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. Global Fruit and Vegetable Trade: Patterns 1 (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 Background 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. Global Fruit and Vegetable Trade: Patterns 1 (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 Background

5. Global Fruit and Vegetable Trade: Patterns 1 (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 Background 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 http://www.somo.nl/html/paginas/pdf/Who_reaps_the_fruit_june_2006_NL.pdf

6. High Value Crop: Characteristics 2 (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 ] High Value Crops

7. High Value Crop: Attributes (2/3) ICTA 3 Japan 4 Remarks Taste(4) Taste Appearance(3) Visual perfection Safety(1) Freshness (2) Quality Stringent safety standards Nutrition Ease of preparation Packaging & Shelf-life Consistency in supply(7) Stability of supply (5) Lower prices (6) Tariffs Tariffs: vary by country of origin 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 High Value Crops

8. High Value Crop: Strategic Focus 5 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 5 Ramu Govindasamy and Suzanne Thornsbury, 2006. Theme Overview: Fresh Produce Marketing: Critical Trends and Issues. Choices, 4 th Qtr 2006 21(4), http://www.choicesmagazine.org/2006-4/produce/2006-4-05.htm High Value Crops

9. An Asian Perspective (1/5) 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 http://203.64.245.173/world_iv/News/news.asp Asian Perspective Amaranth

10. “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. An Asian Perspective (2/5) Differentiate their products –Product: Good Agricultural Practice Join the organic movement Asian Perspective Branded Packed

11. An Asian Perspective (3/5) 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 Asian Perspective Reefer truck

12. 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 Asian Perspective Chiller hold in vessel

13. Empowering the Poor Village Phone (VP) concept 6 & 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) 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 Info & Knowledge VP in action 7 http://www.telecommons.com/villagephone/section1.htmlhttp://www.telecommons.com/villagephone/section1.html

14. Empowering the Village Village meeting place 8&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 8 B 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 9 http://www.itcportal.com/ruraldevp_philosophy/echoupal.htm http://www.itcportal.com/ruraldevp_philosophy/echoupal.htm Info & Knowledge E-choupal in action

15. Empowering the Economy 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. 10 Rehman 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] 11 http://www.umich.edu/~ipolicy/china/5)%20Chinese%20Township%20and%20Village%20Enterprises,%20A%2 0Model%20for%20Oth.pdf http://www.umich.edu/~ipolicy/china/5)%20Chinese%20Township%20and%20Village%20Enterprises,%20A%2 0Model%20for%20Oth.pdf Info & Knowledge Awarding elite businessmen

16. 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 An Asian Perspective (5/5) Establish early brand loyalty: Maple Leaf case study Asian Perspective Lesson learnt: Public-Private partnerships work, and succeeds well when entrepreneurial spirit is strong.

17. Another Strategic Focus: Access to Capital 12 Eric Onstad, 2007. Big corporations try to tap a market they have ignored (By) C.K.Prahalad. (In) Khaleej Times, 6 June 2007. 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 China 11 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 Azteca 12 Equity Bank: low-cost bank accounts Banco Azteca: Mexicans without formal jobs One more Focus

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