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SUB-REGIONAL OFFICE for the PACIFIC ISLANDS in Association With SUB-REGIONAL OFFICE FOR THE PACIFIC ISLANDS POTENTIAL FOR EXPORTS OF RETAIL PACKS OF FROZEN ROOT-CROPS FROM TONGA TO NEW ZEALAND A SUPPLY CHAIN STUDY Prepared by Pousima Afeaki December 2009 For The Government of Tonga in association with 1 POTENTIAL FOR EXPORTS OF RETAIL PACKS OF FROZEN ROOT CROPS FROM TONGA TO NEW ZEALAND: A SUPPLY CHAIN STUDY Pousima Afeaki December 2009 2 FAO DISCLAIMER “The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned. The views expressed herein are those of the authors and do not necessarily represent those of FAO.” This study was commissioned under the FAO Regional Programme for Food Security 3 PREFACE Following a consultative workshop in Tonga on March 9-10 2009, the potential for export of retail size packs of frozen root crops from Tonga to New Zealand was selected as an issue for further study and evaluation. FAO agreed to fund a study by a National Consultant, Pousima Afeaki, under the technical supervision of Jamie Morrison, Trade and Markets Division, in conjunction with the FAO Sub-Regional Office in Samoa. The objective of the study was to evaluate whether there is a viable opportunity for Tonga to process fresh root crops into small frozen packs (1-2 kg) for export and sale in retail outlets in New Zealand. Initial Terms of Reference (TOR) for the study were drawn up on the basis of discussions at the March 2009 Consultative Workshop (refer to Attachment 1), and the selection of the consultant carried out by MAFF-Tonga. The TOR were refined following an interim report to FAO by the consultant in May 2009. The interim report set out a map of the activities involved in the supply chain for supply of frozen retail packs of root crops from Tonga to New Zealand, and identified issues and constraints associated with those activities. The report also identified key activities and areas where information was lacking, and made recommendations for obtaining this information: (i) current supplies of root crops in Tonga; and (ii) the current and potential demand for frozen retail packs of root crops in New Zealand. FAO agreed to fund a survey of roadside markets in Tonga to provide fuller information on available supplies of root crops. The Pacific Island Trade and Investment Commission, New Zealand (PITICNZ) agreed to fund a visit by the consultant to New Zealand to carry out research on current and potential demand for frozen retail pack root crops. Separate TOR were drawn up for the research visit to New Zealand (refer to Attachment 2). 4 CONTENTS PREFACE......................................................................................................................4 CONTENTS...................................................................................................................5 EXECUTIVE SUMMARY ...........................................................................................6 1. Introduction............................................................................................................8 1.1 Background.........................................................................................................8 1.2 Study approach and structure of the report .........................................................9 2. Supply Chain for Retail Packs of Frozen Root Crops .........................................11 3. Current Levels of Production and Supply of Root Crops...................................14 3.1 Talamahu Market..............................................................................................14 3.2 Roadside markets..............................................................................................16 3.3 Direct consumption by farmers and their extended families ............................17 3. 4 Exports of root crops........................................................................................18 3. 5 Total root crop supply......................................................................................19 4. Expanding the Supply of Root Crops ..................................................................20 4.1 Inputs.................................................................................................................20 4.2 Farming.............................................................................................................22 4.3 Post-Harvest Handling......................................................................................28 5. Current and Potential Demand for Frozen Retail-Pack Root Crops.....................28 5.1 Competing products and prices?.......................................................................28 5.2 What is the demand for frozen root crops for formal markets?........................30 6. Meeting the Demand for Frozen Retail Pack Root Crops ...................................34 6. 1 Processing/Packing – New Zealand Food-Safety Requirements.....................34 6.2 Processing and Packing – Capacity and Commercial Requirements................36 6.3 Exporting to New Zealand................................................................................36 6.4 What are the processes involved in export to importers/distributors as opposed to direct to retailers?.................................................................................................37 6.5 Import and Retailing in New Zealand...............................................................38 6.6 Customer/Consumer Satisfaction......................................................................39 7. Conclusion and Recommendations......................................................................39 7.1 Demand from New Zealand..............................................................................39 7.2 Supply from Tonga ...........................................................................................40 7.3 Future opportunities..........................................................................................41 7.4 Recommendations.............................................................................................41 8. List of Attachments..................................................................................................42 5 EXECUTIVE SUMMARY This study uses a value chain approach to assess whether a viable opportunity exists to export retail sized packs of frozen root crops from Tonga to New Zealand. Drawing on survey based assessments of the current levels of supply of root crops in Tonga for human consumption, and of the demand for frozen root crops in formal markets in New Zealand, the approach allows the identification of key constraints and issues in meeting this potential opportunity. Discussion of the identified constraints and issues results in a set conclusions and recommendations for actions by key chain stakeholders. The study identifies an opportunity for Tonga to export frozen retail packs of root crops to the formal market in New Zealand. However, the current market for frozen retail packs is found to be small, albeit growing. In seeking to assess the viability of this opportunity, a number of issues were noted: (i) Currently, competing frozen root crops from Asian suppliers retail at two to four times the retail prices for equivalent products from the Pacific Islands. The Asian frozen root crops are available in a wider range of sizes and have better packaging and presentation than equivalent products from Pacific Island countries. (ii) Pacific Island consumers have the option of buying cheaper frozen and fresh root crops in bulk through the informal market in New Zealand. This acts as a restraint on prices of frozen retail packs on sale to Pacific Island consumers in New Zealand. The study suggests that Tongan processors/exporters will need to develop a wider range of sizes, and improve packaging and presentation. They also need to determine whether exporting to supply Asian customers in New Zealand is profitable. This would require particular attention to food safety and labelling requirements both from the Food Safety Authority of New Zealand and the importer/retailer in New Zealand. Given the relatively small size of the New Zealand market, supply is not considered be a problem for Tonga. The main island of Tongatapu will produce an estimated 6,330 tonnes of root crops for human consumption in 2009. In 2008, Tonga exported 3,537 tonnes of root crops while New Zealand imported only 143 tonnes of frozen retail pack root crops, which equates to about 14 containers, or just over 1 container per month. Additionally, processing capacity in Tonga to supply the small market is not likely to be a constraint. The facility in Tonga which is currently processing frozen retail pack root crops for export has the capacity to process 20 tonnes per week or 1,000 tonnes per year. 6 The New Zealand market for frozen retail pack root crops is therefore not yet large enough to justify large-scale investment by Tongan processors/exporters and farmers, nor by MAFFTonga and Growers Federation of Tonga
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