High Value Fruits And Vegetables: A perspective from Asia

1. 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

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

3. 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

4. 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

5. 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

6. 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]

7. 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

8. 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

9. 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

10. 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.

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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.

17. 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.

18. 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

19. Thank You