California agricultural producers have many opportunities to break into overseas markets using the international airline industry.Previous reports published by the Center for Agricultural Business (CAB) ased at California State University, Fresno have outlined strategies or using the “backhaul” mode of transport, i.e., exporting agricultural roduce from the United States to foreign countries in the holds of assenger or freight airliners on their return flights to their country f origin. Further research in this area has revealed specific pportunities in China – growing markets that could be accessed by California produce exporters, states international trade consultant Jock O’Connell in a new report published by CAB.

The report is titled, “Taking the Fast Plane to China: An Expanded Role for Air Freight in Increasing California’s Fresh Fruit and Vegetable Exports to China.” The work follows two studies in which O’Connell collaborated with Fresno State economists to explore the potential for increased airborne agricultural exports from California to foreign countries.

The most recent report examines the potential for using air freight services more extensively than ever before, at least on an interim basis, to supply California-grown fruits and vegetables to what U.S. Foreign Agricultural Service officials have identified as China’s emerging city markets.

These 14 city markets consist of highly populated urban centers scattered around the country. While most city markets are along China’s coastline, the roster includes several in its interior provinces.

“With an increasing number of direct and indirect flight connections available between California and China, exporters of perishable fruits and vegetables should take a new look at air-freight’s potential in overcoming severe shortcomings in China’s cold-chain systems,” O’Connell states in the report.

The cold-chain system consists of mostly truck and train services that deliver produce from China’s many small farms in outlying areas into the urban centers. While technology is advancing rapidly in many areas, dependable cold-chain transport is lacking. According to a recent report by the Pacific Economic Corporation Council, spoilage rates as high as one-third occur on shipments of fresh fruits and vegetables from China’s farms to its urban markets.

“The scale of economic loss is overshadowed only by the threat posed to food safety and public health,” O’Connell said.

These food safety concerns, combined with growing ranks of upper-middle class consumers and increased presence of Western-style food retailers, could open doors to California shippers.

“Ultimately, Chinese importers and distributors would have to determine whether demand in second-tier markets can tolerate the higher prices that would have to be charged to offset the additional costs associated with expedited air delivery,” O’Connell said. At any rate, California exporters may benefit from the relatively low airfreight rates being charged by airlines eager to have cargo to carry back to the Far East on the backhaul, he added.

Concluding his report, O’Connell said his research findings suggest that fruit, rather than vegetables, provide the most opportunities for backhaul export to China. Both organic fruits and vegetables could also see demand there.

While city markets remain a narrow niche for California exporters, there is still potential for profit, O’Connell said.

“Even a small percentage of a consumer public as large as China’s constitutes what in other countries might be regarded as a mass market,” he said. “The opportunities and logistics are both there to be exploited.”

Funding for this study was made available by the Governor’s “Buy California” Initiative, the California Department of Food and Agriculture and the U.S. Department of Agriculture, through the California State University Agricultural Research Initiative.

The complete report on backhaul trade opportunities in China is available for viewing or downloading from the CAB Web site, http://cati.csufresno.edu/cab. For additional information about agricultural economics research and/or related events, call the CAB office at 559.278.4405.

(Copy by Steve Olson of the California Agricultural Technology Institute at Fresno State.)