Guatemalan exporters rush to redirect shipments banned by China

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By LatAm Reports Staff Writers

At least 100 containers with coffee and 15 with macadamia destined for the Asian giant have been sent to substitute markets such as Japan, Vietnam and Singapore.

Finding substitute or emerging markets to place goods destined for the People’s Republic of China is the solution adopted by several producers and exporters of coffee and macadamia in the face of the veto of entering their products into the Asian country, so that at least a hundred containers with these products, ordered by Chinese customers, have been redirected to nearby countries.

Since 27 May, when the first restrictions on entry into goods of Guatemalan origin were announced, companies have had to place the products in other neighbouring markets, which are redistributed by Chinese importers.

The measure has contractual implications, which are assumed by the buyers, since the contracts are FOB classification (from port to port), so each of the parties must fulfil their commitments and the buyers are responsible for withdrawing their port goods.

Meanwhile, the timing of the dispatch of goods to China has been suspended due to restrictions or in a given case, the same buyer indicates to which neighbouring port the required product is shipped.

The delegation of Guatemala to the World Trade Organization (WTO) requested the Chinese delegation for an explanation of the restriction of entry to Guatemalan exports, but no response has been formalized.

Key market

José Chávez, executive director of the Association of Coffee Exporters (Adec) explained that at least 75 containers were sent to Taiwan, Singapore, Japan and South Korea, including those in transit in late May or early June and other shipments that departed later.

Most of the shipments were received in Japan, as they are owned by companies or companies operating in Shanghai, but at the same time have toasty shops on Japanese land, where the raw material can be processed or stored.

The manager specified that the Guatemalan product is used to make mixtures with grains from other countries, according to various formulas, so the Chinese market is important for buyers, and one of the objectives is to avoid the loss of that market. If this situation continues, those preparations could be affected and the companies that process them could be affected, just when Shanghai was becoming a food hub.

“Most of the shipments were received in Japan, as they are owned by companies or companies operating in Shanghai, but at the same time have toasty shops on Japanese land, where the raw material can be processed or stored”

José Chávez, Executive Director of Coffee Exporters Association

In any case, the producers and exporters expect to know the positions of the intermediaries – known as brokers – to make the respective shipments and it is expected that it will not impact the 2024-2025 harvest that would be starting next October.

Place at lower price

When consulting with Flor Gámez, secretary of the National Association of Macadamia (Asomac), he reiterated that this issue is one of the problems that is affecting his sector, impacting the marketing chain.

He explained that, at present, there are eight containers in port that were already in transit and could not be stopped, apart from the fact that they need the re-export documents and currently work with the Guatemalan Association of Exporters (Agexport) to expedite the procedures and thus sell to other destinations, even at a lower price. The containers initially held were seven were redirected to Vietnam. Purchases are closed with customers in China, but you can’t move forward if they don’t allow them to remove the shipments they’re retained from customs, Gámez said, adding that 70% of the product goes to that market and 30% to other buyers.

With the support and assistance of the Vice-Ministry of Foreign Affairs we have contacts from potential buyers in other countries, but the negotiations are not as fast as expected; at present we must try to sell in kernel – which is the macadamia sin shell – to other destinations (usually, the macadamia is sold).

On potential substitute markets, it expanded that India is a market that attracts attention and the US. The U.S. is a very large niche, even though they produce in Hawaii, according to the World Organization of Macadamia (OWM), of which Guatemala is part.

“The containers initially held were seven were redirected to Vietnam”

Flor Gámez, secretary of the National Association of Macadamia

He concluded that the problem of macadamia producers is very complex because it was coming out of low prices in the global market, then the problem of container in China – which pressured increases in freight – and now has the serious problem of climate change, as the heat during the flowering during the time of flowering affected almost 33% of the harvest.

Market coffee maker

According to 2022-2023 harvest statistics, coffee exports to the Asian market as an economic bloc accounted for 22% of the total, occupying third place, as 49% are heading towards North America; 26% towards Europe and 3% to other markets, according to the National Coffee Association (Anacafé).

Of the Asian market, 12 per cent is for South Korea; 4 per cent to Taiwan and 2 per cent to the People’s Republic of China; 1 per cent for Malaysia and another percentage equal for the rest of Asia.

By total currency, in the previous harvest, coffee exports accounted for US$944.4 million.

Fernando Zuluoaga, manager of Agexport’s agricultural sector, reported on the contingent measures being developed on various fronts of work.

He commented that there is communication with the authorities of the Ministry of Economy and Foreign Affairs regarding the high-level efforts they were making to learn about the official Chinese version of the situation, and thus that exporters had clearer information about what happened.

In terms of finding new markets substitute for these agricultural raw materials in the future, he noted that the commercial intelligence and market development unit uses two state-of-the-art information platforms called Brain and Connecting Best Markets that allow potential markets to be predicted for agro-export companies. These tools are at the service of Agexport partners.

This article has been translated after first appearing in Prensa Libre