Cornell’s Miguel Gómez has a unique way of bonding with his audience — a reality we have experienced many times in both New York and London. Presentations are memorialized in pieces such as these:
Now he has joined the faculty at the Foundational Excellence program. You can see the website for the program here. And below find three pieces written about the program:
Knowing that Professor Gómez will offer the global-trade perspective for the program, we asked Julie Cook Ramirez, Contributing Editor to Pundit sister publication, PRODUCE BUSINESS, to find out more:
Miguel I. Gómez
Associate Professor
Charles H. Dyson School of
Applied Economics and Management
Cornell University
Ithaca, New York
Q: Your presentations are always highly anticipated and well received. This year, I understand you are going to talk about the global reach of the produce industry and some of the effects of imports and opportunities for exports. Could you give us a sneak peak into what we can expect?
A: First, I will talk about trade patterns for fruits and vegetables in the U.S. What are the most important trade partners for imports and exports? Then, after I give this overview on trends in trade, I will talk about specific trade partners and what’s happening in the fruits and vegetable supply chains in some of the main suppliers to the U.S. and some of the major destination markets.
Q: Imports, in particular, have grown fourfold for fresh produce across the board over the past 20 years. Is it primarily an issue of providing the consumer with this year-round availability of all types of produce that they have come to expect?
A: If you compare now to 20 years ago, we saw in the stores seasonal products in terms of fruits and vegetable. Today, the U.S. consumer expects to find in any retail outlet, a restaurant or a supermarket, all products with year-around availability. That has increased trade, but also a huge increase in imports in recent years because of product seasonality in the northern hemisphere. There are many large volumes of product coming from the southern hemisphere, but also from partners nearby, from countries nearby.
That’s one of the big drivers — consumer expectations — but also the produce industry in the U.S. is becoming more and more global. So it’s not a surprise that imports from Mexico have increased by almost 10 percent a year in the past 10 years. Why? Because many investors — produce packers, shippers, growers — have also invested in Mexico. It is becoming more and more global in terms of becoming almost like multi-national companies.
Q: Where, in particular, do you see the most growth in terms of imports? What types of produce and in addition to Mexico, what other areas of the world?
A: The fastest by far is Peru. Peru is still not the biggest importer, but the growth is almost 20 percent per year, and that is much higher than the average eight percent per year that imports are increasing. From Peru, mostly asparagus, grapes, avocadoes, onions and tropical fruits.
The second one is China. Imports from China have increased in the past 10 years at an annual rate of about 14 percent. But these are mostly processed fruits and vegetables and citrus, onions, fruit juice, garlic, mushrooms and stone fruits. So Peru and China, then Mexico.
Then we have Canada and Chile still important and still growing as leading import suppliers to the U.S. From Mexico, we are importing mostly more tomatoes, avocados, peppers, cucumbers, lemons, grapes and berries. The numbers that I’m giving you are not only for fresh, but it is also processed product.
Q: Over 50 percent of fresh fruit consumed in the U.S. is currently imported. Is that a significant increase compared to 10 or 20 years ago?
A: Definitely, it has increased dramatically.
Q: At the same time, we are seeing the movement toward locally grown, and many people are looking for produce grown as close to home as possible. They are also accepting produce that is grown in many different countries around the world. How do the two complement each other, so to speak?
A: That is an excellent point. When you see the buzz about local, particularly fresh fruits and vegetables, you wonder who is hurt? And I think year-round availability of high quality fruits and vegetables is the most important factor driving demand among consumers, so local plays an important role.
But we need to understand the share of local fruits and vegetable is about one percent when you think about the total industry. This is an important segment because consumers want local, particularly during harvest season.
But I think the fact the consumers prefer to have one-stop shopping solutions, where they can get anything they want any time of the year, is by far much more important for consumers than having a local product labeled as local.
Local products are important for a very particular and small segment of the population. When we think about the whole market, local is a very tiny, but growing segment.
Q: What items within the produce category are you not able to offer year-round availability?
A: The items you cannot store. Think about blueberries, broccoli, lettuce, fresh tomatoes. The need to develop supply chain networks that allow you to bring produce from distant regions is key to the success of having more fruits and vegetables consumed in the households. There are some items, notably cherries, that are just not available 365 days a year even with imports.
Q: What are the drivers behind the export market, which I understand has more than doubled?
A: The U.S. has huge opportunities for certain products, where we have a clear advantage and for which consumption is increasing, such as apples, grapes, citrus fruits and berries to Asia and when we think about vegetables, we think about lettuce, tomatoes, potatoes mostly to Canada and Mexico.
Our major export destination is Asia. The most promising market is in Asia. From 2004 to 2014, exports have been growing about five percent per year. When you look at specific countries, you look at China. Our exports to China are increasing at an annual rate of almost 12 percent. These are mostly lemons, cherries, grapes, apples, oranges and pears. These are mostly fresh products.
Another growing market is South Korea, which has about the same growth in the past 10 years as China. It’s cherries, oranges, grapes, grapefruits, and potatoes. Then you also have growing a little bit above average growth with our closest partners, Canada and Mexico. We are exporting more apples, organic apples, for example, pears, grapes, peaches, organic grapes, potatoes, and tomatoes to Mexico.
Exports to Mexico have increased at a rate of about six percent per year the past 10 years. We are increasing our exports to Canada at a rate of about six percent per year. These are mostly lettuce, strawberries, grapes, apples, and we export a lot of orange juice to Canada. Interestingly, a market that has been traditionally attractive, Japan, which is still very big in volume, the growth in the past 10 years has been negative. Our exports to Japan have decreased at a rate of about one percent per year.
Q: Are there a lot of untapped opportunities remaining for exports? How can growers and producers take advantage of those?
A: There are huge opportunities. For example, in China, clearly it’s a growing destination for U.S. fresh fruits and high-quality vegetables. There are initiatives, for example, on promotions, using e-commerce through Tmall. For example, there was a huge marketing activity for cherries online. Cherries export from the U.S. They were sold online to about 100,000 individual shoppers, 168 metric tons, through Tmall in just two weeks.
Tmall is like the Amazon of China, and they are selling fresh fruits and vegetables, and the cherry growers in the northwestern U.S. have entered into an alliance with them to promote cherries. That’s a beautiful example of how market-oriented you have to be to really increase the sales of products in destination markets. The U.S. market has a lot of opportunities because of the quality of the fresh products we are able to produce. They are highly appreciated in emerging markets, in Latin America, Asia, and in Europe, too. Quality is an important feature the U.S. industry is able to offer consistently. That’s a big advantage.
Q: What role have the various trade agreements played in setting the stage for growth in import and export?
A: Definitely, huge. They provide opportunities, which are also threats to industry. You have to be aware that you are competing in a larger market for exports, but also for imports in the domestic market. What NAFTA has demonstrated is that today, the produce industry is extremely integrated in terms of pricing, in terms of flow of product between Canada, Mexico and the U.S.
Canada and Mexico’s exports to the U.S. have increased dramatically. We see the exports of U.S. products to these countries have also increased based on the competitive advantage of each country.
Q: What are some other subjects you plan to address in your presentation?
A: My objective is to open the eyes of the attendees to emphasize that the produce industry is becoming a global industry, even if you are working as a grower, a packer, a shipper or a retailer. Whatever happens elsewhere in the world in terms of production and new developments is likely to affect you here in the U.S. in positive or maybe negative ways.
The objective is to tell the participants to keep an eye on trends in imports and exports, as well as policies. I am going to talk about the newly signed Trans-Pacific Partnership (TPP) agreement because it is going to provide huge opportunities for some of the Asia markets and Pacific markets.
I want to emphasize how we need to be aware, to keep abreast of what’s happening overseas because they represent both opportunities and threats to the domestic industry.
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Of course, knowing the trends is important; it’s the factual base that helps to make the decisions, but the discussion afterwards is just as important. What do these trends mean in terms of strategically positioning one’s company to succeed? How does one identify opportunities and obstacles — and how does knowing the facts lead to development of a strategy to overcome or avoid obstacles?
Act now! The program starts Monday morning! If you have less than five years’ experience in the produce industry, please let us know that you would like to attend the Foundational Excellence program right here.
We also have a registration site for the broader New York Produce Show, which you can access here.
E-mail us here to get hotel rooms at the headquarters hotel and take advantage of travel discounts right here.
