AFC banana session

Liu Zijie, Willem Kokeel and Adriaan van Beek at AFC

The development of China’s banana market is being held back by the poor quality of domestically grown fruit caused by outdated production techniques, inadequate handling and packaging, and a lack of cold chain management and ripening facilities. This was the view of a panel of experts who took part in a breakout session on the opportunities in the Chinese banana market at Tuesday’s Asiafruit Congress.

Willem Kokeel of Eurasia Connection noted that the quantity, rather than quality-driven approach prevalent among producers exerted huge pressure on prices and made the industry unprofitable for the majority of players.

Nevertheless, he argued that quality improvements driven by better production techniques, packaging, logistics and marketing, would bring about a dramatic increase in per capita consumption, which currently lags way behind the global average.

“I believe that quality improvements ultimately will get rewarded, but the total banana supply chain needs to be revised,” Kokeel told delegates, adding that it just takes one company taking the lead to transform the entire market, as happened in Japan some years ago.

He argued that rising demand could be met through improvements in domestic production rather than imports.

The volume of imported bananas in any given year is heavily dictated by how much fruit is produced locally, according to Liu Zijie of Chinese importer Goodfarmer. This can be seen from the sharp rise in imports experienced in 2014 when typhoons and flooding slashed Chinese output, creating a big gap between demand and supply. Nevertheless, the overall trend has been upwards and the past decade alone has seen production climb by 88 per cent to a projected 12.9m tonnes in 2015. Planted area has increased by 41 per cent to 402,300ha over the same period.

Currently, imported bananas account for just 5-6 per cent of total supply. However, demand for higher quality imports is strengthening, particularly in Tier 1 cities. The bulk of imports come from the Philippines but demand for Ecuadorean bananas is rising and Liu predicted that it would continue to grow strongly in the years ahead.

Issues with land availability and high transportation and environmental costs meant there was not much room for productivity gains in China, Liu said. He also noted that investments in supply chain improvements would bump up the price of domestically-grown fruit and fuel demand for imports, which could potentially be served by nearby countries such as Laos and Cambodia expanding their own banana industries.

Finally, Adriaan van Beek of Dutch ripening room specialist De Laat Koudetechniek took to the podium to outline some of the pressurised ripening solutions developed by the company to served the different requirements of local producers. He stressed that the investment made by companies today would determine their future outcomes.

“If you are going to build something it’s not about what it will cost you but what it will bring to you to help you to survive in the future,” he concluded.