“This time of year - post the Lunar New Year holiday - Vanguard International is typically engaged in both exports of produce from China as well as imports into the country. “For us, China is an important export destination as well as source of produce to supply our many global customers,” says Craig Stauffer, CEO of Vanguard International. With its Shanghai office established back in 2002, China is an important piece of the company’s global business.
China’s export production at standstill
As a result of the Coronavirus outbreak, many local Chinese provincial governments are not allowing people back to work until February 10 and some provinces close to Hubei province, have extended this period to February 17. “This means that packing houses in fruit origins like Shandong, Shaanxi, and Fujian are not fully staffed to operate,” said Stauffer. “Therefore, China’s export production is almost at a standstill.” Many provinces have local policies in place that do not allow empty container transportation to enter from external provinces in order to load the fruit for exporting. These restrictions have created numerous challenges for Vanguard’s Chinese grower/packer partners to make vessel loading dates and it is resulting in a delay of many shipments.
Fuji apple is impacted
One of the fruit varieties that is negatively impacted by the Coronavirus is the Fuji apple. Chinese growers and packers are experiencing high pressure as a result of domestic supply outpacing domestic demand. This coupled with their inability to get fruit to the ports for export is putting pressure on growers. Since the fruit can’t be transported, people are choosing to spend their money on vegetables, staple grocery items, and masks. In the short-term, it is expected to result in downward pressure on selling prices.
Optimism for improvement
Vanguard’s customers are hopeful the situation will improve when people return back to work on February 10. “The situation is delicate for highly perishable commodities such as berries and cherries since they have a short shelf life,” Stauffer mentioned. “Grapes, citrus, and apples on the other hand, can be kept in cold storage for better market selling.” Potentially, there are actions, such as reducing the VAT tax, that would have a positive impact on China’s import volumes and prices. All in all, there is cautious optimism for the market to improve both in volumes and pricing in mid to late February.
To control the Coronavirus outbreak, a continuation of policies is expected to be announced. “It is not unusual for global markets to be reviewing food safety elements from all countries of origin. Of course, those discussions will include auditing food safety of fresh produce from China.” There may also be an increased pressure on Chinese packers to focus intensely on their food safety and apply for certificates, such as Global GAP for their registered packing houses.
“Our main priority will always be the wellbeing of our Vanguard teammates who live and work in China, and our Chinese growers and customers. We are following all recommendations and guidelines provided by the Chinese government to ensure their safety,” finished Stauffer.
For more information:
Rebecca Cumming
Vanguard International
Tel: (+1) 226-456-3141
rebecca@blitzme.ca