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Why the Global Fresh Produce Trade Faces a New World Order

Posted by IFCO Systems
October 06, 2016

The global fresh produce trade is facing the dawn of a “new world order,” and consumers will be the beneficiaries. According to a new report from Rabobank, a Dutch multinational specialist in food and agribusiness banking, the shift in the international produce trade is the result of three fundamental changes.

  1. Evolving Tastes and Preferences in Developed Countries

While the overall consumption of fruits and vegetables in mature markets such as the U.S. is only marginally increasing, customers continue to seek novel tastes and new experiences. As a result, the value of fresh produce sales continues to rise, in spite of relatively flat overall volume. In fact, value has outpaced volume in terms of global sales. Global exports of fresh fruit and vegetables. It has risen from just below $40 billion per year to over $106 billion over the last 14 years. Comparatively, volume has increased from less than 66 million tons to over 107 million tons in the same period. In Europe, interest in novel fruit and vegetables has also created new opportunities, notably for surrounding countries such as Turkey and Morocco.

  1. Growing Import Markets

The report also notes the importance of China as a growing and sophisticated import market for fresh produce, and the emergence of several promising new import markets, including Thailand, Malaysia, South Korea and the United Arab Emirates. The growth in China has been attributed to rising incomes and increased awareness of healthy eating habits.

  1. A New Generation of Fresh Produce Exporting Nations

Rabobank notes that while established fruit and vegetable producers such as the U.S., New Zealand, Australia and Chile are looking to increase their role, rising stars such as Mexico and Peru are creating a presence. Other countries, including Morocco, Thailand and Vietnam, are located in strategic proximity to important markets, and are in a position to capitalize as they increasingly meet quality and variety demands of the high-value import market. In addition, local suppliers are also rising to fill the void for affordable produce in countries such as China in order to compete with imports.

Aside from being in close proximity to large markets, the emerging produce exporters have benefited from the establishment of trade agreements, as well as investment and low wages. Mexico, now the third largest exporter of fresh produce, benefited from NAFTA, while Peru took advantage of the US-Peru Trade Promotion to gain easier access to the U.S. market.

“Those in the world’s leading high-value fruit and vegetable-exporting nations are seeing these two up-and-coming nations looming increasingly large on their radar screens, stated Marc Soccio, senior horticulture analyst at Rabobank.” Both Mexico and Peru have experienced remarkable growth in recent years, especially in many of the high-value categories where other more established horticultural-exporting nations have previously staked their claim.”

Soccio stressed the importance for established export nations to plan for the future. “Infrastructure investments to unlock key resources such as irrigation water, investment behind R&D—both at the firm and industry level, and building a deeper understanding of the needs of consumers and customers in key export markets can deliver valuable and sustainable points of difference from which to compete and grow.”

The produce market is clearly changing in terms of customer preferences, growing markets, and exciting opportunities for emerging export countries. How the market will transform remains to be seen. The only certainty, experts note, is that consumers will be the winners.

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