Shippers voice concerns over latest US-China tariffs

CBP will begin to collect duties from 6 July on 818 additional product lines covering $34bn worth of imports from PRC

Representatives of US retail importers have voiced their concerns about the impact of the latest US-China tariffs after the US last Friday said it would go ahead with new 25% taxes on $50 billion of Chinese imports.

Despite an agreement last month to suspend planned punitive tariffs against one another after achieving “meaningful progress” towards a new trade framework, the Office of the United States Trade Representative (USTR) last Friday released a list of products imported from China that it said would be “subject to additional tariffs as part of the US response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property”.

US Customs and Border Protection will begin to collect the additional duties on 6 July on 818 lines of the original 1,333 lines that were included on the proposed list published on 6 April. These lines cover approximately $34 billion worth of imports from China, USTR said.

US president Donald Trump reportedly also said the US would impose another $100bn of Chinese imports if Beijing “engages in retaliatory measures, such as imposing new tariffs on US goods, services, or agricultural products; raising non-tariff barriers or taking punitive actions against US exporters or US companies operating in China”.

As reported today in Lloyd’s Loading List, China has published its own list of threatened tariffs on $50bn in US goods, including soyabeans, aircraft and autos, threatening it would hit back if Washington followed up with further measures. And now Washington has completed a second list of possible tariffs on another $100bn in Chinese goods, in the expectation that China will respond to the initial US tariff list in kind, sources told Reuters.

The Guardian said China’s commerce ministry said China did not wish to have a trade war, “but the Chinese side has no choice but to strongly oppose this. We will immediately introduce tariff measures of the same scale and strength. All the results from the negotiations previously reached by the two parties will be invalid.”

It added: “It is deeply regrettable that in disregard of the consensus between the two sides, the US has demonstrated flip-flops and ignited a trade war.”

National Retail Federation (NRF) president and CEO Matthew Shay said tariffs are taxes on American consumers, noting: “These tariffs won’t reduce or eliminate China’s abusive trade practices, but they will strain the budgets of working families by raising consumer prices.

“Tax reform has encouraged US companies to expand and invest in their workforces and unleashed the strongest levels of consumer confidence in a generation. Unfortunately, these tariffs and the retaliation China has promised put all this economic progress at risk. Once again, we urge the administration to change course and develop a clear and comprehensive strategy to hold China accountable.”

A study commissioned by NRF and the Consumer Technology Association found that tariffs on $50 billion of Chinese imports, coupled with the impact of retaliation, would lead to four job losses for every job gained and reduce US gross domestic product by nearly $3 billion.

NRF testified before the Office of the US Trade Representative during a hearing last month to share the retail industry’s concerns over tariffs.

USTR explained on Friday that president Trump had stated on 29 May that USTR would announce by 15 June “the imposition of an additional duty of 25% on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s ‘Made in China 2025’ industrial policy. Today’s action comes after an exhaustive Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden US commerce.”

The list of products issued last week covers around 1,100 separate US tariff lines valued at approximately $50 billion in 2018 trade values. It generally focuses on products from industrial sectors that contribute to or benefit from the ‘Made in China 2025’ industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles, USTR said.

USTR said list of products consists of two sets of US tariff lines: The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China.

USTR said it had determined to impose an additional duty of 25% on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on 6 July.

The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the ‘Made in China 2025’ industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

USTR said it “recognizes that some US companies may have an interest in importing items from China that are covered by the additional duties. Accordingly, USTR will soon provide an opportunity for the public to request the exclusion of particular products from the additional duties subject to this action. USTR will issue a notice in the Federal Register with details regarding this process within the next few weeks.”

Source: https://www.lloydsloadinglist.com

Will Waters | Monday, 18 June 2018

Season of Australian orange exports to China about to kick off

"Bleak finish for Egyptian orange import season"

China has entered the final week for the selection and packaging of late-season oranges. The 2017 orange production season has come to an end. At the same time, US oranges, Egyptian oranges, and Spanish oranges are all entering the final stage of their production seasons. The overall condition of the Chinese orange market during the last production season was depressed. The market condition was similarly disastrous for imported Egyptian oranges. Most importers suffered losses from the beginning of the production season until the very end. Only the quality of late-season Spanish oranges was relatively good and had some potential for profit.

Australia and South Africa have begun to select and package oranges for the upcoming, scorching hot Chinese summer. Mr. Xie Jinshan, CEO of the Shenzhen GoldAnda Agricultural Technology Development Co., Ltd. (hereafter GoldAnda) recently visited Nippys farms in Australia and the Gogo farms in South Africa. He stated that Australian orange production has slightly decreased this year, but the fruit size is slightly larger than last year. A larger share of the production volume meets the requirement for export to China. The taste and sweetness is also better than last year.

The production volume of South African oranges increased, but the fruit size is slightly smaller than last year. The area recently suffered from hail and other extreme weather conditions, but this only had limited influence on the overall production volume.

GoldAnda is a global leader in orange retail. They annually sell more than 1000 shipping containers full of oranges. GoldAnda has developed a strong cooperation with Australian Nippys in recent years. Together they have worked hard to make Nippys the number one Australian orange brand in China. At the same time, GoldAnda developed a good working relation with high-end South African brand Gogo. Their import volume has increased by 30%. Australian and South African oranges are already underway to Chinese ports and will soon arrive.

Xie Jinshan - CEO
GoldAnda
Shenzhen GoldAnda Agricultural Technology Development Co., Ltd.
Website: www.goldanda.com
Telephone number: +86 755 2515 4488
E-mail address: goldanda@goldanda.com

Publication date: 6/7/2018
Source: www.freshplaza.com

Vietnamese lychee hubs to start picking main crop

Lychee growers in the two lychee farming hubs of Vietnam (Bac Giang and Hai Duong provinces), are currently busy with harvesting this season's first crop of lychees. They are also preparing for picking the lychees of the fast-approaching main crop scheduled for the next five days.

By June 5, the lychee growing areas in the northern province of Bac Giang are entering the end of the early maturing fruit crop and are in preparation for harvesting the main crop. The province is expected to harvest 150,000-180,000 tons of lychees this season, the highest volume of the past few years. This is mainly due to the favourable climate and the acceleration of the application of technology in farming in accordance with VietGAP and GlobalGAP standards.

The quality and shape of the lychees are considered as the best in the past 10 years. The entire province of Bac Giang is estimated to sell approximately 9,000 tons of lychees by June 3, with a total value of $7.48 million.

Meanwhile, in the lychee farming hub of Hai Duong, Thanh Ha lychees are labelled with QR code stamps and all growing areas that meet the VietGAP and GlobalGAP standards will also be labelled with QR codes in order to trace the origins of the fruit. QR code labels are an essential requirement for Vietnamese lychees if they are to be exported to China through the Guangxi border in 2018.

According to the Hai Duong provincial Trade Promotion Centre, lychees tagged with QR codes are valued by consumers, particularly those in large cities and they are also at least 10% more expensive than those without a QR code.

According to en.nhandan.org.vn, the good news for lychee growers is that the Red Dragon Company successfully shipped 1.2 tons of early maturing lychees to Australia on March 28, which was the first batch of Hai Duong lychees to be exported to Australia. The company also plans to export more to Australia in addition to the EU and the Middle East.

Publication date: 6/7/2018

Source: www.freshplaza.com 

'It's like a licence to print money' — Citrus industry urges Government to help preserve China trade

The citrus industry has called on the Federal Government to not "trip up" their trade with China, as Australian orange and mandarin growers enjoy the best prices in years.
Citrus Australia chief executive Nathan Hancock said the industry was experiencing boom times, with growers getting twice to three times as much for their fruit as they were five years ago.

The citrus harvest started in early May and this season demand is expected to outstrip supply, largely due to increasing exports to China.

China accounted for almost a quarter of the total 273,000 tonnes of citrus fruit exported last year.

"In 2013 we were close to zero export tonnes to China … In 2017, we exceeded 70,000 tonnes to China," Mr Hancock said.

But Mr Hancock was concerned about the fragility of the current world order, and Australia's relationship with our most lucrative trading partner.

"I'm not the only one in industry who is nervous about that," Mr Hancock said.

"We can't do anything much about those political machinations except to say to our government we don't want them tripping things up."

Mr Hancock said the industry's peak body, Citrus Australia, along with growers and packers had put "a lot of work" into supplying China's needs.

'It's like a licence to print money'
The on-farm protocols the Chinese government demanded, primarily to prevent pests and diseases, had been difficult to enact but the hard work has paid off.

Of the 25,000 hectares of citrus trees planted across the growing regions of Queensland, the Northern Territory, New South Wales, Victoria, South Australia and Western Australia, 9,200 hectares have been registered for export to China.

Second generation fruit grower John Hederics at Trentham, near Mildura, said one variety of pink-fleshed navel orange was particularly popular.

"It's like a licence to print money," he said.

The pink navel, which looks like any other orange from the outside, can fetch as much as $1,300 a tonne, Mr Hederics said.

"China's been a big change for us in the last four years with that market opening up and the demand for our fruit, they really love our fruit, especially the pink navels," he said.

"The Australian dollar has been good to us the last couple of years, it has really made a difference to the profitability of us growing citrus and exporting it."

Close view of a man's hands holding hald a pink navel orange, with a knife sliding into a section of fruit
PHOTO: Grower John Hederics says pink navels can fetch as much as $1,300 a tonne. (ABC News: Prue Adams)
Mr Hederics grows 130 hectares of citrus on his property adjacent to the Murray River, and he is clearing more land to expand the orchards to 350 hectares over the next three years; he wants to increase his production of seedless mandarins and pink-fleshed navels.

"It's a big investment," he said.

"You can't just plant a tree and harvest it next year — you've got to wait five to seven years to come into full production, so it's a real gamble guessing the varieties and what you should be doing."

Mr Hederics is one of the Mildura Fruit Company's (MFC) 130 contracted growers.

MFC is the country's biggest single supplier to the China market — accounting for about one third of the overall citrus trade.

MFC general manager Perry Hill said the Mildura-based packing plant first shipped fruit to China in 2011, after the export trade to the United States collapsed.

"Going back ten or more years ago, the biggest market for the premium grade fruit was the US," Mr Hill said.

"That diminished because of the likes of South Africa and Chile pushing a lot of fruit into that market, so all of a sudden we couldn't get the premium prices we were looking for, so we turned our mind elsewhere."

Source: http://www.abc.net.au

Author: Prue Adams

Produce in firing line as US sparks trade war

The EU, Canada and Mexico consider retaliatory measures in response to US tariffs on steel and aluminium imports
The US has announced the imposition of tariffs on steel and aluminum imports from the EU, Canada and Mexico, prompting fears of a protracted and damaging trade war.

Almost immediately after president Donald Trump’s announcement, the Mexican government issued a statement announcing that it would impose equivalent measures on various US imports including apples, table grapes and cranberries.

The measures would remain in effect until the US government eliminated the import tariffs, the Ministry for the Economy said.

The latest trade data available from ITC suggests that, of the three products, the US apple export trade would stand to lose the most from a Mexican tariff hike.

Mexico is by far the largest importer of US apples, with sales worth US$276.5m last year, compared with US$174.3m in Canada and US$97.4m in India.

Mark Powers, president of the Yakima, Washington-based Northwest Horticultural Council, said the move was expected to cause substantial damage to the industry.

Mexico is the third major market to impose tariffs on Washington apples as a result of US trade policy on steel and aluminium this year.

Last week, India announced plans to put a 30 per cent retaliatory tariff on US apples – on top of the 50 per cent tariff that they are already subjected to, while in China US fruit imports have faced a 15 per cent hike in tariffs since 2 April.

Sales of US fresh apples to Mexico may have declined slightly in recent years, but last year they were 21 per cent up on the previous campaign.

Meanwhile, fresh cranberry exporters in the US have seen the value of their business in Mexico increase considerably over the past few years, albeit from a low starting point. According to ITC, Mexican import sales rose by 30 per cent to just under US$1.27m between 2013 and 2017.

As for table grapes, the value of US sales to Mexico fell by 2 per cent to US$97.2m during 2013-2017, although ITC noted a 26 per cent increase in 2017 compared with the previous campaign.

WTO case opened

The EU, meanwhile, has confirmed it is opening a case at the World Trade Organisation in response to the new US duties, with EU trade commissioner Cecilia Malmström expected to announce retaliatory "proportionate" tariffs on US exports including cranberries "in accordance with WTO rules".

Federica Mogherini, the EU high representative on foreign policy, told journalists: "The European Union will today proceed with the WTO dispute settlement case adding those additional duties on a number of imports from the United States. The European Union measures will be reasonable, proportionate and in full compliance with WTO rules and obligations.”

The decision by the White House was dubbed “patently absurd” by the UK’s international trade secretary, Liam Fox, who suggested the UK would be prepared for “tit-for-tat” moves. “We absolutely do not rule out counter measures,” he asserted.

When the initial threat of tariffs was raised by the US back in March, the EU pledged to retaliate with tariffs on American imports such as orange juice, cranberries and bourbon.

“Logically, these unilateral measures on steel and aluminium will lead to multiple counter reactions around the world, and for sure they will be challenged within the WTO,” said Philippe Binard, general delegate of European fresh produce association Freshfel Europe.

“The EU has already published a list of potential retaliatory measures that will be effective from 18 June, including on orange juice, cranberry juice and sweet corn. Elsewhere in the world, retaliatory measures may include increased taxes on US fresh fruit and vegetables.”

The question, according to Binard, is whether or not the US will remove its measures on steel and aluminium in order to avoid triggering such a response.

Additional reporting by Mike Knowles and Maura Maxwell

Source: http://www.fruitnet.com/asiafruit

Author: Tom Joyce

WA Avocado growers looking forward to developing market in Japan

A Western Australian avocado packer has welcomed new market access to Japan, saying it will be needed to help ensure growers get a good price for their produce into the future.

Last week, the Australian government reached a new protocol agreement for Hass avocados with Japan, and will be calling for applications for accreditation for growers in the coming weeks. Managing Director of Karri Country Produce, Jennie Franceschi, says at the current rate of industry expansion producers will need new markets like this to develop, with a major increase in volume forecast for coming years.

"It's a positive step as there are a lot of trees in the ground and production in Australia is going to be increasing significantly," she said. "So the figures I have been given by industry, there are 30 per cent of trees not producing and 20 per cent of trees that are producing, but not in full production. So that means half the trees in the ground are either not producing or under producing. I always think it's important to have many market distribution channels."

She praised the Australian Government for getting this access, saying the more supply channels available means more diversity and therefore more stability. Ms Franceschi adds that prices are "not exciting" for growers at the moment due to the amount of fruit on the market.

"The industry as a whole is under a bit of pressure at the moment," Ms Franceschi said. "We haven't seen these sort of returns in around five years. I think it's just getting people to eat them. There have been some very good sales, but it just hasn't encouraged more people to buy. So it's not really price, and I am not sure why people are not buying. There are good volumes around and very good quality. So, if you look at the current pricing in Australia, we will be very effective up there (in Japan)."

Initially the opportunity will only be available to fruit fly free areas, such as Western Australia, Riverland (South Australia) and Tasmania, and Ms Franceschi admits there may not be huge number of volumes at first, as growers get an understanding of the market.

"I don't think there will be huge quantities, but I will definitely be putting some fruit up there," she said. "Just to understand the lay of the land, as I think that's important to do that and learn. I have worked with the Japanese lately and I have found them to be honourable. They are hard, like you've got to go through a process, but they are very honourable. So I think it's very promising."

Among Australia's advantages is the proximity to Asia, meaning the fruit can get to market fairly quickly as well as Australia's clean and green image. This has put the produce high on the list for many Asian countries, according to Ms Franceschi, who conducted her own taste testing while recently in Malaysia.

"They had some fruit from other countries, as well as fruit from Australia - not Western Australian, but East Coast fruit," Ms Franceschi said. "We bought some from other countries, because we wanted to understand why our fruit was retailing for more, which was quite a premium over these other countries. I wanted to see if there was a legitimate reason for this. But when we cut the fruit there wasn't a very good seed in one, and the flavour wasn't the same. So everyone who tried it, all picked the Aussie avocado as being of a superior flavour and there was also more flesh."

The Hass season is underway in the east but the west is still a few months away. The last estimates put the Western Australian crop at a similar level as last season, but with winter to get through, those numbers are expected to firm up at a later date.

For more information:
Jennie Franceschi
Karri Country Produce
Phone: +61 8 9777 2246
Publication date: 5/31/2018
Author: Matthew Russell
Copyright: www.freshplaza.com

Australian stone fruit producers taking advantage of new improved Chinese protocols

New protocols, and an improved growing season has helped the imports of Australian stone fruit into the Chinese supply chain increase 167 per cent in volume, compared to last year.

Summerfruit Australia says the figures, as of March 2018, recognise the addition of peaches and plums for the first time, after the industry gained access for all categories of stone fruit from November 2017, adding to nectarines, which started supply the year prior.

"Due to our protocol conditions and current limitations, our industry quickly seized on the new access for peaches and plums," CEO of Summerfruit Australia John Moore said. "Apricots are a very delicate fruit and will need more protocol improvements to successfully deliver first class quality to Chinese consumers. With nectarines in the second year of access, there was a significant increase in exports due to a much improved growing season over 2016/17."

He adds that the late announcement in 2017 for access of peaches, plums and apricots was very much welcomed, by both Australian producers and Chinese customers.

"Detailed surveillance of the key Chinese markets - Guangzhou, Shanghai and Beijing - heard positive feedback of quality, price points and consumer satisfaction for eating quality across the spectrum of nectarines, both yellow and white flesh; peaches both yellow and white flesh; and the spectrum of plums, inclusive of sugar plums," Mr Moore said. "The Australian Summerfruit sent to China this season re-established our distinguishing quality factor, eating characteristics and freshness over southern competitors.”

Summerfruit Australia's General Manager for Intellectual Property and Business Development Rowan Little says overall the season was an improvement in terms of timing and fruit quality on the year prior. Early fruit was almost two weeks earlier than the year prior which proved a good introduction into the season.

"I think the general consensus was that peaches were in heavy supply which resulted in some low grower returns," Mr Little said. "Nectarines were in good supply but not in over production. Plums were a little lighter than the previous season while Apricots returns were overall slightly lower."

The main challenge from a quality perspective was early season frosts in most districts and a few hail events which primarily affected the Cobram district. Other than that a few rain events had impacts at various times but overall the summer growing season was good.

However, Mr Little says domestic demand was relatively flat, but flavour and fruit size remain the primary drivers of domestic consumer demand.

"Nectarines continue to dominate the Australian domestic market in terms of volume of sales," he said. "In this space, yellow nectarines are also preferred over white. Sales were strongest for nectarines through January. During this period demand off shore for large white nectarines was also strong though grower returns were only average. Nectarines performed much better in China than the year prior with better fruit flavour driving demand and increased volume. Formal access for Plums and Peaches was not granted until mid-season, but with the benefit of a full season of access in 2018/19 this situation is expected to improve."

For more information:
Summerfruit Australia
Phone: +61 2 6041 6641
ceo@summerfruit.com.au
www.summerfruit.com.au

Publication date: 5/28/2018
Author: Matthew Russell
Copyright: www.freshplaza.com

Potential Australia-Europe FTA

The Council of the European Union has agreed to talk with Australia about forming a free trade agreement
In the coming weeks, discussions for a free trade agreement between Australia and the European Union (EU) will commence.

Horticultural products are in the mix of potential exports, and a proposed agricultural counsellor strategically placed in the EU will help secure and improve market access for Australian producers.

“This has big potential for our farmers and will open up lucrative premium markets in our fourth largest export destination driving increased exports, economic growth and jobs in rural and regional Australia,” said Australian minister for agriculture and water resources, David Littleproud.

“So much of the food our famers produce goes to export and the government will be working hard to make sure our farmers get real benefits from this.”

As part of this year’s budget in Australia, the federal government has announced the appointment of an agricultural counsellor in the EU who will work on market access deals on the ground.

“The EU is our fourth largest export destination for agriculture, fisheries and forestry worth $3.8 billion in 2016-17. It is also our largest source of agriculture, fisheries and forestry imports, valued at $5.6 billion,” Littleproud said.

“I look forward to the launch of negotiations between Australia and the European Union next month in Australia to further cement our important trade relationship with the EU.”

 

Australian Hass to Japan approved for access

Hass avocados from Australia can now be officially exported to Japan from fruitfly-free regions
On May 23, Australia’s Department of Agriculture and Water Resources officially declared export access to Japan for Hass avocados.

The avocados must be grown in specific zones, meet the “hard mature” condition, and be sent from Department of Agriculture accredited packhouses and growers.

The source regions are strictly limited to officially recognised areas free from Queensland fruit fly: Western Australia, Riverland (South Australia) and Tasmania.

The Department of Agriculture confirmed with Asiafruit that there is no cold treatment protocol as part of the access.

In the coming weeks the department will release an official call for applications for accreditation.

 

Source: http://www.fruitnet.com/asiafruit

Author: Camellia Aebischer

Costa scoops Aus-China business award

Leading Australian group recognised for pioneering investment in Chinese agriculture at AustCham Westpac Business Awards


Costa Group, Australia’s leading horticulture company, was announced as the winner of the Business Excellence Award for Agriculture, Food & Beverage at the 25th Annual AustCham Westpac Australia-China Business Awards on Thursday night in Shanghai.

Peter McPherson, general manager of Costa’s international business, accepted the award on behalf of Costa and told the assembled audience of local and international dignitaries that it was a great honour to be recognised with such a prestigious accolade.

“The footprint Costa has established in China working together with Driscoll’s has taken a lot of hard work,” said McPherson. “Most importantly this has involved a commitment to work cooperatively and harmoniously with local stakeholders, including government officials, our employees and local villagers.”

The award recognised the agronomic practices Costa has brought to China, including its world-leading blueberry intellectual property and substrate growing methods, according to a media statement from Costa. Such ground-breaking moves have not only been a game changer for the way berries are grown in China, but also for the way agriculture is conducted in general, the group noted.

“Importantly, the award is also a recognition of how Costa has worked with all local stakeholders in helping to realise their commitment to agricultural policies and practices that improve economic development by creating jobs in agriculture, have a positive environmental impact and benefit the greater social good,” said McPherson.

McPherson also flagged the great work Costa’s local employees had done to establish three farms in Yunnan Province, and their willingness to learn and apply new skills.

Costa’s investment in China is one of the largest made by a foreign-owned company in Chinese agriculture in recent years, according to the media statement. Key factors underpinning the investment include: introducing world leading high-tech growing and management systems; recognition of key national agricultural policies focusing on sustainable production; improvement in the economic and social well-being of the local population; strong and harmonious working relationships with local authorities; and implementation of safe and healthy work practices. 


Earlier this week, McPherson also spoke on the horticultural potential of Yunnan Province, and Costa’s investments in this region of southwest China, at Fresh Produce Forum China, China’s leading fresh produce conference event, which took place at the inaugural edition of China Fruit Logistica in Shanghai on 14-16 May.

The AustCham Westpac Australia-China Business Awards recognise the success of Australian and Chinese businesses in China across a broad spectrum, from small entrepreneurs to large publicly listed companies. Besides agriculture, food and beverage, the awards are given in a range of other sectors including: business innovation and the digital economy; construction and infrastructure; consumer services; cross-border investment; professional and business services; and sustainability, diversity and social responsibility.

The awards evening formed part of the Australia-China business week, which concludes with an Australian Rules (AFL) football match to be played in Shanghai between Port Adelaide and Gold Coast Suns on Saturday (19 May). The match at Jiangwan Stadium will be attended by Australian Trade and Tourism Minister Steve Ciobo.

Source: http://www.fruitnet.com/asiafruit

Author: John Hey

New market for West Australian sprouts in South Korea

West Australian-grown brussels sprouts are now making their way into Asia. This is partly due to efforts by local horticulture business Odeum Farms to diversify its market base. Nick Paterniti, export manager at Odeum Farms, said the 20-year-old company has been exporting brussels sprouts for a while now, with most going to South Korea. Last year’s 60 tons is set to increase to 90 tons during the 2018 season, and should reach 120 tons annually by 2020. “South Australia has for many years provided sprouts into South Korea and will continue to supply them during their six-month season,” Paterniti said. “Here in WA we can supply them for the other five or six months of the year.”

According to an article on thewest.com.au, Odeum’s exports are taking a market share from Belgium and the Netherlands during those months. Fuelling Mr Paterniti’s confidence that market share will continue to grow, is the Korea-Australia Free Trade Agreement. By January 2020, the previous 27 per cent tariff should have been eliminated, a process that has been happening in incremental stages since 2014.

Although making their biggest headway with sprouts, Odeum also started exporting other fruit and vegetables in the past two years, including melons to Malaysia and the UAE and strawberries to South-East Asia.

Publication date: 5/14/2018

Source: www.freshplaza.com 

E-retail, not e-commerce: China’s fast-changing online market for fresh fruit

In China the question isn’t whether you sell online but how. In the fruit trade it pays to understand the nuances of various e-commerce platforms, so much so that Frutacloud CEO George Liu believes ‘e-retail’ is a better term for the phenomenon which is sweeping its way towards 20% penetration in the fresh produce market.

“If you do business in China you have to use WeChat,” said Liu early on in his presentation at the Global Cherry Summit in Chile last week.

For the experienced China hands Liu was merely stating the obvious but for others his comment was likely a wake-up call to get accounts with the service, which is like Facebook meets Whatsapp with a digital payment element as well.

And in modern China digital payments have become the norm. Liu highlighted there were now 731 million Chinese citizens on the internet, which is more than the United States and India combined. Of these people, 70% make regular payments online.

“And with many of these Chinese internet users, they first went online through their mobile phones,” Liu said.

“A lot of these people don’t have email accounts. So we call these people mobile digital natives – they conduct their daily lives through mobile apps.

“It is very common in China that the small merchant will only accept digital payments.”

He said this evolution meant shopping habits could be tracked, analyzed and charted.

“This gives a huge advantage to those people who hold the data. Here’s another thing for consideration – the national disposable income growth has been increasing every year,” he said.

“Some of you may have heard that GDP growth is slowing down in China, but I think this [disposable income growth] is a better indication of the overall growth in China.”

Liu pointed to a 9% growth rate in the national resident disposable income level last year, up from 8.4% growth in 2016.

“Such high growth of income is what you would call the consumption upgrade,” he said.

“Consumption upgrade means that Chinese people with money now want to buy better food, they want to buy imported product instead of domestic, and they want to buy fresh fruit instead of mass-produced junk food.

“This is wonderful for the Chilean cherry industry.”

The disposable income growth measure also helps for understanding opportunities in the interior. It is now common knowledge that fruit exporters need to break through the first tier cities, but Liu made a deeper argument than the sheer business case.

“The disposable income here is rising faster compared to the first tier cities, and the housing cost is more affordable so people have more money to spend on other items,” he said.

“In the past one of the obstacles in developing market share was the lack of cold chain logistics, but now many players including us are investing heavily in the distribution network.

And while in the first tier cities of Beijing, Tianjin, Shanghai, Guangzhou and Shenzhen there are around 78 million people, Liu emphasized the population in second tier cities was around 236 million.

A brief summary of China’s e-retail platforms

Liu broke down China’s e-retail market into four broad categories that have evolved over time. The original of these is ‘comprehensive e-commerce’, dominated by Alibaba’s Tmall.com and Tencent’s JD.com.

Both these companies incidentally own or have connections to various alternative e-retail platforms as well as conventional retail, with notable examples being Tencent’s partnership with Walmart in China as well as investments in Fruitday.

“However I think this type of [comprehensive] e-commerce is getting very saturated. Growth has slowed down and also the delivery and packaging costs for this type of e-commerce, especially for fresh fruits, are very high,” Liu said.

He said these services tended to use third-party providers like DHL, with the cost of using a box, a bag and including ice packs making up approximately 30% of the final selling price.

The second category is known as ‘vertical fresh produce’, involving players like Benlai, Fruitday and Missfresh which “don’t sell anything else except fresh product”.

“Usually they build their own logistics system to deliver better fruit to the customer,” Liu said.

Vertical integration requires heavy investment in cold chain logistics and warehousing, according to Liu, so players in this space tend to focus on specific geographies, such as Missfresh in the north and Fruitday in Shanghai.

“They’re facing similar challenges including high building costs, high packing costs so a lot of them are diversifying through acquisition in traditional retail, or they invent something new like a self-service kiosk,” he said.

The third type of platform is ‘fresh specialty O2O’, which stands for online-to-offline.

“Here there are two leaders. Pagoda and Xianfeng combined have about 4,000 stores in China. These stores are small and close to residential areas, so in such close proximity they can deliver fruit to their customer within an hour,” he said.

Liu described the final category as ‘new retail’, including such outfits as Hema, 7Fresh and Super Species.

“This was started only three years ago by Hema Fresh, which is also owned by Alibaba, and this is no doubt the hottest and most competitive retail space in China,” he said.

“I think there are three key aspects that differentiate new retail from the regular supermarket – first these stores are built from the ground up to support online development.

“They often have a unified imagery management system and some mechanism to support fast pick-up from within the store. Second of all they place a big focus on fresh product and shopping experience. Fresh produce will usually account for more than half of the floor space.”

But in Liu’s view the most important aspect of new retail is that you can only make digital payments, and the experience serves as a hook for mobile digital natives.

“Together with all the data they have about you they can give you the most personalized suggestions,” he said.

“The eventual goal for all the ‘new retail’ is for you to first experience in store but then for the repeat purchase to go through your mobile phone.

“You place an order on your mobile app and somebody in the store will pick up all your products, put it in a little bag, and it will be transported to one of these guys on a bike or a motorbike outside to deliver to you.”

Liu said the model required a lot of capital investment, which is why most of the players involved are large companies.

“In the U.S. people have heard big news about Amazon buying Whole Foods but this has happened on a much bigger scale in China.”

www.freshfruitportal.com