China is a massive producer of most primary foods. The country grows an astonishing 40 per cent of the world’s apples, 60 per cent of the world tomato crop and over 50 per cent of world pork - the list goes on. And when things don’t go according to plan in China, the impact can be huge.
This week, when in China on business, I noticed in the China Daily News a prominent article on the use of what are referred to as “protective bags” in the production of apples in Shandong Province. There is concern that there is a risk that these have been made using an illegal chemical impregnated in the bag to help prevent problems with pest and crop disease. China, of course, is a massive apple producer with an annual crop of some 35-40 million tonnes.
As someone said to me once in China, “they are not sure exactly how many people there are in China, let alone how many apples”, but conventional wisdom is that the annual variation in yield is bigger than the overall crop in the next biggest world producer, the US, at some four million tonnes per annum. What happens in China counts.
Shandong is a leading producer of top fruit in China, and along with other key production areas Shaanxi, Henan, Hebei, Shanxi and Liaoning, accounts for 85 per cent of production. The use of the protective bags has been widespread for many years and is designed to protect the fruit from overspraying. The report this week only serves to underline the issues surrounding food safety in China per se. It is not, however, just the fruit industry exposed to this sort of issue.
The 2008 melamine problems in the dairy sector caused some 300,000 illnesses and six deaths. This week again Walmart has had problems with possible contamination of sesame seed oil and squid products. This follows on from an issue with the incorrect labelling of organic pork a few months ago and accusations of selling pork from diseased animals.
The costs of getting it wrong in China are high. Sanlu, the Chinese dairy company at the heart of the melamine problem, collapsed and was fined £ 2 million. Other dairy companies were ordered to pay out compensation of over £100 million. The MD of Sanlu was jailed for life and the two workers responsible for the contamination sentenced to death. The impact on Walmart’s business in China could be substantial, where it has some 370 stores in around 120 cities and revenue of some $7.5 billion.
At the moment, the direct impact of the Shandong problem on the UK market is likely to be minimal. While China has become an increasingly influential player in the global produce sector, most exports are destined for other Asian markets, parts of the former Soviet Union, and only modest volumes typically enter the EU via the Dutch auction markets. It only
re-enforces, however, the concern over food safety in countries such as China and other Asian markets at a level maybe not seen before.
At a conference I attended earlier in the week, a presentation from the leading packaging company, Tetra Pak, suggested that up to 65 per cent of Asian consumers are concerned over environmental and related issues and want to be seen as acting proactively on them - around the same level as found in the EU. Had the figure been quoted for Sweden or Switzerland, I would have not been surprised at all. But it does show the nature of some of these global concerns and which are no longer the preserve of Europe, Japan and North America.
And we have to be careful in the UK in jumping to too many conclusions on what others are up to, particularly after a string of problems in the domestic food sector such as FMD, BSE, salmonella and so on, and from which it has taken years to recover, especially in export markets. As an example, the UK beef sector has only just announced that it can re-commence exports to Hong Kong after they were suspended in 1996.
The moral of the story is clear. The issue of food safety is one that is not going to go away. It is coming to the attention of government agencies, consumers and others in the supply chain almost regardless of where you are in the world and what products you are involved with. Anything seen anywhere near cutting corners is a dangerous game to play. Even when it might appear a genuine mistake has been made, the impact on both human and business life, in the most extreme cases, can be severe. -
John Giles is a divisional director with Promar International, a leading agri-food supply-and-demand chain consultancy and subsidiary of Genus plc. He is also chair of the Food, Drink & Agriculture Group of the Chartered Institute of Marketing and he can be reached at john.giles@genusplc.com.
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