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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. Coverage.

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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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Background

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

  • Share of world agricultural trade:

    • 1961: 10.6% or US$3.4 bil

    • 2001: 16.9% or US$70 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/publications/wrs0406/wrs0406b.pdf


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Background

Global Fruit and Vegetable Trade: Patterns1 (2/3)

  • 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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Background

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

  • 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

    • Japan’s 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 Crops

High Value Crop: Characteristics2 (1/3)

  • 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/articlefiles/279-our_story.pdf]


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High Value Crops

High Value Crop: Attributes (2/3)

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/ciat_in_focus_2004_2005_text_only.pdf

4 John H Dyck and Kenzo Ito, 2005. Japan’s Fruit and Vegetable Market. (In) Global Trade Patterns in Fruits and Vegetables, Economic Research Service/USDA. Chapter 7. http://www.ers.usda.gov/publications/wrs0406/wrs0406h.pdf


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High Value Crops

High Value Crop: Strategic Focus5

  • 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

5Ramu 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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Asian Perspective

An Asian Perspective (1/5)

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 (US$454,000)

    • Other IV news: http://203.64.245.173/world_iv/News/news.asp


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Asian Perspective

An Asian Perspective (2/5)

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 Hotel’s mezza9 restaurant.


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Asian Perspective

An Asian Perspective (3/5)

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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Asian Perspective

An Asian Perspective (4/5)

  • 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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Info & Knowledge

Empowering the Poor

  • 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 Bangladesh’s 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

7http://www.telecommons.com/villagephone/section1.html


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Info & Knowledge

Empowering the Village

E-choupal in action

  • Village meeting place8&9 [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

8B 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/ruraldevp_philosophy/echoupal.htm


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Info & Knowledge

Empowering the Economy

Awarding elite businessmen

  • Township and Village Enterprises (TVE)10&11 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.

10Rehman 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.1:43-54] 11http://www.umich.edu/~ipolicy/china/5)%20Chinese%20Township%20and%20Village%20Enterprises,%20A%20Model%20for%20Oth.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 country’s post-war economic boom

Adversity: Town’s 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 S$3.13 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, I’m 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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One more Focus

Another Strategic Focus: Access to Capital

  • 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 TVE’s 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

    • Kenya’s Equity Bank and Mexico’s Banco Azteca12

      • Equity Bank: low-cost bank accounts

      • Banco Azteca: Mexicans without formal jobs

12Eric 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