CHAPTER 1 INTRODUCTION

Transcription

1 CHAPTER 1 INTRODUCTION 1.1 BACKGROUND A rising global population, coupled with increasing demand for fresh, imported perishables, is driving growth in the business of high quality, international food transportation and storage (Bell, 2006). Every day around the world, there are more people who need food on their plates. With reached global population of 7 billion by the end of 2011, the world s population has increased by 1 billion since the turn of the millennium, and it keeps increasing by 83 million every year. At the same time, living standards have improved noticeably for many around the world, leading to increased demand for better quality fresh food. (Ceylon Chamber of Commerce, 2007) The fresh food market has seen rapid growth in recent years, and this trend shows no sign of slowing. (Jessica, 2007) In 2009, when the logistics industry was in the grip of the global economic crisis, many market segments saw a drop in transportation volumes and revenues. The market for fresh food transportation, however, continued to grow by a healthy 4%. Experts have a simple and logical explanation for this. According to all of these findings emphasised that the fresh food demand is increasing rapidly day by day.really challenge in this industry is to provide freshness from the start to the end of it with low cost. If successful can be achieved in that task, there will be no threat for the Fresh Food Export business. (Huang, 2004) It justified that there is a trend for organic treated food in the Fresh Food Export field with the recent development. Modern sophisticated man always looks for the natural food. If your food carrying containers (bag/boxes/packets) have the seal of Organic Food, then you will not lose the market. Researchers have shown from last five years the demand of the food market has changed from Processed Food to Fresh Food drastically (Huang, 2004) 1

2 The fresh food market is growing rapidly year by year. The world fresh market has been growing by 20% a year since the early 1990 (Farhad, 2006). Sri Lanka, then Ceylon was famous for the Cinnamon during Dutch Colonial era and Coffee and Tea in British Colonial era. Sri Lanka s Cinnamon is acclaimed as the most superior cinnamon in the world. Branding of Sri Lanka has an origin cinnamon as the Ceylon Cinnamon as an effective strategy to combat the threat emanating from cassia. Currently, Sri Lanka is the main global supplier accounting for 38% market share in 2007 (Sri Lanka Export Development Board, 2009 March). Sri Lanka still bears the reputation of the world top quality tea provider. The tropical weather condition and monsoon rains which bring the fruitful rainy seasons to the island always keep Sri Lanka Food reputation high in the world. When compared with some other countries the fruits and vegetables sector in Sri Lanka has a good potential for further development due to the country s warm climate and fertile soils. The East Europe Countries are highly dependent on imports, as some Fruits are not grown in the East Europe countries, Such as bananas, mangos and others such as citrus fruits ( Sri Lanka Export Development Board, 2009 December). However, this potential is largely untapped as most produce is grown for local consumption. Compared to tea and spices, the fruits and vegetables sector is the least organized and probably needs the most attention to improve its standing. The product range is more diverse than in other agricultural sectors. Similar to most other agricultural sectors, the fruits and vegetables sector consists of a large number of small growers. The Sri Lanka Export Development Board said through the article of Fruits and Vegetables from Sri Lanka The Sri Lanka Fruit & Vegetable producers, processors 2

3 and Exporters Association are playing a vital role in Organizing and Planning Production and export activities Sri Lanka being a tropical country, situated in the Indian Ocean, has a wide variety of cultivated food crops. The main fruits grown in Sri Lanka are orange, mango, papaw, avocado, banana, watermelon and pineapple, etc. some of the vegetables are beans, cabbage, tomato, carrots, etc. Sri Lanka mainly exports fruit and vegetables to Middle East and Asia. Over 60% of vegetables exported from Sri Lanka are destined to UAE, Saudi Arabia, Maldives and India. Sri Lankan fruits are exported mainly to UAE, India and Maldives add these countries account for 55% of the total export. (Ceylon Chamber of commerce, 2007) The Sri Lankan fruits are in high demand abroad. However, a major challenge faced by exporters is not a lack of demand but fining exportable quality fruits and vegetable in sufficient quantities for export. 1.2 PROBLEM STATEMENT The potential for cultivating fruits and vegetables for the domestic and export market is high. Despite the being a healthy demand for Sri Lankan fruits and vegetable abroad, the country faces a serious problems with finding exportable quality fruits and vegetable in a sufficient quantity. The export revenue has however, increased gradually over the years and the value of export of fresh & proceeded fruits and vegetables reached US $ 69 million in 2008 (Central Bank of Sri Lanka, 2008) But it accounts only 1% of total export of the country. 3

4 Figure 1.1: Value of Export fruits and Vegetable from (Rs million) Source: (Central Bank of Sri Lanka, 2008) As a percentage of total quantity produced for selected crops, the quantity exported remains very low, in most instances well below 1% of total production is currently being exported. Figure 1.2: Country wise Export of Vegetable Source: (Sri Lanka customs, 2008) 4

5 Figure 1.3: Country wise Export of fruits (Except Coconut) Source: (Sri Lanka customs, 2008) The marketing chain established in Sri Lanka involves the grower, collector, wholesaler, retailer and the consumer. In order to gain better marketing value all the people involved in the marketing chain should participate together. Once the grower packs his commodities, the package moves through the handling chain, once the commodity reaches the retailer, the produce is often sorted manually and displayed to the consumer. Due to poor post harvest handling and inadequate packaging, the quality of the produce falls every day. This widens the price gap between the grower and consumer. Inappropriate cultivation practices and methods of harvesting and subsequent rough handling coupled with inadequate packaging during transport, and storage are the major factors which contribute to deterioration of perishables, causing high post harvest losses, thereby reducing the market value as well as the market competitiveness. This call upon for identification of issues and methods and strategies to be taken to solve the associated problems of fresh fruits and vegetable export industry is remedial action. Hence, the research leads to identification of problems associated with the fresh fruits and vegetable export industry. 5

6 1.3. OBJECTIVES The main objective of this research is to review the fresh Fruit and Vegetable industry and to identify parameters for face international competitiveness. The sub objectives can be stated as. 1. To review recent developments in fresh fruit and vegetable export market in Sri Lanka. 2. To identify issues and constraints in improving fruit and vegetable marketing systems, enhancing our international competitiveness and identify parameters to address them. 3. To identify special issues related to small producers to cope with increasing market competition. The first objective s issues and constrains relates to the production practices, post harvest technologies, issues relate to supply chain, issues related to supplying, market access, non traffic restrictions and government policies. The second objective seeks to identify the recent development in fruits and vegetable market in Sri Lanka and other Asian countries. The secondary data and literature review would be helpful to achieve first and second objectives. The third objective seeks to identify the actions for solution of the identified issues and challenges. The objective is fulfilling with the help of senior executive perceptions and farmers perceptions. The Primary data will be helpful to achieve that objective GUIDES TO THE REPORT This section discusses the structure and flow of the report. The report consists of five chapters. Following presents a brief guide to the report. 6

7 Chapter 01 Introduction Chapter 02 Literature Review Chapter 03 Methodology This chapter provides an introduction to the research. It describes the research background, problem statement, and research objective, and the main findings of the research. Further it provides a guide to the report summarizing each chapter to follow. This chapter illustrates the exiting literature in the area of recent development in fresh fruit and vegetable market in Sri Lanka and other competitors. Furthermore, it describes the role of developing countries, consumer behavior of increasing demand for fresh food and variables influencing the quality and unique feature of fresh produce marketing. Further Literature review focuses on identifying the issues and constraints in improving fresh fruit and vegetable market. This chapter discusses about the methodology of the research. It discusses about the operationalization of variables, sample selection and sample size, structured interview development and data analyzing methods. Chapter 04 Data Collection and Analysis This chapter explains the analysis of the collected data. Mainly descriptive statistics and tabular method have been used to present and analyze the data. Chapter 05 Conclusions and Recommendations Final chapter are aimed at providing the conclusion that could be derived from the study, recommendation based on the research, limitation of the study and areas of future research. 7