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The Pros and Cons of Local Sourcing

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Archives, Global Logistics, Global Trade Daily, International Trade

The Pros and Cons of Local Sourcing

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The Pros and Cons of Local Sourcing

Local sourcing is the practice of contracting suppliers located within your country or even city. This term also applies to the suppliers in your home county. However, there is always considerable debate over whether to prioritize the local suppliers or cast your net wider. To help decide, it is wise to look at the pros and cons of local sourcing.

The pros of local sourcing

Local sourcing means faster and more predictable delivery times

The news of supply chain disruptions is prevalent. Also, planning for survival in the new normal the pandemic has left us with is complex. So, it is no wonder that perhaps the most significant advantage of local sourcing is its reliability. Considering that the distance your cargo would need to travel is vastly reduced, the problems it can run into are fewer as well. You would not need to worry about ports or airports closing down and leaving your goods stranded. And, with that increased reliability, it becomes much easier to handle the risk factors of high-profitability deals.

You can work with suppliers much more closely

Another of the advantages of local suppliers is that you can work with them more closely. When dealing with an international supplier a whole sea away, it is natural that you can have at most one or two meetings in person a year. On the other hand, a short trip is all that would take to reach and discuss business with a local supplier. Of course, this means that you can also get them to customize some of their services for you, particularly if you need certain parts that need to be custom produced for your needs or a similar demand.

You would not need to manage your warehouses as meticulously

When your supplier is just down the street or a city or two away, timing deliveries right becomes easier. It means that, instead of having huge shipments that take up lots of space and cause logistics problems, it is possible to have a string of smaller deliveries. And, with the reduced risk and delay factors that we have already discussed, you can also order them, so they arrive before you need to have them shipped out. In turn, this would ensure that your warehouse is kept busy but never overflows or has shipments clogging up space better used for something else. And you could even manage with much smaller warehouses.

You could more easily make last-minute orders

Making a last-minute order is not something you should turn into a habit. However, if any of your suppliers run into problems, or you have a sudden order of goods yourself, you would be able to resolve the situation much more easily. A quick trip or a phone call would allow you to check in with your partners and look for additional goods. And the proximity would make getting the goods to you a breeze, as well. In the end, this extra wiggle room would let you approach your business in a much more relaxed way than ordering goods from overseas. After all, a missing shipment in such cases might take weeks to make up for.

You would not need to deal with import taxes

It is impossible to avoid worrying about taxes when trying to import goods. For any legitimate business, it is not too difficult a hurdle to cross. However, it can be tough to manage when you are just starting, and they are cutting into your profits. That is why, especially for brand new businesses, local suppliers that allow them to bypass this expense are an excellent choice. There are plenty of rare and common U.S. customs clearance issues you would entirely avoid by choosing to go through a local supplier, too.

Enhancing Sustainability and Reducing Carbon Footprint

One of the most significant advantages of local sourcing is its positive impact on the environment. By reducing the distance that goods travel, you contribute to lower carbon emissions and minimize the ecological footprint of your supply chain. With growing awareness of environmental concerns and increasing consumer demands for sustainable practices, opting for local suppliers can significantly boost your company’s reputation and attract eco-conscious customers.

Fostering Community Growth and Support

When you source locally, you actively contribute to the growth of your community and support the local economy. By providing business to nearby suppliers, you help create job opportunities and stimulate economic development. This, in turn, can lead to increased consumer spending within the community, benefiting other businesses as well. Additionally, building strong relationships with local suppliers can foster a sense of camaraderie and collaboration among businesses, creating a supportive network for mutual growth.

The cons of local sourcing

The local supplier might grow over-dependent on your business

It might sound odd. But be it for the supplier or the business, over-dependence is not great. If a supplier starts to prioritize the demands of the company they rely on for the majority of their profits, it can seriously impact their competitiveness in the market. They can grow too specialized to grow their business, and it can be challenging to secure new contracts. There is also the matter of their new product development slowing or halting entirely. It means that they might eventually be left behind and lose their chief source of income as well. It would make demand planning for the buyers difficult as well if planning to branch out to new products.

Canceling a contract can incur a lot of backlash

Hiring local suppliers and helping the local economy is fantastic for PR. However, if you ever need to move on from those contracts, you would be facing an equal amount of backlash and ill-will. No matter how justified your decision might be. The public could still view it as abandoning those same businesses and economies you were lauded for helping.

You might not be able to obtain the best or latest products

Local suppliers might not be able to offer you top-of-the-line goods. They are likely solid and reliable manufacturers, yes. But with the world as a stage for your business, it is always possible to find someone producing better versions of the product you are interested in. So, you are more or less choosing between reliability versus quality. Of course, there are exceptions.

Local suppliers can be less efficient

Even though they are more reliable, local suppliers can have efficiency problems. They tend to be smaller and have a smaller production capacity. Of course, as you work together and prosper, they might expand their business and build more facilities. But then you run the risk of our first cons: their reliance on your purchases growing to the point they practically only cater to you.

It is hard to ensure objective supplier selection

You might, over time, develop a tight-knit bond with the local suppliers, especially if they have been there for you since the foundation of your company. That is natural. However, if your company is developing faster than they are, you might find yourself in need of new partners to keep up with the demand you are facing. At such a time, due to your friendship or perhaps fear of public backlash, it wouldn’t be easy to objectively select another supplier better suited to your needs.

Limited Access to Specialized Products

While local suppliers offer reliability, they may not always have the capacity or expertise to provide highly specialized or cutting-edge products. In industries where innovation is crucial, you might need to explore international options to access the latest advancements and unique offerings.

Higher Costs and Reduced Cost Competitiveness

Local sourcing might come with higher production and labor costs compared to countries with lower manufacturing expenses. This can affect the cost competitiveness of your products in the global market. As a result, careful cost-benefit analysis is essential to ensure that the benefits of local sourcing outweigh the potential price disadvantages.

Dependence on Regional Vulnerabilities

By relying heavily on local suppliers, your supply chain could be susceptible to regional vulnerabilities. Natural disasters, economic downturns, or political instability in the region could disrupt your supply chain and affect your operations. Diversifying your sourcing strategy can help mitigate these risks and ensure a more resilient supply chain.

Final word

Now you know the pros and cons of local sourcing, so it should be easier to make an informed decision. Whether you decide to pursue local or international suppliers, remember that your priority is always the development and future of your company.

 

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Archives, Global Logistics, Global Trade Daily, Warehousing

Calculating the True Value of a WMS: Top Cost Savings for Manufacturing Companies

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When manufacturing companies consider the digitization of their supply chain, many opt to delay their project because of the investments required to acquire and implement new technology solutions. In so doing, however, they deprive themselves of their operational and financial benefits.   

SaaS solutions like the SOLOCHAIN WMS have made efficient technology solutions far more affordable than ever before. Nevertheless, a WMS still remains a significant investment to smaller manufacturing companies. However, it’s important to keep in mind that a WMS or ERP’s TOC is not indicative of the system’s actual value – at least, not in and of itself.

Any investment in supply chain infrastructure must be evaluated by relating the TOC to the ROI an operator stands to achieve. It is therefore essential that operators rigorously understand the kinds of savings and gains a given technology solution can yield to make an informed decision regarding its value.

In this paper, we look at five ways manufacturing companies achieve tangible and intangible savings and gains thanks to the SOLOCHAIN WMS.

1. Roasting Coffee to Customers Satisfaction, for Less

A coffee roasting, packaging, and distribution company is putting out a great product and garnering the attention of major players the likes of Walmart, Target, and Menards. To benefit from these new revenue streams, the manufacturer must comply with distinct customer requirements, from packaging to labeling to shipping.

With the SOLOCHAIN WMS integrated with its ERP system, the manufacturer can rely on automated compliance processes and ensure that all shipments meet their customers’ requirements. At all stages of the production and distribution cycle, employees are informed of the customer’s requirements through intuitive interfaces on handheld devices or computer stations.

Thanks to these efficiency gains, the manufacturer is able to achieve a throughput that meets the increased demand instead of having to invest in new real estate, new material handling equipment, and a larger labor force.

2. Manufacturing Cosmetics in an Attractive Work Environment

Some savings generated by the SOLOCHAIN WMS are easily quantified. Others are more intangible, but nevertheless very real.

Most manufacturers these days have trouble attracting and retaining qualified warehouse workers. For a cosmetics manufacturer, this was true before the pandemic hit and it has become a real thorn in their foot today. Labor shortages are now affecting manufacturing and distribution activities to the point where they cannot meet productivity targets. Delays in shipments are having an impact on service levels. Meanwhile, a high turnover rate leads to significant training fees and further operational penalties.

The SOLOCHAIN WMS supports workflows from production processes all the way to shipping. Thanks to clear instructions on intuitive interfaces, activities in the warehouse are more efficient and the cosmetics maker can meet its productivity targets with fewer employees.

Implementing the WMS on handheld devices similar to iPhones and Android platforms, the younger generation of workers find their work environment much more pleasant. This helps the cosmetic maker achieve a higher retention rate, which in turn reduces the training budgets.

By relying on a smaller workforce and retaining more of its employees thanks to an improved work environment, the company can meet its productivity targets and ensure customer satisfaction while saving on labor costs.

3. A Production Flow That Never Drops the Ball

The benefits of traceability might be more obvious in the Food & Beverage industry, but the truth is that all manufacturers stand to make important savings by keeping track of the items that go into making what they produce.

Through SOLOCHAIN’s traceability and automated order cycles capabilities, a baseball equipment manufacturer can keep an eye on quantities produced as well as every item consumed in the process. Management can configure the WMS so that it automatically generates POs to procure items once a certain quantity threshold is reached. In that way, SOLOCHAIN ensures that production is never halted because items are missing on the shelves.

With management in charge of determining thresholds, the system also bypasses the risk of human errors, avoiding that too many, or to few items are ordered. This leads to an optimal use of the warehouse’s storage capacity, which saves the baseball equipment manufacturer from having to make unnecessary investments in their physical infrastructure.

4. Your Counts

Weekly inventory cycle counts force a manufacturer of audio-visual equipment to close areas in the warehouse. This slows down productivity and cuts into the manufacturer’s margins. Thanks to SOLOCHAIN’s inventory management capabilities, the company can save on the costs of long weekly cycle counts.

Once implemented on handheld scanning devices, SOLOCHAIN enables the manufacturer to keep track, in real time, of the quantity and location of every item in the warehouse. While they perform cycle counts, employees are continuously supported in their activities with clear instructions, which drastically cuts down on the time required to complete their tasks.

Today, the manufacturer is attaining inventory accuracy levels of 99.6% and working on eliminating weekly shutdown periods altogether. Thanks to SOLOCHAIN’s support, annual counts can be performed in a single weekend, ensuring that their production of a5. Thinking Ahead: Intelligent Manufacturing  audio-visual equipment never misses a beat.

A food processing facility specialises in the production of organic packaged meals that are delivered daily to various organic grocers in the region. Their products are gaining in popularity and demand is on the rise. The number and complexity of customer orders are quickly overwhelming their pen & paper fulfilment processes. The resulting production and shipping errors are now eating at the manufacturer’s profits and affecting customer satisfaction levels.

The SOLOCHAIN WMS facilitates Just-In-Time Delivery through automated full cycle order management. Thanks to the system’s support, order fulfillment at the food service manufacturer is now virtually errorless. Clients are satisfied and demand is on the rise again. Meanwhile, lesser returns lead to lesser losses, which in turn saves the organic meal maker from welting margins.

About Generix Group

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more. 

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Archives, Global Logistics, Global Trade Daily, Warehousing

3 Insightful Decisions That SOLOCHAIN WMS Can Assist Manufacturers With

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The digitization of supply chains is well underway. SaaS solutions, such as the SOLOCHAIN WMS, have made it easier for manufacturing companies to reap the operational benefits of new technology solutions, rapidly obtain ROI, and stimulate growth. 

In this blog, we take a quick look at the three scenarios that illustrate how the SOLOCHAIN WMS not only improves daily operations on the floor, but also provides management crucial information to help leaders make better decisions. Find out how SOLOCHAIN concretely enables more efficient and cost-effective activities in the warehouse and paves the way to better client experience, sustained growth, and higher margins.

Planning Production in a Time of Supply Chain Disruptions

Many pieces and parts go into making a forklift that usually must be acquired from various vendors. When supply chain disruptions leave items blocked in container yards here and there across the coast, it quickly becomes difficult to determine when the needed pieces will be delivered. This severely limits a manufacturer’s ability to plan production and, consequently, to adequately manage clients’ expectations.

SOLOCHAIN gives a forklift manufacturer the ability to manage orders and locate incoming items across all channels from one easy to read interface. Once SOLOCHAIN is integrated with their ERP and their vendors’ systems, the manufacturer can the leverage the WMS to identify every container, every truck, and every facility where ordered items are located, as well as any changes to delivery dates. Thanks to that data, the manufacturer can precisely determine production calendars, find alternative solutions when need be, and keep their customers apprised.

Maintaining high service levels in a time of disruptions gives the forklift manufacturer a competitive advantage that opens new possibilities for growth.

Making Candy Bars that Make Everyone Smile

Manufacturing in the food & beverage industry requires that operators pay attention to a variety of details: FIFO across different temp zones, items consumed in a batch, customer shelf-life requirements, etc. To ensure its commercial success, a candy bar processing facility must be able to rely on the right data so that items are consumed at the right time and processed products are efficiently picked and shipped that meet the client’s standards.

SOLOCHAIN supports all activities in the processing facility, from the reception of ingredients to the production of processed goods to shipping the candy. At every step, adaptable mobile workflow and graphical tools are accessible to employees on intuitive, easy to read interfaces. Dashboards provide them the right information to ensure that items are handled properly and efficiently. SOLOCHAIN will, for example, communicate FIFO data to employees picking ingredients, guaranteeing that stocks are efficiently consumed and losses are avoided. It will also inform employees of a client’s shelf-life requirements, making sure that picked items meet their standards and are not returned, which avoids costly penalties.

Meanwhile, SOLOCHAIN affords management granular visibility on crucial information: who is performing what task, details regarding production progress, all inventory modifications in real time, and the status of orders fulfilment. Thanks to intuitive dashboards and detailed reporting capabilities, the SOLOCHAIN WMS enables faster order fulfillment, improved customer satisfaction, and, ultimately, higher margins.

Download WMS SOLOCHAIN Product Sheet Here

Efficient Recalls at the Ice Cream Factory

While all manufacturers do their best to steer clear of having to perform recalls, they remain a part of the game. The real differentiator between competing companies is how well recalls are managed. The key, of course, is to achieve recalls that are precise and expedient. By doing so, operators avoid crippling financial penalties and maintain the high service levels that have allowed them to build strong customer confidence over time.

Thanks to its powerful traceability capabilities, SOLOCHAIN informs a manufacturer such as an ice cream maker of all the items that were consumed in a batch. Moreover, it allows the ice cream maker to rigorously trace each and every one of these items, from vendor to customer. And if that wasn’t enough, the WMS also contains a visual tool that makes it easy for employees on the floor to verify, understand, and comply with FDA regulations.

SOLOCHAIN therefore makes it easy for the ice cream maker to precisely identify which lot of cream was problematic, which batches of ice cream consumed that cream, and which must consequently be recalled. SOLOCHAIN let management know of the exact location of every unit from these batches, enabling them to make precise and efficient recalls. Thanks to SOLOCHAIN, no good ice cream goes wasted!

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.

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Archives, Global Trade Daily, Imports/Exports, News

U.S. Non-Electric Air Heater Imports Surpass Record $805M

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IndexBox has just published a new report: ‘U.S. – Air Heaters Or Hot Air Distributors – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

In 2021, the U.S., the largest buyer in the global non-electric air heater market, imported goods worth over $805B, a 33% increase compared to the figures of 2020. American purchases from Mexico and Canada sharply increased, while supplies from China dropped by 21% y-o-y.

The U.S. keeps holding the position of leading non-electric air heater importer worldwide, a new report published by IndexBox reveals. In 2021, the value of air heaters supplied to the U.S. exceeded $805M, soaring by 33% compared to the year earlier.

Mexico, China and Canada remain the largest air heater suppliers to the U.S. Over Q1-Q3 2021, imports from Mexico amounted to $368M, rising by 49% y-o-y. Canada expanded exports to America by 53% y-o-y to $68M during that time, while China’s supplies to the U.S. dropped by 21% y-o-y to $42M.

U.S. Non-Electric Air Heater Imports by Country

In 2020, imports of non-electric air heater and air distributors totalled $607M (IndexBox estimates). Mexico ($381M) constituted the largest supplier of air heaters to the U.S., comprising 63% of total purchases. The second position in the ranking was occupied by China ($78M), with a 13% share of total imports. It was followed by Canada, with a 12% share.

Top Largest Non-Electric Air Heater Importers Worldwide

Global imports of non-electric air heaters and air distributors amounted to $1.6B in 2020. The U.S. ($607M), Canada ($361M) and Russia ($60M) were the largest air heater importers, accounting for 65% of global supplies. These countries were followed by Germany, the Netherlands, Poland, France and the U.K., which accounted for a further 12%. In 2020, Germany recorded the highest growth rates of the import value (+4.3% y-o-y), while purchases for the other global leaders experienced more modest paces of growth.

Source: IndexBox Platform 

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Nitrile butadiene rubber (NBR) latex market: Growing demand across food services to push industry landscape through 2027

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The ongoing pandemic pertaining to COVID-19 and its variants has escalated the global demand for gloves across a range of industries, creating numerous opportunities for nitrile butadiene rubber (NBR) latex market expansion. Typically used for medical purposes, nitrile gloves provide the advantage of a two-way contact barrier during patient evaluation and the disposal of medical waste.

In addition, NBR gloves provide reliable hand protection to healthcare workers in various areas such as surgery, examinations, pharmaceuticals, and dentistry. Numerous regulatory bodies, including the FDA, have, therefore, recommended the use of nitrile gloves for ensuring the adequate protection of workers in healthcare facilities and hospitals.

As per the latest research conducted by Global Market Insights Inc., nitrile butadiene rubber (NBR) latex market size is expected to surpass USD 4 billion by 2027. Here are a few major trends that are slated to drive industry growth through the coming years:

Favorable government policies in the Asia Pacific region

The Asia Pacific NBR latex market share is expected to record appreciable gains through 2027 propelled by the rising adoption of favorable regulatory policies in the region. For instance, in October 2020, the Indian government eased the exports policy for NBR/nitrile gloves from ‘prohibited’ to ‘restricted’. While the country had earlier banned their exports, the amended policy is expected to open avenues for business expansion in the region.

Growing NBR usage in the food industry

The food industry is witnessing a soaring demand for NBR gloves as they provide extra protection during food preparation and are safe for the purpose of food handling. Furthermore, the gloves have recorded an escalated usage in a customer-facing role owing to the benefit of ease of changing.

According to sources, the usage of a color-coded system of nitrile gloves can help in preventing the cross-contamination of a food-based business. Impelled by these factors, the food end-user industry is expected to exhibit a CAGR of 9% between 2022 and 2028.

Rising use of NBR in industrial plants

NBR latex is increasingly being adopted across various industries that earlier made use of natural rubber latex. The utilization of nitrile gloves can provide protection from hazardous substances such as pesticides, chemicals, commercial cleaning products, and others, further elevating the suitability of the product for commercial and industrial settings.

Examining the competitive landscape

Major players in the nitrile butadiene rubber industry comprise Zeon Chemicals, Jubilant Bhartia Group, Emerald Performance Materials LLC, Versalis S.p.A., Apcotex Industries Limited, LG Chem, Nantex, Kumho Petrochemical, and others. A number of NBR latex manufacturers are focused on the implementation of capacity expansion and product development strategies for the consolidation of their position in the market.

Some of the instances have been mentioned below:

-In June 2021, Kumho Petrochemical Co., spent USD 226 million for ramping up NB latex output by 240,000 tons for bolstering capacity to near 1 million by 2023. The company intends to add a new line that can produce around 240,000 tons of NB latex each year at its Ulsan manufacturing complex based in southeast Korea.

-In July 2021, LG Chem announced plans for the expansion of its production line for nitrile butadiene latex (NBL) across Asia, covering Malaysia, China, and South Korea.

All in all, rising population, increasing advancement in medical treatments, and escalating product deployment by food companies are expected to drive nitrile butadiene rubber (NBR) latex market expansion through the forthcoming years.

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EU Olive Oil Production to Gain 13% Through 2030 on High Export Demand

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IndexBox has just published a new report: ‘EU – Olive Oil (Virgin) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

High prices and growing demand in the olive oil market have spurred investments to expand and mechanize plantations that will automate the production process. This will enable increased production in the EU from a projected 2.2M tonnes in 2021 to 2.3M tonnes by 2025. Thanks to rising demand from Asia, top European exporters – Spain, Italy and Portugal – will be able to boost shipments.

Key Trends and Insights

High prices for olive oil in 2020-2021 have prompted an influx of investments to expand plantation sizes in Spain, Italy and Portugal. Olive oil production is becoming completely mechanized from planting trees to harvesting the product. This facilitates minimizing waste and achieving high quality and that improves profitability. Based on projections from the EU Agricultural Outlook 2021-31, IndexBox calculates that in 2021 EU olive oil production will total 2.2M tonnes, then by 2025 increase to 2.3M tonnes and in the following years, it will steadfastly grow to reach 2.5M tonnes by 2031. In Greece, land allocated for plantations will be reduced, however, the country will retain its status as one of the leading exporters.

Climate change, drought and water scarcity will be the key negative factors hindering production growth. To mitigate that, new olive tree varieties that are more resistant to extreme weather conditions will be introduced for new plantations and to replace current ones.

Consumption per capita of olive oil in EU countries, excluding Italy, Spain, Portugal and Greece, will rise about 4% annually, but remain relatively low (1.3 kg/person by 2025). At the same time, the arithmetic mean of per capita consumption in Italy, Spain, Portugal and Greece will decline from 9.3 kg/person in 2021 to 8.9 kg/person in 2025.

Demand from non-European countries is growing and thus driving a projected increase in the total EU olive oil shipments to outside the union from an estimated 860K tonnes in 2021 to 949K tonnes in 2025. The main gains in exports come from those countries without domestic production. In these cases, the main focus is on shipments of high-quality bottled and organic olive oil.

Portugal and Spain should significantly solidify their leadership positions in global exports thanks to heightened demand in Asia-Pacific as well as potentially increased shipments to Brazil. Spain is the largest olive oil supplier with a market share of 43% of global exports. Growing competition from producers in the southern hemisphere is forecast to not significantly influence the EU’s position on the international market.

Virgin Olive Oil Exports in the EU

In 2020, the amount of virgin olive oil exported in the EU expanded to 1.5M tonnes, growing by 11% against 2019 figures. In value terms, supplies reached $5.2B (IndexBox estimates).

Spain represented the major exporting country with an export of about 852K tonnes, which accounted for 56% of total exports. It was distantly followed by Italy (311K tonnes), Portugal (177K tonnes) and Greece (165K tonnes), together creating a 43% share of total supplies.

In value terms, Spain ($2.5B), Italy ($1.4B) and Portugal ($569M) appeared to be the countries with the highest levels of exports in 2020, together comprising 87% of total exports. Greece lagged somewhat behind, accounting for a further 10%.

In 2020, the virgin olive oil export price in the EU amounted to $3,371 per tonne, falling by -6.2% against the previous year. There were significant differences in the average prices amongst the major exporting countries. In 2020, the country with the highest price was Italy ($4,481 per tonne), while Spain ($2,960 per tonne) was amongst the lowest.

Source: IndexBox Platform

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Archives, Global Trade Daily, Imports/Exports, News

EU Olive Oil Production to Gain 13% Through 2030 on High Export Demand

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IndexBox has just published a new report: ‘EU – Olive Oil (Virgin) – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

High prices and growing demand in the olive oil market have spurred investments to expand and mechanize plantations that will automate the production process. This will enable increased production in the EU from a projected 2.2M tonnes in 2021 to 2.3M tonnes by 2025. Thanks to rising demand from Asia, top European exporters – Spain, Italy and Portugal – will be able to boost shipments.

Key Trends and Insights

High prices for olive oil in 2020-2021 have prompted an influx of investments to expand plantation sizes in Spain, Italy and Portugal. Olive oil production is becoming completely mechanized from planting trees to harvesting the product. This facilitates minimizing waste and achieving high quality and that improves profitability. Based on projections from the EU Agricultural Outlook 2021-31, IndexBox calculates that in 2021 EU olive oil production will total 2.2M tonnes, then by 2025 increase to 2.3M tonnes and in the following years, it will steadfastly grow to reach 2.5M tonnes by 2031. In Greece, land allocated for plantations will be reduced, however, the country will retain its status as one of the leading exporters.

Climate change, drought and water scarcity will be the key negative factors hindering production growth. To mitigate that, new olive tree varieties that are more resistant to extreme weather conditions will be introduced for new plantations and to replace current ones.

Consumption per capita of olive oil in EU countries, excluding Italy, Spain, Portugal and Greece, will rise about 4% annually, but remain relatively low (1.3 kg/person by 2025). At the same time, the arithmetic mean of per capita consumption in Italy, Spain, Portugal and Greece will decline from 9.3 kg/person in 2021 to 8.9 kg/person in 2025.

Demand from non-European countries is growing and thus driving a projected increase in the total EU olive oil shipments to outside the union from an estimated 860K tonnes in 2021 to 949K tonnes in 2025. The main gains in exports come from those countries without domestic production. In these cases, the main focus is on shipments of high-quality bottled and organic olive oil.

Portugal and Spain should significantly solidify their leadership positions in global exports thanks to heightened demand in Asia-Pacific as well as potentially increased shipments to Brazil. Spain is the largest olive oil supplier with a market share of 43% of global exports. Growing competition from producers in the southern hemisphere is forecast to not significantly influence the EU’s position on the international market.

Virgin Olive Oil Exports in the EU

In 2020, the amount of virgin olive oil exported in the EU expanded to 1.5M tonnes, growing by 11% against 2019 figures. In value terms, supplies reached $5.2B (IndexBox estimates).

Spain represented the major exporting country with an export of about 852K tonnes, which accounted for 56% of total exports. It was distantly followed by Italy (311K tonnes), Portugal (177K tonnes) and Greece (165K tonnes), together creating a 43% share of total supplies.

In value terms, Spain ($2.5B), Italy ($1.4B) and Portugal ($569M) appeared to be the countries with the highest levels of exports in 2020, together comprising 87% of total exports. Greece lagged somewhat behind, accounting for a further 10%.

In 2020, the virgin olive oil export price in the EU amounted to $3,371 per tonne, falling by -6.2% against the previous year. There were significant differences in the average prices amongst the major exporting countries. In 2020, the country with the highest price was Italy ($4,481 per tonne), while Spain ($2,960 per tonne) was amongst the lowest.

Source: IndexBox Platform

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Soybean Oil Prices to Gain 4% in 2022 Due to Boosting Demand for Biofuels

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IndexBox has just published a new report: ‘World – Soybean Oil – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

In 2022, soybean oil prices are forecast to rise by nearly 4% to $1,425 per tonne, driven by boosting demand for biofuels. In 2021, the average annual soybean oil price skyrocketed, rising 65% y-o-y to $1,385 per tonne. India remains the world’s largest soybean oil importer, while Argentina holds the position of the leading global supplier. 

Soybean Oil Price Forecast 2022

According to the World Bank’s October forecast, the average annual soybean oil price is set to grow by nearly 4% to $1,425 per tonne in 2022. Rising demand for biofuels, especially in Asia, will be the key driver of that increase.

In 2021, the average annual soybean oil price soared by 65% y-o-y, from $838 per tonne to $1,385 per tonne. The most rapid price growth was recorded in Q3, instigated by weather-related production shortfalls in South America, strong demand in China, and high freight rates.

Soybean Oil Imports 

In 2020, overseas soybean oil purchases increased by 7.5% to 13M tonnes, rising for the second year in a row after three years of decline. In value terms, soybean oil imports expanded notably to $10.3B (IndexBox estimates).

India was the major importing country with a purchase volume of around 3.7M tonnes, which resulted in 28% of global supplies. China (963K tonnes) held the second position in the ranking, followed by Algeria (670K tonnes) and Bangladesh (666K tonnes). All these countries together took near 17% share of total imports. Morocco (547K tonnes), Mauritania (537K tonnes), Peru (521K tonnes), South Korea (390K tonnes), Colombia (378K tonnes), Venezuela (373K tonnes), Egypt (243K tonnes), Poland (229K tonnes) and Nepal (215K tonnes) followed a long way behind the leaders.

In value terms, India ($3B) constitutes the largest market for imported soybean oil worldwide, comprising 29% of global imports. The second position in the ranking was occupied by China ($725M), with a 7% share of the total value. It was followed by Algeria, with a 4.6% share.

Top Largest Soybean Oil Exporters

In 2020, Argentina (5.3M tonnes) was the key exporter of soybean oil, constituting 42% of total exports. It was distantly followed by the U.S. (1,238K tonnes), Brazil (1,110K tonnes), Paraguay (631K tonnes), the Netherlands (615K tonnes) and Russia (611K tonnes), together creating a 33% share of global shipments. Spain (387K tonnes), Bolivia (377K tonnes), Ukraine (302K tonnes), Turkey (208K tonnes) and Germany (192K tonnes) held relatively small shares of the total volume.

In value terms, Argentina ($3.7B) remains the largest soybean oil supplier worldwide, comprising 39% of global exports. The second position in the ranking was occupied by the U.S. ($979M), with a 10% share of total supplies. It was followed by Brazil, with an 8% share.

Source: IndexBox Platform

caustic soda
Archives, Global Trade Daily, Imports/Exports

U.S. and China Expand Caustic Soda Exports to Brazil

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IndexBox has just published a new report: ‘Brazil – Caustic Soda – Market Analysis, Forecast, Size, Trends And Insights‘. Here is a summary of the report’s key findings.

In 2020, Brazil’s caustic soda imports jumped by +17% y-o-y to 2.7M tonnes, or by +11% y-o-y to $507M in value terms. The U.S., followed by Peru and China, remains the key supplier of caustic soda to Brazil, accounting for 91% of the import volume. Last year, purchases from the U.S. and China soared in physical terms, while imports from Peru declined by -12% y-o-y. The average caustic soda import price dropped by -5.3% y-o-y to $185 per tonne in 2020.

Brazil’s Caustic Soda Imports 

In 2020, approx. 2.7M tonnes of caustic soda were imported into Brazil, increasing by +17% against the previous year’s figure. In value terms, caustic soda imports expanded by +10.6% y-o-y to $507M (IndexBox estimates) in 2020.

In 2020, the U.S. (2.5M tonnes) was the leading supplier of caustic soda to Brazil, with a 91% share of total imports. It was followed by Peru (65K tonnes), with a 2.4% share of total imports. China (63K tonnes) ranked third in terms of total imports with a 2.3% share.

In 2020, the volume of supplies from the U.S. totalled grew by +13.7% y-o-y. Imports from Peru dropped by -12.3% y-o-y, while purchases from China rose nearly twofold.

In value terms, the U.S. ($451M) constituted the largest supplier of to Brazil, comprising 89% of total imports. The second position in the ranking was occupied by China ($15M), with a 3% share of total imports, and it was followed by Peru, with a 2.6% share.

The average caustic soda import price stood at $185 per tonne in 2020, dropping by -5.3% against the previous year. Average prices varied somewhat amongst the major supplying countries. In 2020, the highest prices were recorded for prices from China ($244 per tonne) and Peru ($204 per tonne), while the price for Saudi Arabia ($165 per tonne) and the U.S. ($182 per tonne) were amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Saudi Arabia, while the prices for the other significant suppliers experienced mixed trend patterns.

Source: IndexBox Platform

vegetable
Archives, Global Trade Daily, Imports/Exports

States Producing the Most Fruits & Vegetables

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Many sectors of the economy have struggled during the COVID-19 pandemic, but one of the sectors that has faced the greatest challenges in the U.S. is also one of the most critical: agriculture.

The early days and weeks of the pandemic were difficult for many agricultural businesses as shutdowns created major disruptions for some of their primary customers. Much of the food service industry shut down overnight in March 2020, drastically scaling back one of the primary sales markets for farmers. In response, more agricultural producers shifted their focus to retail grocery and wholesalers. However, they paid a steep price in the form of lost products and new costs in labor and logistics to adapt to different distribution channels.

Since then, agriculture has faced many of the same supply chain and labor challenges currently plaguing the rest of the economy. Supply chain breakdowns have meant that farms have been struggling to obtain supplies and equipment that they need and that it has become more difficult to transport their products to customers. Labor force participation remains below pre-pandemic levels, especially in low-wage occupations, which has contributed to a shortage of pickers and other agricultural workers. Because produce is perishable, these issues have caused millions of pounds of produce to go unharvested or spoil before reaching consumers.

These disruptions pose a problem for consumers, who may have less ability to access high-quality fresh food at a low price, but also for the economy at large. Fresh produce in the form of fruits, nuts, and vegetables represents nearly a quarter of the total production value of U.S. crops. These products are also part of a larger value chain in the food industry that includes food processing plants, distributors, restaurants and other food service businesses, and grocery. This means that challenges in growing, harvesting, and supplying fresh produce creates additional struggles downstream for other closely related businesses.

These issues are also likely to affect what crops farms choose to grow and in what amounts. Because crops take time to raise, farmers essentially must make decisions in the present based on predictions about what the market might look like months in advance. With continued uncertainty, agricultural producers may prefer to shift more of their focus to crops that have higher value to improve their margins. In general, tree nuts and fruits tend to have higher production value than vegetables.

The current state of the agricultural market also underscores the importance of domestic agricultural production. In recent years, the U.S. has been importing a large share of its fresh and frozen fruits and vegetables, with imports totaling more than $24 billion in 2019. But with ongoing supply chain challenges worldwide, production closer to home will be important in maintaining the supply of food.

These fruits and vegetables come from a relatively small number of states where agricultural production is highly concentrated. The leader among these states is California, which is responsible for nearly 70% of U.S. fruit and vegetable production by itself. California is joined by other Western states like Washington, Oregon, and Arizona among the leaders, along with highly agriculture-dependent states in the South and Midwest.

The data used in this analysis is from the USDA. All data shown is for the year 2019, the most recent available covering both fruits and vegetables. To identify the states producing the most fruits and vegetables, researchers at Commodity.com calculated the total production value of both fruit and nut crops as well as vegetable crops, measured in dollars. Researchers also calculated what percentage of total U.S. fruit, nut, and vegetable production is accounted for by each state. Only states with available agricultural data from the USDA were included in the study.

Here are the states producing the most fruits and vegetables.

State Rank Total fruit & vegetable production Share of U.S. total fruit & vegetable production Total fruit production Total vegetable production
California    1    $29,181,329,000    68.94%    $21,437,185,000    $7,744,144,000
Washington    2    $3,396,600,000    8.02%    $3,033,860,000    $362,740,000
Florida    3    $2,759,462,000    6.52%    $1,536,612,000    $1,222,850,000
Arizona    4    $1,825,539,000    4.31%    $197,188,000    $1,628,351,000
Georgia    5    $823,604,000    1.95%    $308,074,000    $515,530,000
Oregon    6    $650,912,000    1.54%    $456,326,000    $194,586,000
Michigan    7    $578,847,000    1.37%    $361,709,000    $217,138,000
North Carolina    8    $560,492,000    1.32%    $60,811,000    $499,681,000
New York    9    $503,842,000    1.19%    $276,937,000    $226,905,000
Texas    10    $348,246,000    0.82%    $163,350,000    $184,896,000
United States    –    $42,326,702,000    100.0%    $28,770,303,000    $13,556,399,000

 

For more information, a detailed methodology, and complete results, you can find the original report on Commodity.com’s website: https://commodity.com/blog/most-fruits-vegetables/