dube tradeport

The Dube TradePort (DTP) is a world-class airport development which combines the King

Shaka International Airport (KSIA), a Trade Zone and a Cyberport.

This series of export fact sheets has been developed to provide an introduction to some of the

key airfreight export products from the DTP catchment area.

The fact sheets provide overviews of both supply and demand trends for product clusters.

More detailed information is available from DTP for interested producers and potential investors.

Dube TradePort Export fact sheets

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BE

RP

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SIA

COMMERCIAL

VENTURESSUPPORT SERVICES

CARGO TERMINALPERISHABLES CENTRE

PASSENGER TERMINAL

R U N W A Y

Contents

P e r i s h a b l e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A u t o m o t i v e c o m p o n e n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7

T e x t i l e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1

C l o t h i n g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5

E l e c t r o n i c s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1

MR SBU NDEBELEPremier of KwaZulu-Natal

MR B H CELEMinister of Transport,

Community Safety and Liaison

MRS C M CRONJEMinister of Education

MR M B GWALAMinister of Public Works

MRS N P NKONYENI

Minister of Health

MR M MABUYAKHULU

Minister of Local Government, Housing and Traditional Affairs

PROF L B G NDABANDABAMinister of Agriculture and

Environmental Affairs

INKOSI N J NGUBANEMinister of Social Welfare and

Population Development

MR A RAJBANSIMinister of Sport and Recreation

MR N SINGHMinister of Arts, Culture and Tourism

DR Z L MKHIZEMinister of Finance and Economic

Development and Leader of Government Business

The Kwazulu-Natal Executive CouncilDube TradePort is a flagship project of the Kwazulu-Natal Provincial Government

Dube TradePort Export fact sheet:

Perishables

© D u b e T r a d e p o r t

C o n t a c t d e t a i l s :

22 Gardiner Street, 15th Floor, Marine, Durban, 4001

Tel: +27 31 307 2857

Fax: +27 31 307 2636

Email : [email protected]

www.dubetradeport.co.za

P r e p a r e d b y K a i s e r A s s o c i a t e s E c o n o m i c D e v e l o p m e n t P r a c t i c e

O c t o b e r 2 0 0 5

D e s i g n a n d p r o d u c t i o n : d o t t e d l i n e d e s i g n

P r i n t e d : H a n s a R e p r o p r i n t

T h e D u b e T r a d e P o r t w o u l d l i k e t o t h a n k t h e f o l l o w i n g f o r p e r m i s s i o n t o u s e t h e i r p h o t o g r a p h s :

B e l g o t e x , D u r b a n C l o t h i n g , F e l t e x , P P E C B E x p o r t D i r e c t o r y a n d U E C T e c h n o l o g i e s

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Export fact sheet: Perishables

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Dube TradePort

TEMPERATURE RARELY AIRFREIGHTED OCCASIONALLY AIRFREIGHTED PRIMARILY AIRFREIGHTED

<0 oC frozen fish and sea food

frozen meat

0 – 2 oC apricot

dates, figs

oranges

artichoke

beets

broccoli

leaf vegetables

onion

root vegetables

table grapes

kiwi fruit

stone fruit (peach, plum)

cantaloupe

berries

litchi

asparagus

peas

sweet corn

baby vegetables

fresh fish fillets

fresh/chilled seafood

chilled meat

2 – 7 oC apple avocado

guava

watermelon

honeydew melon

cranberry

green bean

lima bean

7 –13 oC grapefruit

lime

olive

cucumber

aubergine

mango

papaya

pineapple

tomato

squash

marrow

passion fruit

rambutan

1 Definition of perishables

The term “perishables” is used primarily in the logistics sector to describe a group of products that have a limited “shelf

life” and are dependent on temperature and humidity control, and special handling to limit product deterioration. These

products therefore require a specialised logistics solution. The degree to which these products are perishable varies, with

ideal temperatures and shelf lives ranging from less than a day to a few weeks. Only the most perishable items tend to be

airfreighted, except when airfreighting allows producers to secure significant premiums due to early arrival at markets.

The table below provides examples of products, their ideal temperatures, and the extent to which they are airfreighted.

In addition to the fresh produce items above, some pharmaceutical and chemical products, as well as processed foods (e.g.

frozen and chilled products) require temperature control to retain their properties.

Given the relatively high labour intensity of the production of many perishable products, the sector has the potential to make a

positive impact on job creation, rural economic development, poverty alleviation and broad-based black economic empower-

ment in South Africa.

2 Overview of production in the DTP catchment area

The DTP “catchment area” is the production area that may use DTP’s services (to varying degrees depending on proximity,

travelling time, flight routes etc). It is expected that KZN producers will be the predominant users, but there may be other

exporters in the Eastern Cape, Free State, Mpumalanga, Gauteng, Swaziland, Lesotho and Mozambique. The largest categories

of perishable products within the DTP catchment area are horticultural products and seafood.

KZN has a particularly strong tradition in both commercial and subsistence agriculture and fishing – there are an estimated

216,000 large and small-scale farming operations in KZN. However, not all of these producers export, and only a relatively

small proportion of those who do currently make use of airfreight. The airfreight export component of these overall exports is

indicated in the graph below.

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Current perishables exports from the

catchment area are highly seasonal and

peak between October and February. These

fluctuations correspond to growing seasons

and peaks in export demand (see figure 2).

As the perishables industry is still in its

infancy, it must be nurtured to ensure

rapid but sustainable growth. Key

challenges include access to land and

inputs, access to market information,

availability of skills and technical

knowledge, as well as poor quality

management. Logistics costs are more

important for perishables producers than

almost all other industries, as they can

constitute nearly 50% of landed costs for

some products. Smaller producers have

limited resources to invest intensively

in logistics-related equipment and

infrastructure, and therefore struggle to

achieve economies of scale that could

secure them reduced freight rates.

As a result, all spheres of government (national, provincial and local) have begun to invest in the sector to address a range of

barriers to growth. Current and planned developments by various role players include:

t Re-orientation towards exports of some established growers that have primarily focused on the domestic market in the

past, e.g. vegetable growers seeking to supply retail markets in the UK

t Agricultural diversification driven by the private sector. This includes sugar growers shifting some or all of their

production to other crops, in particular into flower growing, on the expectation of imminent improvements in the

airfreight logistics solution

t Emergence of new growers, including relocations

t Projects (in flowers, citrus and organic vegetables) with an empowerment focus facilitated by DEDT, Department of

Agriculture, IDC and Ithala

t Initiation of more systematic public sector interventions through the creation of the KZN Agricultural Forum

OVERVIEW OF KEY TRENDS FOR AIRFREIGHTED PERISHABLES

DTP CATCHMENT AREA WITHIN SOUTH AFRICA SWAZILAND & MOZAMBIQUE

Estimation of 2003 airfreight volumes (tons)

§ KZN: 6,604

§ Gauteng: 35,919

§ Southern Eastern Cape: 21,217

§ Mpumalanga: 8,241

§ Northern Eastern Cape: 1,560

§ Free State: 540

§ Mozambique and Swaziland perishables airfreight volumes have not been estimated due to insufficient data

Major products currently being produced/ exported/

and potentially exported in future

§ Cut flowers – proteas, other fynbos, roses, anthuriums, gerberas, heliconia

§ Fruit – avocadoes, mangoes, table grapes, peaches, plums, apricots, apples, pears, citrus

§ Birds’ eggs – hatching eggs

§ Fish

— pelagics: tuna & swordfish

— freshwater, e.g. catfish

§ Other seafood – prawns

§ Nuts – macadamia, cashew

§ Vegetables (potential) – organic vegetables, baby vegetables, sweetcorn

§ Processed (potentially) – agro-medicinal plants, essential oils (rose, geranium, lavender), herbal teas, etc

§ Fish – barracuda

§ Other seafood – deep water prawns, mussels, lobster, crabs, octopus

§ Nuts

§ Fruit – citrus (orange, lemon, grapefruit, lime) coconut, litchi, banana

§ Avocadoes

§ Vegetables – baby vegetables

§ Cut flowers

Major markets for current exports

& potential future markets

§ UK

§ Europe – Germany, France, Holland, Switzerland

§ UAE & Middle East

§ Rest of Africa

§ Japan (particularly for fish)

§ US and Canada

§ Russia

§ Mozambique – Europe, in particular Portugal & Spain, Japan, China

§ Swaziland – UK, EU, Japan, Far East, Middle East, Mauritius

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Estimate of % airfreight vs. other modes and drivers of airfreighted usage

§ Fish & seafood – pelagics are virtually 100% airfreighted. Less than 5% of freshwater prawns are airfreighted, and the rest are seafreighted frozen (fresh high quality fetches higher price, must be airfreighted, lower quality/frozen fish price does not merit airfreight cost)

§ Eggs – close to 100% airfreighted (time and handling are key)

§ Cut flowers – estimated over 80% airfreighted (high perishability)

§ Foliage – majority sea freighted (less perishable, lower value, therefore does not merit airfreight cost)

§ Citrus – estimate less than 5% airfreighted (less perishable)

§ Avocadoes – less than 3% airfreighted (primarily organic, as the additional premium accommodates airfreight cost) although there is potential to increase

§ Mangoes – estimate less than 10% are airfreighted (ripen in transit, controlled atmosphere seafreight)

§ Nuts – almost no airfreight, close to 100% seafreight (less perishable, not very high value product)

§ Sweetcorn – 100% sea freight (airfreight currently too expensive)

§ Vegetables – currently limited exports, some trucked

§ Table grapes – 80 -100% airfreighted (high degree of perishability, better quality if ripen before picking)

§ Other deciduous fruit – estimate 5 - 10% airfreighted (can ripen in transit)

§ Citrus fruit – estimate 1-5% airfreighted (less perishable)

§ Coconuts – primarily airfreight

§ Seafood – varies depending on market niche. Close to 100% of high quality exports to Japan and Europe are airfreighted, while some lower value chilled/frozen products are seafreighted to Europe

§ Citrus fruit – approximately 1-5% airfreight (less perishable)

Current airfreight/ multi-modal

§ Primarily trucking to JIA

§ Some trucking to Cape Town harbour

§ Trucking or flying from Maputo to JIA

Constraints to export growth

All

§ Market access, in particular non-tariff barriers (tariff barriers seen as of declining importance for fresh produce)

§ Market intelligence and dissemination – lack of understanding of high value product and market opportunities

§ Skills – marketing and management

§ Access to finance

Plant material

§ Availability of cuttings

§ Lead times from planting to harvest

§ R&D – varieties development, harvest, post-harvest

§ Skills – planting, growing, harvesting, organic growing

Fish

§ Illegal fishing and reduction of stock

§ Uncertainty of fishing licences (particularly in SA)

Constraints to increased airfreight volumes

§ Cost of airfreight e.g. cost of airfreight may be 4 to 5 times that of seafreight. Airfreight costs therefore often constitute up to half of the landed cost of perishable products

§ Current requirement to truck to JIA, or via DIA with double-handling

§ Technology advances in sea freight – controlled atmosphere, ripening en route etc.

Potential services required over and above logistics

All§ Efficient customs and excise

Some§ Tracking and traceability systems from farm to retail; on-site inspections

Cut flowers § Established growers unlikely to want on-site value addition and

packaging – prefer to do this on farm

Fish & seafood § Required mercury and other testing for EU

Mozambique and Swaziland

§ Efficient customs and excise system throughout transit

§ Accessibility to testing as this is required for exports to the EU

§ Specialised packaging

3 International market trendsTrade in fresh produce is a large and growing sector of the global economy – current annual trade levels are close to 2 billion

tons, and are valued at over US$280bn. The main product categories include horticulture, fish and meat. The EU, the US and

Japan are the largest importers of perishables with a steady combined annual growth rate of approximately 3%.

There has been strong growth from southern hemisphere production centres. In the future, this trade will be affected by the

following main global trends:

1. Shifting trade patterns, marked by increased supply from developing nations such as Chile, Peru, Thailand, Kenya,

Zambia and South Africa

2. Growth in the use of airfreight

3. Growth of direct-to-retail imports, in particular to large retailers in Europe and the US, with specialised quality and

traceability requirements set by retailers

4. Increased demand for ready-to-eat food products, driven by growing convenience food segments e.g. pre-packed

salads, snack packs, fruit salads and ready-made meals

5. Growing demand for organically grown produce driven by strong environmental awareness

3.1 SUMMARY OF KEY MARKETS AND COMPETITORS

PINEAPPLES

Pineapples continue to dominate global trade in

tropical fruits, accounting for 47% of world exports in 2001.

In 2002, the estimated world production of

pineapples measured 14.2m tons, representing

approximately 22% of the global production of tropical fruits.

EXPORTERS Costa Rica

Cote d’Ivoire

Philippines

Thailand IMPORTERSThe EU and the US continue to be the main import markets of pineapples, accounting for over 70% of global imports by value in 2001.

OVERVIEW OF GLOBAL COMPETITIVE TRENDS

w Thailand is the world’s largest producer of fresh and canned pineapples and accounts for 17.5% of global production

w The Philippines is the second largest producer with 11% of global production

w Brazil accounts for 10% of global production

New hybrid varieties are being introduced to market to stimulate future growth. The “golden” pineapple developed by Del Monte is the most successful new variety.

DTP CATCHMENT AREA WITHIN SOUTH AFRICA SWAZILAND & MOZAMBIQUE

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MANGOES EXPORTERS Mexico is the largest exporter

of mangoes globally, with 31% of total exports by volume or 194,500 tons. Its main markets are the US and Canada, with minimal amounts going to Europe

Brazil is the second largest exporter of mangoes, accounting for 14% of global exports by volume, or 94,300 tons. Brazilian exports go mainly to European markets, with a relatively small amount being exported to the US

India and Pakistan are the third and fourth largest exporters by volume, accounting for 8% and 7% respectively. Both countries supply mainly the Middle East (over 70% of exported volumes) and have been increasing their supply to the UK (approximately 15% of exported volumes) and the Netherlands

VARIETIES

w India is the largest producer of the Alphonso variety; a green, fleshy and very sweet fruit that continues to gain momentum in European markets

w South East Asian producers, including Thailand and the Philippines, produce native varieties similar in taste and texture to the Kensington and Kent varieties

w Mexican and South American producers, including Brazil, produce and trade mostly Haden and Tommy Atkins. These varieties are more colourful with a mild taste

SEASONS

Global production seasons in both hemispheres cover 75% of the year:

w Northern hemisphere producers generally produce mangoes between April and August

w Southern hemisphere producers harvest the main portion of their crops between December and March

w The global market for mangoes is estimated at US$18.4bn, representing

29m tons of global production annually

w Global imports of mangoes have developed dramatically over the past decade, growing by 46%

between 1996 and 2001. Moving forward, import volumes are expected

to increase by 10 to 15% per annum for the next 5 years

IMPORTERSw The US is the largest importer of

mangoes worldwide, accounting for 41% of total import volumes for 2001, or 238,000 tons

w The Netherlands is the second largest importer globally, and the largest importer in Europe, accounting for 12% of total import volumes for 2001, or 69,600 tons

w Traditionally, mangoes were harvested before fully ripe (especially the Tommy Atkins and Haden varieties), and packed for delivery by sea freight to ripen in transit. An emerging trend is tree-ripened fruit, which increases the landed costs of exports as fully ripened mangoes have to be shipped by air to final markets

w With retailers taking more control of the supply chain from wholesalers, consumption characteristics (taste and texture) rather than visual appearance (colour and size) are being emphasised

GROWTH SECTORw Freshly cut and prepared mango is seen as a growth sector for large retailers in

Europe and North America.

GLOBAL COMPETITION TRENDSw Avocado trade patterns are shifting and

growers are seeking to develop alternative export markets

w Increasingly, suppliers are attempting to develop new markets for their products

AVOCADOES

The global trade in avocadoes was valued at over US$400m for 2001.

OPPORTUNITIESw Rising demand in consumption

markets and planned increases in supplier production provides strong indication for continued growth of exports

w Japan is seen as a major growth market

w Traditionally, major South American suppliers (i.e. Mexico and Chile) focused on the US and Canadian markets

w Others such as Israel, South Africa and Spain focused mainly on the European market

EXPORTERS Mexico

Chile

Israel

Spain

South Africaw The top five export markets for US strawberries are Canada,

Japan, Mexico, France, and the UK

w Strawberries are highly perishable with very short shelf lives. The industry believes that the growth of import levels will be driven by cool chain transport technologies and the production of more resilient varieties

w Future strawberry exports by air are increasingly going to be in the form of partly processed multi-fruit products

STRAWBERRIES EXPORTERSw Spain is the top fresh

strawberry exporter in the world in terms of value. In 2001, Spain exported more than US$272m of fresh strawberries

w The United States is the second largest exporter. In 2001, the United States exported more than US$114m of fresh strawberries

TABLE GRAPES

w Worldwide production of grapes (table and wine) is estimated at 60m tons annually

w Global trade in fresh grapes makes up a large fraction of trade in all fresh fruit. In 2001, global imports stood at close to US$3bn representing over 2.5m tons of grapes

w The US is the largest importer of fresh grapes, accounting for over 23% of world

imports by volume. Although the German market is the largest in Europe, it stagnated between 1997 and 2001

EXPORTERSw The Americas dominate the export of table grapes

worldwide, with North and South America accounting for close to 60% of exports by volume in 2001

w In terms of individual country exports, Italy is the largest exporter of table grapes with a market share of 28%. Chile comes second with 24% of the market, followed by the US with 23%

KEY ADVANTAGESouth African grapes are highly regarded in key markets, and generally command higher prices than grapes produced by competing southern hemisphere countries

The global market for apples was estimated at US$26.6bn in 2001, representing over 58m tons of global production

APPLES

EXPORTERSw France is the largest exporter of fresh apples

worldwide, accounting for 15% of all exports by volume (777,800 tons). Most French apple exports are to the EU, with small volumes to Eastern Europe. France exports the Golden and Gala varieties, though export volumes of the Gala variety (especially Royal Gala) are growing at a much higher rate than the Golden variety

w The US is the second largest exporter of fresh apples accounting for 13% of worldwide exports by volume (714,900 tons)

w In third place is Chile, with 12% of global exports by volume (614,800 tons)

w China is emerging as a major low cost supplier to Asian markets, especially with the ongoing economic downturn in Asia

CHALLENGESw New EU directives, including

the introduction of a certificate of conformity, are placing added pressures on imports. This effectively constitutes a non-tariff barrier for exporters to the EU, particularly new entrants

w There is a trend in the wholesale sector towards tray packs rather than bushel boxes. This is especially true for large retailers, but also for wholesale markets where the emphasis is on enhancing the visual appeal of the product

w Apples are globally produced year round with no significant supply shortage periods

TRENDSChilean producers are actively diversifying away from the Delicious (particularly Red Delicious) varieties to others (including Fuji, Braeburn, and Gala), although Red apple varieties still account for about 70% of total output

IMPORTERSw The market for apple

imports is highly fragmented, with the top five markets accounting for only 34% of total imports by volume. As a mature market nearing decline, import levels in key markets have stagnated over the past years

w The EU draws more than 30% of all imports. Germany remains the largest global importer of apples by volume and value, accounting for 13% of total imports by volume for 2001, or 698,300 tons. Close to 80% of all German apple imports originate in the EU

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CHERRIES

VARIETIESw Cherry varieties are split into two major groups:

sweet and sour. Generally, the sweet cherries are traded while the sour cherries are used primarily for local processing and food production

w Among the sweet category, the ‘bing’ variety is by far the most commonly traded and is

premium-priced. The other main varieties are the ‘lambert’ and the ‘ranier’

w A number of new, more resilient hybrids are constantly being developed with a view to prolonging production and export seasons e.g. Spain’s stemless picota variety, which has an extended production season

IMPORTERS• Global exports for 2001 were

valued at US$378m, representing 150,000 tons

• Japan remains the largest importer, accounting for 25% of total imports by value, or US$105m. Germany is a close second, accounting for 17% of total imports by value, or US$74m

• Cherries have long been regarded as a luxury crop with low sales volumes. However, they are increasingly regarded as a mainstream product with increasing sales volumes

EXPORTERSOverall, the export market for cherries is highly fragmented, with more than 20 countries accounting for a market share of 23%

w The US was the largest exporter in 2001, accounting for 27% of total exports, or 39,000 tons. Turkey was the second largest exporter accounting for 17% of total exports, or 24,500 tons

Argentina and New Zealand exclusively supply the North American markets

Germany and Greece are noted for high crop yields through the use of under-glass harvesting methods

CHALLENGESw Cherries are very difficult to grow and are highly susceptible to environmental conditions.

As demonstrated by the low global crop of 1998, harsh weather conditions can dramatically decrease crop yields and create export shortages

w Due to these special growing requirements, cherries remain a highly seasonal fruit, although under-glass production is used increasingly to extend supply periods

w There are two main supply seasons, defined geographically:

— The Northern hemisphere season lasts from mid-May to mid-August

— The Southern hemisphere season lasts from November to mid-January

TOMATOES

w The global trade in tomatoes is valued at US$3.5bn

w Most of the global tomato trade remains in Europe, with European countries accounting for more than 50% of total global imports by value

w The US is the largest importer by volume, with 22% of the global import market, followed by Germany with 12%

w Other main importers include the UK, the Netherlands and France

w Growth in global trade slowed between 1996 and 2001, with volume growing by only 13% during that time

EXPORTERSw Global exports are dominated by Spain, which

accounts for 24% of total export by volume for 2001, or 1m tons. Spanish exports mainly go to other European countries, with some volumes going to the US

w Mexico is the second largest exporter of tomatoes, with 760,000 tons. The vast majority of Mexican tomato exports go to the US and Canada

TRENDSw Tomatoes have become

highly commoditised, with local production technology widely available. This is prompting increasing levels of local production

w In addition, trade in tomatoes is largely regionally driven with over 80% shipped by land. The exceptions are specialty cultivars and varieties (i.e. vine tomatoes, cherry tomatoes) where retail value is providing impetus for cross continental trade

EXPORTERSGlobal trade is dominated by Australia and South Africa, which collectively account for 65% of global exports. Australia exports more than 70% of its production, accounting for 47% of total export volumes for 2001

MARKET TRENDSw The global market for macadamia nuts is

estimated at approximately US$121m, representing 87,800 tons of worldwide production

w Approximately 75% of global imports are further processed by the confectionary, snacks, and increasingly the essential oil, industries. Macadamias exported to this market segment are generally semi-processed (i.e. de-shelled, ground) before being shipped

w The remaining volumes are marketed to end consumers, either whole-in-shell, or shelled

MACADAMIA NUTS

MARKET TRENDSw The US is the largest importer and consumer of macadamias, driven by rising

consumer incomes. In 2001, US imports totalled US$24m, representing 5,300 tons

w Increasing demand from European markets is expected to drive further growth of South African exports over the next 5 years

w Japan is another important market for macadamia exports, where market value is amongst the highest in the world. In 2001, Japan imported 2,900 tons, with the very high value of US$22.4m. Japanese imports have experienced strong growth between 1997 and 2001, increasing by 90% during this period

BABY VEGETABLES

TRENDSThe increase in consumer demand for baby vegetables can be attributed to the following factors:

s Increased awareness of baby vegetables as an alternative to other vegetable products – retailers are stocking more of these products as they are highly profitable

s Baby vegetables are typically more flavourful and sweeter

s Increased demand for smaller portions and the ability to buy in smaller units

s Increasing availability of a wider variety of baby vegetable products

s Increased demand for value added (peeled, washed, cut, bagged or wrapped) baby vegetables

s Increased disposable income results in more consumers being able to purchase these higher value products

OPPORTUNITIESw Slow but steady growth is forecast

for the baby vegetable market

w The following products are expected to offer opportunities for increased export in the future:

— Stir-fry baby corn

— Premium mixed baby vegetables

— Fresh cut baby potatoes

— Mixed baby vegetable snack bowls

Key suppliers of baby vegetables include:

China, Costa Rica, Egypt, Ghana, Guatemala, Honduras, Indonesia, Kenya, Mexico, Morocco,

Nicaragua,South Africa, Sri Lanka, Taiwan, Thailand,

Tunisia, Zambia, Zimbabwe

EXPORTERSw Exports from developing countries increased rapidly

during the nineties, with China, Mexico and Thailand achieving significant market shares

w However, the need to adhere to the phytosanitary, certification and trade regulation requirements and to supply consistent volumes makes it even more difficult for developing countries to compete in this market

w Buyers of baby vegetables focus on the following criteria in order of priority:

— High and consistent quality of the product

— Competitive pricing

— Presentable packaging and labelling

— Adherence to market regulations and standards

— Consistency of supply

— Ability to supply during the off season

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FRESH HERBS

GLOBAL MARKETw The total import market size for herbs and

spices in 2000 was US$2.5bn (this includes dried herbs and spices) representing a volume of 1.2m tons

w The import market showed a steady growth of 6% in terms of value and 4.3% in

terms of volume between 1996 and 2000

w The markets for herbs and spices can be divided into four segments. These are:

— culinary uses including fresh and dried powdered products

— medicine and supplement applications

— essential oils

— pharmaceuticals

IMPORTERSThe top 5 import markets in terms of volume in 2000 were:

s US (191,848 tons)

s Japan (139,784 tons)

s Germany (58,523 tons)

s Malaysia (57,575 tons)

s Netherlands (55,422 tons)

OPPORTUNITIESw Increasing demand for organic spices and herbs

w Increasing demand for fresh herbs due to greater public awareness of the health benefits of herb utilisation in food preparation

w Historically, the limited shelf life of fresh herbs restricted marketing options as production had to be in close proximity to markets. However, improvements in transportation, handling, and storage now permit the supply of fresh product across greater distances

w There are market opportunities for these fresh herbs: basil, oregano, sage, mint, savory, dill, garlic, horseradish, chives

The following are the key suppliers of herbs and spices to the world market in terms of share of value of imports in 2000:

w Indonesia (14.6%)

w India (11.2%)

w China (8.1%)

w Madagascar (6.4%)

w Malaysia (5.3%)

w Vietnam (5.2%)

w Brazil (4%)

TRENDSw The herb and spice market has

become increasingly competitive as suppliers such as Malaysia, Indonesia and Madagascar widen the range of products that they supply and optimise their production capabilities to meet import market demands

w France, traditionally one of the world’s largest producers of fresh herbs, has been unable to meet local demand and is increasingly resorting to imports

w A number of herb and spice companies have started contracting directly with growers to assure the delivery of fresh product to the market place

w Consistent quality is regarded as the most important criteria for buying

w Price competitiveness is also important. A common problem with the fresh herb market is overproduction in response to even moderately high prices, which in turn depresses prices

IMPORTERSw Europe is the largest importer of cut

flowers with total imports of over US$3bn per annum

w Germany is the largest import market with 28% of total imports, followed by the UK (20%) and France (15%)

FRESH CUT FLOWERS AND FOLIAGE

KEY COMPETITIVENESS DRIVERSw High quality and long vase life

w Price

w Consistent supply

COMPETITION DYNAMICSw High and growing competition

levels

w Roses – main competition from Zambia, Kenya, Zimbabwe, and Colombia

w Proteas – main competition from Australia, Israel and increasingly from Madeira, Portugal

w Foliage – main competition from Latin America and increasingly European suppliers

EXPECTED GROWTH IN KEY CONSUMPTION MARKETS:w Germany – overall growth of 2% is

expected in this mature market for cut flowers; but higher growth for foliage and exotic flowers

w UK – growth of 4% overall, as UK per capita spend is expected to reach German and Dutch levels (approximately 30% higher); including higher growth for imports to retailers (5-6%)

w France – stable growth of 3%

w Eastern Europe – high growth rates expected (but growing from a small base)

FRESH TUNA (JAPANESE MARKET)

TRENDS AND OPPORTUNITIESw Although Japan is a major tuna fishing

country (accounting for 15% of the global catch in 2001), Japan is the second largest importer of fresh and frozen tuna accounting for 24% of global imports by volume in 2001

w Over half the sashimi grade tuna is imported

w Bigeye, yellowfin and skipjack are the three main species imported into Japan

w The downturn in the Japanese economy has not affected demand for fresh tuna

KEY COMPETITIVENESS DRIVERSw Highest quality

(strong zero-defect policy for sashimi grade tuna)

w Product uniformity

w Rapid transport to Japan and excellent handling logistics

w Appropriate grading of supply

COMPETITION DYNAMICSw Large number of competitors competing for one buyer (i.e. Japan)

w Fresh tuna fishery and fish husbandry in Australia and Fiji are actively supported by the respective governments; there is also strong aquaculture expertise, resulting in increasing exports of farmed blue fin tuna

w Reductions in world-wide fishing quotas as a result of stock levels being depleted

w Steep learning curves for establishing appropriate fishing methods and complex handling mechanisms are barriers to entry

w A complex sourcing and distribution system requiring exporters to go through a significantly long process

w Lack of country of origin “brand” visibility, and hence difficulty in building defensible brand loyalty

w Relatively strong buyer power; in most cases importers/wholesalers determine the quality grading, and hence the price and sale volume, of imported varieties

w Overall the egg trade is very regional, with most trade flows defined along geographically adjacent country clusters. The exceptions are the Middle East and Hong Kong, which are both important markets

EXPORTERSw The Netherlands is the leading exporter of eggs globally, with 29% of

global exports valued at US$300m. The vast majority of Dutch exports remain inside the EU

The US is the second largest exporter of eggs, with 11% of export values for 2002. US exports largely remain in North America, with some quantities going to Hong Kong. The remaining key European exporters (France, Germany, Spain, and the UK) account for 26% of total export values, or US$260m

w The global production market for eggs is valued at close to US$50bn. China is the largest

producer and consumer of eggs. Its production grew by over 110% between 1990 and 2001

w Global trade in eggs represents only 2% of production, at US$1bn in 2002. International

trade in eggs is largely between EU countries. Outside the EU, trade in eggs takes place

mainly in Japan, Hong Kong and parts of the Middle East. Hong Kong has one of the highest per

capita consumption rates of eggs

w The Middle East is an important market for exporters because of increasing consumption rates, and limited local production (due to lack of infrastructure and technology, and an underdeveloped poultry and egg processing industry)

FRESH EGGS

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SPECIAL FOCUS: ORGANIC PRODUCTS

Overview of the opportunityOrganic produce is a fast growing market segment in Europe, the US, and to a lesser extent, Japan. Although the

market size is still relatively small, high premiums on organic products make this a high-value opportunity.

Drivers of competitiveness & barriers to entryQuality controls and effective supply management are key to competitiveness. Although barriers to entry are currently low,

local production in key consumption markets and competitive advantages of first movers will likely increase these barriers in

the short to medium term.

Drivers of competitiveness and barriers to entry include:

w Cool chain logistics infrastructure to ensure product quality

w Supply management and effective logistics infrastructure and systems to ensure quality

w Appropriate certification from export markets (Europe, US, Japan)

w 3 – 7 year lead time for land to be certified organic in cases where land has been farmed with non-organic techniques

SPECIAL FOCUS: VALUE-ADDED PRODUCTS

Overview of the opportunity

Pre-cut and packaged fruits and vegetables are emerging markets in Europe, Japan, and the US. Increasingly,

value-added handling of organic products is required (e.g. separate packing and labelling). Products include:

w Snack packs of baby carrots

w Packs of baby apples and bananas aimed at children

w Cut and peeled ready-to-cook packs of stir-fry or casserole vegetables

w Washed mixed salads with dressing and crouton sachets

w Peeled, pitted and sliced fruit lunch packs with forks

w Ripe-and-ready-to-eat packs of avocadoes, pears, etc.

w ‘Flown for freshness’ labelled products

w Fruit salads, leaf salads, mixed salads (especially in the summer period from May to September)

w Prepared pineapple

w Prepared exotic fruit

Drivers of competitiveness & barriers to entryQuality controls and effective supply management are key to competitiveness. Although barriers to entry are currently low,

local production in key consumption markets and competitive advantages accruing to first movers will likely increase these

barriers in the short to medium term.

Direct retail relationships are a key success factor for this opportunity. High quality and consistency requirements in

developed country markets are limiting access by developing market exporters because of the required levels of investment

in grower program management systems and appropriate logistics infrastructure.

4 Role of the DTP Perishables CentreThe provincial government has recommended the establishment of a perishables centre at DTP to drive the export growth of

perishables products from the Dube TradePort catchment area. The centre will achieve this by providing commercially viable,

world-class perishables logistics solutions. These objectives form a highly focused sub-component of the overall objectives of

the DTP Trade Zone, as well as overall provincial government efforts to develop the perishables sector in the province.

The Perishables Centre will:

t Provide reliable, time and cost efficient access to key perishables markets through seamless linkages into the logistics

platform provided by DTP

t Provide effective cold chain management, with close relationships from farm gate to market to facilitate an unbroken

cold chain

t Ensure appropriate handling to retain product quality and minimise wastage

t Provide streamlined inspection and customs clearance

t Facilitate growth into high value niche markets, possibly through additional value added services and beneficiation

t Link support for the perishables growing and export processes, with a particular emphasis on small growers, new

entrants and historically disadvantaged enterprises.Partnerships with key role players will be essential to achieve this

NOTES

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