As Asia’s demand for fresh fruit and vegetable imports continues to grow, one question remains: where will production come from to meet Asia’s soaring demand for fresh produce?
Wayne Prowse of Fresh Intelligence Consulting opened the final session ‘Future supplies for Asia’ at the Asiafruit Congress in Hong Kong on 6 September, with a statistical analysis of where Asia’s supplies are coming from.
While China imported around 3.8m tonnes of fruit in 2015, it’s a small amount compared to its total fruit consumption, explained Prowse.
More than 60 per cent of Asia’s fresh fruit imports come via intra-Asia trade, with the Southern Hemisphere accounting for 18 per cent, the US making up 10 per cent, and Europe supplying just 1 per cent, though growing strongly off a small base.
While China remains a powerhouse of fresh fruit production, soaring consumer demand for safe, high-quality produce has seen the country turn more to imports, added Asiafruit editor John Hey.
With factors such as food safety fears, rural to urban migration and rising labour costs, China’s exports have been levelling off as domestic producers grapple to meet growing internal demand.
But with moves afoot to modernise farming and improve quality and productivity levels, China could become a far more significant domestic and regional supplier in the future, Hey said. Taking the example of China’s domestic kiwifruit production, just two-thirds of China’s plantations are currently bearing fruit, and volumes could double to make up two-thirds of global production in the coming years. In table grapes too, China is also seeing sizeable year-on-year increases in production, with the potential to export much more in the future with improvements in quality and varieties.
Some of the key challenges to China include small landholdings and the structure of farming, which make it difficult to achieve consistent standards and quality, Hey said.
Elsewhere, the US faces several challenges in water, labour, and the absence of a free trade agreement with China, while Southern Hemisphere suppliers such as Chile and Peru have succeeded in trade agreements and supplying produce, though face the challenge of longer transit times.
In a snapshot of other supplying countries, Hey said Australia and New Zealand have capitalised on 'the premiumisation trend' among consumers in Asia, but would never become the ‘food bowl for Asia’, while up-and-coming suppliers for China include Canada and Mexico. Europe has been under-represented as a supplier to Asian markets, but this is beginning to change as key exporting countries ramp up their efforts in the region amid lacklustre demand from the UK and Europe, and the loss of the Russian market.
As for tropical fruits, emerging suppliers include Myanmar, Cambodia and Indonesia, as traditional tropical fruit supplier the Philippines grapples with disease pressures and market access issues for its bananas, concluded Hey.
Representing some of the major suppliers of produce to Asia, Zespri CEO Lain Jager, Vanguard International CEO Craig Stauffer, Matahari Putra Prima’s John Glover and Exportadora Prize’s Alejandro Garcia Huidobro joined Asiafruit managing director Chris White on stage where they turned to some of the challenges in investing in production in China.
“If we take grapes and look at the increased production and most importantly the improved quality in supply chain infrastructure in China’s domestic grape production, China has effectively been able to significantly reduce the quantity of California grape imports, specifically during July and August,” said Stauffer.
Having recently acquired a grape grower-packer-shipper in Ica, Peru, Stauffer said Vanguard International is looking to secure farm-to-consumer grape production for 52-weeks of the year.
“We are having many internal debates about becoming involved in Chinese grape production and it’s strategically interesting, but the actual process of getting it done is overwhelming daunting,” Stauffer said.
Jager outlined similar challenges in securing Chinese production of Zespri-branded kiwifruit in line with the New Zealand kiwifruit marketer’s broader strategy to secure a 12-month supply of branded kiwifruit production.
“The biggest supplier of kiwifruit to China today is China, and it will be a bigger supplier, proportionately, in the future,” Jager said. “Our aspiration is to partner with Chinese kiwifruit growers to get our brand to the shelf 12 months of the year.
“The idea of sourcing out of China is strategically enormously attractive… but it comes with significant complexity.”
While challenges remain on the production side in China, quality of Chinese-grown fruit has improved enormously in the past few decades, said Glover, speaking from his experience working at leading retailers across Asia.
“Go back ten or 20 years ago and the quality of produce from China wasn’t so great. Now, it’s class act,” Glover said. “We’ve had one quality issue from China in the past 12 months.”
The challenge, Glover said, was finding the right company to partner with in order to secure 365-days of quality produce from China.
So where will Asia’s future supplies of fresh produce come from? An Asiafruit poll taken on during the final session of the congress put Australasia as the leading future source, followed by Latin America.
More than 360 delegates from more than from 40 countries attended the Asiafruit Congress, held the day before the Asia Fruit Logistica trade show in Hong Kong.
