Analysis and Prospect of Fresh Vegetable Market in Five Central Asian Countries

Overall, the opportunities and challenges of the fresh vegetable market in the five Central Asian countries coexist.

Opportunities: First, the demand for vegetable market in Central Asia has grown overall in recent years, and the low base has long-term growth potential. Second, because of the limitations of geography, climate, and technology, most countries except Uzbekistan have insufficient self-sufficiency in vegetables (especially in the off-season vegetables), and import dependence depends to varying degrees. Third, China has many varieties of vegetables, large output, mature technology, and a high degree of cooperation in trade industry cooperation. Fourth, the “One Belt, One Road” infrastructure is perfect to promote trade facilitation.

Risk: First, compared with other overseas markets, the consumption of vegetables in the five Central Asian countries is not large, and it is difficult to form a scale effect in the short term. Second, the current total export volume of China's exports to the market is limited, and the growth rate during the year fluctuates greatly. The foundation is still not stable; thirdly, it continues to face competition risks from neighboring countries including Uzbekistan. Fourth, the five countries in Central Asia have exchange rate risks to varying degrees, which will have an impact on demand and foreign exchange collection.

I. Analysis of fresh vegetable market in five countries in Central Asia

(1) Kazakhstan

In recent years, the demand for fresh vegetables in Kazakhstan has shown an overall growth trend. Although domestic supply is also growing, there are few varieties and limited production, which is difficult to meet demand. According to statistics, more than 40% of vegetables in Kazakhstan are imported, and a large number of imported vegetables come from China and EU countries. The total apparent consumption of fresh vegetables in Kazakhstan in 2012-2015 (Note: the consumption mentioned in this article is all apparent consumption) maintained a growth trend, and in 2016 it decreased slightly by 3.76% to 3.868 million tons. According to forecasts, the overall market will maintain growth in 2017-2020, and it is expected that the market capacity will reach a level of about 4,468,400 tons by 2020. In terms of trade policy, Kazakhstan and China mutually grant MFN status. Kazakhstan is a member of the Eurasian Economic Union. The Treaty of the Eurasian Economic Union defines the legal basis for the operation of the Union's unified customs, that is, the unified implementation of the unified commodity market within the territory, and the implementation of uniform tariffs and foreign trade adjustment measures. Other customs taxes and fees (customs handling fees, etc.) shall be examined and approved by the Kazakhstan government. The import value-added tax and consumption tax of Kazakhstan shall be collected by the tax authorities. From February 15, 2013, all products under the jurisdiction of the Customs Union (CU) must apply for CU certification.

Looking into the future, in the context of economic and population growth, the gap in the supply of fresh vegetables in Kazakhstan will continue to exist, especially in the winter, which requires a large amount of imported vegetables, while Chinese vegetables are of high quality and low price, with many varieties and strong supply capacity. In the long run, it has a relatively broad market space for Kazakhstan's exports, and China's share of Kazakhstan's exports has an absolute advantage in the total exports of fresh vegetables to the five countries. On the other hand, the overall risk of trade in Kazakhstan is relatively high, and the exchange rate risk of the local currency is still relatively prominent. The country also tries to encourage increased production to reduce the dependence on vegetable imports. These are the risk points that China needs to pay attention to for the export of vegetables.

(2) Kyrgyzstan

In recent years, the demand for fresh vegetables in Kyrgyzstan has increased overall, with a total consumption of 1,041,900 tons in 2016. Although domestic output has risen year by year, it is still difficult to be self-sufficient. Tomato is the country's most imported vegetable variety in 2012-2016. The countries of origin of vegetables are mainly China and Uzbekistan, as well as Kazakhstan and Tajikistan. In the future, with the growth of demand, it is estimated that by 2020, the total vegetable consumption of the country will reach 1,388,700 tons. In terms of trade policy, Kyrgyzstan grants MFN status to all WTO members including China and to countries that have reached bilateral agreements with them. Kyrgyzstan is a member of the Eurasian Economic Union. The Treaty of the Eurasian Economic Union defines the legal basis for the operation of the Union's unified customs, that is, the unified implementation of the unified commodity market within the territory, and the implementation of unified tariffs and foreign trade adjustment measures. Kyrgyzstan's certification standards for fresh vegetables mainly include: General Certificate of Origin (CO), CU-TR certification of the Customs Union of Russia, Belarus and Kazakhstan, and Government Regulation No. 26 of the “Safety of Fresh Fruits and Vegetables”.

    Looking forward to the future, Kyrgyzstan's vegetable self-sufficiency is insufficient. The entry of Chinese vegetables is expected to make up for the shortcomings of Kyrgyzstan's winter vegetable varieties. At the same time, the country also has the conditions to develop entrepot trade, and there is potential for radiating surrounding markets in the future. At the same time, the per capita vegetable consumption in the country is low (in 2016, the per capita vegetable consumption of the country is only 171.3 kg, which is significantly lower than the level of 215.56 kg in Kazakhstan). The scale effect is still difficult to show, the risk of demand fluctuation is prominent, and the exchange rate risk is also high. These are all aspects that need attention and measures when entering the vegetable market in the country.

(3) Tajikistan

In recent years, the demand for fresh vegetables in Tajikistan has increased overall. In 2016, the total consumption was 1,653,500 tons. Due to geographical and climatic conditions, the number of vegetables that can be planted in the tower is very small, the production is scattered, the degree of mechanization is low, and the total output is The volume is low and the import dependence is sustainable. With the economic recovery and the increase in residents' income, it is estimated that by 2020, the total consumption of vegetable towers will reach 2,111.7 thousand tons. In terms of trade policy, Tajikistan has not yet joined the Eurasian Economic Union and still implements an independent tariff system; imported products for seed, plant and plant processing must be subject to phytosanitary certificates; current implementation is international, inter-country, national, industry and technology. Multi-level standards such as standards; import tariff rates are levied at 0%, 2.5%, 5%, 7%, 10%, and 15%, respectively, depending on the type.

Looking into the future, China's fresh vegetable exports to the tower are limited overall, and may face the dual challenges of large fluctuations in demand and high credit risk. This is mainly because: First, the economic downturn in Russia and the downturn in the international commodity market have had a negative impact on the economy of Tajikistan. The depreciation of the local currency Somoni has led to an increase in import costs and increased inflationary pressures. Second, the competition risk is outstanding. In addition to China, the tower also imports fresh vegetables from Russia, Iran, Turkey, Uzbekistan and other countries. The residents have higher preference for Russian and local vegetables. Third, China's export of vegetables to the tower is small and the variety is single, mostly for allgreen vegetables, and the ability to withstand the risks of demand and price fluctuations is poor. In addition, traffic problems have also affected the trade of Zhongta in fresh produce such as fresh vegetables.

(4) Turkmenistan

In recent years, the demand for fresh vegetables in Turkmenistan has increased overall. In 2016, the total vegetable consumption was 1.122 million tons. About 80% of the country's territory is covered by the Karakum Desert, and a large amount of land is difficult to use effectively. The climate is dry, the technology is backward, the variety of vegetables is small, and the production capacity in the off-season is insufficient. The local production is mainly based on the conventional vegetables in the open field, almost no green leafy vegetables, and the total output of tomatoes, all kinds of radishes and cabbages accounts for nearly 80%. With population growth, it is expected that by 2020, the country's vegetable consumption will still increase to 1.328 million tons, which creates market space for imported vegetables. In terms of trade policy, Turkmenistan has initially formed an independent standardization and quality inspection system. The Animal and Plant Quarantine Regulations require quarantine inspections on the import and export of various animal and plant products (including transit), including the characteristics of the products and the place of origin. The specific inspection work is jointly carried out by the National Animal Quarantine Bureau, the Plant Quarantine Bureau and the Bureau of Standards. According to the new version of the Customs Tax on Import and Export Commodities, the import tariff on fresh vegetables is 0.15 US dollars / kg, fresh or chilled cabbage, cauliflower, broccoli, feather cabbage and similar practical mustard vegetables and import tariffs on eggplant and sweet pepper. It is 1 USD / kg.

Looking into the future, Turkmenistan is more similar to Tajikistan, and China's vegetable export trade will face more risks and challenges in such markets. This is mainly because: First, the domestic vegetable market capacity is still relatively limited, and it is difficult for Chinese enterprises to achieve economies of scale in the short term. According to China Customs data, from January to May 2015, China did not export any kind to the soil. fresh vegetables. Second, the competition risks are prominent. The soil is bordered by Uzbekistan, an important vegetable exporter in Central Asia. Chinese vegetable exporters will also face competition from the Netherlands, Russia, Kazakhstan, Turkey, Kyrgyzstan and the United Arab Emirates. Third, the difficulty of maintaining the exchange rate of the local currency Manat will increase, and the strengthening of foreign exchange control will also affect foreign economic activities.

(5) Uzbekistan

In recent years, the demand for fresh vegetables in Uzbekistan has increased overall. Because it is an important vegetable exporting country in the region, it has far more than the other four countries in terms of supply and consumption. In 2016, the total consumption of the country was 11.0935 million tons. It is estimated that by 2020, the consumption of fresh vegetables in Uzbekistan will reach 13.5253 million tons. In terms of trade policy, Uganda has no restrictions on import and export of vegetable products, but vegetables are one of the 61 categories of commodities included in the list of compulsory inspection goods. In the first half of 2017, Urumqi introduced 264 ISO international standards, including agricultural fruit and vegetable products. The country's fresh or chilled potatoes (customs code 0701) import tariff rate is 10%, and the remaining vegetable import tariff rate is 30%.

Looking into the future, China's vegetable producers are more serious about the prospects of exporting trade to Ukraine, but if they are determined to open up the market, they can consider from the perspective of industrial investment, taking into account the radiation to Central Asia, Russia and the EU market. This is mainly because: First, although the country also imports vegetables, there is basically no import dependence. Due to the sufficient supply of local vegetables, the market for imported vegetables is very limited. Second, from the historical data, China's fruit and vegetable industry has a small scale of exports to Ukraine, and the violent fluctuations in the scale of each year show the characteristics of extremely unstable orders. Third, the Ukrainian government is gradually expanding the area planted with fruits and vegetables, and its export capacity will continue to increase. It also poses a threat to Chinese vegetables in neighboring countries. Fourth, the pressure on the depreciation of the domestic currency has continued to appear, and the exchange rate risk is prominent, which is not conducive to trade development. From an investment perspective, this helps to reduce investment costs; the depreciation of the euro against the euro may also promote exports to the EU market. While studying the investment in the Ukrainian vegetable industry, due to the poor environment in Uzbekistan, Chinese enterprises should also pay attention to the risks from the administrative intervention and exchange rate fluctuations in the country.

Second, the risk assessment and prospects

Through the above analysis of the vegetable market overview of the five Central Asian countries, it can be seen that China's fruit and vegetable enterprises have a better prospect of entering the Central Asian market, but there are also realities of bones. The opportunities and advantages, risks and challenges of these five country markets are summarized together. The main points are as follows:

(1) Opportunities & Advantages

First, the low base of the vegetable market determines the market for development.

Second, the ability of vegetables in most countries is difficult to be effectively improved in the short term, and the demand for imported vegetables has growth potential. Except for Uzbekistan, the self-sufficiency of vegetables in other countries is insufficient. The main manifestations are: limited planting area, lack of technology, especially insufficient planting ability in the off-season; geographical and climatic reasons cannot effectively increase production capacity (Tajikistan, Turkmenistan) .

Third, Chinese vegetable enterprises have strong supply capacity, many varieties of vegetables, mature planting techniques, and obvious industrial advantages. With the implementation of the “Belt and Road Initiative”, bilateral trade and infrastructure conditions will continue to mature, especially with the improvement of transportation infrastructure, which will help Chinese vegetables to export more to the Central Asian market.

(2) Risk & Challenge

First, affected by long-term living habits, the consumption scale of the vegetable market in the five Central Asian countries is still relatively limited, which is not conducive to the scale advantage of Chinese enterprises in export trade.

Second, historical data shows that Chinese enterprises have limited export to the five Central Asian countries, and from the total amount, the year-on-year growth rate fluctuates greatly. Specific to each country, its stability is relatively worse. Such a foundation may hinder Sustainable development of trade. Although the market has opportunities due to low base, but also because of the limited scale, there are also historical data and lack of experience for reference. Therefore, credit risk still needs careful consideration, and pre-study is essential.

Third, the competition risk in the region is more prominent. This is mainly manifested in the threats brought by competitors from other countries in neighboring countries and neighboring regions, the most prominent of which is Uzbekistan. In addition to Uzbekistan, in Turkmenistan, it will face competition from the Netherlands, Russia, Kazakhstan, Turkey, Kyrgyzstan, the United Arab Emirates and other countries; in Jikstan, it also faces competition from Russia, Iran, Turkey and other countries. The high preference of residents of the country for Russian and local vegetables will also weaken the competitiveness of Chinese vegetables.

Fourth, economic factors will also have a critical impact on trade. Central Asian countries have limited national strength and their ability to withstand external shocks is relatively insufficient. From a trade perspective, exchange rate risk exists in different degrees in the five Central Asian countries. In the future, it will still be an important factor affecting the import of various countries. It is also one of the more prominent risks faced by Chinese enterprises in their exports.

Third, the conclusion

According to the relevant empirical research results, the growth potential of China and Tajikistan and Turkmenistan in the field of fruit and vegetable trade is relatively weaker than the growth potential between China and Kazakhstan, Kyrgyzstan and Uzbekistan. Based on the above analysis, it can be seen that although Uzbekistan's fresh vegetable market is the largest and its historical growth record is good, its main fruit and vegetable producing country in the region not only fails to provide effective market space for Chinese fruits and vegetables, but instead The neighboring country market has become a direct competitor of Chinese enterprises, so it is not recommended to consider this as a potential potential market.

To sum up, in the five markets of Central Asia, for the vegetable exporters in China, the prospects of the vegetable market in Kazakhstan and Kyrgyzstan are relatively promising. It is suggested that if you intend to open up this field, it can be a priority. The other three countries have their own characteristics. For China's fruit and vegetable export enterprises, the risk factors that directly affect trade, such as unstable orders, depreciation of exchange rates, and fierce competition, are more prominent. Therefore, the market potential in the future is inferior.