Sunday, 24 April 2011

Business Planning, Rising From The Ashes And Potassium Fertilizer

Congratulations to the University of the West Indies (UWI) who have won a business planning competition with its development of a fictitious ginger factory. Last weekend more than 300 students across 21 teams from black colleges and universities gathered in Atlanta, USA, to participate in the Opportunity Funding Cooperative Venture Challenge, an entrepreneurship competition which has been running for the last ten years. Four students from the Mona School of Business at UWI won with a project to revitalise the Jamaican ginger industry. It will be interesting to see whether this project translates into real life.

Things are looking up for Sierra Leone. Its ginger industry was destroyed by the 11-year civil war and has taken the best part of a decade to recover with the help of the United Nations. Rising populations and incomes has created a high demand for ginger both locally and across West Africa. Sierra Leone has preferential access across this wider region through its membership of ECOWAS (Economic Community of West African States). The country also has duty-free access to both the EU and the US. This is a story that I shall return to in the near future.

The Chinese Academy of Social Sciences (CASS) has reported that China's agricultural sector will face rising costs in 2011. A major contributor to the increased costs will be global fertilizer prices. This will mean higher costs for ginger which is grown with potassium fertilizer to boost the size, and hence the yield, of the rhizomes. Although China does produce its own potassium fertilizer, the majority of its requirements must be met by imports. Global prices of potash (the principal source of potassium), along with other agricultural nutrients, have been rising to satisfy demand from a rapidly increasing world population and to compensate for poor harvests caused by inappropriate weather conditions. The increasing cost will also affect other ginger growing countries such as India which has to import all of its potassium. So, consumers and manufacturers be warned. Your ginger is going to cost more.

Sunday, 17 April 2011

Royal Wedding Packaging, Ginger Tonic And Low Nigerian Stocks

Coca-Cola Enterprises will mark the forthcoming Royal Wedding between William & Kate by bringing out a Schweppes Canada Dry Ginger Ale in special limited edition themed packaging. Unusual but not surprising given that many businesses will be cashing in on the wedding. But it was only when I was delving a little deeper (I do like to delve) that I learnt that Schweppes is not actually manufactured by Schweppes, well, not in the UK anyway. The Schweppes brand is owned by Dr Pepper who make it in the US. In the UK and many other countries like Russia, Egypt, Vietnam and Russia it is made by Coca-Cola. In Denmark it is made by Carlsberg but I assume it is still non-alcoholic there. And in Poland it is made by Pepsico. I wonder how many other famous brands have their manufacture contracted out?

Still on the subject of Schweppes, Orangina Schweppes has launched a Ginger & Cardamom tonic in its Heritage tonic range. Unfortunately it is only available in Spain as Orangina Schweppes holds the rights to manufacture and distribute there (and France & Portugal). Message to Dr Pepper - don't forget the rest of us!

I've often wondered how much profit can be made from trading in ginger. Last week Pakistani retailers were buying Chinese ginger from a wholesale market for Rs75 per kg (down from Rs100 the week before) and selling it to consumers for Rs100-120 per kg. That is a markup of 30-60% which is a healthy profit by any measure.

Reports are emerging that Nigerian dried ginger stocks could run out by next month. With China concentrating its exports on the European market and India struggling to produce enough to cover increasing demand from both domestic and international markets, buyers have turned their attention to Nigeria. I find it strange that food and drink manufacturers can substitute one country's ginger for another country's ginger. Ginger from different parts of the world exhibit different characteristics such as in taste, smell and pungency. I liken ginger to wine; a Chardonnay from one region of France differs from a Chardonnay from another region of France and certainly differs from a Chardonnay from England or New Zealand or Chile. Terroir is just as important to ginger as it is to wine. Do manufacturers realise this?

Sunday, 10 April 2011

Food From Japan, Man Shing Expansion, Vietnamese Production And Extra Ginger Beer Capacity

I was rather surprised last week to learn from that UK fans of Japanese food do not need to worry about irradiated imported produce. The reason? Apparently, between 80% and 90% of Japanese food imported by the largest Japanese food and drink distributor in Europe does not actually come from Japan. Many products come from China and America and some fish make the short trip from Norway.

There appears to be no end to the expansion plans of Man Shing, one of the largest Chinese exporters of fresh ginger to Japan, the UK, the Netherlands and North America. Just months after leasing a ginger farm in Japan, the company has now leased an additional 2.4 million square metres (or 593 acres) in its own backyard of Shandong Province in east China. Founded in 1998, Man Shing plans to increase its share of the total Chinese ginger exports to 31% by the end of 2011. A very impressive growth rate if it is achieved.

Little is known of the ginger industry in Vietnam but we can gain a partial insight from a project undertaken by the country's Academy of Science and Technology. Traditionally, ginger and other herbs and spices have been dried under the sun. But if the weather conditions have been less than perfect the resulting dried ginger has been of a lower quality. So the Academy has developed a production line where, initially, ginger and crocus can be peeled, washed, sliced and dried regardless of the weather outside. The Vietnamese government should look at the export potential of this equipment.

The local government of Kudus in central Java in Indonesia is promoting the planting of medicinal herbs such as ginger. The scheme will cover an area of 160 hectares and each hectare will yield 160 quintals of produce. A quintal, incidentally, is 100 kilograms. The government's initiative could have something to do with improving the health of the population. Alternatively, it could have something to do with the fact that the price of ginger increased by between 300 and 400 percent last year.

Browsing The Engineer the other day whilst waiting for the toast to pop up I read that John Crabbie & Co had recently increased its ginger beer production capacity. The company added nine new storage tanks each with a capacity of 54,000 litres. I can't picture 54,000 litres but it sounds huge.

Sunday, 3 April 2011

Geographical Indication, US Aid, Higher Indian Exports And Crabbie's Football Sponsorship

Spices Board of India has applied for Geographical Indication (GI) status for Cochin ginger. If successful, GI status will help to confer on Cochin ginger a "premium products" rating which should protect its worldwide reputation. GI status is already enjoyed by many products including Champagne, Prosciutto di Parma and Melton Mowbray pork pies. The Spices Board is part of the Indian government's Ministry of Commerce & Industry and exists to provide a link between Indian exporters and foreign importers.

The US Agency for International Development (USAID) has given Nepal $30m in aid to improve, amongst other things, ginger exports. The money will be targeted at increasing competitiveness and exports in selected product areas and will be allocated by NEAT, the Nepal Economic, Agriculture and Trade project. The project will run for two and a half years. Currently Nepal exports the majority of its ginger to neighbouring India.

The decision by Indian farmers to increase production of ginger has paid off after reports last week showed that for the first ten months of the current financial year exports were 126% higher in volume terms and 76% higher in value terms. With China concentrating on selling ginger to Europe, India has been able to fill the void left in West Asia at prices up to 30% lower than late 2010.

Last week I wrote that ginger farmers from Dreketi in Fiji were struggling to find a market for their produce. Within hours of publishing the post, The Fiji Times reported that the Fijian Ministry of Agriculture had held meetings with the farmers during the previous week to offer assistance in marketing and finding local markets.

Frespac Ginger Fiji Ltd, owned by Australia's Buderim Ginger, has announced that it is targetting the USA as a new export market. It currently exports 80% of its produce to Europe and 20% to New Zealand. Presumably Fijian ginger production will have to increase to meet the expected demand. This will be welcome news for the 300 farmers who are contracted to provide ginger to Frespac.

And finally, Scotland's Hibernian Football Club has announced a three-year sponsorship deal with Crabbie’s, the ginger beer company. This follows Crabbie's involvement in projects ranging from the British Comedy Awards to the Perth Festival national hunt horse racing event. The Hibs first and reserve teams will display the alcoholic ginger beer name and logo. The ladies and youth teams and general public sales will display the name and logo for the non-alcoholic version. Crabbie and Hibernian are both from Leith, near Edinburgh.