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Why China’s fruit supply outstrips demand

china merkets

Chinese producers are being encouraged to open up foreign markets to shift the excess of fruit production the country is seeing. Another cause of the imbalance is information asymmetry.
Most fruit producers in China are small-scale farmers, who sell their products to intermediaries. This leads to a time lag before information is fed back to producers, meaning they cannot respond to quickly to changing market conditions. Also, as fruit has a determined production cycle, wherein the period from planting to harvest can be as long as ten years, the paramount need for farmers to make decisions apprised of detailed information relating to market conditions is evident. It has been suggested that the Chinese Government and producers’ associations need to take the initiative in overall planning and be forward-looking.  

Another issue which Chinese farmers face is the competition from overseas production. Chinese consumers are increasingly demanding high-quality fruits now that they have tasted Australian mango, New Zealand cherries, and Canadian blueberries. Likewise, they demand higher levels of food safety, healthiness and taste. Therefore, it is clear that Chinese fruit production is going to have to develop both technically and commercially if it is to overcome the current lethargy in demand for its products.

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How significant are US fruit exports to China?

manzana china

Amidst an escalating trade war between China and the US, a historic event went little noticed. While the US has been exporting its apples to China since the 1990s, 2015 marked the first time that China had sent its apples in the opposite direction. However, plenty of technical barriers still remain. The two countries produce similar fruits and have seasons that run in parallel to one another. Likewise, they have huge domestic markets. This explains why the US has hitherto imported relatively little fresh produce from China. Indeed, in 2015, China was the fifth largest supplier of fruit and vegetable products to the US, behind Mexico, Canada, Chile, and the EU. Chinese exports of fruit and vegetable products to the US were worth US$1.4 billion, mainly consisting of processed products.

Only four kinds of fruits have been exported from China to the US: apple, pear, lychee, and longan.
Although apples and pears account for the largest share of the fruit produced in China, exports are relatively low. In 2016, China’s total output was 43.88 million tons, of which only 1.32 million tons was exported (3%), mainly to Thailand, the Philippines, India and Vietnam.

By contrast, the Chinese market is hugely important for US fruits, with Chinese consumers rushing to get their hands on imported goods. The variety and quality of the products arriving from the US have given them a firm foothold in China. The main products the US exports to China are apples, pears, plums, strawberries, cherries, grapes, and citrus fruits (orange, grapefruit, lemon). In 2017, 27,000 tons of US Cherries (worth US$170 million) entered the Chinese market, making it China’s fifth-largest fruit supplier and the only country in the Northern Hemisphere that is among China’s top ten fruit suppliers. It remains to be seen whether US products will be able to maintain their market share once the new round of trade tariffs kick in.

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Overall turnover of Belgium’s association of horticultural cooperatives (VBT) remains stable

belgium frutas y verduras

The total turnover of all auctions affiliated with the VBT was very similar to 2016’s level, amounting to €944 million. This figure is 1.9% higher than that recorded for 2015 and 2.4% higher than 2014’s turnover. In the fruit sector, however, turnover in 2017 was up by 3.6% on 2016’s level. This rise was obtained in conditions of drought in the first semester, late spring frosts in April, a heat wave in June, moderate summer temperatures, high mid-October temperatures, and a particularly gloomy December. This led to a very volatile year in terms of supply, sales and pricing for many varieties of fruit and vegetables.

Fruit and vegetable production associated with VBT

Source: VBT

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Fresh fruit among potential targets of Chinese retaliation to US trade tariffs

121MARKET china ODF 2

The world’s second largest economy, China, has announced it will retaliate to the imposition of tariffs on Chinese goods imposed by the US if an agreement cannot be reached with Washington, On Friday morning, China’s commerce ministry published a list of 128 US products as potential targets. With an import value of $3 billion in 2017, the goods on the list include fresh fruit, dried fruit and nuts, which, according to the ministry, could face a 15% duty. Although details are still lacking, US soybeans are expected to be the biggest area of retaliation by the Chinese. Total US exports to China are expected to hit $172 billion this year. Below is a list of the potential targeted goods.

Bilateral trade between China and United States of America 

Product: 08 Edible fruit and nuts; peel of citrus fruit or melons

Product code

Product label

China’s imports from United States of America

Quantity in 2015

Quantity in 2016

‘0801

Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled

4

12

‘0802

Other nuts, fresh or dried, whether or not shelled or peeled (excluding coconuts, Brazil nuts …

33973

39127

‘0803

Bananas, incl. plantains, fresh or dried

 

 

‘0804

Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried

12

5

‘0805

Citrus fruit, fresh or dried

39064

70739

‘0806

Grapes, fresh or dried

31703

29715

‘0807

Melons, incl. watermelons, and papaws (papayas), fresh

 

1

‘0808

Apples, pears and quinces, fresh

41979

29519

‘0809

Apricots, cherries, peaches incl. nectarines, plums and sloes, fresh

20089

25691

‘0810

Fresh strawberries, raspberries, blackberries, back, white or red currants, gooseberries and …

 

0

‘0811

Fruit and nuts, uncooked or cooked by steaming or boiling in water, frozen, whether or not …

1256

1302

‘0812

Fruit and nuts, provisionally preserved, e.g. by sulphur dioxide gas, in brine, in sulphur …

20

22

‘0813

Dried apricots, prunes, apples, peaches, pears, papaws “papayas”, tamarinds and other edible …

1530

1412

‘0814

Peel of citrus fruit or melons, incl. watermelons, fresh, frozen, dried or provisionally preserved …

10

1

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M&S’s dancing fruit and bursting berries

Boasting that its marketing campaigns constantly break new ground, the UK retail chain said its ‘Adventures In…’ Food ads used new photography techniques to showcase food innovation.

M&S highlights the importance of store presentation in its latest annual report.

Boasting that its marketing campaigns constantly break new ground, the UK retail chain said its ‘Adventures In…’ Food ads used new photography techniques to showcase food innovation.

If you missed the dancing fruit, bursting berries and other fancy food features, you can catch them here.

 

 

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North Americans to Eat More Fruit and Vegetables

changes in fruit consumpt

Fresh produce consumption to rise in Pacific Rim

Canadians will be eating 5.7% more fruit and vegetables and Americans 4.9% more by 2025, according to the USDA Economic Research Service (ERS).

And per capita fruit and vegetable consumption will similarly rise in Vietnam, by 5.3%, Chile 4.8%, Malaysia 4.5%, Japan 4.4%, Australia 3.8%, New Zealand 3.3%, Peru 3.3%, Mexico 2.5% and Singapore 1.5%, it predicts.

 

The figures are in the ERS’s baseline scenario for percent changes in per capita consumption quantities for 2014-2025 and appear in its recent report “Agriculture in the Trans-Pacific Partnership (TPP)”.

Fruit and vegetable consumption increases as incomes do

The report says the figures reflect that income growth is associated with higher intakes of fresh fruits and vegetables in low, middle and high income countries. “This is due to factors including improvements in the quality and diversity of fresh produce and the effects of higher income on the demand for fresh fruits and vegetables.”

 

The report assesses the potential impacts of the proposed TPP trade and investment agreement under negotiation by 12 countries in the Pacific Rim, including the US. Population growth will be the main engine driving the 10.4% real growth in the region’s demand for food over 2014-25 under the baseline scenario, it says.

Increased trade in fruit and vegetables

The ERS expects the value of intra-TPP agricultural trade to rise 16.8% by 2025, compared to a 9.3% gain across all commodities.

 

 

Read the report:

http://www.ers.usda.gov/publications/err-economic-research-report/err176.aspx

 
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US Expert Says Consumers Want Easy to Eat Fruit

José Chaparro with Mary Ann Lila and José Gandía Giner at the Fresh & Life symposium

What does today’s consumer want from fruit? University of Florida associate professor José Chaparro says it’s user friendliness.

 

Speaking on Tuesday in Madrid on the first day of the Fresh & Life symposium on berries – within the framework of the Fruit Attraction fair – the horticultural expert said this means fruit that:

  • is easy to peel and seedless

  • of an appropriate serving size

  • doesn’t leave you with sticky or dirty hands or with things you need to find a bin for, such as seeds.

 

Displaying USDA data showing a drop-off in per capita consumption of various kinds of larger fruit in the US since 1980, Chaparro said that in the case of oranges, the reasons behind this include that consumers find them too big to eat all at once and that they can tend to be bitter.

 

Meanwhile, there’s been an “incredible increase” in consumption of small, easy to eat fruit, he said. In the case of grapes, the availability of seedless varieties saw per capita consumption double in the US at the end of the 1980s. There has also been a considerable rise in demand for blueberries, strawberries and raspberries – all easy to eat fruit that either have small seeds or none at all, don’t require peeling and are available in small servings, he said.

 

Diversification crucial

 

Modern methods are such that these days there are many kinds of fruit that can be eaten year-round, “but the quality isn’t consistent and the result is consumers are not satisfied,” Chaparro said. Instead, people need to be able to trust that the fruit they know will be as they expect 365 days a year. “But what kinds of fruit can you say that about? Very few,” he said.

 

Among Chaparro’s recommendations is that the fruit sector seek diversity not just in the types of fruit available but in qualities that make them stand out, such as the colour of skin or flesh (helping consumer to distinguish between products), new flavours and improved nutritional value.

 

And increasingly important is choosing plants that can cope with climate change, namely those that adapt more readily to factors such as high temperatures and spring frosts, he said.

 

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How fruit fared in China in 2013

CHINA-market-INTRO-(6)

In 2013, China’s fruit exports still focused on apple, citrus and pear. With 35 nations/regions obtaining protocols from AQSIQ (China’s General Administration of Quality Supervision, Inspection and Quarantine), it imported more varieties of fruit. Thanks to zero tariffs between China and ASEAN nations, fruit is imported from Pakistan, New Zealand, Chile, and Peru at very competitive prices. The top 10 imported fruits (in order of import value) were durian, grape, banana, cherry, mango, kiwi, citrus, plum, apple and watermelon. The total value of imported fruit increased 10.6% last year – more evidence that China is an increasingly attractive market.

Apples remain an export market
In 2013, apples were still an export market for China. The total export volume reached 994,664 tons, a 1.9% increase on 2012, with a 7.2% rise in total value to $1.03 billion. The peak months were January, March, April, November and December, with each seeing the export of more than 100,000 tons.
Asia and Europe are still the top two destinations. In terms of trade volume, Thailand, Indonesia and the Philippines are the top three buyers of Chinese apples, while in value, the Philippines topped the list, with more than $20 million, followed closely by Thailand with more than $19 million and Vietnam with more than $11 million. Two other buyers of Chinese apples also stood out: India (with about a 35% increase in volume and 25% increase in value) and Malaysia (30% increase both in volume and value). The Russian Commonwealth remains strong, but buyers have shifted to lower priced apples. Shandong province is the main apple growing region in China, and exported almost half of the total.

China’s apple imports
China imported 38,724 tons of apples value with a value of $67.6 million, down 37% and 26.8% respectively on 2012. In 2013, Chile, NZ and USA apple protocols were temporarily frozen, leaving little choices for importers. Only apples from Argentina, Australia (Tasmania), France, and Japan could be exported to China. At time of writing the bans on New Zealand and Chile had been lifted but the US had yet to regain access. As with apples, apple juice exports exceed imports. In 2012, China exported 750,000 tons of apple juice concentrate, however in 2013 the volume fell 1.7% to 601,000 tons. China imported 1,811 tons of apple juice last year, 75% more than 2012, though the value slipped 20.7% from $1.14 billion to under $0.91 billion. Apple juice from China mainly goes to the US – which bought half the total – and Germany, Japan, the Russian Commonwealth, Chile and Argentina. The average price for exported apple juice last year was $1507.29/ton. 
Citrus: China pays more for imported products
While in terms of volume China exported more citrus than it imported, the good news for suppliers is that exported citrus averaged $1,155/ton, but China paid $1,618.8/ton for imported citrus. At present, Argentina, Australia, Cyprus, Egypt, Israel, Morocco, New Zealand, Pakistan, Peru, Spain, Uruguay, and the US have protocols for export to China. (Though the US protocol was suspended last year, the ban may be lifted in 2014, according to AQSIQ sources.). Year-on-year, China’s citrus imports rose 53.6% last year, to 12,602 tons, while its citrus exports, mainly to other Asian nations, totalled 773,365 tons. The main exporting provinces are Fujian, Guangxi, Shandong, Xinjiang and Yunnan. China’s top citrus buyer, Malaysia, last year took more than 140,000 tons, up 46% on 2012. Malaysia paid $217 million, an increase of more than 72%. Next came Thailand, with more than 62,000 tons (+13%) and $106 million (+50%), followed by Vietnam. Price-wise, Malaysia paid a per ton average of $1588.20, and Thailand $1714.80, while, after a 39.5% increase, Vietnam averaged $685.3. Russia was the top buyer among European continent nations. 

Pears: import price twice that of exports
The top 10 Chinese pear destinations are (in order of value): Indonesia, Vietnam, Malaysia, Thailand, Hong Kong, the US, the Russian Commonwealth, Canada, the Philippines and Singapore. Border trade accounts for about 18% of the total. Shandong and Hebei are the top growing regions.
In 2013, China exported 381,281 tons of pears, down 6.9%. The total value of exports was $361.75 million, up 11.3%. The average price was $948.80 per ton. Though China only imported 3,766 tons of pears (+51.9%), the average price for imported pears was $1,834.80/ton. The total value of pear imports in 2013 was $6.91 million, up 82.3%.Argentina, Belgium, Japan, New Zealand and the US obtained AQSIQ protocols to export pears to China.

Grapes: export price 9% of import price
Grape exporters to China had a great year. In 2013, they sold 205,301 tons (+21.9%) to China, at a value of $55.23 million (+29.8%). Though China exported 141,128 tons of grapes, the average price was only $249.6/ton while it paid $2,690/ton for imported grapes. The export price was thus only 9% of the import price.
Chile and Peru, with the opposite growing season to China, had a great year. At present, besides these two nations, Australia, New Zealand and US (California only) also have grape protocols.