In an attempt to turn away from the "trade" and "logistics" undertones 'Free on Board' carries, we've adopted a new name to focus on the Food & Agricultural Industry and the trade dynamics existent within. Say hello to AgriNow!
🍎🥑 Agri Now gives you an outline on notable news in the agriculture space. For this week, we cover the surging demand for pre-prepared vegetables in China, a look into the reversal of the palm oil ban in Indonesia and the reasons behind the export drop in South African grapefruits.
0:00 Hey, thanks for stopping by. This is AgriNow a podcast by Tridge.
0:04 Stay in the now with Tridge’s agricultural insights and data.
0:07 Let's get onto the updates.
0:17 [Ben] Welcome back to another episode of Agri Headlines or should I say the first episode of AgriNow.
0:23 [Hyesun] Yes free on board is free no more.
0:25 [Hyesun] We've got a new intro, new name, and cool cover art.
0:27 [Hyesun] So for those of you who are listening we're curious to know what changes will be made.
0:31[Ben] Not much is actually changing.
0:33 [Ben] We will still be providing you with the most relevant and recent agricultural news and we thought the new title is more representative of that.
0:40 [Hyesun] Right. So please stay tuned for more content like this.
0:42 [Hyesun] And with that let's jump right into our three stories for the week.
0:57 [Ben] So this week we're taking a look at the increasing demand for pre-prepared vegetables and ready-to-cook meals in China.
1:03 [Ben] We discuss another policy change in the Indonesian palm oil industry
1:07 [Ben] And finally we look at the drop in South African grapefruit exports in the 2022 season.
1:12 [Hyesun] Right. So let's get started.
1:13 [Hyesun] The way that people think about food and the way food is consumed has evolved globally since the onset of COVID-19.
1:19 [Hyesun] Consumers have developed a preference for foods that are quick and convenient to prepare and easy to eat.
1:24 [Ben] That's right.
1:25 [Ben] The popularity of pre-prepared vegetables continues to surge in China with consumers preferring ready-to-cook, instant-heated, and ready-to-eat products.
1:33 [Hyesun] Yes, and products like individually quick frozen IQF vegetables have surged in popularity.
1:39 [Hyesun] They tick all the boxes that consumers are looking for.
1:41 [Ben] They’re often pre-cut, leading to less preparation time and added convenience.
1:45 [Ben] They can be stored for longer periods of time, leading to less wastage and a more sustainable approach to food.
1:50 [Ben] Plus they offer a cheaper alternative compared to fresh produce
1:54 [Hyesun] Cheaper vegetables that last longer and are more convenient to prepare.
1:57 [Ben] Exactly.
1:58 [Ben] And supermarkets have taken note of this trend, evidenced by many outlets around the country placing these products at the front of the store to entice customers.
2:06 [Hyesun] And online sales of pre-prepared vegetables and other pre-made issues are also on the rise.
2:10 [Ben] Also worth noting is that before the pandemic, the pre-prepared vegetable market was dominated by the restaurant industry with fast food outlets and fine dining establishments using it as a substitute for fresh produce.
2:22 [Hyesun] Right. And right now we are seeing a reverse in that trend as the restaurant industry has been surpassed by home-cooked meals due to COVID-19 protocols and shifting consumer habits.
2:30 [Ben] And the trend is expected to continue as demand as well as production of pre-packaged vegetables are on the rise in China with an increase of 7% in the number of producing companies compared to last year.
2:42 [Ben] And for our second issue, in another turn of events, Indonesia has reversed its ban on palm oil exports.
2:47 [Hyesun] Right. This is like ban update 10.0, isn't it?
2:50 [Ben] Yes, this is the latest in a string of close to ten policy changes since the start of 2022.
2:56 [Hyesun] The announcement was made by President Joko Widodo on May 19.
3:00 [Hyesun] Oil mills are still required to allocate a portion of their production to the domestic market, otherwise known as the domestic market obligation or DMO.
3:08 [Hyesun] But exports have still been up and running since May 23rd.
3:11 [Ben] Exactly.
3:12 [Ben] And how much stock is the government planning on keeping domestically?
3:15 [Hyesun] So the exact amount is not clear, but Indonesia is expected to try to keep ten million metric tons within the domestic market and two million in the reserves.
3:23 [Ben] So let's get more into detail.
3:25 [Ben] After the export ban was placed at the end of April without an end date, it was later announced that the ban will remain in place until prices dropped to 14,000 Indonesian rupiahs or 96 US cents per liter.
3:37 [Hyesun] Indonesia did end up lifting the ban while prices remained higher at 17,000 Indonesian rupiahs or 1.17 US dollars.
3:45 [Ben] So it looks like this is related to how the ban actually had quite the opposite effect of what it was intended to do.
3:50 [Hyesun] Exactly. Where the ban was supposed to keep food inflation in check
3:53 [Hyesun] it led to a quarter of Indonesia's palm oil mills temporarily halting purchases from farmers and large-scale protests by farmers and farmer groups.
4:01 [Ben] And in addition to that, the value of the Indonesian rupiah plummeted after the band took place, losing 2% against the US dollar in the span of a month.
4:10 [Ben] While domestic cooking oil prices dropped, prices of other imported goods increased, adding to the inflation.
4:16 [Hyesun] Prices in Malaysia, one of the top two palm oil-producing regions, decreased upon hearing word of the band lifting, then proceeded to climb with the DMO announcement, closing at 1,559 US dollars per metric ton on Monday, May 23rd.
4:31 [Hyesun] Currently, prices have started to drop again, settling at 1,449 US dollars on June 1st.
4:37 [Ben] And for our last issue, South Africa's year-to-date grapefruit export volumes are down at the end of May.
4:43 [Ben] Let's start off with the cause of this major decrease.
4:45 [Hyesun] Well, there are two major causes for the decrease.
4:48 [Hyesun] A new packing and export volume monitoring and management campaign, as well as market access issues in China and Russia.
4:54 [Ben] Yes, so grapefruit growers in Letsitele, Hoedspruit, and Onderberg, who jointly produce almost 75% of South Africa's grapefruit, launched the campaign to monitor and report their weekly packing data and carefully manage the packing and export volumes.
5:09 [Hyesun] Every week, packing data is collected from all packhouses consolidated and shared to improve decision-making not only to extend the grapefruit season but also to manage the pressure that traditionally builds in the port of Durban during the peak season. 5:21 [Ben] The campaign appears to be working well as year-to-date exports of higher quality products, Class 1 and 2 grapefruit are down by 33% at the end of May 2022.
5:31 [Hyesun] There also seems to be another reason for decreased exports.
5:34 [Hyesun] China and Russia, two of South Africa's major grapefruit export destinations, are nearly inaccessible during the 2022 season.
5:42 [Ben] Large grapefruits that were viable for export to the Russian market in the past are not being exported in 2022 due to extremely high shipping rates and difficulty of accessing the Russian market.
5:53 [Ben] These grapefruits are being sent directly to local juicing facilities instead of packhouses.
5:58 [Hyesun] Right.
5:58 [Hyesun] So in the previous seasons, these were essentially the fruits that were being run across the packing line, put in a carton, and exported, consisting roughly 70% of production.
6:07 [Hyesun] However, in 2022, only about 40% of the grapefruit that enters a packhouse are exported due to the lack of market access to Russia.
6:15 [Ben] The outbreak of COVID-19 in China in mid-February 2022 along with renewed lockdown restrictions and enforcement of China's strict border control policies have come at an extremely unfavorable point in the South African citrus calendar, especially for grapefruit.
6:29 [Hyesun] China is South Africa's largest export market for grapefruit, in 2021, making up 27% of the total export volume.
6:36 [Ben] So the majority of packhouses have stopped packing grapefruit for the Chinese market until the lockdown is lifted.
6:42 [Ben] There is some South African grapefruit in the Chinese market, but it's moving very slowly
6:46 [Hyesun] Right. It's predicted that export volumes of grapefruit will continue to trend below previous seasons for the remainder of 2022, with total export volumes coming in lower than previous years at the conclusion of the harvest.
6:59 [Ben[ Hyesun, can you get us started on the takeaways?
7:00 [Hyesun] Sure, Ben. For our first issue, the consumer demand for pre-prepared vegetables is on the rise in China with demand forecast to remain high and rising in the coming years.
7:09 [Ben] For our second issue, the Indonesian palm oil industry has reversed its latest ban on palm oil exports but still requires producers to allocate a portion of their production to the domestic market.
7:19 [Hyesun] And for our final issue, South African grapefruit exports are down 33% year to date due to a carefully managed packing and export campaign combined with difficulty accessing the Chinese and Russian markets.
7:30 [Ben] And that is all we have for you today.
7:32 [Ben] We will be back next week with the latest news and developments in the global agricultural industry.
7:53 If you enjoyed this episode, please leave a review, subscribe, and share AgriNow.
7:57 Check out tridge.com/intelligence-data/intro for more price analyses and up-to-date insights into the food and agricultural industry.
