Discuss about the Economic Impacts of Bird Damage and Management.
This report discusses the expansion of the Wild about Fruit Company in the Japanese market. In the recent times, the demand of fruits in the domestic market of Japan have increased and consequently the demand of the imported fruits in the Japanese market have also increased. The company is located in the Yarra Valley of Australia. Australia have enjoyed the monopoly of exporting cherries to Japan for several years. In Australia 40% of the production and export market of Cherries is occupied by the Wild about Cherries Company. The organisation have their own cherry farm in Coldstream, Bacchus Marsh, Kerang, New South Wales and Gundagai. The organisation exports fresh cherries along with painted Juice which is produced by them in collaboration with the CSIRO.
The Satonishiki variety of Cherries have the highest demand in Japan. However, in Japan, the season of cherries is very short. It lasts for 10 to 14 days. Owing to climatic differences, when the season of cherries ends in Japan, it begins in Australia. This is why Australia exports maximum cherries to Japan. The Fumigated Cherries of Wild about Company is counted among the best quality cherry produces (Schmitz, Zilberman & Zhu, 2015). The company has almost 18,000 Cherry plants in the Yarra Valley that are dedicated to producing export quality cherries for the Japanese market. During the summer months in Australia, the company exports about 255 million AUD of Cherries to Japan. However in the winter months, the estimate is only about 10% of what it exports in summer.
Cherry and Citrus plantation accounts for almost 35% of the national fruit plantation in Australia. Therefore, the revenue generation of the fruit industry of Australia depends largely on the produce and business of these two crops. On the other hand, Japan is the largest market for Australian Cherries. This report focuses on discussing the production and export of cherries by Wild about Fruits Company of the Yarra Valley of Australia.
The season of Cherry produce has a ver4y small tenure in Japan. It lasts for around 10 to 14%. Hence this limited produce is unable to satisfy the huge demand of cherries in the country. However, by the time the season of cherry production ends in Japan, it starts in Australia. Hence, Japan relies on Australian Cherries for fresh supply of Cherries during the winter months. Other than that, since the beginning of production, the company have been an exponent in the production of the Satonishiki variety of Cherries in Australia. As an outcome, the Wild about Fruits Company gained an automatic market entry (Yamamura et al. 2016).
Owing to a decline in the population rate in Japan and the ageing Demographic structure is impacting the rate of consumption of small fruits like Cherries in Japan. The national Health campaign of Japan have confirmed that, majority of Japanese irrespective of age, are fond of Cherries. Again, since the last decade of the twentieth century, the economic condition of the Japanese middle class have improved.
The customer of the retail products in Japan now have 12% more disposable income compared to that in the mid-1970s. On the other hand, the new generation of the Japanese are showing a greater craze towards packaged fruits. As an outcome, the import of premium quality cherries from Australia, Turkey and few other countries have increased comprehensively. This is very essential for the people who have busy lifestyle and consume a lot of processed food. The salaried class in Japan is the ideal customer of this kind. This is why, it has been easy for the company to enter the Japanese market.
Up to the 1990s, the imported cherries were sold mostly in the wet markets. In spite of being premium products, the products gained average price. This is because, in the wet market, the products were not sold separately as premium level products. However, now, the same produce that reaches the Japanese market form the farms of Wild about Fruits are mostly sold in the Supermarkets as premium packaged processed fruits (Smith & Hogan, 2016). Only 10 to 15% of the second grad produce reaches the wet market.
In the year 2014, the retail sales of raw fruits declined in Japan. However, this fall was followed by a gradual solidification of the market for Australian cherries in Japan, the percentage of ageing peole in japan is about 37%. Again, the ageing population consumes more small fruits like berries and cherries. That is why, the demand for cherries began to remain same throughout the year in Japan. This prompted the Wild about Fruits Company to increase their export volume by 15 to 20% (Zull et al. 2017). Again, according to the estimation of CAR, the demand for Cherries in Japan is supposed to increase by 2.7% within 2019. In fact, cherries have a great cultural significance in Japan. Therefore in the spring and the summer season the Japanese people consume maximum amount of cherries. During this time, most of the exponents of cherry production in Australia and the other countries like Turkey, New Zealand and Philippines attempt to export cherries to Japan. However, the Japanese people generally despise the imported raw food products. They prefer fresh produce form local farms. However, as per Elser et al. (2016), the market demand of the existing exporters of cherries remain same. That is why the target population do not become segregated. During special occasions like cultural fests and so on, generally owing to maximum market demand, the number of new market entrants increase. However, owing to the typical market nature of Japan, the existing suppliers enjoy the maximum benefits.
The food services sector in Japan is the largest in the world and the retail food market is greater than the combination of all other food markets in Asia. The Asia Pacific Market department reveals that the valuation of Australian cherry export to Japan is 300 million USD on an average during the peak season. The Japanese have a lavish culture of consumption of luxury fruits. This is why the Japanese are particularly fond of the Cherries of Australia. In the season of Cherry blossom, the Japanese gifts cherries packaged in gorgeous wrappings to their friends and family. About 90% of the Japanese families prefer to buy the premium cherries from Supermarkets in Japan for gifting their near ones (investinaustralia.com, 2018). The price of premium cherries increase due to that. Owing to strict food safety regulations in Japan, the import of cherries from Chile or the Southern African countries have ceased. On the contrary, the import of cherries from countries like Australia, New Zealand, Philippines or Turkey have increased reasonably (Bujdosó et al. 2017). During the festive season, on one hand the import rate of cherries increase highly. However, on the other hand, the foreign ministry of Japan, imposes a seasonal tariff on the import of premium quality of cherries. Other than that the Ministry of Fisheries, Agriculture and Forestry also conduct psychosanitary inspection of the firms before granting license to export cherries in Japan. Many of the small fruit exporters select the distribution channel by virtue of which they get hold of the bypassing wholesalers who approach the retailers directly. However, the products entering the market in that way can never reach the large supermarkets, or the restaurant groups. The large retailers like the company highlighted here, have third party contracts with trading companies in Japan. The product quality of the food imported by the trading companies are selected for inspection. Hence these trading organisations update their recipients regarding their demands about standards of products. The products form the Wild about Fruits Company gets the accreditation of passing the quality check of the Japanese government.
Among companies like Australia fruits, N&A group and so on, the Wild about Fruits Company is the sixth in position regarding export of Cherries. The organisation started trading with Japan since 1980s. At present, the Valley Fresh is also exporting lot of processed raw fruits in Japan. Nevertheless, there is a demand for the cherries of Wild about Fruits in the Japanese market. Moreover, in the upcoming 5 to 10 years the demand for imported cherries would increase in Japan. The rate of consumption of cherries have also increased over the years. This is a fruit that people of all communities consume. Therefore, Wild about Fruits Company is also planning to increase their export in the Asian market, with focus on Japan (investinaustralia.com, 2018).
Conclusion
Analysing the demand of cherries in japan, it can be opined that there would be high level of threat of new market entrants in the country. In this respect it is noteworthy, major part of the cherry produce of the Wild about Fruits company depends on the demand of the Japanese market. In case if the productivity of the foreign market falls, the company would endure high loss. Moreover, the market positioning of the product and the company in Japan shows that it is necessary for the company to start expensing their market with alternative products also so that they can mitigate the risk factor associated with sale of a single product in the foreign market.
Reference List
Bujdosó, G., Hrotkó, K., Quero-Garcia, J., Lezzoni, A., Pu?awska, J. and Lang, G., 2017. Cherry production. CAB. International. Cherries: Botany, Production and Uses, pp.1-13.
Elser, J.L., Anderson, A., Lindell, C.A., Dalsted, N., Bernasek, A. and Shwiff, S.A., 2016. Economic impacts of bird damage and management in US sweet cherry production. Crop Protection, 83, pp.9-14.
investinaustralia.com, (2018). Wild About Fruit Company Pty Ltd. Available at: https://www.investinaustralia.com/company-profile/wild-about-fruit-company-pty-ltd [Accessed: 24 May 2018]
Schmitz, A., Zilberman, D. and Zhu, M., 2015, November. Trans-Pacific Partnership, GMOs, and Japan’s Agricultural Trade. In International Agricultural Trade Research Consortium 2015 Annual Meeting, Clearwater Beach, FL, 13e15 December. https://ageconsearch. tind. io//bitstream/229242/2/Session (Vol. 207).
Smith, S. and Hogan, J., 2016. Trade in fresh fruit, fresh vegetables and tree nuts. Agricultural Commodities, 6(2), p.116.
Yamamura, K., Katsumata, H., Yoshioka, J., Yuda, T. and Kasugai, K., 2016. Sampling inspection to prevent the invasion of alien pests: statistical theory of import plant quarantine systems in Japan. Population ecology, 58(1), pp.63-80.
Zull, A., Sun, X.T., Nugent, T. and Woodhead, A., 2017. Value chain analysis of high value horticulture products and report documentation from Queensland Murray-Darling Basin.
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