Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.): III. Synthesis high-value food commodity system ''Success stories'': Selected dimensions of commodity systems performance: (introduction...)

Exporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)

III. Synthesis high-value food commodity system ''Success stories''

Selected dimensions of commodity systems performance

		*(introduction...)*
		Cost advantages and product/service differentiation
		Additional performance indicators

(introduction...)

3.2 As discussed earlier, there are many criteria against which the performance of food commodity systems can be assessed. These include indicators of 1) operational, allocative, and transactional efficiency, 2) market development (volumes and values) and market shares, 3) product quality and variety, 4) marketing service quality, 5) profitability at farm, processing, and trade levels, 6) the levels and types of employment, 7) the distribution of income and risk, and 8) innovativeness and adaptability. -Both the limitations of space and the absence of comparable data for several of these criteria lead to a focus here on long-term patterns of growth in high-value food production, trade, and world market shares, although several additional performance criteria (such as cost competitiveness, product quality and differentiation, local market development, and employment-generation) are also briefly addressed here and in the Appendix.

3.3 With the exceptions of China, Thailand, and perhaps Brazil, the 'successful' commodity systems are drawn from countries whose overall agricultural performance over the past quarter century has not been especially notable. In fact, long-term agricultural growth has been slower in many of these countries than in low- and middle-income countries more generally. This is illustrated in Table 6. Only Israel (for the 1965-80 period), China (for the 1980s), Chile (for the 1980s), and Thailand (for 1965-89) have experienced agricultural GDP growth rates well above those of developing countries as a group.

Table 6: Average Annual Growth Rates in Agricultural GDP (%)

Country(s)	1965-1980	1980-1989
Argentina	1.4	0.3
Brazil	3.8	3.0
Chile	6	4.1
China	2.8	6.3
Israel^a	5.5	2.4
Kenya	5.0	3.2
Mexico	3.2	0.8
Taiwan (China)	2.0	1.6
Thailand	4.6	4.1
All Low-Income Countries	2.6	4.0
All Middle-Income Countries	3.4	2.6
All Low-/Middle Income	3.0	3.3

^a Rates of change in agricultural production quantities only.
Sources: World Development Report (1991, Table 2); Hsiao (1992); Statistical Abstract of Israel (1991)

3.4 Rapid agricultural growth in both China and Thailand has been broadly based, covering livestock, horticultural, grain, and fisheries sub-sectors. The four commodity systems examined here for these countries could have been supplemented by additional 'success stories'. Agricultural growth in Brazil has also been fairly broad based, with several different sub-sectors experiencing considerable export growth. In contrast, much of the dynamic growth in Chilean agriculture since the mid-1970s has been accounted for by a single sub-sector: that of temperate fruits. While the importance of agriculture in the Taiwanese economy has declined steadily, that of the food processing industry has increased with its share of GDP and employment now matching that of agriculture. The other countries covered in this survey have featured a stagnation in many of their traditional agricultural sub-sectors.

3.5 Long-term trends in total food production for the case study countries are somewhat better then the trends in agricultural GDP growth, although they also are not exceptional compared with developing countries in general (Table 7). For Argentina, Chile, and Israel, rates of growth in total food production have lagged behind growth rates for middle-income countries as a group through the 1960s, 1970s, and 1980s. Of the focal countries, only Brazil, China, and Kenya experienced growth rates in food production during the 1980s which exceeded comparative international norms.

Table 7: COMPARISON OF AVERAGE ANNUAL GROWTH IN TOTAL FOOD PRODUCTION AND CASE STUDY COMMODITY PRODUCTION OR EXPORTS (X)

Country	Total Food Production				Case Study Commodities
	1960s	1970s	1980s		1960s	1970s	1980s
Argentina	2.6	2.6	0.9	Beef	4.0	1.4	-0.7
				Soybeans	112.5	74.5	10.7
Brazil	4.1	3.2	3.2	FCOJ	39.8	28.2	10.2
				Soybeans	24.8	28.8	6.9
Chile	2.4	1.9	2.7	Fish	NA.	NA.	19.1
				Tomatoes	2.9	-2.2	15.4
				Grapes (X)	NA.	15.1	25.6
China	5.9	3.4	4.0	Shrimp (Cult.)	NA.	NA.	65.9
Israel	3.3	1.7	0.9	Citrus Fruit	14.9	2.5	-0.2
Kenya	3.5	2.2	4.7	Vegetables (X)	NA.	24.9	7.0
Mexico	4.9	4.5	1.5	Tomatoes	9.5	6.3	3.7
Taiwan	4.4	3.3	2.1	Livestock	7.6	7.1	5.2
(China)				Fisheries	10.1	5.8	4.4
Thailand	3.9	4.8	2.4	Poultry	5.1	12.0	8.7
				Shrimp (Cult.)	NA.	NA.	40.2
				Tuna (X)	NA.	NA.	68.8
Comparison
All Low-Income	2.3	2.3	3.0
Middle-Income	3.4	3.5	2.8
High-Income	4.2	3.4	3.4

NA. Complete data not available.
Sources: FAO World Crop and Livestock Statistics, 1948-85; FAO Production and Trade Yearbooks; Case Study Sources

3.6 In addition to providing data on growth rates for total food production in the focal countries, Table 7 also indicates the rates rates of growth in production volumes (or export volumes where production data are not available) for the case study commodities. In virtually all cases, production (or export volume) growth for the focal commodities has far exceeded that for total food production. For two-thirds of our cases, there has been double-digit growth in production (or exports) for a decade or more.

3.7 Each of the focal commodity systems have been successful in international markets, as evidenced either by a long-term development of trade and market shares covering several decades or by a surge in exports over the past decade in response to new market opportunities. These long-term or more recent export development patterns are discussed and illustrated graphically in Appendix. Table 8 below provides a summary of export performance patterns over the past two decades, signifying rising export values, world market shares, and commodity shares in total food exports.

3.8 The table shows that in 1970, exports in most of these commodity systems were either very small or non-existent. Only in the cases of Israel citrus, Brazil FCOJ, Argentina beef, and Taiwan (China) canned vegetables did exports exceed $50 million and world market shares exceed 10%. The 1970s witnessed a major expansion in exports and world market shares in many of these cases, the most dramatic growth occurring for Brazilian and Argentine soybeans and soybean products, Brazilian FCOJ, Chilean fish products, and Taiwanese fish and canned vegetables. While export growth slowed in a number of the focal commodity systems during the 1980s, initial or secondary export rooms were experienced in Chilean fruit and fish, Brazilian FCOJ, Chinese shrimp, Taiwanese pork products, and Thai poultry, tuna, and shrimp. By 1988/89, the focal commodity systems generated contained exports worth $11.1 billion, representing more than 20% of the total exports of high-value foods by middle- and low-income countries.

3.9 With only a few exceptions, world market shares for the focal commodity systems have increased since 1970 or 1980, the largest industries occurring for Chilean grapes, Brazilian FCOJ, Thai tuna, and Argentine and Brazilian soybeans/soybean products. Brazil has taken over from the United States as the dominant world exporter of FCOJ. In less than ten years, Thailand went from a non-exporter of canned tuna to the supplier of nearly 50% of the world's rapidly expanding trade. During the 1980s, China and Thailand experienced the world's most significant expansions in shrimp exports and together now account for more than one-fifth of total world trade.

3.10 Again with only a few exceptions (e.g. Argentine beef, Taiwanese canned vegetables, and Brazilian soybean products during the 1980s), the focal commodity systems have increased or maintained their shares of national food exports over the past two decades. This is a sign of their long-established or recently developed comparative advantage within domestic agriculture and agro-industry. For several of the countries, the focal commodity systems account for a large share of national food (and beverage) exports, as in Chile (81 %), Taiwan na) (73 %), Israel (60%), Argentina (29 %), Thailand (25 %), and Brazil (24 %).

3.11 To what extent are the focal commodity systems exceptional within the wider patterns of agricultural export development in the countries examined? For Chile, Taiwan (China), Mexico, and Kenya, the focal subsectors can be regarded exceptional performers, particularly if one extends the latter two subsectors to include a broader range of fresh and processed horticultural products. For Israel, agricultural export success has also centered around fresh and processed horticultural products with the citrus subsector remaining the core. Nevertheless, that country has also developed a small, but successful trade in high-quality meat products. Argentina conducts relatively large export trades in cereals, fish products, and fruits and vegetables, although the volume and value of this trade has either stagnated or declined during the 1980s. Argentina's soybean commodity system has far outperformed that country's traditionally strong cereals sub-sector over the past two decades (Box 1). Thailand's agricultural export success extends beyond the focal commodity systems to include fresh and processed tropical horticultural products, rice, and processed cassava (for feed). Agricultural export success has also been broadly based in Brazil and China, with each country having export trades exceeding $100 million for six of our eight focal categories of high-value foods.

Table 8: Case Study Commodity System Export Performance

Commodity System	Export Value ($ Million)			Share of World Export Value (%)			Share of total national food export earnings (%)
	1970	1980	1988/89	1970	1980	1988/89	1970	1980	1988/89
Mexico Tomatoes	26.6^a	185.4	243.1	13.1^a	16.6	15.3	5.6	9.7	8.6
Kenya Vegetables	2.3	17.6	47.7	0.1	0.2	0.4	1.8	3.1	7.4
Chile Grapes	4.0	51.8	315,1	2.4	7.9	25.1	7.2	7.6	16.8
Apples	3.5	74.7	129.1	1.1	5.3	8.1	6.3	10,9	6.9
All Fruit	11.8	168.7	582.3	N.A.	N.A.	N.A.	21.3	24.7	31.1
Chile Tomato Paste	0	2.3	48.8^b	0	0.6	4.5	0	0.3	2.2
Israel
Fresh Citrus	86.1	231.1	177.5	12.3	8.3	5.3	49.1	35.7	21.5
Proc. Citrus	37.0	124.0	322.0	N.A.	N.A.	N.A.	21. 1	19.1	39.0
Brazil FCOJ	147.3	338.7	1144,3	18.4	65.6^c	73.3^d	8.5	3.6	11.6
Argentina Beef	239.7	566.8	313.0	13.1	6.4	2.6	18.2	10.9	5.3
Canned Meat	135.3	278.9	263.3	14.9	9.7	7.7	10.3	5.4	4.2
Thailand Poultry	0	32.5	236.3	0	1.3	7.6	0	1.1	4.3
Thailand Tuna	0	0	536.8	0	0	46.5	0	0	9.7
Thailand Shrimp	11.3	97.4	630.5	1.8	4.1	9.2	3.2	3.3	11.4
Chile Fish/Fish	27.1	322.9	895.8	6.5	2.1	2.7	48.8	47.3	47.8
Products
China Shrimp	0	180.2	846.3	0	7.5	12.4	0	3.9	11.8
Taiwan Pork	2.6	63.5	507.0	0.4	1.4	6.5	1.0	3.7	16.8
Fish Products	22.7	561.2	1310.3	5.4	3.7	4.0	8.5	32.9	43.4
Canned Vegs	85.7	443.1	397.7	13,5	19.3	12.7	32.3	26.0	13.2
Argentina Soybeans	0	604,5	549.6	0	10.9	11.5^b	0	11.6	10.1
Soybean Oil	0	53.4	415.5	0	4.6	23.4^b	0	1.0	7.6
Soybean Meal	0	68.4	117.9	0	2.0	17.6^b	0	1.3	2.2
Brazil Soybeans	27.1	393.9	989.7^b	2.3	7.1	16.5^b	1.6	4.2	7.4
Soybean Oil	0.8	421.3	333,9^b	0.2	36.2	18,7^b	0.1	4.5	3.0
Soybean Meal	43.6	1449.0	161.0^b	9.8	43.3	30.8^b	2.5	15.5	2.1

	Soybeans	Wheat	Maize	Sorghum	Sunflower
Annual Growth: Rates (1970-88)
Area Planted	30.6	1.7	-1.3	-1.9	3.5
Yields	3,3	2.0	2.6	2.5	4.8
Production	34.9	3.7	1.3	0.6	8.4
Gross Revenue (Constant Aust.)	-0.7	-0.7	-0.9	-1.6	0.6
Gross Revenue/Hectare (Constan Aust.)
1974 -1978 (Ave.)	14191	5308	15729	9271	12014
1984 - 1988 (Ave.)	22615	5599	12116	5915	11501
DRC (1984/85)	0.18	0.48	0.36	0.39	0.31
Export Volumes (Million Tons)
1974 - 1978 (Ave.)	0 7	3 4	3 4	3 5	N.A
1984 - 1988 (Ave.)	2.5	2.9	2 3	1 9	N.A;