Noon International: Food Trading Import Export

As one who travels alot now I must reconsider the glasses I drink from in the hotels. I wonder if it is any better overseas?

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Do you know where your frozen vegetables come from? 

If product is packaged in  a specific country and imported it will have the country of origin on the label.  However if  the vegetable is imported as an ingredient in  bulk form and repackaged here  in the states with other items it will most likely become product of USA.  What this mean to you and I the consumer is we don’t have any way of knowing what we are eating or from what country.

Do we care? In today’s world with food safety on everybody’s mind how important is it to know where your vegetables are coming  from?  How can you as a consumer be informed?  How can we make a conscious decision not to eat vegetables from certain countries because of food safety concerns, or any other concern or belief one has.  Why don’t we have a well defined Country of Origin policy?

We at Noon International are advocates of free trade but we are also advocates of openness.

If it is necessary for the consumer to know where the product comes then  it is necessary to label the product appropriately and disclose where product comes from.

Working together as one all things are possible.

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The China government has just declared that starting from December 20, 2007 they will cancel tax refunds for 84 kinds of grains and powder products.  Some  of the items involved include wheat, rice, corn, soybeans etc.  The purpose behind the withdrawal is to guarantee enough supply of grains to the domestic market and to stabilize the domestic grain prices and finally to relieve trade surplus. 

We as importers  of frozen vegetables from China are concerned because this could be the harbinger of things to come.  The elimination of tax refunds for frozen vegetable exports.  This would have a dramatic impact  upon frozen vegetables or any vegetable for that matter of more than  a 10% cost increase because of the loss of the tax refund.

Let’s keep our eyes on China and see what the next move brings.

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We have mentioned food inflation in the past and it keeps coming back.  When will it start to accelerate?  Or has it?  When will we notice it in our pocketbooks?  I really don’t know what it is about the government inflation numbers I keep paying higher and higher prices for food and energy, yet inflation just keeps creeping along at a very low number.  I wished I could manipulate numbers in the same fashion.  Sometimes I wonder if we where all educated in the same system or, maybe this is just New New Math.

Today Wheat on the Chicago Board of Trade is over $10.00 a bushel, an all time high, more that 2.5 times the average price over the past 15 years, soybeans are trading at a 34 year high.  Prices seems to be headed higher before lower.  There is global tightness in basic commodities. 

How will all this food inflation impact the food cost for the imported vegetables we do from China?  As we have already mentioned food cost are increasing because of labor cost, energy cost, weather related problems.  Now with the basic grains increasing in cost I wonder how many farmers of peapods and waterchestnuts will switch to wheat or corn or some other basic crop.  It doesn’t take too much Old Math to figure out you can make more money for a crop selling at $10.00 per bushel vs. $2 or $3 dollar a bushel. 

I would suspect that all our imported crops will continue to accelerate in cost which will lead to higher food cost which will exacerbate the inflationary spiral.

Look out for the inflationary monster to raise its ugly head once again.

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Nothing is Real, only crooks are Real!

This is a rough translation of a Chinese saying that is sweeping South East Asia. 

As China’s woos continue with one food safety issue after another both Singapore and Hong Kong authorities have banned Maling brand luncheon meat after finding a illegal chemical substance.  The authorities reported having found the prohibited cancer causing antibiotic Nitrofurans in a batch of Maling lunch meat. 

Shanghai based Maling has immediately stopped exports of its luncheon meats as they undergo further investigation.

But what of the saying?  The meaning behind the saying, is to say that anything from China is not real, it is not exactly as stated, it can’t be trusted, it is fake, but, crooks are real, we can be assured that they exist and will take advantage of any situation and exploit and capitalize on the opportunity.

Will the crooks slay the Dragon?

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China and the U.S. establish Food Safety Pact 

Not sure how the FDA will be able to examine facilites in China when they are understaffed here at the ports.  How can they possibly visit all the facilities and pass judgment.  From the article it appears that China authorities will be mostly responsible for evaluating product to be exported from China.  After reading the article it doesn’t appear to give too much credence to the Food Safety Pact.  Another round of political maneuvering.

You can read the article below from Chicago Tribune.

U.S., China set food-safety pact
Deal gives American inspectors access to Chinese factoriesBy Stephen J. Hedges, Washington Bureau Tribune foreign correspondent Evan Osnos contributed to this report from Beijing December 12, 2007

WASHINGTON - After months of product recalls and fears over contaminated food imports, the U.S. and Chinese governments reached a food and drug safety agreement Tuesday that will give American inspectors access to Chinese factories while assuring Chinese manufacturers continued access to the U.S. market. The agreement, announced by a U.S. official in Beijing, was hailed by Bush administration negotiators as a major step toward addressing the safety of imported goods. The White House can claim a political victory in the fight against tainted imports, and China can attempt a recovery from damaging publicity surrounding its products. “These strong, action-oriented documents require specific steps and set clear deadlines,” said Mike Leavitt, secretary of Health and Human Services. “Taken together, these agreements will enhance the safety of scores of household items the American people consume on a daily basis.” But critics, while praising the intent behind the agreement, said it fails to provide enough safeguards to prevent further imports of seafood tainted by banned antibiotics or pet food ingredients blended with adulterants.

“I would say it’s not a strong enough signal to the Chinese,” said Jean Halloran, director of food policy initiatives at Consumers Union. “It seems to indicate that we’re not all that concerned about these problems. I think the administration is underestimating the concerns of consumers and the public.”

Tainted opinion

The agreement drew sharp criticism from Democrats on Capitol Hill, where product and food safety has become a major political theme.

“At face value, this long-anticipated accord between the United States and China seems to set in motion changes to improve the safety of our nation’s food supply system,” said Rep. Rosa DeLauro (D-Conn.), who has focused the House Agriculture subcommittee she chairs on food safety issues.

“However, even Secretary Leavitt has acknowledged that much work needs to be done,” she added. “Because of the limited scope of the accord — it only applies to 10 specific products — there are very serious questions as to the potential effectiveness of this new agreement.”

Sen. Dick Durbin (D-Ill.), who has similarly taken a leading role on the consumer protection issue, also found the agreement wanting. “Today’s agreement applies to a tiny fraction of the food we import from China,” Durbin said. “And while it can be expanded, it doesn’t cover nearly enough products to restore our confidence in Chinese goods.”

The agreement does not address consumer products like the toys and cribs that have experienced recalls recently. But it does cover food, drugs and medical devices.

Damaged relations

The deal marks China’s most aggressive regulatory step in response to American demands for greater scrutiny. Chinese leaders have acknowledged that an issue they initially dismissed as a political brush fire has begun to taint broader U.S.-China relations with “disharmonious notes,” as Wu Yi, China’s top trade envoy, put it recently.

The agreement is likely to bring greater transparency to the specific industries named in the deal. But the new measures are unlikely to spur abrupt changes in other parts of China’s export economy, which is vast and underregulated.

If the initial steps prove effective, and can begin to repair damage to the Made in China brand, both sides could find it in their interest to expand the program.

A summary of the agreement provided by the Department of Health and Human Services says the deal would initially address preserved foods; pet food and pet treats; raw materials used in making food, such as wheat and rice protein; and farm-raised fish, including shrimp and catfish.

Contaminated past

The Food and Drug Administration imposed restrictions several months ago on some Chinese fish, including shrimp, after discovering banned antibiotics in import shipments.

Under the new agreement, Chinese exporters to the U.S. will register with the Chinese government and agree to annual inspections by China’s office of General Administration of Quality Supervision, Inspection and Quarantine. The HHS said in a statement that the “new certification requirement will help ensure products exported from China to the United States meet our standards.”

Yet, enforcing that standard will largely be up to the Chinese.

The agreement also calls for the U.S. and China to notify each other within 48 hours of learning of “the emergence of significant risk to public health relation to product safety, recalls and other situations.”

As the number of product recalls increase this year, President Bush formed a Cabinet-level import safety review panel in July. Andrew C. von Eschenbach, the commissioner of the Food and Drug Administration, told The New York Times that FDA officials were already allowed to inspect Chinese facilities under limited conditions, but that the agreement signed Tuesday would expand that role.

However, the agreement doesn’t guarantee the continued presence of FDA or other U.S. inspectors in Chinese facilities, just a pledge from the Chinese to “facilitate” access to manufacturing plants.

If adhered to, that could be a significant change in trade policy. FDA inspectors experienced delays earlier this year when they sought to examine Chinese plants that had produced wheat gluten that turned out to be laced with melamine, a compound used to make plastic. The gluten was exported for use in pet food in the U.S.

Finally, both sides pledged to establish a working group that will develop benchmarks with which to regulate products.

Those thresholds could include the rate of imports, the percentage of items exported to the U.S. by companies that have not registered with the Chinese government, and “the volume, frequency and public-health significance of products recalled,” according to the HHS.

Source Chicago Tribune

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Customer is King

As an importer of frozen vegetables it is important for us to ensure we provide product that meets our customers’ satisfaction.  We must listen to our customer’s customer (the end user) who is king and we do follow the principle that customer is king.  If our customers complain of poor quality vegetables because of appearance, taste, flavor or whatever we must listen and make the corrective actions for future shipments.  Complaints about taste, flavor, and texture are all arbitrary.  What one says is bad tasting another might enjoy.  Some people like spinach while others hate spinach.  Why, we don’t know, it just is. 

What confuses me is when you supply two customers, one sells brand A and other sells brand B, with the same mixed vegetables from the  same supplier only with different labels. The confusing part is that we get 100 complaints for brand A to only 1 complaint for brand B, same product, same supplier, and same volume of business.  They both sell in the same market, yet we get complaints all the time from brand A about the peas for taste, flavor, color, hardness etc. and we get almost no complaints from brand B customers.  Do brand A customers have a more sensitive pallet?  Are they more sophisticated?  Why is there such a difference?  How do I answer our supplier when he ask why only brand A?  It is the same product after all.  What corrective action is needed?

This  is a perplexing problem and one we would like to resolve but how can you accommodate 2 customers, in essence the same customer, in the same demographic market, the only difference is one shops at A while the other shops at B.  It will be a long night as we ponder possible solutions.

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Channukah Ham

Only in NYC…  How important is it to know your market and what they eat? (Thank God this isn’t from China)

Spotted this on Seth Godin’s blog.

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Here is an update on the broccoli and cauliflower situation in China from my China friend. 

Broccoli

North areas - Shandong Province
Harvest so poor we can consider this as no harvest, nothing to offer.

Middle Eastern China - Zhejiang and Jiangsu Province

Peak season for frozen will start in about 15 days.  Growers planted more this year than last but lost a lot during the typhoon in November (krosa), consequently supply will be about the same as last year.  Currently what is available today is costing about 3.00RMB (Renminbi) per kilo versus the normal 1.00 - 1.20RMB per kilo.  We predict the average price for this year will be around 2.00 - 2.20 per kilo.

South China - Fujian and Guangdong Province
The season will not start until late January 2008. So far the growing conditions are normal.  At present we don’t have any price indication but we feel broccoli will definitely be higher than last year.

Overall the total harvest from China will be 20-30% short (or lower than last year).  Prices will be higher due to shortage, raw material cost, labor and energy cost.

Cauliflower

North areas - Shandong Province
Harvest is so poor we can say no harvest or no quantity to offer.

Middle Eastern China - Zhejiang and Jiangsu Province
The total harvest will be about 40-50% short (or less than last years crop).  The season will start in about 20 days.  So far the weather and growing conditions appear to be normal for the month  of December.  The average raw material cost last year was 0.80 - 0.90 RMB per kilo.  We are predicting that this year the average raw material prices will be around 1.80 - 2.00RMB per kilo. 

South China - Fujian and Guangdong Province
Planting area is the same as last year.  So far the growing conditions are normal with the season starting late January 2008.  We predict the harvest will be the same as last year with the only question being at what price.

Of particular note is the white color of the cauliflower.  The best color is in the North, followed by the Middle Eastern areas and lastly in the South where it may have a little yellowish tinge.

Again the overall harvest for China will be short and prices will be higher this coming year for the same reasons as broccoli.
 
Of particular note is the Japanese.  They are large users of the broccoli and cauliflower from China as well as from other parts of the world.  With Mexico having problems and China having problems it is likely that we may see the Japanese bid up the price of broccoli and cauliflower to secure the quantities needed.

For those interested in frozen broccoli or cauliflower from China now is the time to act to secure quantities needed.

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What is happening in China with the new CIQ procedures 3 months after the start of the new program to monitor frozen vegetables and fruits. What can we the importers expect? Delays and more delays are a constant problem. For us living in the JIT (Just In Time) world how does it impact us?

The problem we encounter now is the CIQ itself. Each CIQ office from the province, county, or city acts as an autonomous unit. What one province does or test another may or may not do. And the CIQ offices located at the ports do their own inspection. This means that we have at least two inspections prior to exportation or a minimum of two delays to our shipments and nothing ships with out the CIQ chop (signature) of approval.

If we look at the province of Zhejiang, the CIQ will inspect the cargo prior to exportation and check primarily for pesticide and microorganisms. This will cause delays for shipments as the supplier has to wait for the results from the CIQ who is not only inspecting their product but many others, which means delays in the labs to get results. And then we would have another inspection, such as Shanghai port, where the CIQ would check again to make sure all the documentation matches the manifest log itself.

For us living in the JIT world this means delays of minimum of 2 or 3 weeks for shipments. In the past, it took us from the time shipping instructions were given, to shipment of the goods, to arrival would be about 4 weeks to the west coast of the US. Now with the inspections we are looking at 6 to 7 weeks away from our customers. Inventory planning and control becomes more unpredictable.

Although the intent in China is to ensure food safety with the CIQ checks, it creates problems for us in the food supply chain to deliver in a timely JIT fashion to the customer. With more delays it means that the customers must increase their inventories to allow for delays or risk being out of stock. Either scenario is not good for the customer.

It is time for China to revisit their procedure and come up with a new method to increase the speed of monitoring and allow for JIT shipments once again.  Until then we must learn to live with delays.

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