Module 7 - Horticultural Exports from Developing Countries

International demand for horticultural products with high unit value and income elasticity is growing rapidly. Growers in developing countries often have a comparative advantage arising from low labor costs, seasonality, and favorable natural resource endowments. Exploiting these opportunities may increase the income, skills, and employment of the rural poor. A highly integrated, demand-led supply system, cold chain infrastructure, and technical support are necessary to realize the potential benefits of horticultural production for export.

Low prices for cereals, coffee, tea, and cotton are forcing developing country producers to shift away from supply-led production and open market selling. The emergence of highly organized and integrated supply chains is opening new opportunities for these producers. The coordinated supply of perishable products to targeted, high-value consumer markets requires demand-oriented production and marketing systems.

Expanding Opportunities for Export Horticulture

Horticultural products include fresh, frozen, and processed fruits and vegetables, and products such as medicinal herbs, ornamental plants, and cut flowers. Key characteristics of horticultural production are high technological and managerial requirements, seasonality of production, perishable nature, and challenging requirements for export and marketing. Rising consumer income, urban lifestyles, demand for convenience food, ethnic niche markets, and trade liberalization have increased the volume and value of the international horticultural trade (figure 7.1). Growing demand for convenient consumer packages gives developing countries a chance to add value by grading and packaging prior to export.

North America, Western Europe, and Japan have been the main markets. Russia and Eastern Europe provide promising opportunities. The Middle East is important already for slightly lower grades. In local markets, demand is growing for produce that is not export quality, which allows growers and traders to generate revenue and experience that will help them to penetrate the high-value markets of industrialized countries.

Exports of fruits and vegetables from developing countries are likely to rise in the coming years. As competition is likely to intensify and erode profit margins for established fruit and vegetable exports, product differentiation will increasingly be necessary in order to retain and capture new markets. Producers must adopt a strategy aimed at supplying changing products to changing markets to generate new value-adding activities. Inflexible suppliers that are unable to compete will be forced to exit the industry.