World Conference on Horticultural Research - 17-20 June 1998 in Rome, Italy
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GLOBAL HORTICULTURAL IMPACT: FRUITS AND VEGETABLES IN DEVELOPING COUNTRIES

Andrea Segrè
Dipartimento di Economia e Ingegneria Agrarie, Sezione di Economia e Politicria Agrarie, Sezione di Economia e Politica Agraria, Università degli Studi di Bologna, via. Filippo Re 10, 40126 Bologna, Italy

With the contribution of Fabio Lunati and Andrea Brandani,
Nomisma, Bologna, and CECOB, Bologna.


Keywords: developing countries, vegetables, fruits, production, consumption, marketing, trade


Abstract

Since 1985 horticultural produce and commodities have been evincing increasing importance in developing countries, which have increased their overall share of world production and now have fruits and vegetables making up a large proportion of their exports. Future growth will likely depend on rising and changes in demand in both developed and developing countries and on the capability of emerging economies to maintain or increase their competitive strength in world markets. The implementation of the Uruguay Agreement will impact on trade volumes and trade flows particularly through such general areas as market access, tarification, limits on export subsidies, cuts in domestic supports, phytosanitary measures and safeguard clauses. The brief of the present study is to gain a better understanding of the economic significance of, and outlook for, production, consumption, imports and exports of fruits and vegetables, and key issues related thereto, in developing countries.


1. Introduction



1. Introduction

In recent years analysts have been taking a much closer look at the horticultural sector of developing countries, especially in regard to its potential contribution to income generation and export earnings (OECD, 1996; Islam, 1990). The literature is full of specific studies on selected horticultural produce/countries (Segrè et al., 1997), although little research has been done to arrive at a comprehensive analysis of production, consumption and trade. One factor explaining the lack of such a comparative approach is the limited range of available data.

On the strength of a homogeneous FAO-derived worldwide database (World Tables of Fruits and Vegetables Development, WTF&VD) specifically worked up for its brief, the present paper adds to this small fund of knowledge so that a better understanding of the economic significance of and outlook for production, consumption, imports and exports of fruits and vegetables (excluding such products as cut flowers, foliage, potted plants, and nursery materials) in developing countries can be achieved. The data reported in the following pages cover 61 products over the period 1985-1996 for 168 countries. The following sections also summarize certain findings that were part of a wider analysis conducted in the framework of the WCHR-Working Group 1. The complete information set, including a widely cast bibliographic net, can be found a widely cast bibliographic net, can be found in the working document by Segrè et al. (1997), while the summary tables of the database are now on the WCHR Web Site (http://wchr.agrsci.unibo.it) (Segrè et al., 1998) and the country-by-country and product-by-product dataset will be available upon request to the author.


2. Methodology

The present study combines statistical and economic analyses. The former is performed by the WTF&VD. These tables, derived from the FAO database, cover the time period 1985-1996 and consider some 228 countries arranged in 17 country groupings. Only the aggregate "Developing Countries" (hereinafter DCs) is considered here, which enumerates nine country groupings: 1. North Africa, 2. Sub-Saharan Africa, 3. Central America and Caribbean, 4. South America, 5. China, 6. Near East in Asia, 7. East and South-East Asia, 8. South Asia, 9. Oceania Developing. Within each one three product groups are examined-vegetables, fresh fruits and other fruits-and for each such group in turn the following indicators are reported: production, imports and exports (in volume and value). Five-year averages, annual growth rates and shares were than calculated, and total and per capita (apparent) consumption and a standardized trade balance index were derived. It should be noted that in the WTF&VD all these figures are available also at comp;VD all these figures are available also at country and product levels.

These data were then used to apply an economic model known in the literature as portfolio analysis (Valdani, 1992), which by crossing growth rates, market shares and averages of production, exports and imports focuses on the dynamics of competitiveness in fruits and vegetables between the chosen countries/country groupings. The results of past trends and salient characteristics of fruit and vegetables in DCs, as based on the aggregate data supra, raise a number of issues and questions-strengths, weaknesses and advantages for production and trade, possible impact of the general trend towards trade liberalization, implication of export competition, and the like. The statistical and economic analyses are therefore complemented with more detailed examinations of specific related issues, especially experiences of an individual country/product in the area under investigation. Concluding remarks and future prospects are reported in the final section infra.


3. Main results and related issues

This section reports the main findings of the statistical and economic analyses. For reasons of space, only the main aggregates are considered, i.e. vegetables and fresh fruits and country groupings. Some comparisons with the aggreand country groupings. Some comparisons with the aggregate "World" (developing countries plus 8 areas of developed countries) are also presented for comparison. Comments on the trends and related issues are kept to the essential. Tables and figures are selected. More details can be found in Segrè et al. (1997, 1998).


3.1 Vegetable Production

DCs account for 72% of world-wide vegetable production (1996) (Table 1). Over the time period 1986-95 production increased, on average, at a growth rate of 4.11%, a faster pace than the 2.11% world trend. Total production surged from 263 million metric tonnes (MMT) in 1986-90 to 327 MMT in 1991-95. All nine examined areas showed a positive trend, although the 6.6% growth rate for China was much higher than that for the other country groupings. By 1996 China accounted for more than 48% of the total vegetable production in DCs, a more than 10% rise from its 38% in 1986. South Asia was by 1996 the second leading producer at 19.4% of total vegetable output, followed by the Near East (8.48%) and East and South-East Asia (9.14%).

Figure 1 confirms, from another angle, the remarkable growth of vegetable produce in DCs. Of particular note here is the importance of China's top ranking in this cere is the importance of China's top ranking in this context and the impact it now has on the world horticultural sector as supplier, especially in the light of China's limits in storing and processing its domestic production. Among the other DCs, the developing vegetable production raises two priority issues, one related to income generation and the other to introduction of new types of vegetables.


3.1.1 Income generation

The evolution of vegetable production has an important economic significance in this area as output is relatively labor and capital intensive and vegetable growing by farmers is consequently dependent upon whether returns can at least cover production outlays. The role of vegetables in income generation is best illustrated through country examples.

In Vietnam much of the increased demand for fresh vegetables from the urban population, particularly for the more perishable species, is being met by peri-urban production, which has significantly increased since the change from a centrally planned economy with collective systems to a market-orientated one. Vegetables provide about $650 value added (returns to labor, land and management) per farm yearly for peri-urban vegetable farmers. Value Added per hectare daily of vegetables is twice or more than the above figure for rice, providing employment for five or ove figure for rice, providing employment for five or more times the number of workers despite very high labor use in rice (Jansen, 1996).

Guatemala provides a similar example. Vegetable production may be a promising option for meeting the two national goals of crop diversification and expansion of non-traditional agricultural exports because of rising foreign demand. Targeted to the smallholder sector, such production creates opportunities for labor-absorbing production techniques, although it also exposes farmers to greater risks related to market uncertainties. Production of export crops by small-holder farms in Guatemala appears to have had a positive effect on household income and food security, particularly for the smallest farms. Production of export vegetables increased on-farm employment, reducing the need to rely on uncertain off-farm employment in local and distant labor markets for additional income. New employment opportunities were also created for non-cooperative-member households. Disparities in income levels were also reduced (Von Braun, 1994).

Also in Malawi a wide range of exotic and indigenous vegetables are grown that play a critical role in the nutrition of the people by providing essential minerals and vitamins and generate some income for small-holders. This has prompted the Ministry of Agriculture more vigorously to pursue research, extension and personnel y to pursue research, extension and personnel training in vegetable production (Mkamanga, 1990).

Another interesting example is in the North Indian state of Himachal Pradesh, where returns from vegetable growing are quite high and could be much higher if the package of recommended practices is adopted. Increases in vegetable acreage on small and marginal farms will not only provide gainful employment for under-utilized family labor but would also reduce income disparity among farms of differing sizes (Bathi, 1993).


3.1.2. New types of vegetables

The future of the vegetable industry in DCs will necessarily depend on improving people's standard of living as well as on the increasing, and more sophisticated, demand of consumers in large towns and cities for produce enhancement in terms of color, taste, smell and shape. The new types of produce these countries, and China in particular, want to develop or to introduce from foreign countries are spicy vegetables, vegetable powder and convenience vegetables.

The demand for spicy vegetables depends on the fact that many people have become tired of mediocre delicacies but pungent spicy foods seem to be well-received all the time. Some food specialists believe that this type of produce can help dissolve fat and reduce its sediment in human tissues. Spicy foods are also said to be cancer-r human tissues. Spicy foods are also said to be cancer-resistant. Most vegetables can be reduced to powder after they are washed clean, the usual method being to pulverize, sterilize, dehydrate, dry and package (in plastic bags) them. The powder can be added to fermented dough before being processed into vegetable biscuits or noodles. It could also be made into instant vegetable soup, especially catering to the needs of those children or infants who dislike fresh vegetables. According to some food specialists, these vegetables show rosy prospects in sales and have become so popular in some big cities in the past two years that supply has fallen short of demand (USDA, 1998).

Packaged vegetables with a registered trade mark are growing quickly. The appearance of this type of produce in the marketplace indicates that many DCs will industrialize the mass production and processing of vegetables and establish a number of domestic and global name brands of their own. These products are thought to have a very bright future in the coming 21st century.


3.2 Production of fresh fruits

In 1996 DCs represented some 72% of World fresh fruit production (Table 2). As with vegetables, China registered the fastest growth rate (7.61%) for fresh fruit production in all DCs, wherte (7.61%) for fresh fruit production in all DCs, where the average growth rate over the period 1986-95 was 3.25% (World: 1.46%). Production climbed from 253 MT in 1986-90 to 302 MT in 1991-95.

Together with South America, China also garnered the largest market share with one-fifth (1996) of total fresh fruit production, the remainder being equally distributed in the other country groupings. Figure 2 shows that China has a potential very similar to South America's, but with a much higher growth rate. The difference between the two areas consists in the fact that while South America is export-oriented towards the US and the EU, Chinese production is still earmarked for local consumption.

These trends raise at least two issues-the importance of the quality and stability of supply (China) and the role played by agricultural policy reforms (South America).


3.2.1. Quality and stability of supply

Fruit supply, in effect, should offer a minimum standard of quality and stability. Buyer surveys have clearly established the importance of quality, reliability of delivery and price as determining factors. Quality elements comprise grade of produce, defects, ingredients, mode of preparation of raw materials for processing, preparation and density of liquerials for processing, preparation and density of liquid medium, additives, drained weight, cleanliness, strength and fill of container and packaging material, and storage conditions to safeguard quality retention.

Although the fruit handling systems and marketing arrangements in DCs have evolved to take account of environmental factors and the lack of appropriate support systems, local marketing of fruit is still a high-risk enterprise. The fruit handling systems for mangoes and bananas clearly show the role of simple technological innovations, such as those designed for heat dissipation, reduction of physical injury or disease control, in reducing risks (Concepcion, 1994).

Infestation by fruit flies (Tephritidae: Diptera), common in the tropics, is a major constraint to the production and export of tropical fruits. Current control procedures include cover sprays of insecticides, spot sprays of protein baits, orchard sanitation and fruit wrapping, all of which seek to prevent direct damage to fruits or are aimed at population suppression, mostly in individual plantations. These field control techniques enable fruit production of sufficient quality to meet the needs of domestic consumption as well as that for export to markets where fruit flies are not quarantine pests. (Vijaysegaran, 1994). It is worth noting that evidence suggests that in the EU quality standards have bsuggests that in the EU quality standards have been more systematically applied against imported products rather than to what is domestically produced or marketed.


3.2.2. Diversification of production and agricultural policy reform

South America has benefited from a number of land reform measures, as well as from a general agricultural and fiscal policy encouraging the production and marketing of fruits for export. The fruit sector of several countries in this area has expanded. Chile, for instance, has developed this sector since the introduction of structural reforms in the 1970s aimed at market liberalization. Fruit exports have increased four- to five-fold, making Chile a prime example of boom in fruit production and exports. The development of the country's temperate fruit industry has been quite impressive-pears, grapes, apples, and the rapid introduction of new products such as kiwifruit in 1987. A similar evolution occurred in Argentina when in the 1980s the government began encouraging producers of cotton, sugar and tobacco to diversify into fruit and vegetables (OECD, 1996).


3.3. Exports of vegetables (quantity)

Exports of vegetables in DCs increased at an average annual rate of 4.91% over the period 1986-1995 (very similar to the World figure of 4.93%), going fro-1995 (very similar to the World figure of 4.93%), going from 3.6 MMT in 1986 to 5.8 MMT in 1995 when this area originated some 36% of World total vegetable exports (Table 3). However, data presented in Table 3 show a strong variability according to the country grouping, i.e. in South America the export growth rate peaked at 18.71%, while South Asia registered a 1.85% decline. Central America is the main exporting area (37% of total exports in 1995), followed by the Near East Asia (18%) and China (13%). One issue that affects very differently South American vis à vis Asian countries relates storage and transport to trade.


3.3.1. Technical progress in storage and transport vs. trade liberalization

The growth in exports indicates that in Central and South America exporters, processors and producers are quite capable of adopting technology and finding new export markets. Poor infrastructure, lack of food standards and grading, and importer concerns about food safety are constraints which will have to be addressed in Asian countries. Although these problems can be considered as a limit to trade development, it is important to underline that trade liberalization has not developed at the same pace all over the world, and among the developing countries themselves the reasons are as much political as economic. A marked number of Asian DCs are not members of the Worldnumber of Asian DCs are not members of the World Trade Organization (WTO) and favor trade isolation. Figure 3 shows how export growth rates in most of the Asian country groupings are very low when compared with the corresponding level of production.


3.4. Vegetable imports (quantity)

On the import side the average growth rate of DCs has climbed to 5.15% (1986-95), going from 2 MMT in 1986 to 3.5 MMT in 1995 (World growth rate was 4.52%). In aggregate terms DCs represented in 1995 22% of World vegetable imports (Table 4). The main importing areas were Near East Asia, with 37% of the DCs total import in 1995, and South Asia (33%).

Figure 4 shows that the growth rate of vegetable imports is higher in South America with respect to Asian countries, where, however, import share is more consistent. The highly perishable nature of vegetables (as of all fruits) and the consequent need for immediate disposal calls for elaborate marketing arrangements in the absence of cold storage. South American countries have developed not only a good level of production but also an efficient storage and distribution system, and therefore can use raw products for the processing industry. In developing countries the vegetable processing industry has also important implications in relation try has also important implications in relation to employment.


3.4.1 Processing industry and employment

The processing of vegetables (as of fruits) helps to tackle the considerable potential loss arising from the perishable nature of the produce during times of seasonal glut in the context of low demand, poor infrastructures and weak transport. The reduction in tariff escalation helps to capitalize on off-season demand for high-value fruit in diverse developed country niche markets, enabling horizontal diversification away from traditional agricultural products. At the same time, it allows more value added in the form of further processing and packaging rather than the mere export of raw products, thus opening up in the process possibilities of vertical diversification by generating both rural and urban employment. Greater emphasis on a diversified and healthy diet has brought a substantial increase in the number and variety of fruit and vegetable products available to the consumer, with an ever increasing number of different types being processed and exported thanks to new heating (UHT, microwave, ohmic) and freezing (cryogenic) techniques combined with new packaging materials and technologies (aseptic, modified atmosphere packaging).

With the diminishing capacity of agriculture to provide employmentinishing capacity of agriculture to provide employment for ever-increasing surplus labor, the rural youth have been migrating to urban areas in search of a better life. The industrialization of rural areas is considered to be one of the most promising solutions to this problem. This is especially applicable to industries for the processing and preservation of fruits and vegetables (Khalil, 1993).


3.5. Export of fresh fruits (quantity)

Fresh fruit exports by DCs (52% of World exports in 1995) grew at an average rate of 4.43% (World 4.32%), going from 14.2 MMT in 1986 to 18.1 MMT in 1995. Only North Africa showed a decline over this period (-2.61%). South America and Asian country groupings registered the most remarkable increases with a growth rate superior to 5%. In 1995 Central America covered more than one-third of fruit exports. With the share of South America (37%), these two country groupings originated some 70% of total exports by Developing Countries in 1995. Exports of temperate fruit and demand for tropical fruit products are two important issues affecting trade, with non-tariff barriers limiting potential imports from DCs.
(Table 5)

3.5.1. Temperate fruit exports: marketing early or late

Chile and Argentina are the largest exporters>

Chile and Argentina are the largest exporters of temperate fruits (apple, pear, table grape and kiwi). To obtain favorable prices in export markets and to avoid tariff rates that otherwise could be very high, these countries take advantage of their seasonality, i.e. when their produce can be either early or late. Three types of methods are adopted to achieve this market advantage: cultivate early or late varieties (e.g. Chile harvests the early grape cvs. 'Perlette' and 'Flame' from early December essentially for the US market); adopt management techniques to bring harvest date forward e.g. plastic and hydrogen cynamide for grapes), adopt storage techniques to accelerate or slow the ripening process (e.g. controlled atmosphere, refrigeration and packaging film to slow and spraying ethylene to accelerate the ripening process).

During the last few years, sales by these countries have increased consistently. However, competition has also increased among them and with northern hemisphere countries. For instance, both Argentina and Chile are exporting the greater part of their pears to the EU, while the extension of the storage period for pears, currently nine months, has been an element of marked competition between producers in the northern and those in the southern hemisphere (OECD, 1996).


3.5.2. Demand for tropical fruits

Banana, papaya, guropical fruits

Banana, papaya, guava and passion fruit deserve mention. The main banana suppliers are Costa Rica, Ecuador, Brazil, Honduras and India. Passion fruit producers are Ecuador, Brazil, Peru and Kenya. The major suppliers of mango are India, Peru and Ecuador, while guavas originate mainly from South Africa, Malaysia and India. The leading exporters of papaya are India, Peru and Brazil. For tropical fruits as a whole, the EU has been the fastest growing major import market during the decade 1986-96, with consumption more than doubling between 1984 and 1994. These fruits enjoy high income elasticities, i.e. a much higher consumption in proportion to the rise in income. A considerable amount of canned tropical fruit imported into the EU, however, is re-exported to other European markets, a substantial amount going to Central and Eastern Europe. Demand for tropical fruit products has, in recent years, risen on the international market, thus raising the stakes for certain developing country exporters.

Figure 5 shows how most fruit exports derive from Central and South America because of the overlapping seasonality and marketing periods between the southern and northern hemispheres (with US and EU as major markets). However, growth rates of Asian country groupings are of increasing importance.


3.5.3. Non-tariff barriers

In general t3.5.3. Non-tariff barriers

In general there are still non-tariff barriers that are limiting potential imports from DCs In this respect considerable importance is being attached to an international agreement on national sanitary standards and regulations. Maintenance of human and plant health are primary considerations in tropical fruit and vegetable-importing countries. The exporters have to satisfy consumer quality criteria as well as those of the relevant government agencies. The WTO's Sanitary and PhytoSanitary (SPS) Agreement (separate from the Agreement on Agriculture) sets and encourages the adoption of international standards, while at the same time affirming the rights of countries to set their own health and safety standards if scientifically justifiable and not likely to result in an unreasonable barrier to trade.


3.6. Fresh fruit imports (quantity)

Imports of fresh fruits in DCs grew at a yearly rate of 7.75%, doubling the amount traded (from 3.3 MMT in 1986 to 6.7 MMT in 1995). The share of DCs in the World aggregate went from 14% in 1985 to 16% in 1995. Remarkably, North Africa showed a 25.7% increase of imports, although the imports of this area account for only 1% (1995) of the total fresh fruit imports by DCs (Table 6). Main importers of fresh fruit were the Nea6). Main importers of fresh fruit were the Near East Asia (34% of total 1995 imports) and East and South East Asia (29%) countries. It should also be noted that China is increasing its imports of fresh fruits (13% annual growth rate) and its share has grown from 3% in 1985 to 7% in 1995.

Figure 6 highlights the growth of imports by North Africa, where the climatic conditions of most countries are not conducive to fruit production. In Sub-Saharan Africa and South Asia the growth rate of imports is much lower because the capacity for self-production is higher. The relatively low growth rate in Asian countries is related to the high tariff duties on fruits.

The growth rates of imports by the various country groupings investigated are generally rather concentrated. This indicates that very differentiated production conditions are accompanied by similar trade situations, i.e. guarded opening to international trade. Until recently, most imports in South East Asia were channeled via Hong Kong, one of the area's few WTO member-countries.


3.6.1. The underestimation of Chinese trade statistics

While China is a big importer of fresh fruit, official Chinese trade statistics vastly underestimate actual imports of fresh fruit as well as of many other commodities. Unrecorded shipments, rampant under-invoicing, misdeclaration of products, and other imponvoicing, misdeclaration of products, and other importation practices make Chinese trade statistics an inadequate indicator of real trade value and volume. Hong Kong's re-export statistics also reveal parts of China's import situation and usually are more accurate. Hong Kong re-exports are imports that transit the territory on their way to other countries, including China. As an indication of Chinese customs undercounting of fresh fruit imports, Hong Kong re-export statistics show much higher apple, grape, and orange trade volumes and values than the official Chinese data. In China and in many Asian countries most imported fresh fruit enters through "unofficial channels", because of phytosanitary restrictions and high tariffs. Under-invoicing and misdeclaration of product are two of the most common unofficial importation practices. As an example of misdeclaration, traders will sometimes declare table grapes or plums-prohibited by a phytosanitary barrier-as apples, which can be legally imported (USDA, 1998).


3.7. Per capita vegetable consumption

Per capita apparent consumption of vegetables showed a 0.92% increase over the period 1986-95, despite the growth rate decline in Africa and Central America. Apparent consumption went from 68.7 kg per capita in 1986 to 75.3 kg in 1995 on average (Table 7). The highest consumption was registered in China The highest consumption was registered in China, where apparent per capita consumption jumped from 86 kg in 1986 to 146 kg in 1995 (a 5.38% growth rate). The lowest (and more stable) figure was registered by Sub-Saharan Africa (29 kg of vegetables consumed both in 1986 and in 1995).


3.7.1. New consumer trends in vegetable products

New trends in vegetable products for consumers in the DCs refers to people's standard of living. Generally speaking, fresh vegetables should lose market share to processed products. Many kinds of vegetables can be made into canned foods that cater to local tastes, cucumbers and peppers being but two examples. Easy to carry and convenient to serve, they can be stored for quite a long time and reduce losses incurred from seasonal supply surpluses of vegetables marketed at the same time of the year. At present the highest consumption has been registered by China, where three different kinds of vegetable should develop over the next few years-vegetable crisps, enriched vegetables and vegetable chips. Under vacuum-packaging at low temperature, radishes, melons and potatoes can be dehydrated and fried in edible oil into crisps. As they are processed in a low ambient temperature, which also reduced the loss of aromatic substances in their natural pigments, they can usually keep all their original flavors. They are regarded as a nall their original flavors. They are regarded as a new generation of food products upgraded to substitute the traditional fried and sponge foods (USDA, 1998).

On the other hand quite a number of scientists are doing research on so-called enriched vegetables, which contain many different nutrients. By means of conventional agricultural techniques, a certain number of trace elements can be dripped or sprayed onto the roots or leaves of vegetables to enhance them with the nutrients they lack. So far, Shanghai has developed a kind of vegetable called selenium cabbage.


3.8. Per capita consumption of fresh fruit

Per capita apparent consumption of fresh fruit has been relatively stable, with a growth rate of 0.38% (1986-95). Again, China has registered the highest growth rate (6.43%), while African and Near East Asian countries have shown a decrease (Table 8). It should be noted, however, that in China consumption is comparatively lower (54 kg per capita in 1995) with respect to the other areas, e.g. in Near East Asian countries apparent per capita consumption is three times higher. Apparent consumption went from 107.96 kg per capita in 1986 to 109.35 kg in 1995 on average.


3.8.1. Chinese consumer trends

3.8.1. Chinese consumer trends

It must be assumed that the growth in per capita consumption in the DCs is the result of China's marked increase. According to trade sources, Chinese consumers buy most of their fresh fruit at street retail shops and wet markets, i.e. approximately 95% of imported fresh fruit purchases are made at these locations. US and European fresh fruit has won brand-name recognition by China's consumers, especially Red Delicious apples, Sunkist® oranges and Red Globe® table grapes. Sunkist is one of the few overseas fresh fruit brands that consumers recognize. As an indication of its high level of local recognition, its packaging design has been imitated by a Chinese company with the intent to deceive local consumers. With the recent explosion in the number of supermarkets and hypermarkets, imported fresh fruit has begun to appear on retail shelves. While the amounts are still limited in comparison to those of the street stalls and wet markets, they could rise rapidly in the future (USDA, 1998).


3.8.2. Food demand projections

It should be noted in general that food demand in the DCs is projected to grow rapidly in the medium term due to a combination of factors-fast population growth, continuing rural migration to major urban centers and improved diets. Higher per capita income in these countred diets. Higher per capita income in these countries will provide impetus for a better and more varied diet, including to some extent fruits. Demand for fruit is generally very price elastic, thus final consumption is very much determined by the price, the quality and the disposable income of the consumer. (OECD, 1996, 1998).


3.9. Vegetable exports and imports (value) and standardized trade balance index

The total value of vegetable exports by DCs was US $3 billion in 1995 (28% of World aggregate), almost 50% of which originated in South America and 14% in China (Table 9). The 1995 vegetable imports by DCs (Table 10) had a total value of US $1:4 billion (12% World aggregate), most of which originated from Asian countries (71%). The share of the East and South East Asian countries increased from 32% in 1985 to 42% in 1995, while the Near East in Asia registered an opposite trend, declining from 42% to 29% of total vegetable exports.

For vegetables the 1995 standardized trade balance (Table 11), an index showing the propensity of a given area towards importing (0 ÷ -1) or exporting (0 ÷ +1) a certain commodity (or commodity group), was close to 1 in North Africa (0.96), China (0 was close to 1 in North Africa (0.96), China (0.91) and Central America (0.89). Asian countries, although registering a negative standardized trade balance, over the same period of showed a tendency towards a decreasing import propensity, i.e. Near East Asia went from -0.36 in 1985 to -0.08 in 1995.


3.10. Fresh fruit exports and imports (value) and standardized trade balance index

More than one-third of World fresh fruit exports originated in DCs (Table 12), although over the long term their share decreased from 43% in 1995 to 37% in 1995. South America is the main exporting area (33% of total DC exports in 1995) followed by Central America and the Caribbean (27%).

In 1995 DCs accounted for some 17% of World fresh fruit imports (Table 13), an increased share with respect to the beginning of the observation period (14% in 1985). In 1995 the main importers were Asian countries, which accounted for more than 60% of the total imports, and South America (17%).

Central America showed in 1995 the highest standardized trade index (0.82) in fresh fruits (Table 14), followed by African countries (0.64 in North Africa and 0.50 in Sub-Saharan Africa) and South America and 0.50 in Sub-Saharan Africa) and South America (0.37). China registered instead a negative 1995 index (-0.15), its import propensity also declining with respect to the previous decade when the trade index was at -0.59 (1985).


4. Conclusion and prospects

Over the past decade increased trade volumes of fruit and vegetables, together with significant changes in trade flows, have been indicative of a general increase in consumption and a greater demand for imports, with a corresponding general rise in production. Linked to these aggregate trends has been a variety of shifts in demand, production and trade flows both within and between Developing and Developed Countries.

A limited number of DC country groupings dominates production and trade. There is competition between them and their relative shares of world production and trade shifted from time to time. The limited number of competitive country groupings can be explained in part by the agro-ecological characteristics of the areas under investigation and in part by the sum of factors comprising the cost of production, processing, marketing, availability of appropriate technologies and infrastructure, product standards and technical regulations. The constraints to increasing horticultural exports from India, for instance, include poor postharvest management, inadequate cold storage and prpostharvest management, inadequate cold storage and processing facilities, high import duties on packing materials, underdeveloped market infrastructure, inadequate market information services, low levels of productivity and fragmented holdings (Subrahmanyam, 1994).

No less important are entry obstacles to export markets resulting from the specialized nature of the export-related infrastructure, including quality and health standards, as well as established consumer preferences for specific products in particular markets.

During the period under investigation, trade volumes were stimulated by a general trend towards liberalization as well as an extension of trading blocs. The general expansion in the demand and trade of fruit and vegetables has been accompanied by a greater internationalization of trade due to a greater number of importing countries as well as supplier countries engaged in international trade, which in turn has led to an evolution of trade flows. In many cases trade that was formerly local or bilaterally oriented is now much more international, which has intensified the trading contacts between Developing and Developed countries. The greater participation of the former in this trade evolution, both in the role of supplier and consumer, is thus considered to be a major development of the past decade in world fruit and vegetable production and trade. Strong growth of exports has occurrend trade. Strong growth of exports has occurred in the traditional exporting area of South and Central America (in particular Chile and Argentina but also Brazil and Mexico). This trend is expected to continue in the medium term. Significant growth in exports has occurred and is expected to continue in Asia (especially China and India).

During the period under review, the Asian region has been the area of stronger growth, which, given generally rising per capita disposable incomes and the vast potential of the Chinese market, should continue as a major growth market.

Apart from China, the wave of development is the result of the fast pace at which the so-called tiger economies of South East Asia have grown during the last decade. With a population of about 600 million, excluding China and India, this part of the hemisphere is ideal for the fruit and vegetable business from the quantitative point of view. Since the early eighties the countries of the region have passed through an unprecedented boom with 15-20% annual growth rate, stable currency and low wages. Unfortunately some countries have run up a great deal of currency debts and the boom has been followed by a heavy downturn. This does not mean that the area is no longer of interest for worldwide trade but certainly in the near future trade will suffer the lack of purchasing power in the most important countries of the area. This is a market which rematries of the area. This is a market which remains of great interest for mass-consumer goods like fruit and vegetables.

This trend is expected to accelerate both in the short and in the medium term as a result of the Uruguay Round Agreement, which will provide (a) increased market accession, (b) reduce subsidized export and aggregate levels of support, and clearer and more detailed rights and obligations for (c) food safety and phytosanitary regulations. Although at this stage it is too early to estimate the URA's impact on fruit and vegetable developments, and actually this will vary according to the country and to the product concerned, it is evident that these three elements will stimulate the trade environment.

The further extension of trading blocs such as the North American Free Trade Agreement (Nafta) linking Canada, Mexico and the United States, various association agreements in Central and South America: the Central American Common Market, the Andean Pact, the Caribbean Community and Mercosur, the Association of Southeast Nations (Asean: Indonesia, Philippines, Singapore, Thailand, Brunei), and the Lomé Convention between the European Union and the ACP countries are likely to provide additional opportunities for increased trade.

Future prospects of the fruit and vegetable exports of DCs will also largely depend on the growth of import demand, mostly in the developed countries. Dort demand, mostly in the developed countries. Developed countries are expected to diversify their food consumption patterns, including consumption of horticultural products. This heightened concern with health and nutrition and familiarity with more fruits and vegetables because of wider availability, increased travel and improved communications will lead to an increase in the ratio of imports to domestic products in total demand. Differences in per capita consumption of fruits and vegetables among developed countries with similar patterns and standards of living may also indicate a potential for increases in import-oriented consumption in countries where consumption is relatively low at present.


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