Noon International: Food Trading Import Export

Another water chestnut season in China is fast approaching (harvest is December through early March). It will be an interesting year, being that we are coming off of a very short year, strong pent up demand, and in the midst of a global slowdown. What will the season bring??

Frozen and Canned processors scramble for product.

The water chestnut acreage this year is up 20% but due to bad growing conditions. yields are way off and it appears that the market will still be extremely short. In addition to the normal delays encountered during production, we must wait for CIQ (China Inspection and Quarantine) approval of lands to be used for water chestnuts, if they are to be exported.

Initial pricing this year is 40 - 50% higher than last years price. The reason for the current high price is due to the shortage coming into the new crop and the need to fill the pipeline. This applies for both to canned and frozen processors. The canned users are generally willing to pay higher prices then the frozen users therefore they will get initial raw material coming from the fieldsl because of there willingness to pay a premium.

CIQ (China Inspection and Quarantine) delays due to regulation that makes it mandatory that fields be registered with them. This can create some bottlenecks in the supply as packers need to await the certification for the fields being used as well as CIQ approval of finished product before exportation.

The Chinese currency continues to appreciate against the dollar albeit at a much slower rate. Ocean and trucking freight cost remain high but this is starting to come under recessionary pressure.

What to expect?

I would envisage that after the initial replenishment of supply that we will see prices come down due to world wide slowdown. We will encounter consumer resistance to high prices especially for a luxury vegetable such as water chestnuts. Just as we have seen the price of natural resources plummet in the past few months, I believe the food chain will experience the same collapse.

Time will tell, and if I were a betting man, I would bet on lower prices next April or June (and possibly sooner).

The rathe of world wide recession will reck havoc on frozen vegetable pricing in 2009.

Technorati Tags: Water Chestnuts, China

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Lily Noon of Noon International presented her speech on China past, present and future on October 16, 2007 in Cologne, Germany.  http://www.noon-intl.com/blog/anuga-speech-by-lily-noon-oct-16-2007-presented-at-crystal-ice-awards/

Technorati Tags: Noon International, China, food safety

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I just recently got an email from one of our suppliers with concerns about the future business. In the email, which I will paraphrase, he states following:

“All the raw material prices went up a lot recently in China and Taiwan. Prices of bread in China has risen 40% due to higher flour prices. Prices of flour doubled in Taiwan. All of the other foods such as soybeans, pork, poultry, sugar have risen sharply. Basically all foodstuffs have risen in price. Many of the restaurants, fastfood chains etc were forced to adjust there selling prices recently. One of the recent news article was concerning Kentucky Fried Chicken and its price increase to take effect Aug. 1, 2007 and this is only one of many examples.This means most all of the foodstuff are at higer prices.

Understand all kinds of products are faced with the energy issue. Due to higher prices of oil these years it impacts all kinds of products now. Worldwide weather has also been abnormal these last 2 - 3 years, it makes for harvest shortages on many agricultural products. I beleive you read all of these kinds of information from TV, newspapers and magazines and aware of the situation better than me.

We don’t know and cannot imagine how the situation will develop in the future. It is really beyond my abilities to guess or to imaging what the situation will be. We in the frozen food business make only a small gross profit when our business is smooth. On the other hand, we lose huge money and lose buyers when there is a shortage which cause non-delivery of goods.

The world has changed a lot beyond my experiences. As a long term business friend, I need your comments on how to proceed for our future business in a conservative and safe manner. “

This is the dilemma we face in the frozen food industry, it is not unique to China, nor to the frozen food industy, but a global problem for all at the low end of the supply chain. The industries at the low end are squeezed constantly by the buyers of such large corporations as Walmart, Costco, Target etc. In our frozen vegetable industry prices have been flat for years here in the states, and product that I now source in China is cheaper today then it was 10 years ago. How can that be when labor cost have risen dramatically, engery cost are soaring, and currency appreciation to name a few? The reason is becuase of the squeezing of the profit margins. Yes we have improved efficiencies but this only goes so far. We are at the point where many business will go bankrupt if they are not able to pass on the increased cost of production. Actually, this is the first year here in the states, that the processors have been able to increase prices of corn, peas etc. The main reason is probably due to the ethanol issue. Many farmers have switched to growing corn for ethanol because of the higher prices they can receive.

As for my China friend what can I say? The reality is that there are so many China frozen food suppliers, that are all competiting for the same business that they end up beating each other on price to get the business. I believe there will be a shake out of the industry as the weaker players will end up closing their doors and things will return to normal, what ever that may be. Or perhaps with the latest China food scares, customers will demand to do business with the frozen factories that have met more strigent qualifiations and end up paying a premium to buy from these faclities. Today with the internet many people just buy from someone they don’t know and they have never inspected the faciltiy. On my many visits to factories in China I have seen product packed for reputable retailers here in the states, in factories that are very very marginal and would be high risk faclities in my estimation.

Once again, this is why we at Noon International, make it our business to know the companies we work with and know that they are meeting the highest qualtity standards. Do we have problems? Yes, but we all have problems. The key is we recognize the problems and make changes to improve. This is the way it should be, a constant never ending process of improvement.

In the end it has to be a win-win for all parties from the very beginning to the very end (the end user, you and me the consumer).

Technorati Tags: noon international, china, frozen food, food processors, win-win, ethanol, corn, peas

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It looks like CIQ China (China Inspection and Quarantine) has decided that a way to tackle the China Food Safety Crisis is by forcing all producers approved by CIQ to place stickers containing its official logo in all master cartons, some producers in China say the CIQ logo must also be imprinted on the retail packs.
Please note that by Chinese law only approved CIQ producers are able to export edible products overseas.

My point here has to do with effort / reward meaning the effort is going to be considerable and I honestly have to say the rewards would be questionable. In other words I don’t think they are solving the real problem.

Why are they not solving the real problem? Because plant X which is CIQ certified and has all sorts of different international certificates could still be buying product from factory Y which doesn’t have any of the aforementioned. The only thing factory X has to do is to spare a couple of cartons stickered with the CIQ logo for factory Y to pack the product, same scenario will apply to retail packs.
So the final objective which is to stop noncertified facilities from packing products for export might not be totally achieved.

My long time mentor once told me customers you can always find however good reliable suppliers are hard to get a hold of. Here at Noon International, we have spent more than 30 years developing our suppliers in China and to this day we keep working with them on how to do things in a better fashion trying to exceed our customers’ demands.

Does this mean we are old fashioned traders in a world where reverse internet bid is a common way to do business?
What I think this means, is that we really CARE and have a high level of TRUST with our suppliers in China other might call this TRUE RELATIONSHIPS.

Does this make our products from China be safer? You bet it does.

As for the CIQ logo, the saga will continue…

Technorati Tags: Noon International, ciq logo,   china food safety

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