Emerging suppliers on processed agricultural commodities

Global food and agricultural supply chains are constantly tested by potential risks such as weather, climate change, trade policy developments, ESG standards (Environmental, Social and Governance) or international conflicts. Moreover, the global food supply chain was recently heavily disrupted by movement restrictions during the Covid-19 pandemic and the global logistical disruption that preceded it.

Uncertainty and supply chain risks create opportunities for producing countries outside the traditional dominant players to expand sourcing options and distribution networks, resulting in new players entering the global market. These are seven diverse examples of how relative power in production is changing in different markets.

Ginger

Ginger sales enjoyed a boom during the Covid-19 pandemic amid the rise of new healthy trends that resulted in a strong global demand for product which is low in pesticides. This opened a window of opportunity for secondary ginger origins such as Peru, that strengthened its share as a global ginger supplier at the expense of traditionally key origins like China (with exports above 400,000 metric tons in 2022, down 11% y/y), India (with exports above 350,000 metric tons in 2022, down 20% y/y) and Nigeria (with exports around 100,000 metric tons in 2022, down 64% y/y). Peruvian farmers started to plant ginger without pesticides, which complies with demand in EU and US for low pesticides levels. In addition, Peruvian ginger is highly appreciated for its taste and odour and the industry has developed packaging to better preserve the product during sea shipping. The Peruvian ginger crop exceeded 70,000 metric tons in the 2023 harvesting season, four times more than in 2018, and it is expected to reach 100,000 metric tons in 2024.

Frozen strawberries

Egypt has emerged as an important supplier in the global frozen strawberry trade in a relatively short time at the expense of traditional suppliers like Poland, Chile and Morocco.

Egyptian frozen strawberry exports increased from fewer than 30,000 metric tons in 2016 to over 200,000 metric tons in 2022. Exports from Egypt continued to grow in the first seven months of the current year 2023 to 150,000 metric tons (up 5% y/y), while all other large processing countries experienced relevant setbacks in their exports: exports from Morocco dipped by 38.5% y/y to 42,000 metric tons, Poland exported just below 30,000 metric tons, down 20% y/y, Chile's exports were down 34% y/y to 27,000 metric tons.

Egyptian frozen fruit is extremely price competitive compared with other conventional origins. Nevertheless, the Egyptian frozen industry is still building a reputation and despite market players entering the market, European traders and importers still prefer well-known Egyptian processors for now.

Canned sweetcorn

China has emerged as a key global supplier of canned sweetcorn in a short period of time. The local canning industry traditionally supplied the foodservice domestic market but turned to exports as a route out of dramatic losses from the country's Covid-19 zero policy as well as the ongoing economic slowdown.

The Chinese export share in the global trade for the commodity is projected to increase from 10% in 2020 to 35% this year, with exports nearly reaching 150,000 metric tons to the world. This is supported by a sudden strong demand from the EU27, a market traditionally supplied completely by well-established European vegetable processing conglomerates mainly located in Hungary and France. In the first half of 2023, Chinese canned sweetcorn imports to EU27 and UK markets represented nearly 30% of the total trade, as opposed to negligible volumes in the past.

Poultry

Until 2019 Russia was a net importer of chicken but since then the country has emulated nearby rivals such as Ukraine and Poland by becoming an important supplier to international markets. The opening of China has been key to Russia's emergence on global poultry markets, at the expense of the US which is the second biggest supplier after Brazil.

Chinese imports of Russian chicken (broiler) meat reached 77,076 metric tons in the first seven months of 2023, up 6% y/y. A further 48,794 metric tons came from Belarus - close to double the year-before figure of 25,097 metric tons. Over the same period, imports of US chicken into mainland China fell by 29% y/y to 158,511 metric tons.

Large Russian companies aim to build on this progress by entering new markets in Asia and Africa - Russia has also made big inroads in Saudi Arabia, increasing shipments to the country by more than 60% in the first five months of 2023 - although this could be hampered in the short term by recent outbreaks of avian flu on several large Russian poultry farms.

Hazelnuts

Diversification of supply in the edible nuts sector continues as buyers look to reduce their dependence on any particular origin and as new producing countries enter the fray. Turkey will remain the dominant global producer and exporter of hazelnuts, traditionally shipping around 200,000 metric tons per year. However, key eastern European origins continue to expand their production and are projected to significantly increase their export share from current negligible volumes.

Moderate growth is expected for well-established alternative hazelnut suppliers Azerbaijan and Georgia (each of them exporting around 20,000 metric tons per year) but over the next five years Poland, Moldova, Serbia, Bulgaria, Croatia and Ukraine will emerge with increasing volumes as plantings made a few years ago enter the production cycle. The success of Ukraine will depend on the end of its conflict with Russia. 

Meanwhile, the second biggest global hazelnut producer Italy is expanding its output and could reach 250,000 metric tons in the next 10 years (up from an estimated 100,000 metric tons in 2023). The US also looks set to boost its hazelnut output, selling mainly into the north American market and Canada, and to a lesser extent Mexico. 

Bananas

China has become increasingly dependent on banana imports over the years amid declining domestic production, with the Philippines and Ecuador as the top traditional suppliers to the country. However, more recently, Vietnam has stepped in to capitalize on the Philippines and Ecuadorian fall in banana exports to China as it looks for lower prices and shipping costs.

Banana cultivation is expanding in Vietnam as an export-oriented business targeting the Chinese market. Vietnam's banana shipments to China last year totaled 470,000 metric tons representing 26% of the total volume entering the country, compared with 16% in 2020.

Cocoa

The Ivory Coast, the world's largest raw cocoa bean grower and exporter, is increasing its grinding capacity and its exports of semi-finished cocoa products. This is a relevant move because even though Ivory Coast remains as the world's largest raw cocoa bean grower, it increases competition with Europe as the current leading processor of cocoa beans. Cocoa processing on Ivorian territory totaled 350,468 metric tons in the first half of 2023, 12% more year-on-year and 28% above the five-year average. In recent years, tax cuts and other incentives have been offered to Ivorian cocoa companies in order to facilitate domestic grinding activity. In this context, new factories are expected to be operating in the West African country under agreements with the UAE and China, which are likely to increase the local processing capacity to more than a million metric tons of cocoa annually, making Ivory Coast the world's leading cocoa grinder.