Archived entries – Globalisation

World Cup’s lasting legacy in South Africa

As the quarter-finals of the FIFA World Cup in South Africa get underway, it’s interesting to note how, in two of the matches, a traditional European market is taking on a major South American fruit supplier, with Brazil against Holland and Germany meeting Argentina.

As in this business, there is much at stake: will the steady, experience traditions of Europe be able to tame the exuberance and flair of the Latins? On both sides of the Atlantic, the fresh produce sector will be watching and you can be certain that plenty of bets between suppliers and customers will be riding on these games. Some of the old continent’s football/fruit powerhouses have not made it – in England, France and Italy, the bubble has already burst – but in Spain, Holland and Germany the tension will be rising as the games get underway.

Whether it is Europe or South America which dominates this weekend, this World Cup is already a roaring success; Cape Town had already welcomed more than a million foreigners before the start of the last 16 matches. This weekend the ‘fan walk’ from the city will be buzzing with Argentine and German supporters, along with thousands upon thousands of Capetonians who will gather on the sidewalks along the route and drink some beers in the street cafés, just for the sake of being part of this fantastic event. For their part, local fruit traders along the route are rolling out their best products and the retailers in and around the stadia are reporting bumper times.

In Johannesburg, meanwhile, a million people are expected to parade the South African flag through the city this weekend and sing the anthem at regular intervals. Forget the fact that the local heroes Bafana Bafana are already watching the tournament from home – this is one proud nation which has received a new injection of the kind of rainbow spirit which Nelson Mandela brought with him when he swept into power in 1994.

Predictions of benefit to the local economy have been exceeded, with estimates that during the tournament alone R10bn will be injected into the local economy. The secondary benefits, in the form of increased tourism and other trade, are expected to last for at least a decade.

Most importantly, South Africa has proven the sceptics wrong and showed that it can host one of the world’s premier events. The pre-World Cup hype about security during the tournament and about crime has been proven wrong. Happy fans from all over the world are speaking with enthusiasm about their experiences and their intention to return to these shores again soon. The PR value for the South African fresh produce trade could arguably be likened to that enjoyed by Australia following the Sydney Olympics.

The events in and around Soccer City in Johannesburg, built in the townships built for black people during the apartheid era, have opened up these areas and broken down barriers between previously traditional ‘white’ and ‘black’ areas. Dancing in the streets and a pint of beer in the shebeen (as pubs in these parts are called) is now a common feature. South Africa’s rugby fraternity has also embraced this openness by playing two of the most important Southern Hemisphere rugby matches in the stadium.

So strong is the national pride now that Soccer City will next month host the rugby test match between South Africa and New Zealand, presenting the All Blacks with the frightening prospect of 90,000 South Africans from all parts of the country screaming and blowing their vuvuzelas.

There is a feeling of proud nationalism in South Africa today which most countries probably envy. The fruit growers and the thousands of people connected with the industry should continue to reap the benefits. Despite a crippling strike before the tournament and fears that shipments would be disrupted because of congestion in the main port cities, everything has been running smoothly.

So far, it has been a triumphant tournament for a country which has somehow been defying the odds ever since Mandela’s long walk to freedom began.

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McDonald’s backing leaves bad taste in mouth

Luca Zaia endorses McItaly range

The decision of Luca Zaia (above left) to offer an endorsement of McDonald’s‘ latest product launch – the new McItaly line of burgers and salads made using ingredients sourced entirely within Italy – clearly illustrates that Italy’s current Minister of Agriculture has no sense of irony, something which many in the global fresh produce trade already believe. The big question many of them are asking is this: how can the man appointed as one of the stewards of Italy’s superb gastronomic heritage sell out so cheaply to a US multinational which clearly won’t have Italian producers at the top of its list of priorities?

Personally, I have no problem with McDonald’s taking steps to make its menus more healthy and to add more local ingredients. What I do object to is the hypocrisy of a government official who on the one hand espouses free trade and the expansion of Italian fresh produce exports, while at the same time denigrating products from outside Italy and discouraging those in Italy that buy them. McDonald’s may source much of the ingredients used in its Italian restaurants from within the country, but its ethos is overtly international – something which seems to clash with Mr Zaia’s own outlook.

While forward-thinking officials around the globe have spent the past 18 months attempting to prevent international commerce tying itself in knots of self-interest, Mr Zaia has bravely gone it alone and opted to pursue a trade policy that incorporates a protectionist agenda well in tune with major farming constituents in his home region of Veneto. While valiantly lobbying for other countries – most notably China – to buy more of Italy’s fruit, he has had no problem with angering the country’s fresh produce trade by calling on consumers to boycott pineapples and other produce at certain times of the year.

The recent campaign to promote local products in Mr Zaia’s home region of Veneto is a laudable one, promoting as it does a more sustainable system of fruit and vegetable supply for the area’s various institutional bodies. But to actually go as far as dismissing imported products leaves a bad taste in the mouth. Mr Zaia even felt it necessary to tarnish the reputation of imported fruit “grown in countries where it is still possible to use hepatotoxic and sometimes carcinogenic insecticides”. Nice work, Luca – presumably you had a word with the leading Italian pineapple importers before throwing that one out?

“He should not forget that there are many companies involved in importing pineapples, a product which is very popular among Italian consumers,” said Luigi Peviani, head of industry organisation Fruit Imprese, at the time. “These companies are competing daily on risky international markets; they provide employment for thousands of Italians, not to mention the earnings they generate.”

The danger is that regional protectionism goes too far. We don’t live in a world where borders are designed to keep commercial factions apart. Business, including agriculture, should not be governed by political division. Those whose livelihoods depend on agriculture should recognise the fact that their markets, the sources of their income, are no longer insular, but integrated. Farmers should be assisted, but not protected, because propping them up artificially gives them no long-term future – what if Mr Zaia’s policy were to be overturned by a future incumbent? True sustainability is far more likely to be achieved by building on new opportunities for growth in new and emerging markets, something which has been of particular benefit to geographically protected radicchio from Mr Zaia’s home town of Treviso.

Oh, and by the way, McDonald’s Italy does indeed sell pineapple…

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Fruit features in new business landscape

Interesting to see that the Financial Times’ latest billboard campaign depicts fresh produce as a prominent feature of what it terms the “new business landscape”.

As you’ll see from the photo below, a vibrant fruit market sits in the bottom left corner of what is an impressive composite image combining different artistic styles from the four so-called BRIC countries – Brazil, Russia, India and China.

The suggestion being made by the (other) FT is that these four economies represent the future of global commerce.

As these four emerging economies continue to grow, fresh produce is indeed set to feature prominently in each country’s development.

Of course, this is something that has been well known and documented within the fresh produce trade for some time. Still, nice for it to be recognised by such a well-respected newspaper like the FT.

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Brazilian breakthrough

In stark contrast to yesterday’s news that the Italian region of Veneto has decreed ‘local produce’ should mean food which has been produced within its own border, today sees the announcement that Italy has shipped its first ever consignment of citrus to Brazil.

For Sicilian orange producers, the past decade has been all about survival through diversification of markets and a notable shift in marketing focus towards exports, so the news that export company Oranfrizer is planning to send at least three container-loads to the South American country represents a major breakthrough following successes in other parts of the world like Japan, Russia and the US.

Sicilian red-fleshed oranges, which are unique to the island province, have emerged as high-end, niche products suited to premium markets that are prepared to pay extra for something special. For that reason, they offer something that oranges closer to Brazil cannot. All the same, the fact that South America’s citrus-producing powerhouse should show any interest in importing Italian oranges is a stunning achievement.

Some will suggest that exporting oranges to Brazil is like shipping snow to the Antarctic, but many will also feel that, when you’ve got a product that people are willing to pay extra for, the development of such business should not be discouraged. If anything, they will say, it should be embraced as a means of making the world even more integrated and interconnected, bringing markets closer together and encouraging the supply chain between producer and customer to improve their services and make them more efficient.

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German discounting is dispiriting

A quick store visit to two of Germany’s leading discounters is a dispiriting experience.

Hamburg, one of Germany’s richest cities, is home to its fair share of discount stores too. The Penny outlet on the city’s Reeperbahn, Hamburg’s notorious red-light district, is famous for its extensive offer of cheap alcohol. Its fresh fruit and vegetable offer palls by comparison, but in keeping with the area adds up to a tawdry mix of cheap tat.

Things don’t get any better at a nearby outlet run by Aldi. Here too, the product offer is not up to much. White seedless table grapes that looked tired, cauliflower that has seen better days and there’s a tired selection of lettuce that will not entice anyone.

Aldi Markt outlet in Hamburg

And yet the Germans love them. Hard discounters account for almost 50 per cent of fresh fruit and vegetable sales in Europe’s richest country. Germany’s economic downturn is likely to attract even more shoppers through their doors, lured by the low prices and limited offer.

It’s not as if they have nothing better to chose from. Conventional retailers such as Rewe and Edeka are trying their best to stem the tide, though they too run their own discount chains to help German shoppers feed their habit.

They’re making advances elsewhere in Europe too. Switzerland, for example, is home to two of Europe’s most quality-oriented food retailers, Migros and Coop. And yet the latest reports are for big growth for German discounters there too.

Curiously enough, Aldi’s billionaire owner, Theo Albrecht, also owns the Trader Joes chain in the United States. It’s a food retailer that could not be more different than Aldi but Aldi shoppers able to buy some of its branded product in their stores in Germany.

Trader Joes

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Suppliers learn the merits of price stability

Latest data from the South African table grape industry suggests that suppliers are watching the market with more care than usual.

Volumes shipped from South Africa to Continental Europe have climbed by 10 per cent on last season. Shipments to the UK, traditionally South Africa’s strongest seedless grape market, have fallen by an almost identical amount,  dropping by 13 per cent (Full report from SATI as PDF)

What’s perhaps most signficant is the stability in pricing that the South Africans say they have achieved. Prices have not fluctuated, in fact they’ve stayed pretty stable in the UK and in Continental Europe thanks in no small part to the volume stability in the market.

The outlook is good. The South Africans say that the US market has been performing better than expected, which must augur well for Chilean exporters, who tend to balance their shipments to the US and EU. Let’s hope things go well for the rest of the season.

Perhaps it’s best to keep a close eye on exchange rate fluctuations over the new few weeks. Despite the woeful economic news, the dollar looks to have strengthened in recent weeks, fighting back against the euro after its gains in the early part of the year.

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Some good news on the carbon footprint

If you thought fresh fruits and vegetables had a large carbon footprint, then think again.

Eating green is good for you and good for the environment, says an article in the latest issue of Time magazine. “It’s eco- and waistline friendly,” writes columnist Bryan Walsh.

According to Time,  a 110g grilled steak has a carbon footprint of some 4.8kg and contains 24.5g of fat and 347 calories of energy;  the same quantity of steamed vegetables has a footprint of just 0.08kg and contains 0.13g of fat and some 74 calories. Quite some difference.

Time’s article ought to become a handy “cut-out-and-keep” guide for all of us. More often than not, it’s fresh fruits and vegetables that come of worst in any debate about the carbon footprint. It’s the meat and dairy sectors that really ought to be worried.

Here’s a PDF for the article for you to print.

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Bananas: Bob Kistinger goes to Noboa

Bob Kistinger, who spent half a lifetime at Chiquita Brands, is joining Noboa, according to Reefer Trends.

Mr Kistinger left Chiquita at the end of 2007, having served as its President and Chief Operating Officer and as the largest casualty of a major restructuring of the company.

The native New Yorker had spent some 27 years with the banana company, steering it through some of its most difficult moments, many of which had happened in the last 10 years as Chiquita’s star waxed and waned.

Now, a little more than a year after Mr Kistinger left Chiquita, he has joined Ecuador’s largest banana company. Noboa, and other banana companies like it in the world’s largest banana exporting country, have been at loggerheads with Chiquita and others over the last number of years about European Union banana import regulations. Their latest salvo came just before Christmas.

Mr Kistinger’s move echoes one made in the other direction by an erstwhile colleague. Bob Fisher, who worked for Dole for almost 25 years including a four-year stint as president, joined Geest in the early 1990s, had two stints in top jobs at Noboa, and now works for Chiquita Brands.

The banana business is a merry-go-round.

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