The Middle East is in the headlines at the moment, with a wave of political demonstrations sweeping across the region over the last few weeks. There is a sense of change coming not seen before. The outcome on the political and social structure of the region and in turn on the fresh produce sector remains to be seen.
What we do know, however, is that parts of the world where the so-called “enabling environment” is not working well often struggle to make both their internal and export industries function effectively. When confidence in macro economic policy, social and political stability and investment codes, as well as the physical and commercial infrastructure is put under pressure, private producers and exporters often find it difficult to manage their businesses and provide confidence to demanding international customers in global markets.
The potential of the region to produce high quality fruit and vegetables has never been in doubt. For some countries, the physical infrastructure is excellent, such as in the United Arab Emirates - where there is also a highly liberalised trading and commercial environment - and in Saudi Arabia, where sea and air transport facilities are modern and well equipped.
As in many others parts of the world, however, this is a region of contrasts. In poorer parts of the Middle East, the infrastructure will still need considerable investment if it is to support an international-class fresh produce sector. In many cases, the general enabling environment has often held back real development beyond supplying regional markets. Having said that, there are a number of high quality projects across the region. The best are as good as anywhere else in the world; it just needs more of them.
What the region does have in its favour though is the presence of some very wealthy investors and a good supply of relatively low-cost labour, as well as in some cases, ongoing negotiations to secure preferential access to key international markets. And for some countries, such as Israel, Morocco, Tunisia and Egypt in particular, an existing reputation of supplying sophisticated markets, especially in the EU.
Looking at these more locally based exports though, the scale of trade to neighbouring markets is often substantial. As examples, both Egypt and Israel have developed export sectors in the fresh produce sector of more than US$1 billion a year, with others such as Iran seeing exports of fruits and vegetables of over $900 million a year, Jordan with exports of some $490m and Syria with exports worth $330m. Sendings from Saudi Arabia are now worth in the region of $300m on an annual basis and from the UAE, a massive $750m a year, although a very high percentage of this will be re-exported produce to other parts of the Middle East and the Gulf in its role as the “Rotterdam of the region”.
Over the last 10 years, there has been significant growth in the scale of exports, with these often doubling and in some cases trebling in value. The potential is, therefore, clear. When looking at the international markets being served, it underlines the different focus to date compared to established exporters to world markets such as South Africa, New Zealand, the US, Chile, Brazil and from within the EU. Leading destinations for exports from the Middle East include an array of destinations that are often not on the radar for the main international suppliers. These might include the likes of Iraq, the Former Soviet Union countries, not least the “Stahns” and other regional markets such as Oman, the Yemen and Kuwait, as well as the main internal markets to the Middle East such as Saudi Arabia itself, Dubai and the other Emirates.
Russia is also emerging as a key market for Middle Eastern suppliers and where the more established international supplies might face the most direct competition in the immediate future. The attraction of the Russian market is clear for all to see. A population base of some 148m, a fast-expanding economy and the associated rise of an affluent middle class have encouraged the presence of some highly professional import companies, which are a far cry from the early operators when the Soviet bloc first opened up in terms of how they operate - and increasingly, there is a willingness to pay international going rates for good quality produce. Russia also still imports huge volumes of produce, as its own agricultural system still struggles to keep pace with the burgeoning demand that the booming economy has generated.
But besides concerns over the enabling environment, there may be other factors coming into play that might act as a brake to the development of the Middle East as a global supplier. These might include the challenges of water supply and usage, the impact of climate change and the need to show high standards of corporate social responsibility throughout the supply chain. These are factors that will not just impact on the Middle East, of course.
The UK, to date, has not featured as a key international market of strategic significance for the Middle East region, with maybe the exception of early season potatoes from Egypt, some North African citrus and speciality salads, as well as citrus and other produce from Israel. These appear to be exceptions rather than the rule. Often, the Netherlands and Germany have been preferred EU markets. Yet the attraction of the UK is still strong, with 60m affluent consumers, clear routes to market, a wide-ranging supply base from international sources of supply and a tradition of importing produce out of season.
So what would need to happen for Middle Eastern countries to be in a position to supply the UK and other sophisticated markets on a regular and consistent basis? In short, it would need a change of strategic focus and probably a good deal of further investment in top quality farms, packhouses and the building of long-term supply chain relationships with key importers and other supply chain partners. This would all need to be allied to high levels of good agricultural practice and corporate social responsibility. It would also need high levels of market and consumer understanding and invariably, the ability to be better in some context than the existing supply base.
Clearly, none of this can happen overnight, but the region has a number of strong factors operating in its favour. Not least, one only had to look at how many companies from the Middle East were at the recent Fruit Logistica in Berlin to see the appetite for building existing markets and developing new ones is strong. And the fresh produce industry has surely learnt never to say never in terms of who can supply an expanding global market. If the enabling environment is correct - but it might be quite a big “if” - why not the Middle East?
John Giles is a divisional director with Promar International, a leading agri food marketing and business development consulting firm and a subsidiary of Genus plc. Promar has carried out a good deal of work in the international fruit sector and this includes projects in Central and Latin America as well as analysis of key international markets in the EU, eastern Europe, Middle East, North America and Asia. John can be contacted at: jgiles@promar-international.com
MIDDLE EAST SETS NEW STANDARD
The Middle East is renowned for its sunshine, history and culture and the region is fast gaining plaudits for improvements in fruit and vegetable quality. Doris Lee Butterworth looks at the initiatives that producers are implementing to gain a competitive edge.
As growers and government organisations continue to invest time, energy and capital in progressive programmes aimed at boosting agricultural exports, the Middle East is securing a reputation as a key supplier of high quality fresh produce.
Support and investment in accredited global food safety programmes, as well as new varieties of fresh produce, have raised the bar and led to changes in grower practises in recent years.
“There has been a substantial improvement in fruit quality, not only from Egypt but also from many other Middle East countries over the last couple of years,” says Dr Ihab Tadros, managing director of the Egyptian Producers Consortium (EPC). “The quality of supplies has been much more consistent.”
Shipments of Egyptian fresh produce have been disrupted by recent political events, but the long-term future for the country remains bright. Egypt has enjoyed a rapid increase in fruit and vegetable production over the last decade and supporters say there has been a greater emphasis on quality, as well as quantity.
The introduction of new techniques for improved production and investments in biological control programmes in order to reduce pesticides, coupled with extending the season for a range of fresh produce including grapes and citrus, have provided a clear advantage.
Egypt has ramped up its exports and is focusing on the UK with greater zeal. Grapes, citrus, stonefruit, potatoes and green beans are all accepted readily and in recent years, the industry has focused heavily on improving logistics and reducing costs, as well as stepping up traceability.
The Horticultural Export Improvement Association (HEIA) has been singled out by Tadros for introducing a different concept to the Egyptian farmer through several workshops. “These workshops target the basic labourer and have resulted in the biggest success during the last couple of years in improving fruit and vegetable quality and standards,” says Tadros. “The result of these efforts and the continuation of the quality standards year round has put Egypt and the Middle East region on the agenda as a reliable supplier to the EU member states and other areas,” he continues.
Elsewhere in the region, Israel is a key exporter to the UK and producers have long-established connections with retailers and wholesalers. There is strong demand for winter lines in particular and though concerns remain over the state of the UK economy, an anticipated rise in Israel’s fruit production in the coming years could mean the UK market is targeted more heavily in future.
Recent innovations have boosted the profile of the Israeli fresh produce sector and Agrexco’s Evergreen pepper has won significant column inches. Agrexco’s partnership with Fertiseeds could also result in the launch of new strawberry and plum varieties.
MTEX works with Israeli research institutes and according to UK general manager Marius du Plessis, the producer has three to four easy-peel lines that are undergoing “serious commercial trials”.
Meanwhile, Jordan is seeking to boost its credentials. The Jordan Exporters and Producers Association for Fruit and Vegetables (JEPA) is on a mission to improve the competitiveness of fresh produce in the domestic and international arenas. JEPA chairman Basel Deek recently announced that the association is working on opening new markets, particularly in Europe.
The agricultural sector is a main source of export revenue for Jordan, ranking third in terms of value. Annual production of fruit and vegetables is approximately 2.7 million tonnes but only 700,000t is exported. However, dates are a key export line.
Earlier this month, exports enjoyed a boost when the United Arab Emirates agreed to import lettuce and parsley from Jordan. Exporters have stated that they would like to gain access to the US and Asian markets.
Initiatives by the Syrian government are also causing excitement in the region. Fruit and vegetable production has expanded significantly in the country since the 1980s and the second wave of the investment programme to develop organic farming in the country is set to begin.
The aim of this national government programme, launched in 2006, is to spread awareness among producers about the value of organic crops. The first stage began with 20 training workshops throughout the country aimed at informing farmers about organic farming methods and the second stage will focus on infrastructure to support the launch of new products. Pistachio nuts, olives and tomatoes will receive the greatest attention, though cherries, citrus fruits and several vegetables will also come under the spotlight.
Supporters say that continued investment in technology, the introduction of new varieties and
co-ordinating the timing of produce to suit export markets will secure the region’s ability to supply Europe.
However, whether the UK will import significantly larger volumes from the Middle East at the expense of other shippers remains to be seen. Exporters have often claimed that the entry requirements to secure business in the UK are too stringent and volatile currency rates have resulted in some growers opting to stick to regional markets.
Nevertheless, raising standards means that Middle Eastern countries are better able to compete and send product to the UK, while supporters say that focusing on high value products will prove to be the best strategy. “Egypt and the Middle East region have learnt the lesson that it is not economically viable to export any fresh produce item that is not up to standard due to the raised bar of the global fruit industry,” Tadros says.
IRAN ENJOYS FRESH PRODUCE EXPORT BOOST
Iran is the largest fresh produce grower in the Middle East, with production totalling 16.5 million tonnes. According to the Tehran Times, Iran exported $2 billion (£1.25bn) worth of fruit to the Middle East and the European Union last year - a rise of 46 per cent compared to the year before.
The report claims that Iran produced 4.5m tonnes of citrus and 3mt of apples. New measures have been taken by the government to improve the yield of orchards in Iran. The country supplies the UK with dates and is keen to export pomegranates - one of its most important lines.
No comments yet