Thanks to globalisation, the fresh produce industry is changing quicker than ever before. Global trade patterns for fresh fruit and veg are evolving and emerging export and import countries are developing quickly. Produce Business UK reports on the illuminating seminar given by Dr Miguel Gomez of Cornell University at The London Produce Show and Conference in which he examines international trade and the globalisation of the fresh-produce sector
Dr Miguel Gomez, associate professor of applied economics and management at Cornell University in the US recently returned from a trip to the country of his birth, Colombia. His visit coincided with the start of the mangosteen harvest, the delicious tropical fruit whose properties he gleefully avowed. As such, the fruit, he explained was to be seen everywhere. Not least on the streets and at stop signs next to roads. There it was selling for $0.80 a pound.
Back in his adopted hometown of New York he rang a friend to enquire how much mangosteen was retailing for. His friend told him it was being sold for $60 a pound.
“It happens every year,” he says. “I know of someone who brings mangosteens to retail in New York. He does that for a three-week period, and at the end of that he doesn’t have to work for six months.”
Thus began, Dr Gomez’s seminar on International Trade and Globalisation of the Produce Industry at the recent London Produce Show and Conference. His point being that globalisation, and the global trade that occurs as a result of these shifts, is rapidly changing the fresh produce industry. And as he drew a line under his introduction he stated that he believed there are more changes to come – far more than have already happened.
Gomez’s seminar looked at the following:
- Global trade patterns for fruits and vegetables
- Competitive Market Factors
- Emerging export countries
- Emerging importing countries
- The impact of regional trade agreements on the present and future of the produce industry
Shifting perspective
Bearing this rapid transformation in mind Gomez believes that those in the fresh produce industry might feel slightly disorientated at present. However, he says it’s merely a matter of looking at things differently. And to bear this out he displayed a map of the world upside down – it was important he said because it demonstrates the importance of perspective.
In the past 14 years the value of global exports of fresh fruit and vegetables has increased dramatically, from just below $40 billion to $106.4bn.
“In real terms this increase is double the size of trade,” Gomez says. “The last two years have been flat as emerging countries such as Brazil have slowed somewhat. But long term this increase is going to continue and maybe even accelerate.”
Volume is also increasing from just below 60 million tonnes to 97.4mt. Not as rapidly as the value, but a rise nonetheless.
“We don’t know which products are growing so dramatically,” he says. “This isn’t corn, when we talk about fresh produce we are talking about hundreds of products – but we do know that the value of exports is growing faster than the volume.”
Netherlands remains top of the exports of fresh fruits, while China is growing as this is an area where consumption is increasing. Many of the top importers – Netherlands, Spain, Mexico, United States, Italy and China – are also top exporters. The same countries are responsible for the bulk of trade.
The top exporters of fresh vegetables are also those that dominate the fruit exports – they have the infrastructure and the ability to export. Spain and Mexico, Gomez notes, have increased and China has grown a lot. Here there are a lot of regional exports, Gomez said.
Per capita vegetable consumption has risen steeply in China, while most other countries have remained broadly similar. Asked why China has done so well while others have flatlined, Gomez noted that rising incomes were a contributory factor and also the increasing awareness of health within the country. He concluded that the reporting of statistics in China was perhaps more accurate these days too.
Dominant regions
Within global trade, three areas tend to dominate: the European Union, NAFTA (the US, Mexico and Canada) and Asia and the Pacific. The EU is the biggest importer of fruit and vegetables (50% of global imports head to the EU), while it’s also the largest supplier, with the EU providing 40% of exports.
In the wake of the NAFTA agreement (the North American Free Trade Agreement, signed on 1 January 1994), substantial growth has been witnessed in this area. This has been replicated with similar growth in Asia and the Pacific in the same period.
All three regions depend on Southern Hemisphere countries for imports of off-season fruits, and on equatorial regions for bananas, the leading fresh fruit import. What we have witnessed is substantial growth in the volume and variety of fruits and vegetables traded globally.
Gomez said: “There has been an increasing trade of fresh produce due to lower prices and improved quality resulting from lower tariffs and improved technology. The ability to maintain quality through technology has enabled the emergence of a global market, for example, by allowing very perishable tropical fruits to be introduced into markets previously unreachable.”
He also stated that we have acknowledge that the food industry has got very good at understanding the local consumers in different locations. This is what is fascinating about the produce industry – as an industry at the back end it’s becoming an increasingly global industry. At the front end however – and this is the consumer – it’s still focused on the local. Culture and location is very important. So the industry has got very good at understanding consumers’ tastes, consumers’ needs and that, he reasons, is also driving demand.
Trade agreements and farm strategies such as the EU’s Common Agricultural Policy and the liberalisation of trade in NAFTA countries have certainly contributed to this growth in trade. This has certainly been the case for Mexico and Peru, two countries Gomez highlighted as benefitting from the NAFTA agreement (Mexico) and the 2009 US-Peru Trade Promotion.
“For the produce industry signing trade agreements has increased trade by about fourfold across all the regions,” Gomez said.
Future factors
And looking to the future the Transatlantic Trade and Investment Partnership (TTIP) that aims to remove barriers to trade and investment between the EU and the US could act as another driver for growth. Gomez believes that trade will increase both ways, but that the EU produce industry is going to benefit tremendously with harmonisation.
In conclusion, Gomez stated:
- The produce industry is becoming rapidly globalised
- The global produce industry has benefited substantially from increased trade (both exports and imports)
- Demand is growing faster in developing countries – how to take advantage of export opportunities?
- Market access is constantly improving.
- More exporters will be competing in many markets (for examples, increased consumption in Asia)
The big winners in this increased global trade are the consumers. There is more employment, more trade and more consumers Gomez said.
