Overview

  • China accounts for just over half of the world’s kiwifruit output, with the bulk of production occurring in the southern counties of Shaanxi Province.
  • New Zealand and Chile dominate China’s kiwifruit import market, with nearly all supply entering via the port cities of Shanghai, Shenzhen, Hong Kong, and Tianjin.
  • Since 2013, New Zealand supply of gold-fleshed kiwifruit has increased rapidly and, if the current trends hold, will likely surpass green-fleshed supply in 2017.

Introduction

Native to China, kiwifruit has been consumed in the Middle Kingdom for more than 2,500 years. Around the Tang Dynasty (7th century) era kiwifruit was dubbed the “macaque peach” (獼猴桃 or míhóutáo) as it was not only a favorite snack of local monkeys, but it also shared a similar fuzzy brown appearance. It wasn’t until the late 1950s that kiwifruit took on its well-known New Zealand-inspired moniker. Although the Chinese market still sells kiwifruit under its original name, a transliterated version of kiwi (奇異果 or qíyì) is increasingly being used, particularly for imported kiwifruit.



Production

From its humble beginnings in the Qinling mountains of north-central China, kiwifruit cultivation has spread across the globe to commercial orchards in New Zealand, Chile, Italy, Greece, and France to name a few. Although an international hit, China remains the largest kiwifruit producer in the world with 1.78 million MTs harvested in 2015. Within China, Shaanxi Province is the largest regional grower. From 2015 to 2016, Shaanxi’s kiwifruit production increased from 1.23 million MTs to 1.31 million MTs. The bulk of Shaanxi’s kiwifruit orchards are primarily situated in the southern counties of Mei (Meixian), Zhouzhi, and Wugong. The harvest season in these counties typically runs from August to October, meaning imports from all international suppliers tend to dip around this time. Other producers of significance include the provinces of Sichuan, Henan, Hunan, Hubei, Guangdong, Anhui, Jiangxi, Zhejiang, Fujian, Guizhou, as well as Guangxi Region and Chongqing Municipality. It should be noted that the bulk of China’s kiwifruit farmers are relatively old. A 2015 survey noted that more than half of China’s kiwifruit farmers were at least 56 years old, while those aged 18 to 35 years old accounted for less than 10% of all farmers.

Imports

From 2012 to 2016, China’s (including Hong Kong and Macau) kiwifruit imports more than doubled, from 72,620 MTs to 153,009 MTs. The bulk of this import growth occurred over a two-year period, when imports saw a year-on-year increase of approximately 30,000 MTs in 2015 and 44,000 MTs in 2016. The large uptick in 2016 was due in part to China’s Free Trade Agreements (FTA) with New Zealand and Chile. In particular, New Zealand saw its Chinese tariffs finally drop to zero in 2016. During that year, when a record 153,009 MTs of kiwifruit were imported, nearly all (~99%) of China’s kiwifruit imports (by volume) were channeled through the port cities of Shanghai, Shenzhen, Hong Kong, and Tianjin. Shanghai was by far the top destination, importing 72,327 MTs of kiwifruit in 2016. Shenzhen, Hong Kong, and Tianjin followed with 30,745 MTs, 27,021 MTs, and 21,301 MTs, respectively. New Zealand was the top supplier and dominated exports to mainland China, while Chile supplanted New Zealand as the the top supplier to Hong Kong in 2016. During that year, New Zealand’s kiwifruit exports to mainland China consisted primarily of green and gold-fleshed kiwifruit. Since 2013, New Zealand supply of gold-fleshed has increased rapidly and, if the current trends hold, will likely surpass green-fleshed supply in 2017.



Hong Kong’s monthly imports of kiwifruit offer a good glimpse of the seasonality of supply. Hong Kong imports of Chilean kiwifruit generally begin in earnest in April, peak in May, and bottom out by August. As a reference point, it takes approximately 33 days for kiwifruit to reach China from the Chilean Port of Lirquén. Imports of New Zealand kiwifruit typically begin in May, peak in July/August, and bottom out in November. Unlike Chilean supply, which takes over a month to reach China, New Zealand’s supply—from the Port of Wellington (North Island)—can reach China in approximately 11 days. The European Union (i.e. Italy, Greece, and France) does not complete directly with Chile and New Zealand, and supplies Hong Kong from November to April (countercyclical supply). On the whole, Hong Kong imports decline from September to November, which coincides with mainland China’s harvest season. Imports also dip in February and March owing to Chinese New Year festivities and low output in Chile/New Zealand.



Prices & Tariffs

The Jiangnan Vegetable & Fruit Wholesale Market (founded in 1994) in Guangzhou, Guangdong Province, is one of mainland China’s largest fresh fruit wholesale markets. Situated close to Hong Kong and Shenzhen, the wholesale market is a buyer and distributor of domestic kiwifruit from Shaanxi and Sichuan, as well as of imported kiwifruit from Chile. From January 2016 to December 2016, wholesale kiwifruit prices from Shaanxi/Sichuan ranged from a low of CNY 14 (~USD 2.02) per carton to a high of CNY 24 (~USD 3.47) per carton. The price peaks occurred late in China’s harvest season (late October and early November), while the low prices occurred at the start of the year (January to April) owing to declining product quality and availability. Over the same time period, wholesale prices for Chilean imports ranged from a low of CNY 16.5 (~USD 2.38) per carton to a high of CNY 29 (~USD 4.19) per carton. Chilean price trends were sporadic, though prices dipped to their lowest point in August, which coincides with the seasonal end of Chilean supply to the Chinese market.



Mainland China’s imports of fresh kiwifruit have a 20% Most-Favored Nation duty rate (i.e. for WTO members) and an 80% General duty rate for all other nations. As a free port, Hong Kong has a 0% import duty rate. Thanks to the Closer Economic Partnership Arrangement (CEPA), Hong Kong can re-export kiwifruit to mainland China tariff-free.

Outlook

Over the past few years, China’s kiwifruit market has seen annual growth both in terms of domestic production and foreign imports, denoting a robust and active market. Imported kiwifruit is generally of a much higher quality than Chinese grown kiwifruit, meaning high-end retailers prefer to stock their produce aisle with supply from New Zealand and Chile. These two countries are not only major producers in their own right (New Zealand is the 3rd largest global producer, Chile is the 4th largest), but both are also beneficiaries of reduced import tariffs thanks to their respective bilateral Free Trade Agreements (FTA) with mainland China. Guangzhou’s Jiangnan Vegetable & Fruit Wholesale Market, Shanghai’s Huizhan Produce Market, and Shanghai’s Fruitday (e-commerce platform) have particularly benefited from these FTA agreements as two-thirds of China’s kiwifruit imports (by volume, 2016) entered via the port cities of Shanghai and Shenzhen (only ~140 km from Guangzhou). The market dominance of these cities is set to continue as New Zealand’s Zespri, a top exporting company, noted in April 2017 that Shanghai and Guangzhou were the first recipient cities of the country’s 2017 harvest. The arrivals also marked the one-year anniversary of Zespri’s three-year research program to test the feasibility of cultivating Zespri fruit varietals in Shaanxi Province. The program is focusing on the cultivation of Zespri’s popular gold-fleshed kiwifruit, which not only has a unique color, but also has Psa (bacterial kiwifruit vine disease) resistance. It remains to be seen if the program will succeed, as there have already been reports of third parties illegally selling and planting golden kiwifruit outside the program. Based on this evidence, it can be inferred that Chinese demand for gold-fleshed kiwifruit is currently stronger than what the market can supply. Going forward, Chinese import demand for gold-fleshed kiwifruit should see healthy annual growth while demand for green-fleshed kiwifruit should also rise, though at a lower rate, owing to rising mainland output. However, green-fleshed imports could benefit from poor climatic conditions, such as frosts (in early spring) or drought (in summers), which would negatively impact domestic Chinese production.

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