INTERNATIONAL ECONOMIC

TRADE AND POLICY

REPORT ON EXPORT OF POMEGRANATE

Course Coordinator : Dr. Jitendra Mishra

Submitted by:

Mrigakshi Singal (09609022)

Aakriti Bhasin (09609139)

Aayush Rustagi (09609143)

Objectives of the study

The specific objectives entrusted for preparation of the project report on export promotion of
pomegranate from India were as follows:

a. To prepare a detailed report on export promotion of Pomegranate from India

b. To identify the constrains in export promotion of Pomegranate

c. To identify harvest and post-harvest technologies for pomegranate including mechanization of

harvesting and post-harvest management.

d. To identify constraints in profitability of pomegranate growers etc

e. To identify and suggests the action plan for the establishment of backward and
forward linkages in the present scenario.
 1. Overview of the Indian Economy
India economy, the third largest economy in the world, in terms of purchasing power, is going to
touch new heights in coming years. As predicted by Goldman Sachs, the Global Investment
Bank, by 2035 India would be the third largest economy of the world just after US and China. It
will grow to 60% of size of the US economy. This booming economy of today has to pass
through many phases before it can achieve the current milestone of 9% GDP.

It is one of the most attractive destinations for business and investment opportunities due to huge
manpower base, diversified natural resources and strong macro-economic fundamentals.

Current State of the Indian Economy

The current scenario of Indian economy has been characterised by optimistic growth and strong
macro-economic fundamentals, particularly with tangible progress towards fiscal consolidation
and a strong balance of payments position. Gross Domestic Product (GDP), at current market
prices, is projected at Rs. 46,93,602 crore in 2007-08 by the Central Statistical Organisation
(CSO) in its advance estimates (AE) of GDP. While, the GDP at factor cost, at constant 1999-
2000 prices, is projected to grow at 8.7 per cent in 2007-08.

Export Sector of Indian Economy has improved immensely over the years and has earned US
$ 125 billion in the current fiscal year. The goods exported from India mainly include wide
variety of agricultural products, chemicals, jewelery, garments, leather goods and so on. 
India has developed business relations with a number of foreign countries like the member
countries of SAARC, some Eastern European countries as well as African countries, Members of
EU.

The export barriers in India have been hampering Indian exports to a great extent and most of
such barriers have been announced by the European Union regarding certification requirements,
application of pesticides, dumping of waste products. But the most significant export barrier
faced by the Indian exporters is red tapism which is mostly accompanied by corruption.
However, the government of India has considered plans to liberate the Indian exporters from the
cumbersome paper works and simplify the required procedures.
India’s Agricultural Exports: An Overview

Agriculture forms the backbone of the India economy contributing more than one-fifth to the
GDP and providing livelihood support to about two-thirds of country’s population. In fact, it is
the single largest private sector occupation. The multiplier for food industry is much higher than
that for industries such as power and telecom, reason being that the food industry directly and
indirectly triggers growth in a number of other industries such as transport, refrigeration,
pesticides and fertilizers.

Export of agriculture products increased from US$ 6.0 bn in 2000-01 to US$ 11.2 bn in 2006-07.
During the period 2000-01 to 2006-07, India’s overall exports grew faster than agro exports. The
difference has always been substantial except in 2001-02 where both experienced negative
growths. In terms of production, India, with an arable land of 162 mn ha remains a major player
in the global market. India, with a production of 47 mmt of fruits and 80 mmt of vegetables, is
the second largest producer of fruits and vegetables after China.
Trends in Exports of Fruits and Vegetables

Within the agricultural sector, it has been the fruits and vegetable segment that has shown
dynamism. India is the second largest producer of the fruits and vegetables in the world after
China. In 2005 total area under fruits and vegetables had been 11.72 million hectares and total
production had been 150.73 million tones. Annual area and production growth under fruits and
vegetables in the period 1991-2005 in India was 2.6 per cent and 3.6 per cent respectively. This
growth is quite significant compared to the decline in area under cereals and cereal production
which is growing at the rate of 1.4 percent per annum only in last one and a half decade. The
major fruits exported in terms of quantity are mango (53.5 thousand tonnes), grapes (38.9
thousand tonnes), orange (31.5 thousand tonnes), apple (23.2 thousand tonnes), banana (12.8
thousand tonnes), other citrus fruits (11.4 thousand tonnes) and lemon (10.5 thousand tonnes). In
value terms grapes and mango exports earn the maximum foreign exchange for India. However,
there is immense potential to diversify this product basket, and one such fruit is pomegranate –
the focus of this study.
2. Overview of the United Kingdom Economy

As in most developed countries, the share of manufacturing in the UK economy has declined
relative to the services sector. The service sector accounts for two-thirds of GDP, while
manufacturing represents less than 20% of national output. UK was the first country to start
industrial revolution and now the fall in share of manufacturing has been more pronounced than
in most other industrialised countries.

The production of about 60% of food needs by 1% of the labour force indicates that agriculture
is intensive, highly mechanized and efficient.

The United Kingdom is the world's leading trading power and financial centre. The
financial and business services sector as a whole accounts for over 70% of GDP, a reflection
both of the traditional strength of the City of London and of the rapid growth in business services
over the past decade.

The communications sector has also been growing fast, but prices within the sector have
fallen as a result of rapid productivity growth (so its share of GDP at current prices has remained
stable).

The economy of United Kingdom is the strongest in Europe and it was this relatively good
economic performance that had complicated the government's efforts to join the European
Economic and Monetary Union (EMU). A majority of Britons are still opposed to the single
currency as they feel they are doing well without any alliance.

By the end of 2009, the UK economy is expected to have contracted 3.2 per cent (although some
economists are revising that figure downwards), with the UK budget deficit ballooning 11.3 per
cent of GDP, from 5.3 per cent, and British national public debt expanding to 59 per cent of
GDP.

Inflation is no longer a concern thanks to the collapse in energy and commodity prices. It is
expected to be around 0.5 per cent this year. Indeed many argue that deflation is now a bigger
concern. As such, the Bank of England is expected to cut Interest Rates to 0.5 per cent by the
middle of 2009.

Uk Trade Pattern

Open economy

The UK is an open economy and a rising share of output is exported overseas and a growing
percentage of AD is satisfied by imports of goods and services. The UK currently is the world’s
8th largest exporter of goods and the 2nd largest exporter of services. In terms of capital flows,
Britain has the highest ratio of inward and outward investment to GDP of any leading economy.
Over time, it is inevitable that the pattern and balance of trade in goods and services changes,
reflecting shifts in comparative advantage and movements in relative prices of traded
products in many international markets. The pattern of trade is also affected by the economic
growth and development of particular countries or regions and by the foreign investment
decisions of UK and overseas companies.

The majority of UK trade in goods and services is with our partner countries within the
European Union. There has been a long-term shift in our trade with EU since the UK joined the
EEC in January 1973. The growth of trade has been encouraged by the Single Market which has
led to trade creation and trade diversion effects.

The share of UK trade with North American countries has declined, but the United States
remains the largest single export market accounting for 15% of total UK exports. Trade with oil
exporting countries has fallen in relative importance over the last fifteen years In 1979, 10% of
UK exports went to oil exporting countries, this has now declined to just over 3% as has the
share of imports from these countries.

The other significant change in the geographical pattern of trade for the UK is an increasing
share of trade with emerging economies in Asia including China, Singapore, Malaysia, South
Korea, Taiwan and Thailand. The growth of the Indian economy should also help to boost
exports to the sub-continent in the years to come, providing that UK businesses take advantage
of the export opportunities available there.
Although the UK is now a net importer of manufactured goods (our last trade surplus in
manufactured products was achieved in 1983), in several industries, the UK retains a significant
position in international markets and we achieve a trade surplus in power generating equipment,
pharmaceuticals, telecoms equipment and scientific instruments and other items of specialized
machinery.
3. Pomegranate – the Fruit
Pomegranate is a high value crop and its entire tree is of great economic importance. Apart from
its demand for fresh fruits and juice, the processed products like wine and candy are also gaining
importance in world trade. It is an ideal crop for the sustainability of small holdings, as
pomegranate is well suited to the topography and agro-climate of arid and semi-arid regions.
Potential areas for pomegranate cultivation need to be identified and non traditional areas need to
be explored for its cultivation.

There has been a steady increase in area and production of pomegranate in the country. It is
estimated that by the year 2025, the area under pomegranate is projected to increase to 7.5 lakhs
ha, from 1.25 lakhs ha at present. Consequently production is expected to increase by 10 folds
and export by nearly seven folds by the year 2025.

Pomegranates grow best in dry areas with very hot summers and very cold winters. There are
many varieties of pomegranate, but from a retail (consumer) perspective, there are two main
types, classified by color: purple or red, and yellow. The latter is most often used to make juices.
Sizes can vary greatly, and quality is determined by an unblemished skin, color, size, weight,
taste (sweetness).

“The Iranian pomegranate is far better than pomegranates from other countries with regard to
color, juice content and sugar content. A better taste is difficult to prove, but results of tastings
are very good“.1 For juice, Iran and India together account for 95% of concentrate production.

Within the EU15, Spain is the only major producer of pomegranates in the EU15 for commercial
export. Within the CEE and Eastern European region, pomegranates are grown in several
countries, but large scale “commercial” production appears to be lacking.
A Global Scenario of Pomegranate

At the global level, Iran is the world's largest producer and exporter of pomegranates with an
estimated annual production of 670,000 tons, In addition to Iran, other countries including India,
Turkey, Spain, Tunisia, Morocco, Afghanistan, China, Greece, Japan, France, Armenia, Cyprus,
Egypt, Italy and Palestine also cultivate this product. Pomegranate is native to Iran, although its
wild forms are found in India, Afghanistan and Syria. In India, Sholapur is famous for juicy
pomegranate fruit known as Anar. India’s exports of fresh pomegranates amounted to US$ 12.8
mn in 2007-08, up from US$ 3.0 mn in 2002-03, thereby registering an impressive compound
annual growth rate of 62.8%. India’s share in global exports of pomegranates is about 6.4%,
although the country is the largest producer of pomegranates. This clearly calls for making the
product more export oriented, particularly in light of the fact that per unit realization in
international markets is far higher than the domestic market. To enhance exports, increasing
production of exportable quality fruits and providing post-harvest handling facilities, are required
to be taken up. Then only India’s share in exports of pomegranates can increase to 20% in next
7-10 years

Production of Pomegranates in India

Pomegranates in Maharashtra & Karnataka

Pomegranate is an important fruit crop of Maharashtra. It is cultivated in an area of 43,151 ha

with a total production of 4, 31,510 tonnes producing about 85% of the total Indian production,
thereby leading in Pomegranate production in the country. Though Maharashtra leads in the
production of pomegranate, post harvest infrastructure of the state needs to be strengthened.
Critical Observations On Pomegranate Procurement
Present Procurement strategy adopted by various Retail Industries:

At present the procurement of Pomegranate is done only for the export purpose. Since the
cultivation of the Pomegranate in India is done in patches, the major areas of concentration for
procurement of the Pomegranate by the Field Fresh are Maharashtra and Karnataka. The reasons
for their selection was, those two states account for more than 90% of the total Indian
Pomegranate production. Also the farmers in those two states are progressive and have a fair
understanding of the crop. The soils and climate are also very much congenial for Pomegranate
growth.

A retail industry procures the fruits from the farmers through the Service providers. The service
provider will purchase the entire produce of the field from the farmer. Out of the entire produce
which ever is of the export quality, that is separated and procured by the concerned buyers and
the amount is paid on ‘per Kg’ basis. The company personnel, one from the procurement
department and the other from the quality control, closely monitor the entire procedure from
harvesting to packing.

After the packing is done, the following details are marked by the company person on the carton.
 Net weight
 Fruit count inside the carton.
 The cold storage where it is being sent.
 And a stamp impression.

There are four forms which are used during procurement process as follows:

 Procurement Order Slip

 Goods Received Note
 Weighment sheet
 Delivery Challan

Procurement Order slip: It is given by the company to the farmer or other source of the
produce. Terms and conditions, quality and quantity requirements of the company are all
mentioned in this procurement order slip.

Goods Received Note: This is given by the company after receiving the produce from the
farmer or service provider. It gives the details about the how much material received and how
much rejected and also description of the material if any.

Weighment sheet: As the name describes, it tells about the weighment details of the produce.

Delivery Challan: It has the details about the shipping location, type of delivery whether it is a
sales despatch, stock transfer, wastage disposal etc. It also mentions the details of the vehicle by
which it is being transported to the shipping location. The containers filled with the material are
then exported to different parts of the world like United Kingdom, Middle Eastern countries and
some European countries.
The Export Destinations

The major export destination for India’s pomegranates are UAE, the Netherlands, UK, Belgium
and Saudi Arabia

Procurement Process in India

Here the procurement of Pomegranate is dealt in five heads as

1. Quality
2. Quantity
3. Price
4. Time
5. Source
1. QUALITY

In order to maintain high quality levels and food safety standards, retail industries has partnered
with SGS, a world leader in quality control. Their farms are HACCP, EUROGAP, BRC and
AVA accredited.

Consumer’s Preference:

Consumer preference is changing from time to time and from country to country. Earlier, Ganesh
variety with big sized fruits was the preferred one, and the fruits were exported to the Gulf
countries.

Soft seeded, coloured varieties with high per cent of juice with easy to remove arils are preferred.
Fruits weighing more than 500 Gms with superior qualities have immediate and ready
acceptance in the international market. Company has quality control persons to look after the
quality aspects of the fresh fruits.

Quality aspects include

• Size of the fruit

• Shape of the fruit
• Colour of the fruit
• Sunburn effect
• Thrips attack
• Mealy bug
• Bacterial spot.
• Sugar content

2. QUANTITY:

The quantity to be procured depends on the orders from the foreign countries. Presently, since
field fresh is engaged only in the export of the fresh Pomegranate we are looking at the
procurement of only the export quality. The recovery of the export quality fruit from the orchards
vary from one to the other depending upon the variety, management and the age of the orchard.
An orchard which can give an export quality of around 40% is desired.

3. PRICE
Pricing of the orchard generally depend on the quantity of the export quality fruit that can be
recovered from it. There is no scientific method of calculating the price of the orchard.
Retail industries are procuring the Pomegranate from the farmers through the service providers.
The price that is offered by the filed fresh at present is 50/- per kg of export material. The entire
pricing structure that is costing to the company for procurement of the fruit till it reaches the cold
storage is as follows

Price prevailing in international market

The given below tables shows the annual average price range of pomegranates in different
international markets.

Country Annual Average price Range

European Union USD/kg 2.52 to 4.08
INR/kg 113.4 to 183.46
Source: ITC Market News Service, Talkingretail.com, Freshplaza.com, Pomegranet.info

Cost Calculation from harvest to pack house to port

Showing the cost involved in exporting pomegranate (as per information collected during
2008)

(a) Procurement price*:

Variety Approx. price (in Rs./kg)
Bhagwa 40-60
*Price of pomegranates varies according to variety like Bhagwa, Arakta or Ganesh
(b) Charges for harvesting, packing, transport ,etc.(below in table):

Table: Charges for harvesting, packing, transport ,etc.

Source: MSAMB, Maharashtra

(c ) Sea freight charges*:

Freight rates for reefer container are as follows:

Reefer containers
(Rates in US dollars)

20’s 40’s

I. Dubai/Doha 1100 1600

II. Kuala Lampur/Singapore 600 900
III. UK/Amsterdam 1700 2700

* It varies from year to year /season to season, capacity of container and distance covered.

Though the main cost of the procurement is the pomegranate itself, the other costs involved are
the transportation costs from the orchard to the cold storage, the service provider commission
and the cost of the filler material like the white coloured cut paper which provides cushion to the
fruit and also to absorb the unwanted moisture.

4. TIME:
Fresh fruit of Pomegranate is available from October onwards. Best quality fruits are available
from November to March due to low temperatures.
5. SOURCE:
The source of the procurement is farmers of the Karnataka and Maharashtra. During the months
of November, December, January the major sourcing is from Sangola and Pandharpur of
Maharashtra. February onwards the areas like Kustagi, Bellary become the sources. In June
Satana, Malegaon, forms the sources of Pomegranate.
Supply Of Harvested Produce

In the current scenario, after the harvest of the Pomegranate the farmer can send his produce to
the market in four different ways. The advantage of each channel is given below both from the
farmer as well as from the company side.

Channel-1: The Company comes in direct contact with the farmer and there is no middleman.
The advantage to the farmer is that he need not pay the commission to the agent as he is
eliminated.

The advantage for the company is that he is close to the farmer and there is a relationship
building between the company and the farmer. Even the company need not pay any commission
to the service providers and it can pay a better price to the farmer to see that he is satisfied.

Limitation: The Company has to handle everything which needs more manpower and it is
cumbersome. The company should spend lot of time in locating the pomegranate farmers and
their harvesting schedules.

Channel-II: The farmers form a group of their interest for better bargaining and to distribute the
cost of storage and transport expenses. Farmers can derive better price since they are in a group.

The company can avail material from these farmer interest groups which also do not include
middleman.

Channel-III: This involves a service provider in between farmer and the company or market.
Advantage: The farmers need not look into the packing and grading aspects. He need not bother
about the transport and storage of the produce. The advantage for the company is that it need not
worry in finding the farmers and the harvesting schedules of different orchards. It also need not
worry about the produce other than export quality as that is taken care of by the service provider

Channel-IV: Farmer directly sells his produce in the Mandi. In this, farmer have a little say
about the price in the market and he may go for distress sale as he may not go back home with
the produce keeping in view of the transportation and storage costs involved in it and also they
are born by him alone.

Export and export potential

A. Domestic strengths for export

Domestic strengths for exporting pomegranate are given in the following points:-

• India is the largest producer of pomegranates in the world.

• India produces finest varieties of pomegranate having soft seeds, very less acids and very
attractive colour of the fruits and grains.
• With adoption of different “bahars”, India can supply pomegranates almost throughout the
year.
• Maximum cultivation of pomegranate is in states of Maharashtra and North Western Karnataka
which are very close to the western port of Mumbai for exporting to Gulf and European
countries.
• Quality of pomegranate is much superior to Spain and Iran in edible quality and attractiveness.
• Agri Export Zone for enhancing exports of pomegranate has been established in Maharashtra
state.
• There is strong research support for scientific cultivation of pomegranate like National
Research Center for Pomegranate, Solapur, MPKV, Rahuri in Maharashtra and IIHR, Bangalore
in Karnataka state.
• Pomegranate co-operative societies from Maharashtra state have formed an apex cooperative
namely MAHA ANAR.
• Bhagwa variety has high acceptance in European market.
• Pomegranate export facility center is being set up/has been set up in Baramati area with
mechanical handling system.

B. Exports

Export of pomegranate has upsurged from 6303 tons in 2002-2003 to 21,670 tons in 2006-2007.
This is more than 300% increase in exports from India. Actually there is tremendous potential for
exports of pomegranate from India. This is evident from the fact that Spain exports about 75% of
its estimated production of 1,20,000 tons, whereas Iran exports about 20% of its estimated
production of 1,20,000 tons and India exports only 2.55% (21,670 tons) of its total production of
8,49,100 tons . This is inspite of the fact that India is largest producer of pomegranates in the
world. Moreover, India produces finest edible quality pomegranates which are available almost
throughout the year.

C. Problems faced in exporting pomegranate

 Production in India is not suitable for export. Very less amount of the total produce fulfil
the basic requirement of exports.
 High concentration of pesticides in the product.
 Lack of awareness of modern method of farming and processing.

D. Measures for enhancing competitiveness for export

Following measures if adopted are likely to enhance competitiveness of Indian pomegranates in

foreign markets:

• Competition of India with regard to export of pomegranates is with Spain and Iran, which are
nearer to European countries who import maximum quantity. Our efforts needs to be towards
lowering production cost by increasing productivity.
• For exporting to South East Asian countries, and to economize on cost of transport, it is
suggested that special production areas for export need to be developed in Anantpur area in
Andhra Pradesh and drier areas of Tamil Nadu, so that exports can be done from eastern ports.
• Pack house facilities need to be established in Karnataka and Andhra Pradesh pomegranate
growing areas also.
• India has already embarked upon building up quality and branding its product in order to
compete with Spain and Iran. The Brand needs to be popularized aggressively.
• Pomegranate supplies from Spain and Iran to Europe taper from January onwards and
therefore, supplies from India need to be concentrated during February to July months with the
help of Hast and Ambe bahar when there will be no competition from Spain.
• Efforts need to be made to popularize pomegranates in Canada, U.S.A., South American
countries etc by holding fruit fairs, exhibitions etc, as there is good price realization also from
these countries.
• Similarly, efforts need to be accelerated in popularizing pomegranates in Australia, Korea,
Japan, etc.

Technological Initiatives In Pomegranate

Crop improvement

A national pomegranate gene bank has been established in 2006. More than 85 accessions
collected from different places.

Crop production

 Multistem (2-4 branches) system of training was being followed by growers and plants
were kept in proper shape through pruning.
 All pomegranate orchards revealed drip irrigation; in addition some orchards had also
irrigation channels.
 Sole cropping system was more common. Intercropping with gram ,watermelon, onion
and brinjal was also practiced in some of the orchards of 1-3 year age.
 Use of FYM and NPK fertilizers was common. However, some growers also applied
neem cake at the time of bahar treatment.

Good Agricultural Practices (GAP)

 Using disease free and quality plant material of improved cultivars.

 Adoption of high planting density.
 Proper canopy management.
 Integrated nutrient and water management.
 Keeping proper load of fruits on the tree
 Timely control of pests and diseases by adopting IPM practices.

International Food Safety Standards & Non Tariff Barriers

Undoubtedly, the thrust of any intervention in future has to be on improving quality of
pomegranates as defined and understood in international markets.

 The activities of Agriculture Export Zones, like sourcing of inputs, production,

processing, infrastructure development, should be in conformation with international
quality standards including compliance of SPS and TBT regulations.
 Necessary pomegranate information, testing facilities may be provided to exporters and
be made known to all stakeholders, including farmers. Thus, the role of Agriculture
Export Zones should also include effective quality control and supply chain management
beginning from planting suitable varieties to marketing and promotion.
 Food safety and agricultural health risk management should be considered as a core
competence in India’s competitiveness strategy, especially in the context of trade in high
value processed pomegranate.
 Government and the private sector should adopt a strategic approach to food safety,
agricultural health, and trade, one that takes into account broad commercial and
developmental objectives.
 Among the factors that must be considered are the long-term costs and benefits of
compliance and the wider distributional and societal impacts of the available responses.
Strategic approaches can be crafted by individual private entities or public agencies, or
through various types of collective action.
4. Imports of Pomegranate in Europe

Factors Driving Consumption and Demand in Europe

In general, the same trends that are influencing fruit and vegetable consumption everywhere are
increasing the popularity of pomegranates:

1. Health and fitness trends: A push towards more healthy living and healthy lifestyles. Obesity
is becoming a serious health problem in many EU countries. Increasing the consumption of fruit
and vegetables is one of the measures most often mentioned by consumers to reduce weight.

2. Opening up of new markets in Eastern Europe: Especially in the eastern countries,

consumption patterns are changing fast towards a Western European style.

3. Immigration: Immigrants often keep (part of) their culinary traditions, using specific fruit
and vegetables that may be unfamiliar to native Europeans. Pomegranates are more common in
the Mediterranean and Middle East than in many parts of Western Europe. In addition to the
above general trends, there are several pomegranate specific demand drivers:

 Health benefits and the labelling and marketing of pomegranates as the next
“super fruit”. Among reported health benefits of the pomegranate: antioxidant
properties to fight disease; lower bad cholesterol; high potassium content (almost as
high as in orange juice, but not a source of vitamin C); good source of fiber. Possibly
beneficial in fighting prostate cancer and breast cancer. Even some studies exist that
point to pomegranate juice helping to remove the AIDS virus.

 Europe is experiencing a “trickle down effect” from the increase in popularity in the
US. Demand in the UK is growing rapidly and other EU countries are following suit.

The following chart highlights key consumption trends (all foods) for Europe across the next few
years, and matches each trend with the implication for pomegranates and India:

European Key Consumption Trends to 2010

Import Overview

The main global import destinations are the non-pomegranate producing countries of Europe.
The UK is the current leader in imports, but according to one industry source, there is very little
difference between EU countries in terms of their consumption and / or growing preference for
pomegranates.

For India, the EU15, especially the UK, are the obvious markets for it to target, but investigation
into the markets of Latvia, Croatia and Slovakia (which import from Spain) could be interesting,
though these markets will not pay the premium of the EU15.

Trade Structure

Distribution Channel Overview

Generally, the distribution channels for fresh fruit conform to the following patterns
Fruits and vegetables are increasingly channelled through large and sophisticated companies
handling all aspects of import and distribution. In the near future, competitiveness will depend
strongly on the ability to supply the global operating supermarkets with mainly local produced
fruits and vegetables. Hypermarkets and supermarkets are also catalysts to the increasing sales of
pre-packed produce. Their fruit and vegetable assortments have become larger and deeper.
Retailers and breeders (product development companies) are increasingly collaborating to
develop new and innovative products.

The rise of multiple stores / supermarkets has radically altered the market structure of fresh fruit
and vegetable distribution. The concentration at the retail level has an ever-smaller number of
very professional players dominating distribution. This, in turn, has also provoked changes in the
supply chains to retailers, where larger entities have emerged, with a stronger customer
orientation. Supermarket chains increasingly seek to ensure their supplies through direct contact
with growers and grower associations, especially for bulk tropical fruit and vegetables, which
already have a considerable market

Market Entry: Tariffs and Non-Tariff Barriers

Subsidies and Tariffs

The market for fresh fruits and vegetables in the EU is freer than other agricultural markets. For
most fruit and vegetables, nevertheless, import duties are payable, but for most developing
countries these duties are waived. There are no EU subsidies for the production of pomegranates

To help developing countries, the EU developed a Generalized System of Preferences (GSP) to

promote the sustainable development of and trade with developing countries, of which India
forms a part.

http://export-help.cec.eu.int.

Non-Tariff Barriers to Entry

Non tariff barriers include social, environmental and quality-related market requirements which
are growing importance in international trade and are often specified by European buyers
through labels, codes of conduct and management systems. Food safety standards and marketing
standards (or quality standards) have been laid down in the EU for products which are supplied
fresh to the consumer, thereby reducing transaction costs and uncertainty in the product supply.

The importance of food safety and quality certification in fresh fruit and vegetables is growing,
relating to all points in the value chain from production to post-harvest. Retailers have set out
their own standards, including GlobalGAP (formerly EurepGAP), BRC, HACCP, ISO, etc. In
addition, individual supermarket chains often impose their own quality standards above and
beyond.
While many of these requirements are technically still “voluntary” the requirements for exporters
to fulfill these and other emerging standards, for example relating to pesticide use and residue,
and even carbon foot printing, will become more mandatory as the years evolve. Ensuring
compliance, meeting and going above and beyond, are becoming the minimum “get in the game”
attributes for new suppliers.

Market Entry: Requirements for Success

In order for newcomers to the demanding export markets for fresh fruit and specialty fruits to
succeed, and regardless of the strategic position taken, they must understand their customers and
the requirements of product and service to be baseline competitive in this competitive and fast
changing industry.

An understanding of importer and retailer needs is crucial for success. The following charts
outline, in general (not specific for pomegranates) the service and product attributes required by
fresh fruit importers in Europe:

Among product attributes, Traceability is extremely important, even higher than the perceived
quality of the product. Interestingly, Price appeared in the Top 5 – this is a low margin business
with high turnover where, as one importer put it: “Every penny counts”. Significant supplier
dissatisfaction exists with Traceability Standards and Price, indicated by satisfaction ratings
being lower than importance ratings.
Among service attributes, Reliability of Delivery was the one “non-negotiable”: this is a zero
inventory business. Also around Delivery, Speed and Frequency rounded out the most important
attributes, though frequency does not necessarily mean daily. Relationship issues, including
Supplier Technology and Communication were also highlighted as important. The most
dissatisfaction exists with Reliability, as well as with Speed of Delivery

Specifically for pomegranates, Quality is primarily determined size and colour. For size, the
trend going forward is to go for larger fruit, not smaller, but there may be a niche to introduce a
new variety that is smaller and if there is potential to market it as a specialty. Consumers
generally preferred fruits, both externally and internally, though some say the yellow fruits from
Spain are tastier. The names of new varieties introduced in the States play on this preference for
the redness of pomegranates: Pink Satin, Red Silk, Kashmir Blend and Garnet Sash.

Quality, encompassing the direct product characteristics (appearance, taste) as well as the
production path and traceability, is the most important attribute to purchasers all along the value
chain. But quality is just a “get in the game” baseline requirement. In addition, each potential
entrant into the market place has to determine their competitive advantage when approaching the
importers and retailers. There are three reasons a supermarket (and suppliers to a supermarket)
will take on a new supplier:

1) Price advantage;
2) off season opportunity;
3) new and unique product.

Unless a new supplier can offer one of these three criteria, they have little chance of entering the
market. Fresh pomegranates, offering the desired consumer characteristics, would qualify as a
new and relatively unique product.
5. Documents required for exports

a) Documents related to goods

a) Invoice b) Packing List c) Certificate of origin

b) Documents related to shipment

a) Mate Receipt b) Shipping Bill c) Bill of handing d) Airway Bill

c) Documents related to Payment

a) Letter of Credit (L/C) b) Bill of Exchange

d) Documents related to quality of goods

a) Phytosanitary Certificate b) GLOBALGAP Certification c) Health Certificate

e) Organic Certification
Certificate indicating material produce is based on organic farming.

f) Documents related to Foreign Exchange Regulations

GR Form: Documents required by RBI which assures to RBI that the exporter will realize the
proceeds of goods within 180 days from the date of Shipment.

g) Other Document
Bank Realization Certification (BRC):- This is the advice given by Foreign Exchange
Bank after the realization of money from Importer.
6. Challenges & Concerns
The following analyses the major threats to entry for developing countries to the EU in general,
matched with the implications for India and pomegranates, if applicable:

Major threats for exporters from Implication for India and Level of
developing countries looking to serve EU Pomegranates Threat
market
Overproduction of fruit in EU countries, leading to Not relevant; apart from Spain Low
low priced domestically produced fruit and there are no major European
vegetables competing with more expensive, producers
imported products
Stagnating or declining consumption of fruit and Not relevant for pomegranates Low
vegetables in old EU countries; consumers will not which are experiencing strong
consume more food but will make changes in growth
eating habits and choice of products (“battle for
stomach share”)
General price pressure on food, influencing the Need to enter and stay at Med
retail prices of fruit and vegetables; price reduction premium end of market
is expected to continue in the near future
First-mover advantage for new products eroding Potential flood of products High
fast, since other producers are likely to copy the coming on line within 2 -3
product or production process rapidly, inducing a years, especially to fill the
spiral of overproduction and falling prices counter season opportunity
Certification, requiring for example EurepGAP for Significant production High
the production process of fresh fruit and vegetables investments required, as with
and GMP/HACCP/BRC for processed fruit and all fruits and vegetables
vegetables, requiring serious managerial and
technical efforts and involving costs
Fluctuating prices of fruit and vegetables, induced Timing of production season Low – High
by fluctuating supply
Increased consolidation in buyers’ market, leading Pomegranates are a good Med
to increased buyers’ power, forcing producers to smallholder crop but
cost-efficient and large-scale production and distribution channel pressures
making it more difficult for small scale and new are real
producers to break into the market
High (and rising) fuel prices increasing the cost of India is relatively far so it has High
transport high effect as compared to
other players

*
What is EUREPGAP CERTIFICATION?
EUREPGAP started as a retailer initiative in 1997 with major inputs and support from the
chemical companies. EUREPGAP was established by the Euro-Retailer Produce Working Group
(EUREP) with the aim of setting standard and procedures for the development of GAP.

What are the Objectives of EUREPGAP?

The main objective of EUREPGAP is, to lead the system to an EN 45011-based accredited
certification system, referring to the cope of "EUREPGAP Fruits and Vegetables". Partners from
the entire food chain for fruit and vegetable production have agreed upon the EUREPGAP
certification document and procedures, which were achieved after extensive consultation over a
three-year period.
7. Opportunities for India

Strategic Positioning
There are three main broad strategies that can be used in targeting new horticulture markets.
The following graph outlines the options:

The supermarkets chains are becoming dominant and revolutionizing distribution in the fruit and
vegetable industry. Even if not directly dealing or selling via supermarkets, increasingly the
effect of the multiples is being felt across the board. The “Chain Strategy” is now taking over
and encompassing elements of the other strategies, especially in the EU15 markets.

Given the premium nature of pomegranates, India should pursue opportunities based on quality
and consumer preferences, and avoid competing on scale, cost, or distribution channel efficiency.
8. The Way Forward

The experience of many countries world over suggests that export orientation of the agriculture
sector is one of the prerequisites for its success in global trade. Further, it has also been observed
that export orientation of agriculture sector is sustained when complemented with a sizeable
processing industry and strong internal market. As India lacks these requirements, much success
on the export front has not been achieved, though India is at the forefront of production under
various segments including pomegranates.

 To provide a push to agri exports, there is a need to follow a five-pronged strategy. This
includes Product Segmentation, Market Diversification, Market Penetration, Value
Addition and Agriculture Infrastructure Up gradation. Pomegranate farmers also need to
be given risk protection across various aspects like market risk protection and production
risk protection.
 The two golden rules for successful development of the pomegranate sector are to ensure
consistency in supply and provide recorded and demonstrated traceability of products.
 It is important that the production innovations should focus on developing sustainable
production techniques for pomegranates, and also focus on adding value in terms of
packaging and processing.
9. RECOMMENDATIONS
 Awareness generation on harvesting and post harvest management with due attention on
mechanized harvesting, sorting, grading, precooling, waxing, packaging, palletisation etc.
The export consignments for Europe require proper palletisation and fumigation. The
pomegranates are required to be packed in trays and usage of paper cuttings to be
discouraged.
 The pomegranate farmers/traders and even exporters are not aware about the pesticide
spray schedule for exports as out of common 43 chemicals under different trade name
with different active ingredients are used on large scale.
 There is need for creating awareness about the chemicals viz trade name Bavistin,
Kavach, M 45, Redomil, Polyram, Antracol, Z-78, Cuman-L, Benofit which should be
avoided. There is high chance of residue detection.
 Awareness generation on EurepGap Certification and promotion of Organic farming in
phased manner should be encouraged. The pomegranates growers should be registered
with the horticulture/agriculture department of the concerned states to ensure traceability
from farm level to the consumer end.
 It is recommended to strengthen the residue testing system especially for fresh
pomegranates for exports.
 There is need for backward and forward linkages by adopting contract farming in
pomegranate.
 Contract farming based on centralized model may be adopted. As the processor buys the
commodity from a large number of farmers under contract with the firm.
 Institutional credit facilities during pest management should be ascertained to the small
farmers.
 The Agri- Export Zone on Pomegranate could be promoted to include export promotion
of fresh pomegranates as well as processed products. The pomegranate
growers/processors, value adding processing firms can get fiscal incentives in terms of
tax concessions under the schemes of government of India.
 It is also recommended to develop literature on pomegranates for distribution in
international exhibitions and the exporters should be encouraged to participate in
exhibitions/fair etc on horticultural crops.
 The products that consumers are willing to pay higher prices for are large, red
pomegranate
10. REFERENCES

Data Sources
CBI, www.cbi.nl
Trademap Statistics, www.trade-map.org
FAOStat, www.fao.org
EuroStat, www.epp.eurostat.ec.europa.eu
CA Pomegranate Council,

Google, www.google.com

Selected Articles, Web Resources and Documents

“EU Market for Fresh Fruits and Vegetables 2006” CBI

Export Opportunities to Europe and the Region, December 19, 2007