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Trends in Horticultural Product TradeOpportunities for Developing Countries

Pascal LiuTrade Economist

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Outline

1. Overview of world trade in F&V – Main trends

2. Challenges to F&V exports1. Supply side

2. Demand side

3. Opportunities for Med developing countries1. Consumption trends

2. Value addition

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1. World Trade in F&VWorld Exports Volume of Fresh Fruit and Fresh Vegetables

from 1970 to 2004

0

10,000

20,000

30,000

40,000

50,000

60,000

197019721974197619781980198219841986198819901992199419961998200020022004

thou

sand

tonn

es

Fruit

Vegetables

4

Developed country importsDeveloped Countries Net Imports of Fruit and Vegetables

from 1970 to 2004

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

197019721974197619781980198219841986198819901992199419961998200020022004

thou

sand

tonn

es

Vegetables

Fruit

5

Export prices for F&VExport Unit Value of Fresh Fruits and Fresh Vegetables

from 1970 to 2004

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

197019721974197619781980198219841986198819901992199419961998200020022004

US$

/ to

nne

FruitVegetables

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2. Challenges to F&V exports

2.1 Major supply side challenges:

Climate change!

Diseases and pests

Surplus

Transport costs

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Climate change

Extreme weather phenomena(hurricanes, frost waves, droughts...)

Arid regions at risk?

Production no longer viable?

Competition from new regions

“Food miles” debate (labelling)

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Other supply challenges

Pests and diseases

Surplus situation (“adding up”)

High transport costsfuel prices

fleet capacity

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2.2 Demand-side challenges

Policy challenges:

Tariffs

SPS regulations

EU enlargement?

Trade challenges:

Concentration of trade, retail

Private standards

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Policy challenges: Tariffs

Tariffs on fresh F&V often low (tropical)

Some important exceptions:

Tariffs high during local harvest seasone.g. citrus in Japan, EU; Melons in USA

Tariff escalation

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SPS measures

Key obstacle to trade in fresh FVGovernment regulations/standards differ

Lack of harmonization

Developing countries: scientific resources?

WTO provides tools: SPS and TBT committees

FAO/WHO Codex Alimentarius

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SPS rules

Notification= WTO requirement1995-2005 notifications :

6000 totalrising trend (913 in 2006)Citrus = 116

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General fruit notifications 1995-2005

02

468

101214

1618

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Year

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WTO disputes 1995-2005

330 formal (DSB)29 on SPS issues

7 on FV

3 Panels

1 bilateral solution found

3 still pending

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Trade policy reforms

Little specific to F&V in Doha Round

EU F&V CMO reform

EU 2006 banana CMO reform

EU enlargement

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Private sector challenges

Concentration of retailers => control value chain

Vertical integration

Supplier oriented private standards:

shift liability for food safety

traceability

all costs on suppliers

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3. Market trends & opportunities

Prices fall

Markets for “commodities”= saturated

Changes in consumer demand

Strategies:

New emerging markets

Add value: product differentiation, certification

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Value added F&V

Consumer criteria:

Quality (presentation, package)

Health (Safety & Nutrition)

Convenience

Environmental

Ethical and social

Cultural

Information (on farm, production mode)

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Adding value

Improved varietiesSmall fruits

Easy peelers

Medjool dates

baby vegetables

Mixed flavour fruits (“grapple”)

! Risk: adding up!

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Adding value

In processing: fresh cut FVNFC citrus juiceready prepared salads

In packaging: snack portionschool packfreshness savers

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Adding value

Functional foods:Strong market expansion

ORAC oxygen radicals absorption capacity

Sultanas, pomegranates, acai

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Adding value

Certification:Food safety/traceability (?)

Food quality

Labels of origin, Geog. indications

Environmental (organic, ISO-14000, RA)

Social (fair-trade, SA-8000)

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Adding value: organicsWorld retail sales of organic products

01020304050607080

1997 2000 2004 2005 2012 (proj)

US$ billion

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Organics: an examplePeru- organic banana exports

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2000 2001 2002 2003 2004 2005 2006

FOB value (US$)

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Can Med countries harness these trends?

Invest in:

improved breeding & production techniques

quality control & traceability systems

storage & marketing infrastructure

market intelligence

partnerships with importers & retail groups

certification

=> organize producers & build PPPs

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Thank you

For more information:Pascal LiuTrade EconomistTrade and Markets DivisionE-mail: Pascal.liu@fao.org