinese government report on climate change predicts that the Yellow and Yangtze rivers, which support the country’s richest agricultural regions ,will initially experience floods and then drought as the Tibetan glaciers melt over this century. It adds that water scarcity and extreme weather events are likely to slash national crop production in the decades ahead. Despite these dire warnings, the Chinese government has declared that economic growth must take priority over cuts in its huge greenhouse gas emissions. China’s economic growth is keenly watched by produce suppliers worldwide, and some may be encouraged by the government’s priorities, eyeing the rise of a huge market with a shortage of domestic crops. But there may be no China market left in the long-term, if, as looks possible, cities like Shanghai and Beijing are submerged by a one-metre rise in sea levels caused by the melting of parts of Antarctica!
Climate change is becoming a very real issue for the global fresh produce trade. Growers must address the threat to their existing production systems, adopt greener practices and lobby their governments on the issue. As the environment becomes an increasingly important factor in consumers’ purchasing decisions, marketers also need to adapt – not only to meet increased demand for organic produce, but to correct misinformation and misconceptions about ‘food miles’ and the impact of global fresh produce sourcing on the environment.
On a recent world trip, I visited a UK basking in its warmest April on record and a New York nipped by cold wind and rain (no spring in sight), before returning to a drought-stricken Australia via Beijing, which was enjoying the earliest arrival of summer in 35 years. While ‘global warming’ is all too easily cited today when we experience weird weather patterns, there is a growing body of evidence to link the unsettling meteorological scenes of the modern age with climate change.
The fresh produce trade in Asia has been affected by a series of extreme weather events in recent years, ranging from a record number of typhoons in Japan in 2004 to the hard freezes that hit citrus growers in Australia and California in 2006/07.
While such weather events look set to strike more frequently as the world gets warmer, another mounting issue facing farmers is that of water shortages. Australia’s devastating drought now heralds a crisis for its fresh produce growers, who may not have water to irrigate their crops in the coming months (see p8). Such dry conditions, while part of an El Niño weather pattern, are set to become more common with global warming – and other countries should pay heed. China’s Yangtze River is running at record-low levels for instance, with drought hitting the country’s citrus crop in 2006/07. Indeed, a recent major Chinese government report on climate change predicts that the Yellow and Yangtze rivers, which support the country’s richest agricultural regions ,will initially experience floods and then drought as the Tibetan glaciers melt over this century. It adds that water scarcity and extreme weather events are likely to slash national crop production in the decades ahead. Despite these dire warnings, the Chinese government has declared that economic growth must take priority over cuts in its huge greenhouse gas emissions. China’s economic growth is keenly watched by produce suppliers worldwide, and some may be encouraged by the government’s priorities, eyeing the rise of a huge market with a shortage of domestic crops. But there may be no China market left in the long-term, if, as looks possible, cities like Shanghai and Beijing are submerged by a one-metre rise in sea levels caused by the melting of parts of Antarctica!
Climate change is becoming a very real issue for the global fresh produce trade. Growers must address the threat to their existing production systems, adopt greener practices and lobby their governments on the issue. As the environment becomes an increasingly important factor in consumers’ purchasing decisions, marketers also need to adapt – not only to meet increased demand for organic produce, but to correct misinformation and misconceptions about ‘food miles’ and the impact of global fresh produce sourcing on the environment.
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India trade gains fresh momentum
01 March 2007 11:56
John Hey
The roving microphone, wielded by conference moderator Chris White, was really doing the rounds at Fresh Produce India (see p24-29).The lively discussion and keen audience participation underlined the fact that in India ‘there’s always another opinion’, but they also reflected the buzz being generated by the big changes afoot in the country and its fresh produce industry.
It’s four years since Market Intelligence last hosted a conference in India, with the Asiafruit Congress meeting in Mumbai in 2003. While that event generated plenty of debate, it was imbued with more of a sense of fatalism than excitement – a feeling that India was a land of huge potential, and always would be. It was a mood of resignation captured by the comment of one speaker who predicted that modern forms of food retailing would never take off in India during his lifetime.
Skip to 2007 and you can’t open a newspaper in India without reading about the latest major corporate to announce its entry to the country’s burgeoning modern retail sector. It is this retail ‘revolution’, coupled with the economic boom, that looks set to provide the impetus for India’s fresh produce sector to make real strides. Yet the speakers at Fresh Produce India were swift to counter some of the commonly-held notions about the Indian food retail sector and the market at large. Everyone singles out the supply chain challenge, resulting from a chronic lack of infrastructure, as the key hurdle to the modern retailers that are setting up shop in India, but Rajan Chhibba of Intrim Business Associates pointed out that the real challenge will be at the front-end rather than the back-end, where they must change the way fresh produce is marketed as well as the mindset and tastes of the Indian consumer. For instance, the Indian consumer ‘eats curry, not vegetables’, making fresh produce a value-driven purchase. He revealed that fruit and vegetable retail in India is low margin, high cost, not the other way around. Traditional small vendors with few overheads thrive in this climate, offering consumers a service that inspires loyalty.
Changing consumers’ behaviour may be the main hurdle for India’s modern retail sector, but there are plenty of others to overcome - poor infrastructure, shortage of expertise, high real estate costs to name a few. Indeed, it’s possible that the fledgling retail revolution will falter and fizzle out, given the size of the challenges ahead. But this looks unlikely, as major corporates are driving the push and the momentum has already been gained. Indeed, delegates to Fresh Produce India would have departed with a sense of the challenges and complexity of the Indian market, but a genuine optimism that the country is finally on track to deliver on the huge potential it offers.
The roving microphone, wielded by conference moderator Chris White, was really doing the rounds at Fresh Produce India (see p24-29).The lively discussion and keen audience participation underlined the fact that in India ‘there’s always another opinion’, but they also reflected the buzz being generated by the big changes afoot in the country and its fresh produce industry.
It’s four years since Market Intelligence last hosted a conference in India, with the Asiafruit Congress meeting in Mumbai in 2003. While that event generated plenty of debate, it was imbued with more of a sense of fatalism than excitement – a feeling that India was a land of huge potential, and always would be. It was a mood of resignation captured by the comment of one speaker who predicted that modern forms of food retailing would never take off in India during his lifetime.
Skip to 2007 and you can’t open a newspaper in India without reading about the latest major corporate to announce its entry to the country’s burgeoning modern retail sector. It is this retail ‘revolution’, coupled with the economic boom, that looks set to provide the impetus for India’s fresh produce sector to make real strides. Yet the speakers at Fresh Produce India were swift to counter some of the commonly-held notions about the Indian food retail sector and the market at large. Everyone singles out the supply chain challenge, resulting from a chronic lack of infrastructure, as the key hurdle to the modern retailers that are setting up shop in India, but Rajan Chhibba of Intrim Business Associates pointed out that the real challenge will be at the front-end rather than the back-end, where they must change the way fresh produce is marketed as well as the mindset and tastes of the Indian consumer. For instance, the Indian consumer ‘eats curry, not vegetables’, making fresh produce a value-driven purchase. He revealed that fruit and vegetable retail in India is low margin, high cost, not the other way around. Traditional small vendors with few overheads thrive in this climate, offering consumers a service that inspires loyalty.
Changing consumers’ behaviour may be the main hurdle for India’s modern retail sector, but there are plenty of others to overcome - poor infrastructure, shortage of expertise, high real estate costs to name a few. Indeed, it’s possible that the fledgling retail revolution will falter and fizzle out, given the size of the challenges ahead. But this looks unlikely, as major corporates are driving the push and the momentum has already been gained. Indeed, delegates to Fresh Produce India would have departed with a sense of the challenges and complexity of the Indian market, but a genuine optimism that the country is finally on track to deliver on the huge potential it offers.
Big freeze shakes up Asian markets
07 January 2007 11:56
John Hey
Barely is 2007 underway and fruit import markets across Asia have already been rocked by a major event in the form of the California freeze, which has reportedly ruined most of the state’s citrus crop.While initial estimates of 70 per cent crop damage may prove to be exaggerated, the domestic market looks set to absorb most of the remaining crop at high prices, leaving very little fruit for export destinations in Asia. By the end of January, navel orange prices had soared in several Asian markets as buyers scrambled to find alternative sources of fruit, with Egypt, Spain, Cyprus, Turkey and Israel all being explored.
The implications of the event are perhaps most serious for Korea, the top export market for California navels. Before the freeze, it was forecast to take 135,000 tonnes, but the import deal may now be over before it had really begun. The problem for Korea is that its quarantine restrictions are so tough that the alternative supply options are very limited. Spain is the only other source of citrus with market access at this time of year, but the import protocol, with its requirement for fruit to be cold-treated, is likely to deter most suppliers. In reality, Korean retailers will be forced to stock their shelves with other fruits like Philippine bananas and pineapples and Chilean grapes.The same kind of products are set to profit in Japan, where alternative citrus suppliers such as Israel and Florida are unlikely to make up the shortfall in US orange imports.
In China, meanwhile, local navels may just meet demand for the upcoming Lunar New Year festival, but supplies were already becoming tight in late January as the season approached its end.
Clearly, the big freeze is set to create a range of opportunities for suppliers of citrus – and indeed other fruits – to Asia. But the event is something of a mixed blessing for the citrus category as a whole. Southern Hemisphere citrus suppliers are no doubt looking forward to entering an undersupplied market by the time their season begins, but they may also face the challenge of winning back retail shelf space lost to other products. Equally, a little bit of fruit from every alternative citrus source could quickly add up to an oversupply situation in some Asian markets.
As for Asian buyers, the freeze is only likely to compound the difficulties of sourcing consistent lines of good-quality fruit that they’ve been facing in recent times, what with a freeze-bitten Australian citrus crop in 2006, a rained out US grape deal and generally disappointing performances from many other products. Asia’s burgeoning consumer markets are being underserved by the fruit trade – and the weather is a key factor.
Barely is 2007 underway and fruit import markets across Asia have already been rocked by a major event in the form of the California freeze, which has reportedly ruined most of the state’s citrus crop.While initial estimates of 70 per cent crop damage may prove to be exaggerated, the domestic market looks set to absorb most of the remaining crop at high prices, leaving very little fruit for export destinations in Asia. By the end of January, navel orange prices had soared in several Asian markets as buyers scrambled to find alternative sources of fruit, with Egypt, Spain, Cyprus, Turkey and Israel all being explored.
The implications of the event are perhaps most serious for Korea, the top export market for California navels. Before the freeze, it was forecast to take 135,000 tonnes, but the import deal may now be over before it had really begun. The problem for Korea is that its quarantine restrictions are so tough that the alternative supply options are very limited. Spain is the only other source of citrus with market access at this time of year, but the import protocol, with its requirement for fruit to be cold-treated, is likely to deter most suppliers. In reality, Korean retailers will be forced to stock their shelves with other fruits like Philippine bananas and pineapples and Chilean grapes.The same kind of products are set to profit in Japan, where alternative citrus suppliers such as Israel and Florida are unlikely to make up the shortfall in US orange imports.
In China, meanwhile, local navels may just meet demand for the upcoming Lunar New Year festival, but supplies were already becoming tight in late January as the season approached its end.
Clearly, the big freeze is set to create a range of opportunities for suppliers of citrus – and indeed other fruits – to Asia. But the event is something of a mixed blessing for the citrus category as a whole. Southern Hemisphere citrus suppliers are no doubt looking forward to entering an undersupplied market by the time their season begins, but they may also face the challenge of winning back retail shelf space lost to other products. Equally, a little bit of fruit from every alternative citrus source could quickly add up to an oversupply situation in some Asian markets.
As for Asian buyers, the freeze is only likely to compound the difficulties of sourcing consistent lines of good-quality fruit that they’ve been facing in recent times, what with a freeze-bitten Australian citrus crop in 2006, a rained out US grape deal and generally disappointing performances from many other products. Asia’s burgeoning consumer markets are being underserved by the fruit trade – and the weather is a key factor.
Asian produce trade develops apace in 2006
10 November 2006 11:58
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.
India begins to deliver on vast potential
15 July 2006 14:08
John Hey
“India is a land of huge potential... and always will be.” So a delegate once told me at a conference in Kolkata focused on the opportunity for Indian horticulture in world markets. He was referring to the snail-like progress of the country’s fruit and vegetable industry in addressing fundamental issues such as lack of infrastructure, fragmented production and poor quality standards. But recent developments in India’s fresh produce sector and food retail industry are enough to persuade even long-term sceptics that the worm has turned.
Most notably, Indian business conglomerate Reliance has unveiled plans for a US$5.6bn foray into the retail sector (see p10). Its move serves as an example of the kind of money that is being invested by domestic companies into retailing and agribusiness – sums that are unprecedented and more usually associated with global retail giants. Reliance has several major issues to overcome to live up to its media billing as the ‘Indian Wal-Mart’, but if it can pull off its plans, it will improve the country’s entire retail and horticulture sectors. For Reliance’s project calls for the creation of a whole new supply chain, including coldstorage facilities and contract farming. And it is not alone, with other local retailers such as Big Bazaar, Subikhsha, Hypercity, Spencer’s and FoodWorld seeking to form similar systems. While the debate rumbles on as to if and when the government will open its market to multi-brand global retail groups like Wal-Mart and Tesco, local chains are already transforming India’s chaotic retail industry.
Meanwhile, big-hitters in the global fresh produce trade are now taking the opportunity to capitalise on India’s vast procurement potential. Capespan and Fyffes recently set up joint ventures for grapes and ‘high-altitude fruits’ respectively, while Field Fresh, the alliance between Bharti Enterprises and European equity firm Rothschild, is also ploughing substantial investment into the horticulture sector.
India’s own market for high quality fruit and vegetables is also growing strongly as its middle-class expands. Moreover, this growth is not confined to the top four or five mega-cities. Rather, India’s burgeoning middle-class, unlike China’s, spans the length and breadth of the country, with studies showing that the smaller cities actually boast the largest increase in millionaire households. Such ‘B’ cities are driving demand for imported fruits, and while suppliers must deal with a restrictive import system and bottlenecks in distribution to reach their market, things are improving as the import trade has consolidated and the government’s threat perceptions over foreign fruits have diminished.
In short, India is beginning to deliver on its huge potential, and the time is ripe for an international conference that enables the fresh produce trade to build on this progress. Fresh Produce India 2007, which will take place in Hyderabad on 22-24 February 2007, provides that very opportunity.
For more information on Fresh Produce India 2007, email: info@freshproduceindia.com
“India is a land of huge potential... and always will be.” So a delegate once told me at a conference in Kolkata focused on the opportunity for Indian horticulture in world markets. He was referring to the snail-like progress of the country’s fruit and vegetable industry in addressing fundamental issues such as lack of infrastructure, fragmented production and poor quality standards. But recent developments in India’s fresh produce sector and food retail industry are enough to persuade even long-term sceptics that the worm has turned.
Most notably, Indian business conglomerate Reliance has unveiled plans for a US$5.6bn foray into the retail sector (see p10). Its move serves as an example of the kind of money that is being invested by domestic companies into retailing and agribusiness – sums that are unprecedented and more usually associated with global retail giants. Reliance has several major issues to overcome to live up to its media billing as the ‘Indian Wal-Mart’, but if it can pull off its plans, it will improve the country’s entire retail and horticulture sectors. For Reliance’s project calls for the creation of a whole new supply chain, including coldstorage facilities and contract farming. And it is not alone, with other local retailers such as Big Bazaar, Subikhsha, Hypercity, Spencer’s and FoodWorld seeking to form similar systems. While the debate rumbles on as to if and when the government will open its market to multi-brand global retail groups like Wal-Mart and Tesco, local chains are already transforming India’s chaotic retail industry.
Meanwhile, big-hitters in the global fresh produce trade are now taking the opportunity to capitalise on India’s vast procurement potential. Capespan and Fyffes recently set up joint ventures for grapes and ‘high-altitude fruits’ respectively, while Field Fresh, the alliance between Bharti Enterprises and European equity firm Rothschild, is also ploughing substantial investment into the horticulture sector.
India’s own market for high quality fruit and vegetables is also growing strongly as its middle-class expands. Moreover, this growth is not confined to the top four or five mega-cities. Rather, India’s burgeoning middle-class, unlike China’s, spans the length and breadth of the country, with studies showing that the smaller cities actually boast the largest increase in millionaire households. Such ‘B’ cities are driving demand for imported fruits, and while suppliers must deal with a restrictive import system and bottlenecks in distribution to reach their market, things are improving as the import trade has consolidated and the government’s threat perceptions over foreign fruits have diminished.
In short, India is beginning to deliver on its huge potential, and the time is ripe for an international conference that enables the fresh produce trade to build on this progress. Fresh Produce India 2007, which will take place in Hyderabad on 22-24 February 2007, provides that very opportunity.
For more information on Fresh Produce India 2007, email: info@freshproduceindia.com