Promar team recently visited the Philippines to conduct a research project on local sugarcane industry. Historically, the Philippines was famous for its production of sugar. During Spanish and American ruling era, the local sugarcane industry had boomed under large sugarcane plantations which assisted the country’s economic growth. Sugar was one of the important agricultural commodities and its largest importer was the United States. Sugar is still an important agricultural export product for the Philippines, however, the local sugarcane industry has shrunk down compared to its peak periods. The industry experienced ups and downs throughout past decades and it has been struggling to stabilize its sugar production to meet local and the US demand. Promar team set out to understand the current challenges faced by the Philippines sugarcane industry.

For the Philippines, its priority is to satisfy local demand for sugar and to meet the import quota for the US market. Domestic supply and demand of sugar are estimated every year, and the government affiliated regulatory body, the Sugar Regulatory Administration (SRA), oversees and controls the overall supply of sugar. They control the supply under a unique system called “Quedan System”, which allocates what percentages of local production should be supplied to domestic market, to the U.S. market, as well as to the international market. The Quedan System is mainly set up to protect local sugarcane farmers and maintain a stable price through controlling the supply volume.

Through our field research in the Philippines, we identified that sugar production has been facing a number of challenges due to

- adverse climate change effects (El Niño, La Niña, and typhoons)
- fragmented sugarcane farmland under the agrarian reform
- labor shortage (especially during harvest season)
- lack of infrastructure
- delay in farm mechanization
- lack of financial assistance

In addition, the Philippine Congress passed a new tax bill which included an excise tax on sweetened beverages. The new tax applies to certain drinks with added sugar such as soft drinks and energy drinks which contain caloric and/or non-caloric sweetener (mostly sugar and/or high fructose corn syrup as well as aspartame).

This bill was proposed due to a growing concern over adverse health effects resulting from a large consumption of sugar. Although the country has lower prevalence on major health issues such as diabetes and obesity compared to other ASEAN countries (e.g. Indonesia and Thailand), some experts estimate that over 7 million of Filipinos are obese and/or diabetic.

It is anticipated that increasing the price of sweetened beverages would drive consumers to make fewer purchases and reduce sugar intake accordingly. With the new bill came into effect in January 2018, beverages containing caloric and non-caloric sweeteners (e.g. sugar, aspartame, etc.) are now taxed at 6 pesos per liter and beverages containing high fructose corn syrup are taxed at 12 pesos per liter.

While those challenges are not easy to overcome, we found that different efforts have been made by stakeholders of sugarcane industry. Some sugarcane millers are collaborating with local farmers by providing training courses to help farmers increase their yield. One of the mills we visited in Negros island has invested in new product development to expand its market and consumers. Another mill we interviewed has been discussing with local governments and farmers the possibilities of expanding sugarcane fields in newly identified farmland. In addition, there is a new law passed in 2015 to revive local sugarcane industry which provides government financial assistance to infrastructure, farm mechanization, etc.

Although it will take more time and require consistent efforts by the government and local industry players to stabilize the sugar production, we were able to see positive changes in the industry.

Photo 1: Farmers harvesting sugarcanes in Negros island
Photo 2: Trucks full of sugarcane waiting to deliver their harvest to a sugar mill
Photo 3: Low-GI sugar and antioxidant supplement derived from sugarcane extract developed by Sagay Central

In many parts of the world, fruits are commonly used in savory dishes. However, cooking with fruits is still quite new in Japan.

On Friday, October 20th, 2017, Promar hosted “Wild Blueberry Reception and Buffet” at the Embassy of Canada introducing cooking ideas and methods for wild blueberries. A total of 150 people were in attendance at the reception. In the past, Promar used to host a symposium to present research studies on health benefits of wild blueberries. This year, however, Promar decided to revamp the event and invited a renown Canadian chef, Alain Bossé, to present new and creative ways of using wild blueberries in desserts and savory dishes. Alain is known for creating dishes with locally sourced fresh produce and he created a 15-course meal using wild blueberries for this special occasion. Along with the delicious food, informational session was provided where attendees learned about basic facts and health benefits of the fruit, latest harvest situation, and the work of the Wild Blueberry Association of North America (WBANA). Promar had a successful event and received positive feedback from the attendees.

Promar Consulting represents Japan office for the Wild Blueberry Association of North America. The company’s promotion team plans and manages promotional activities to support the association and expand its market in Japan. Japan’s import volume of frozen and dehydrated wild blueberry has been increasing since Promar began working with the association in 2015.

Wild Blueberry Association of North America Japan Website http://www.wildblueberry.jp/

In February 2016, Promar helped organize a business mission to Kenya for 15 Japanese private sector companies interested in business opportunities in the Kenyan food and agriculture value chain, as part of a Japanese Ministry of Agriculture, Forestry and Fishery-funded initiative to support development of food value chains in Africa. The Japanese companies came from various industries, including beverage, cold chain equipment, trading and logistics; some were experienced in African markets and some were interested in exploring Kenya as a new market. Japanese investment in Kenyan food and agriculture is generally in its early stages, although there are already several major ongoing Japanese investment projects, including in agricultural inputs (agrochemicals and fertilizer) as well as in agricultural products such as rice. Many mission participants felt they saw positive business opportunities within Kenya’s food chain, even in the very short term.

One of the sectors which struck the Japanese companies was the chicken industry. Demand for chicken has been growing in Kenya, as the number of middle-income consumers increases and the food service industry becomes more dynamic. For example, Toridoll, a Japanese-owned teriyaki chicken fast food chain, has been enjoying strong popularity among urban Nairobi consumers of many different age groups. Nakumatt, the country’s largest retailer uses the slogan ‘value for money’, to offer whole chickens – not boneless chicken which is more expensive – to appeal to a wide-range of consumers. One participant from a leading Japanese trading company said, “I was able to see that the Kenyan chicken business has high potential. Now I would like to visit poultry farms and do further research on the industry.”

Promar helped arrange meetings for the participants with local companies such as Bio Food Products which offers (functional) dairy products, Kenya Meat Commission (KMC) and Kenya Horticulture Council, and visited their processing factories. Through these meetings Japanese participants aimed to understand Kenyan food and agricultural markets, from the stages of production to consumer preferences, and finding possible business partners or clients. Discussions between the Kenyan companies and Japanese visitors were very active, with lively rounds of questions from both sides.

While Promar has found that sourcing stable quality and quantities of raw materials is still a challenge throughout Kenyan value chains, these visits and discussions allowed the participants to understand the attractiveness of the Kenyan agri-food industry as well as the retail sector. As one participant from the vegetable/fruit sector commented, “The value chains for export products like horticultural crops are quite advanced. Although the competition seems tight and we need to consider entrance strategies, there is a good base here for business.”

The Japanese mission participants were also keen to network with Kenyan government authorities, which could support their business in the country. In addition to the business mission, Promar also coordinated a policy dialogue and workshop to promote public-private partnerships together with the Ministry which attracted over 100 participants in total. These events were great opportunities for Kenya and Japan to establish industry connections and seek areas of collaboration.

Based on the enthusiasm shown during the mission, Promar expects to Japanese investment in the Kenyan food and agricultural industries begin to grow.

Photo 1 Teriyaki chicken on noodles by Teriyaki Japan

Photo 2 KMC’s processing site

Photo 3 Chicken products at supermarket

Once again in April Promar welcomed representatives of the Wild Blueberry Association of North America (WBANA) from Canada and supported their annual attendance at Tokyo’s FABEX food and beverage trade show.

This was the final event in a highly successful promotion year for Promar and WBANA, which included highlights such as a trade mission to Canada to connect with the Canadian blueberry industry and a seminar at the Canadian Embassy on research related to the health benefits of wild blueberries.

Wild blueberries are completely distinct from cultivated blueberries. Wild blueberries grow naturally in open fields with little human intervention but are processed using highly advanced quick freezing technology that allows individually quick-frozen (IQF) wild blueberries to be shipped worldwide. Japan is the second largest market for Canadian wild blueberry exports behind Germany and in Japan, the jam industry is the largest purchaser of the berries. This year, the Japan Jam Association and its members celebrated their 50^th anniversary. The jam industry and the Canadian wild blueberry growers decided to use this milestone as an ideal chance to exchange opinions about each side’s needs and experience. Promar organized a successful industry trip to Canada for the Jam Association members in mid-August 2015, during the wild blueberry harvest

Unlike cultivated blueberries which are grown and harvested in a more controlled environment, wild blueberries can only be harvested during a 3-4 week period each year, and each field can only be harvested every other year.  Human effort cannot deliberately increase the number of wild blueberries plants which multiply and expand across fields naturally– which is why the species is considered “wild.” The growing area is also limited to a few eastern Canadian provinces and in the State of Maine in United States

For many of the 16 Japanese participants, this was the first time they had seen the expansive natural fields where wild blueberries are grown. “We are surprised to see that wild blueberries are grown in such wide open fields with little human input, including fertilizer or agrochemicals. I think consumers in Japan would appreciate wild blueberries even more if they could see how naturally wild blueberries are grown,” said one of the jam participants.

Blueberry jam is the second best-selling jam flavor in Japan behind strawberry. Japanese jam manufacturers say they choose wild blueberries over cultivated blueberries for jam production because of the consistent high quality and richer taste. Moving forward, Promar and WBANA are focused on the continued need to educate Japanese end consumers on the characteristics and health benefits of wild blueberries in order to differentiate them from cultivated blueberries.

As Promar moves into the 2016/17 promotion planning season, our challenge is to find a way for everyday Japanese consumers to understand the beauty and expansiveness of Canada’s wild blueberry fields that so impressed the Japanese jam industry.  Stay tuned for updates this year!

Photo: Members of the Japan Jam Association were interviewed by local Canadian television on their impressions of the harvest.

We are proud to share our newly revamped China Soybean Insights monthly newsletter!

There are few markets more complex and dynamic than the Chinese soybean industry; the sheer size of its economy, the complex relationship between major industry players and the government, coupled with the fact that market information and transactions are not always transparent can make it challenging to understand this market. However, given that China is the world’s largest importer of soybeans, grasping this market’s latest key trends is vital to the success of soybean farmers and traders in the US (60% of its soybean exports go to China) and beyond. Our newsletter addresses questions such as:

• How will Brazil’s bumper harvests and depreciation of the Real affect China’s soybean imports from the US?
• Why are Chinese soybean buyers interested in the ongoing Argentinian presidential election?
• Is soybean meal demand from China’s livestock industry expected to increase?

• Why are corn prices this year sluggish in China?
• At what price will China’s animal feed processors switch from using corn to barley and sorghum?

To view the October China Soybean Insights Monthly, click here

If you would like to subscribe to the Monthly, or are interested in having a version of this newsletter tailored to your needs, please contact Mina Suzuki at msuzuki@promarconsulting.com

With the recent conclusion of the Trans-Pacific Partnership Agreement (TPP), Japan’s 4.2% tariff on soybean meal will be eliminated immediately, and tariffs on its soybean oil (currently as high as 13.2 yen/kg) will be phased out over the next 6 years.

Similarly, Malaysia, Vietnam, New Zealand, Brunei, and the US will also be eliminating their tariffs on soybean products. If you are interested in learning more about the impact of the TPP on agricultural products, please contact us.

Kenya is sometimes called the Silicon Valley (or “Silicon Savannah”) of East Africa. Kenya’s technology services sector has grown from $16m in 2002 to over $450 million today and has attracted many tech start-ups. Google, Intel, Nokia all have sites in Nairobi, IBM Innovation Centre is IBM’s first research lab in Africa. The global taxi-hailing mega-app Uber’s team worked at the next table from Twiga Foods, a fresh produce ecommerce start-up, during a recent Promar Consulting visit to one of Nairobi’s entrepreneur co-working offices.

There is a booming and vibrant app industry in Kenya, many of which are directed at farmers and small businesses.

Many of the inefficiencies in Kenyan agribusiness related services such as logistics, warehousing and retail inventory are due to a lack of effective data collection, analysis, management and sharing. It is not surprising then that IT solutions and services are a growing part of agribusiness development in Kenya. The intersection of agriculture and IT is especially attractive to Kenyan young people, who see IT as offering exciting and modern opportunities to be an “agripreneurs”.

Promar’s recent field research in Kenya, led by consultants Reiko Tominaga and Lucia Vancura, focused on identifying investment opportunities in the country’s food and agricultural sectors. The work revealed a variety of innovative applications of mobile apps for agribusiness, including Mgubu Choice that provides information and local availability of seeds for purchase and We Farm which uses crowd sourcing through SMS messages to answer farmer questions.  iCow offers a wide range of services to small scale Kenyan farmers, such as tracking individual dairy  cow health, diet and milking data, providing vaccination calendars for chickens and cows and alerting farmers on the locations of the  nearest veterinarians.

Another example was the Japan-founded social enterprise AfricaScan,which has established the Blue Spoon branded franchise model for neighborhood grocery kiosks. One pillar of the model is use by kiosk owners of an inventory management app on an iPad to track customer purchasing patterns and manage inventory orders. Kiosk owners felt that the efficiency of the Blue Spoon model had improved the ease of doing business.

The wave of mobile apps complements other growing uses of IT in Kenyan agriculture, especially in greenhouse farming where technology can help regulate irrigation and temperature or track fertilizer usage. Kenya’s increasing numbers of “telephone farmers” can use these technologies to monitor their farms from their bases in Kenya’s urban areas, allowing Kenyan young professionals to both benefit from an urban life and take advantage of the rich opportunities in agribusiness. Promar expects IT to be a growing opportunity for investment in Kenyan agribusiness from mobile apps to support small scale farmers to technology services that improve food distribution and inventory control, refrigeration and agro processing.

Photo: 1) A Blue Spoon kiosk in Naivasha, 2) Kenya and the owner with her iPad for inventory management

Source: Promar Consulting

Mackerel has long been a staple of Japanese home cooking; grilled, stewed or pickled, it seemed far too familiar and inexpensive to inspire much excitement among Japanese consumers, to the frustration of Japan’s retailers and the main mackerel suppliers, Japan and Norway.

To counter this, Japanese retailers and manufacturers have carefully assessed niches in the mackerel market, gotten creative and now, to the surprise of many, more expensive, value-added mackerel products have been replacing conventional products in Japanese retail over the past 3 years.

Manufacturers’ desire to develop new and higher-value mackerel products was inspired by Japan’s overall decreasing consumption of fish and the low margins on mackerel products. While fish was once a major part of the Japanese diet, younger Japanese show less enthusiasm for eating and cooking fish. This is partly due to the diversity of food choices in modern Japan as well as the perception that preparing and cooking fish is unpleasant. So prevalent is this phenomenon that there is even a Japanese term, “sakana banare” to refer to this “fish shunning”.

Profiting from conventional mackerel products was also difficult. Common, low value-added products such as salted mackerel fillets have low profit margin. Therefore, to create excitement and secure higher profits, retailers and manufacturers took on the challenge to “premiumize” one of Japan’s most common fish. What they did can be a lesson for other industries who want to turn “familiar” into “trendy”.

The successful new mackerel products can be separated into three categories – products that are 1) easy to consume, 2) easy to prepare, and 3) have new flavorings.

Easy to Consume

“Boneless mackerel” is the best example of a product that falls into the first category. Dealing with mackerel’s small bones have contributed to the recent feeling that mackerel is inconvenient to cook and eat. Boneless mackerel, with all bones removed by hand by processors, has turned out to be a hit with children – who detest picking out bones, and seniors – who fear choking on fish bones. According to Promar’s field research, most supermarkets in the Tokyo region have more than doubled their boneless mackerel sales in the past 2 years, and some have gone as far as to only sell boneless mackerel – completely eliminating the traditional bone-in mackerel.

Easy to prepare

Easy-to-prepare mackerel is a pre-cooked, vacuum-packed product that can easily be heated in a microwave or in hot water. This product is targeted towards busy working people that want to avoid the hassle of grilling fish and cleaning up after. These prepared mackerel products are sold in both supermarkets and 24-hour convenience stores – serving the needs of busy professionals that need a quick, late evening meal.

New flavorings

Flavored mackerel fillets have also greatly diversified. While most of the new mackerel fillet flavorings are familiar within Japanese cuisine, such a variety of flavored mackerel products was not seen in retail in the past. Hit products that have increased shelf space over the past two years include mackerel marinated in kombudashi (seaweed-based stock), drawn from a traditional Japanese cooking method, and also new Western cuisine-influenced products such as basil-marinated mackerel.

In the long run, with Japan’s decreasing population, consumption of mackerel and most other seafood is expected to continue to drop. To maintain profits and retain buyers’ interest, Promar expects that Japanese manufacturers will have no choice but to continue to innovate and provide value-added versions of traditional products, sometimes replacing the traditional versions. The lessons learned from mackerel’s success will no doubt be seen in many other sections of the supermarket.

Pic: Boneless mackerel is beginning to replace traditional bone-in mackerel in Japanese retail.

Nepal is the world’s 3^th largest ginger producer (behind India and China), a little-known fact even among global ginger traders, because virtually all its ginger trade is with only one country – its neighbor India. Nepal’s production in 2013 of 235,000 MT of ginger was 12% of the world’s total – and 65% of this was exported, uncleaned and unprocessed, directly over the southern border to India, where is then cleaned and sold at a higher price.

At the same time, ginger demand in major markets like Dubai and EU is growing, and yet Nepal is unable to participate, as it has almost no export-ready cleaned and processed ginger products.

(Above) The current Nepal export industry is virtually all for India. Ginger farmers, primarily women, carry bags of ginger many miles from their villages to the ginger traders in town. Ginger hands are large, but uncleaned. The raw ginger is then weighed and packed, as is, for export to India.

Nevertheless, a few pioneering Nepal ginger traders have successfully begun exporting small amounts of dried ginger to competitive markets – Japan and the EU – and ginger has been identified by Nepal’s government as a high potential export crop. There is interest in supporting the Nepalese industry to grow its capacity to process ginger (dried or fresh) for export to top ginger markets, including Japan, Dubai and the EU.

This capacity development will need to include expanding processing facilities, strengthening quality control systems and developing the international business skills of traders and exporters.

Promar has been working with Nepal, through the UK’s DIFD-supported program SAMARTH, to understand the requirements and attitudes in these key export markets, in order to aid in the planning and development of a ginger export strategy for Nepal.

Issues we have been looking at include:

• Ÿ   What ginger products are in demand overseas: fresh, dried, powder, oil?

• Ÿ   Who are the competitors in the EU, Japan and Dubai markets and what are their strengths?

• Ÿ   What are the expectations and requirements for new suppliers?

• Ÿ   What investments and preparations are a priority for Nepal’s ginger industry?

Promar Consulting has worked on export development projects in emerging economies around the world including Thai citrus export, Tanzanian coffee export. For more information please contact us.

That China is a massive market for US (and global) food products is not news, but the recent boom in cranberries illustrates some interesting emerging trends in China as a consumer market – the quick uptake by Chinese consumers of a completely new fruit and the very fast and diverse development of Chinese-made retail products featuring cranberries. Unlike other berries, cranberries must be cooked or somehow processed to be palatable, meaning they are not the easiest fruit to be accepted into a market with no history of cranberry use. Nevertheless, the Chinese interest in cranberry flavor, the rapid consumer education on cranberry health benefits and the fast and creative turnaround of Chinese food processors to create new products have resulted in a hit import.

China’s cranberry boom began in 2012, and has grown dramatically over the past three years. Chinese import data on prepared and preserved cranberries (mostly branded dried cranberries), shows that from January to August this year (just 8 months!), the total number of dried cranberry imports (approximately 2,000 MT) was already about 7 times the volume of 2012 (approximately 300 MT).  China’s largest cranberry supplier is overwhelmingly the US, which had a share of approximately 90% of the total imports in the first month of 2014, followed by other suppliers including Chile, Canada, and Norway.

What is driving this boom appears to be interest in the health benefits, especially among young women, as well as a positive acceptance of the cranberry flavor. To capitalize on this, US Cranberry Marketing Committee has been promoting US cranberries in China through one of China’s most popular social networks – Weibo – emphasizing the health benefits of this anti-oxidant rich fruit and its crisp taste.

Cranberry products are now seen as especially popular among young office ladies, who eat them for snack. In the past three years, increasing numbers of cranberry pastries and drinks can be found in bakeries and street drink vendors – using real dried cranberries. This fast acceptance of food companies to use this new, foreign ingredient in creative products indicates that catering to the interest in healthy foods among young professionals is lucrative.

Attempts are even being made to use cranberries in Chinese cuisine, especially in meat dishes where some chefs hope to dilute any oily taste and make the dish more refreshing. This is still very new to most Chinese consumers, but social media reports good feedback from people who have tried it.

Despite the cranberry growth, a recent consumer survey of 10,000 people showed that only half of Chinese consumers even know about cranberries. Hence, we believe, with China’s growing health consciousness and more consumer education, cranberry demand will grow even more in China.

Cranberries today can be easily purchased from the local mid- to high-end supermarkets in major cities like Beijing and Shanghai, and can also be easily be purchased online – which is preferred by younger shoppers, who have a busy work life and enjoy the convenience of online shopping. Costco’s China official shopping website debuted on Oct 12^th 2014, and in the first 3 days alone, dried cranberry orders were approximately 15 tons. The sales rate has not slowed down, and cranberries are one of the Top 3 Sellers on the Costco online web store.

Cranberries in China can be found in many forms and available at mainstream outlets: Examples from L to R): Ocean Spray brand Craisins (online), Chinese brands Ba’Deng cranberry cakes and Panami cranberry cookies (7-11 Convenience Stores), cold cranberry tea using dried cranberries (street vendors). Other drinks and baked goods available online and in supermarkets.

Promar’s China office closely follows Chinese consumer trends in food products. We have worked on market analysis of various fruit markets throughout Asia and are also the representative in Japan for North American Wild Blueberries. For more information, please contact us.

China’s demand for beef is booming, driven by higher incomes and urban lifestyles that include more eating out and increased spending on protein; but with domestic production stagnant, China’s growing beef demand is primarily being met by increasing imports.

As the chart below shows, imported beef may only be a bit over 10% of the China market, but it is responsible for almost 100% of the growth.

Recognizing that domestic production cannot meet demand, China has recently approved or is in the process of approving new suppliers including Costa Rica and Mexico and reapproving Brazil, who had been banned in 2012 due to BSE risk. This will bring the total number of approved suppliers to the China market to 8.  It is rumored that the US too may soon finally be allowed back into the China market legally, after being banned in 2003, also for BSE.

While legal suppliers are growing, the tight beef supply in China has also encouraged a huge increase in informal beef imports, with some estimates putting smuggled beef at over 65% of the foreign beef market.  Informal imports, often brought through Vietnam and Hong Kong, have long been a factor in the beef market and end up on menus at all price levels of restaurant. But 2012 showed a particularly strong surge in the informal sector, with Indian, Brazil and US smuggled beef showing strong presence.

Informal imports are expected to decline however, as Brazil has become legal. If US beef also is approved, smuggled volumes will further drop, leaving India and a handful of other small suppliers as the major origins of smuggled beef in China.

Overall beef imports in China are predicted to grow another 20% in the next 5 years offering strong opportunity for a beef supplying countries.

Promar has done numerous projects on the China market as well as trends in beef markets.  If you are interested in learning more, please contact us.

Graph: Estimated Growth of the Chinese Beef Market (Metric Tons), Legal beef imports were at 300,000 MT in 2013, a 380% jump over 2012.

Graph Source: Promar Interviews, China Bureau of Statistics and Rabobank analysis