At the workshop for Vietnam’s first national fruit festival in April, the focus on export opportunities for the local industry frequently turned to the US, Japan and the EU, with government figures and research officers outlining their efforts and breakthroughs in cracking these “high-value” markets.
Vietnam is not alone among South East Asian exporting countries in setting its sights on these markets, which are often seen as the world’s largest and most lucrative. And there’s an understandable pride that comes from landing product on their shores, but is such a focus well-placed? Suppliers must jump through a lot of hoops to access these markets, whether it be meeting certification standards such as GlobalGAP for the EU or complying with tough phytosanitary protocols for Japan and the US. Such efforts make sense if there is an assured premium price at the end of it, but it can be like sending product into a black hole. In the EU, for instance, the prevalence of consignment selling means suppliers are ultimately price takers rather than price makers. The US, EU and Japan markets have also borne the brunt of the GFC, making the competitive environment even tougher.
In their mission to penetrate these markets, South East Asian suppliers risk overlooking the opportunities arising closer to home. At Fresh Produce Malaysia this year, Siebe van Wijk of Fresh Studio Innovations Asia noted intra-EU trade in fruit and vegetables was valued at US$44.1bn in 2008 whereas intra-ASEAN trade garnered only US$0.7bn. The ASEAN economy is 12 times smaller than that of the EU, but even if the intra-ASEAN produce trade was 12 times smaller, it would still equate to US$3bn, so there is significant untapped potential. The ASEAN bloc comprises many exciting markets with expanding economies and populations, and despite some overlap in the products these nations grow, there are clear windows for trade. The rise of both modern retail channels and aspiring consumers seeking high-quality, branded and packaged produce also signals good prospects for professional suppliers.
This is not to dismiss the opportunities in markets like the EU, or their role in raising standards for Asian exporting nations. India’s grape exports to the EU are a good example of what can be achieved, but the recent crisis to hit that trade highlights the challenge of maintaining market access, and the risk of depending on one high-value market for your high-quality fruit.
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