China
Report Team Narrative
The rapidly transforming Chinese blueberry industry, now the world’s largest according to official reported Chinese figures (although with a heavy diversion to the lower grade processed category), presents contrasting themes that will determine its future trajectory. Investments made into more sophisticated growing systems in China’s southwest over the course of several years contributed to what was an almost doubling of volume between 2020 and 2021 in that region, with higher fruit quality thanks to a mix of overseas-backed joint venture partnerships and the introduction of modern genetics, as well as local companies following suit including domestic farming companies and large national wholesaler-distributors.
Meanwhile the heady pace that has historically accompanied so many growth spurts for a variety of industries in China led to what some have described as a “wild west” scenario for the conversion of farmland to uses other than staple agricultural crops, whether it be for the development of advanced horticultural systems and greenhouses or even commercial property. Both food security concerns and societal backlash (by Chinese standards) over so-called ‘nail house’ hold-outs against large developments led to an adjustment in land use policy from Beijing that has placed a greater emphasis on utilizing arable land for rice, wheat, and corn, whilst also giving more negotiating power to individual plot holders; a major issue because the establishment of new blueberry farms often involves the agglomeration of sometimes hundreds of small landowners to negotiate with a local government enterprise that then signs a lease to the prospective grower. Food security has also been a major driver for these new regulations on land use. In Yunnan, the figurative engine room of China’s modern fresh blueberry industry, these policy changes (resulting in greater limitations on using agricultural land for high value horticulture) prompted a mad dash for land towards the end of 2021 across the fruit industry to secure access to an increasingly limited land supply. The change also disrupted various projects in the region.
These circumstances have attenuated the blueberry planting momentum witnessed to date, whilst the concurrent issues of closed borders and a covid-zero policy at the time of writing have impeded the ability of foreign investors and experts to enter the country. On a more positive note, lockdowns in cities such as Shanghai and Beijing have forced domestic blueberry growers to expedite their diversification activities into new areas to move volume, opening up more new, lower-tier cities to blueberry consumption.
One must be circumspect when it comes to analyzing data in China, but insiders corroborate the official estimate of approximately 500,000 metric tons (MT) of blueberries produced in the country in 2021 of which roughly 200,000MT were for the fresh market. Of that fresh blueberry volume, more than half came from the southwestern provinces of Yunnan and Sichuan focused on the late winter through the spring window. The other half of the summer focused fresh volume is concentrated in Shandong and surrounding provinces. It is important to emphasize the lack of official reliable and comprehensive data on the production and planting statistics of the many producing areas in China.
Yunnan’s blueberry production starts in December with small volumes, peaks in February-Mid April and continues until May. These are all times of relative scarcity in the Chinese domestic blueberry market, and Yunnan growers can do this thanks to diverse climates and growing conditions, from the tropical area around Xishuangbanna to Jianshui at 1,500 metres above sea level, and even higher up at Qujing which is around 2,000 metres above sea level. Sichuan is also characterized by high altitudes and has a colder climate, which has implications for the varietal mix that can be planted with a slightly later season, leading to a preference for Yunnan as a China hub for breeders and genetics companies with low chill varieties wishing to build a presence in the country.
There are now two major joint venture partnerships (one between a Chilean multinational and a local partner, the other being American/Australian) growing IP blueberries successfully in Yunnan and securing significant premiums over average market prices. Other international breeding companies - including one headquartered in the U.S. Pacific Northwest, another from Spain, and a British company with university and private genetics - are also in the early stages of nursery development and varietal introductions to Yunnan.
Both Yunnan and Sichuan border China’s largest blueberry-growing province Guizhou, but most of its production is from small growers producing rabbiteyes and goes to mainly juice grade processing with minimal impact on the fresh blueberry market. China’s fresh blueberry prices usually start to plummet when large volumes of blueberries from the Yangtze River Delta area near Shanghai (Jiangsu, Zhejiang, Anhui) and the Shandong province around Qingdao come on-line. The season finishes in the northeastern provinces of Liaoning and Jilin, often winding up in August when late summer rains arrive. Some northern growers start earlier as growers cultivate their blueberries in greenhouses to induce earlier production, with some innovating with specially designed greenhouses that have north-facing earthen walls.
As volumes from Yunnan increase with berries exhibiting longer shelf life, an emerging trend has been the increased presence of Chinese fresh blueberry exports in Southeast Asian markets such as Singapore and the Philippines; a phenomenon that may also stem from cost competitiveness and proximity to market given it has also been seen with other Chinese-grown fruit.
The extent of China’s boom in blueberry consumption is noteworthy with domestic volume more than quintupling between 2018 and 2021 and imports doubling over the same period. There is a wide spectrum of pricing structures though in a market that has been described as a lead indicator of global stratification trends. The Chinese consumer is fastidious in identifying premium product, and this is translated into high price premiums for jumbo, firm and sweet-tasting berries.
From some accounts, this is something that Peruvian blueberry exporters particularly appear to have mastered with not only a 68% increase in volume to mainland China in the 2021-22 season, but with a higher proportion of next-gen varieties the average pricing per kilogram was stable as well. In 2018 Peru was the second-largest fresh blueberry supplier to mainland China behind Chile, but it has now consolidated its leadership position. For its part, the Chilean industry struggled with logistics delays in 2021-22 which were reportedly worse in the winter months of the Northern Hemisphere than when Peru entered the Chinese market in September. The Chilean season was thus later in its timing, and volume was up 4% although this belies a 46% drop in 2020 when Chilean exporters were more reluctant to ship to the market due to covid-related uncertainty. Chileans nonetheless have the advantage of a free trade agreement with China and zero tariffs.
There appears to be a broader-scale lull in Chinese market development on the part of other exporting nations that prior to the pandemic were either making or planning forays upon securing more favorable market access agreements. Tariffs for Argentina and Uruguay dropped to 15% at the end of 2020 but neither has made a mark yet. Mexico has done little to capitalise on its market access given demand in the U.S. has been so strong and as an industry it is still in the process of transitioning out of the Biloxi variety whose sizing falls short of China’s premium-level benchmarks. Meanwhile, the U.S. did send more volumes in 2021 versus 2020 but tonnage was still in the low single digits. After much fanfare over a market access agreement that led to a trial shipment in 2020, Zambia’s blueberry export ambitions in China are also yet to materialize.
A rebound in fresh blueberry imports in Hong Kong is also worth mentioning here. The non-protocol market was once the leading source of blueberry imports for the Chinese market with a thriving ‘gray channel’ whose relevance faded over time due to stricter phytosanitary enforcements from the mainland where market access protocols had also improved for many suppliers. But in calendar 2021, whilst mainland China’s imports rose by 18%, in Hong Kong they shot up by 48% to a level that was almost on par with the mainland, short by around 2,000MT at record levels; however, it must be noted that much of this increase likely made its way to mainland China in any case. Peru was also the leading exporter to Hong Kong with volume up 64%, shipping around double that of the second-largest supplier Chile (+45%), followed by the United States (-36%), Morocco (+36%), Zimbabwe (+358%), South Africa (+110%), Spain (+95%), Mexico (+53%), and Australia (+48%).