High Value Fruits And Vegetables: A perspective from Asia

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High Value Fruits And Vegetables A perspective
from Asia
By Leslie Cheong Director, Food Supply
Technology Department Agri-Food Veterinary
Authority of Singapore
Challenge Program High Value Crops Fruits and
Vegetables Workshop, Nairobi, Kenya, 7 8 June
2007
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Coverage

• Background
• High Value Crops
• Strategic Focus Asian Perspectives
• Information and Knowledge
• Access to Capital
• Conclusion

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Global Fruit and Vegetable Trade Patterns1 (1/3)
Background

• Share of world agricultural trade
• 1961 10.6 or US3.4 bil
• 2001 16.9 or US70 bil
• Variety
• 1961 bananas, apples, oranges, tomatoes (30 of
  total fruit and vegetable trade)
• End 1990s above less than 20, with increasing
  share by fresh grapes, fresh vegetables, frozen
  potatoes, tree nuts, and other fruit and
  vegetable products

1 Sophia Wu Huang, 2004. Global Trade Patterns in
Fruits and Vegetables. (In) Global Trade Patterns
in Fruits and Vegetables, Economic Research
Service/USDA. Chapter 1. http//www.ers.usda.gov/p
ublications/wrs0406/wrs0406b.pdf
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Global Fruit and Vegetable Trade Patterns1 (2/3)
Background

• Most trade in following regions
• European Union (EU)
• North American Free Trade Agreement (NAFTA)
• Asia
• Typical of these trade regions
• Has high-income consumer countries
• With nearby supplier countries
• Within EU, Britain, France and Germany are main
  importers, Spain largest exporter and Netherlands
  through whose seaports many exports are shipped
• Within NAFTA, USA main importer, Mexico is main
  exporter
• Within Asia, Japan is largest importer, China
  largest exporter

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Global Fruit and Vegetable Trade Patterns1 (3/3)
Background

• Globalisation of markets
• Developed countries will continue to dominate
  global trade
• New varieties will find their way into the diets
  of the relatively affluent everywhere with
  increasing per capita income growth and freer
  trade
• Asia
• China is fast becoming a larger importer and
  exporter as it improves on the quality of its
  produce
• Japans overall consumption unlikely to increase
  and may decrease with population decline
  beginning before 2010 trade in fresh fruits,
  especially temperate fruits, most likely to grow

Further reference M V Stichele, S van der Wal
J Oldenziel, 2006. Who reaps the fruit? Critical
Issues in the Fresh Fruit and Vegetable Chain
(update). SOMO, Amsterdam. 192 pp.
http//www.somo.nl/html/paginas/pdf/Who_reaps_the_
fruit_june_2006_NL.pdf
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High Value Crop Characteristics2 (1/3)
High Value Crops

• High value products usually meet the needs of
  motivated buyers who are willing to pay a premium
  if their expectations about specifications and
  quality are met.
• The number of such buyers is limited, and the
  danger of over-supplying such a market is always
  a threat.

2 International Institute of Tropical
Agriculture, 2005. Our story from field to fork.
IITA Annual Report 2005 http//www.iita.org/cms/a
rticlefiles/279-our_story.pdf
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High Value Crop Attributes (2/3)
High Value Crops
ICTA3 Japan4 Remarks
Taste (4) Taste
Appearance (3) Visual perfection
Safety (1) Freshness (2) Quality Stringent safety standards
Nutrition
Ease of preparation
Packaging Shelf-life
Consistency in supply (7) Stability of supply
(5) Lower prices (6) Tariffs Tariffs vary by country of origin
3 International Center for Tropical Agriculture,
2005. Getting a Handle on High-value Agriculture.
CIAT In Focus, 2004 2005 Annual Report of
International Center for Tropical Agriculture
(CIAT) http//www.ciat.cgiar.org/newsroom/pdf/cia
t_in_focus_2004_2005_text_only.pdf
4 John H Dyck and Kenzo Ito, 2005. Japans Fruit
and Vegetable Market. (In) Global Trade Patterns
in Fruits and Vegetables, Economic Research
Service/USDA. Chapter 7. http//www.ers.usda.gov/p
ublications/wrs0406/wrs0406h.pdf
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High Value Crop Strategic Focus5
High Value Crops

• Commercial production and sales by small farmers
  and retailers will depend on their ability to
• focus on high value, specialty crops targeted at
  specific niche markets
• differentiate their products
• optimise product mix
• establish early brand loyalty

5 Ramu Govindasamy and Suzanne Thornsbury, 2006.
Theme Overview Fresh Produce Marketing Critical
Trends and Issues. Choices, 4th Qtr 2006 21(4),
http//www.choicesmagazine.org/2006-4/produce/2006
-4-05.htm
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An Asian Perspective (1/5)
Asian Perspective
Amaranth

• Specialty Crops Specific Niche Markets
• Proposed 3-year project on Indigenous Vegetables
  (IV)
• Title Enhancing utilization and conservation of
  indigenous vegetables by rural farmers in ASEAN
  countries
• Training of farmer facilitators and farmers in
  growing IV efficiently
• Conservation programme by farmers on IV
• Illustrated guide to IV in ASEAN
• Facilitating farmers in marketing the vegetables
• Promoting private sector involvement to develop
  new varieties of indigenous vegetables
• Lead country Brunei Darussalam under AARNET
  ASEAN-Asian Vegetable Research Development
  Center (AVRDC) Regional Network on Vegetable
  Research
• Status seeking funding support (US454,000)
• Other IV news http//203.64.245.173/world_iv/News
  /news.asp

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An Asian Perspective (2/5)
Asian Perspective
Branded Packed

• Differentiate their products
• Product
• Good Agricultural Practice
• Join the organic movement

People have become more concerned about what
they eat perhaps because of the recent food
scares. Chris Conway, Executive Assistant
Manager, Grnd Hyatt Hotels mezza9 restaurant.
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An Asian Perspective (3/5)
Asian Perspective
Reefer truck

• Differentiate their products
• Service matching quality requirements of major
  retailers, e.g., cold-chain integrity
• Title Study Meeting on Cold-Chain Management of
  Vegetables for members of Asian Productivity
  Organisation (APO)
• Country papers from participants
• Key-note addresses by experts
• Organisers Singapore (AVA and SPRING) and Asian
  Productivity Organisation
• Status scheduled on 21 24 August 2007

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An Asian Perspective (4/5)
Asian Perspective

• Optimise product mix
• Transportation
• High cost of logistics defraying return journey
• Lack of logistics network dedicated freighting
• Information and Knowledge
• Empowerment
• Of the Individual
• Of the Village or Community
• Of the Economy

Chiller hold in vessel
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Empowering the Poor
Info Knowledge

• Village Phone (VP) concept6 7(Grameen Telecom,
  GTC, of Bangladesh)
• Concept A person may not own a telephone but
  he/she should have access to a telephone within a
  ten minute walk
• Operation GTC provides Global System Mobile
  (GSM) 900 cellular mobile phones to villagers
• Grameen Bank member (woman) obtains ownership of
  phone under lease-financing programme of Bank
  serves as a VP operator responsible for extending
  services to the villagers for both incoming and
  outgoing calls may also have phone numbers of
  local MPs, police stations, even the PMO, to
  communicate with
• Average use of village phones 1,600
  minutes/month, with 600 minutes outgoing calls
• Outcome One VP covers 2,500 people of that
  village by 2004, 40,000 VP operators provide
  telephone access to 100 mil rural people target
  100,000 VP operators (covering 85 of
  Bangladeshs villagers)

VP in action
6 Durga P. Paudyal, 2006. From the Peasant
Charter to the ICARRD An Overview of the Current
Trends and Emerging Issues in Rural Development
in the Asia-Pacific Region. Asia-Pacific Journal
of Rural Development, Vol XVI No.1, 42pp
7 http//www.telecommons.com/villagephone/section1
.html
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Empowering the Village
Info Knowledge
E-choupal in action

• Village meeting place89 Indian Tobacco Company
  (ITC) or e-choupal
• Concept confers power of expert knowledge on
  even the smallest individual farmer, thereby
  enhancing competitiveness in the global market
• Operation ITC establishes Internet Kiosk in
  cluster of villages
• Selling centre for seeds, fertiliser, crop
  insurance, etc.,
• Managed by a trained farmer
• E-choupal is a web-supported initiative offering
  farmers information, customised knowledge,
  products and services to enhance farm
  productivity
• Outcome Already benefiting over 3.5 million
  farmers target 10 million farmers in 100,000
  villages to be empowered over next decade

8 B Sudhakar Rao, 2006. Rural Infrastructure A
Critical Issue for Farm Productivity in Asia.
Asia-Pacific Journal of Rural Development, Vol
XVI No.1, 61-77 9http//www.itcportal.com/ruraldev
p_philosophy/echoupal.htm
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Empowering the Economy
Info Knowledge
Awarding elite businessmen

• Township and Village Enterprises (TVE)1011 in
  China
• Concept Integrated rural development by
  combining agricultural production with
  development of rural and small industries in
  public-private partnership
• Operation Both husband and wife who worked on
  their farm also worked in the factory in the
  township or village enterprise in their area
  people who worked in the factory came home in the
  evening to till their plots
• During harvest time, the factories would be
  closed down and the workers would be permitted to
  spend all their time in harvesting their land
  Earlier they would be given time for preparation
  of land for sowing
• Outcome TVEs contributed to the success of
  transitioning China from a controlled economy to
  a market-based economy. It encouraged modern day
  entrepreneurs in China. Line of public and
  private business blurred. However TVEs are
  breaking down because of high rate of
  out-migration from rural areas into urban sector.

10 Rehman Sobhan, 2006. Comments on From the
Peasant Charter to the ICARRD An Overview of the
Current Trends and Emerging Issues in Rural
Development in the Asia-Pacific Region.
Asia-Pacific Journal of Rural Development, Vol
XVI No.143-54 11http//www.umich.edu/ipolicy/ch
ina/5)20Chinese20Township20and20Village20Ente
rprises,20A20Model20for20Oth.pdf
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An Asian Perspective (5/5)
Asian Perspective

• Establish early brand loyalty Maple Leaf case
  study

Problem Shrinking population, getting older,
town left behind by countrys post-war economic
boom
Adversity Towns orange trees, once main source
of income, were damaged by storms and unusually
cold weather in 1981. Farmers forced to look for
other work.
Human spirit No matter how old you are, you
need a job to feel a reason for living.
New Opportunity Gathering leaves to high-end
restaurants to garnish traditional Japanese
dishes began with shipments of simple wild leaves.
Business Some 200 residents (mostly women in
their 80s or older) have contracts with Irodori
Co. Inc., a joint public-private venture that
brokers sale of the leaves.
Information Empowerment They (the residents)
receive faxed orders and get daily information on
the business through the Internet.
Improvements Nowadays the line-up has expanded
to value-added oriducts such as small
origami-style figures, including cranes, fans,
boats and arrows made of iris leaves.
Earnings The residents have managed to turn the
business into an enterprise earning more than
S3.13 million a year.
Viability If you watch TV all day long, you get
old. I can get over the slightest cold easily as
I work hard. In fact, Im too busy to see a
doctor. Hariki, great-grandmother
Lesson learnt Public-Private partnerships work,
and succeeds well when entrepreneurial spirit is
strong.
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Another Strategic Focus Access to Capital
One more Focus

• Raising private capital for starting and
  expanding a business is an essential aspect for
  any business environment
• Government loan
• often given to individual
• sometimes perceived by the individual as an
  entitlement
• Comercial loan
• TVEs Ability to procure production inputs, such
  as capital, is another advantage instrumental for
  TVEs success in China11
• local Government involvement in TVEs created
  favourable environment for banks to lend to the
  TVEs since TVEs have community Government back-up
• Kenyas Equity Bank and Mexicos Banco Azteca12
• Equity Bank low-cost bank accounts
• Banco Azteca Mexicans without formal jobs

12 Eric Onstad, 2007. Big corporations try to tap
a market they have ignored (By) C.K.Prahalad.
(In) Khaleej Times, 6 June 2007.
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Conclusion

• Tremendous potential in business of high-value
  fruits and vegetables
• Characteristics of high-value produce
• Asian perspective on Strategic Focus
• Information and Knowledge Empowerment
• Maple Leaf case study
• Re-engineering of Township Village Enterprises?
• Getting big corporations to tap market of the 4
  billion poor (USD 5 trillion annual purchasing
  power), e.g., bank loans
• Challenge to developing and implementing a
  programme on high value fruits and vegetables is
  in keeping a multi-disciplinary approach from
  farm to plate

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Thank You