While the rain affected only some of the Australian cherries, there are also good crops. But when factored together with trading risks due to geopolitical tensions between China and Australia, along with a bumper supply of Chilean cherries, some Chinese importers have decided to shy away from the Australian harvest this season.With both Chile and Australia located in the southern hemisphere, they share the same cherry season, and this also coincides with the Lunar New Year – a time when cherries are commonly given as gifts in China as a symbol of wealth and prosperity.
Mr De, an agent for Australian exporters at the Jiangnan market, in assessing the latest price of Australian cherries this week, said that given the abundant Chilean harvest and the rain-related problems down under, prices of Australian cherries have been subdued lately.
“Many importers are supporting Chilean cherries now and seem to have lost interest in selling Australian fruit,” he said.
Last week, a report by the Chinese state-run Global Times newspaper struck a negative chord with Australian politicians, local growers and media when it indicated that Australian cherries had lost market share in China due to their inferior quality.
Australia’s acting prime minister, Michael McCormack, responded by saying Chilean cherries were not better than Australian ones, while growers said there had been no complaints from Chinese buyers.
The situation, however, was more nuanced than what was discussed last week, according to traders and market analysts.
The ongoing feud between the two countries – triggered in April by Australia’s push for an international inquiry into the origins of the coronavirus – has taken a particularly heavy toll on trade, with non-official bans placed on Australian products such as coal, cotton, lobsters and log timber. Chinese importers were also warned that Australian imports, including perishable items, could be detained or delayed at ports and airports.“After what has happened in the past six months, with the clearance of numerous shipments being delayed by China customs, resulting in some shipments being dumped, Australian exporters are rather nervous about exporting perishable fruits to China, and so divert them to other markets or sell locally,” said one Queensland exporter who did not want to be identified.
“Tasmanian cherries, for example, have always been regarded as having the better flavour … and there is strong demand from consumers. However, trading confidence has hit a historic low.”
She said there was also a good chance that some Australian exporters were not sending their best cherries to China, resulting in the perception that quality might have dropped. Few buyers were also willing to pay up front for whole containers of fruit.
This is where Chilean exporters have an advantage, as they tend to be more flexible than their Australian counterparts and are willing to offer their cherries for sale by consignment – with Chinese buyers paying for only what they can sell, according to a representative at a Sydney import-export company. Australian farmers tend to be more conservative, preferring to sell containers up front.
The other noticeable change was the improving and more consistent quality of Chilean cherries, the Sydney trader said, pointing to increased investments in the Chilean supply chain, including better warehouses and cold chain technology.
“Chilean and Australian cherries are both good, but the quality of Chilean cherries is relatively more consistent,” he said, adding that Chilean marketing efforts have also ramped up, whereas Australian efforts have been largely stagnant.
Chile is now the top cherry exporter in the world, according to market intelligence group Tridge. Nearly 90 per cent of the country’s cherries end up in China, and Chile’s exports for the 2020-21 season rose by more than 38 per cent compared with the 2019-20 season, resulting in a record export volume, according to the latest estimates by the Chilean Cherry Committee of the Chilean Fruit Exporters Association (ASOEX).
Chile is the top exporter of cherries to China, accounting for about 60 per cent of total imports, while Australian cherries make up 1 per cent, Tridge said.
Competition has ramped up in the Chinese market, pushing suppliers to lift their game in terms of pricing and quality. Pakistan is looking to export cherries this year, and Central Asian countries such as Uzbekistan have also been making their mark.
Australia’s cherry industry body, the Cherry Growers Association, did not respond for comment, but Fresh Intelligence Consulting principal Wayne Prowse said that, in terms of quality, Chilean cherries were not necessarily better, because the two varieties were not comparable.
Chilean cherries can be compared to New South Wales and Victorian cherries, whereas Tasmanian cherries are in a league of their own, being “larger and sweeter than any cherries on the market”, and more niche.
“Australian cherries are supplied to a premium-quality niche sector through marketing channels [including online orders] that often bypass wholesale market floors,” he said.
Australian cherries also tend to retain their sweetness, as they are flown to China within 48 to 72 hours of harvest, whereas Chilean cherries are shipped in cold storage for about 28 days, Prowse said.
This is also why Australian exporters require an upfront payment for the quick turnaround.
“Australia has indeed rested on its quality reputation, and rightly so, with loyal importers prepared to pay the higher prices, and [they] value the premium image of Australian cherries,” he said.
“The Australian government works extensively to promote Australian cherries. However, their capabilities must be seen in the context of the scale of business – cherries are not the dominant export trade from Australia as cherries are for Chile. Thus, Chilean trade offices are much more engaged with Chilean cherries.”
Wu Jiazhe, a loyal Tasmania cherry importer based in Beijing, reflected these sentiments.
“The Tasmanian cherry’s competition is not the Chilean cherry. They are like two cars running in different lanes. Simply put, it’s like a Ferrari vs a Tianjin Xiali,” Wu said, referring to a vehicle model common among Chinese taxis. “They both have four wheels, seats and a steering wheel, but their prices are far apart.
“Those who eat Tasmanian cherries won’t eat Chilean ones. And those who eat Chilean cherries are unlikely to buy those from Tasmania because they are more expensive.”
Overall, the combination of weather, politics, rising competition and even dampened demand amid the coronavirus pandemic has seen prices of Australian cherries drop in China, but they still tend to be priced much higher than the Chilean variety.
Tasmanian cherries are currently priced in China at between 280 yuan (US$31) and 600 yuan for 2kg, while Chilean ones are being sold at 160 to 300 yuan for a 5kg box. In past years, Australian cherries typically sold in China for 500 to 600 yuan for 2kg, according to traders.
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