Litchi of Madagascar: less quantity, more profits from export

The attempted pioneering penetrations of the Middle Eastern markets and in the American continent have not born results yet. Malagasy exporters will have to do with Europe for this year 2009 campaign. France remains the number one customer with 95% of Madagascar’s litchi consumption. The European market is on the verge of a slight extension since orders have actually been received from Lands of the North. This new opportunity will let exporters take advantage from the law of offer and demand. 

Madagascar’s litchi is a first choice production, however, often cheaply sold out. The ministry for Trade is keen on preserving the high standard by making sure that the market’s consumption capacity is matching expectations. Selling out cheaply for cause of shrunken demand is off the point. The measure is drastic but strategic. In the 2009 campaign, the exported quantity will be restricted to 19 000 palettes. The ministry has learnt from the 2008 downturn; 25 000 palettes were introduced on the European market; as a result, the demand did not follow suit, and the product’s quality deteriorated together with the price. In return for the deliberate quantity restriction, exporters will, now, make profits from an advantageous contract with a set price. 

The French market’s consumption capacity is reaching 1200 palettes a day. As a seasonal product, litchi has not yet integrated consumers’ habits. The Trade Ministry’s policy is anyway keen on making it a mass consumption product. Deliberately restricting the exported quantity is meant to stir up the selling price. The subsequent expected gain is simple: make the highest possible export profits. 

Selling less for more profits, what else could be moreover asked? The targeted prices are 0.8 to 1 euro per kilo in France, and 1.40 euro in Great Britain. The large scale French distribution is used to reckon upon other products but litchi after the New Year’s Eve celebrations. The product is, thereafter, negotiated on much opened and less profitable basis for exporters, generally between 0.60 and 0.70 euros per kilo. On supermarkets’ stales, Madagascar’s litchi is being sold for 3 euros per kilo, and for less than 2 euros in special offers. 

The strict implementation of European product conditioning and treatment standards is slightly limiting export rates. Although, export rate restriction happens to be an advantage for quality, and a boosting factor for the Malagasy product’s reliability. The market will be proposed top quality products just as consumers are beginning to turn away from it. 

First quality products will not be widespread during the 2009 season campaign. Rain shortages and unpredictable climate in general are to be blamed for it. Rain is paramount to a big enough litchi. Apart from the picking stage, operators have to engage a genuine race against the clock. Preparation and Conditioning are completed very quickly so that the litchi is not too ripe when reaching the shelves. Air transportation shortens trip durations but burdens the bill a wee bit more. According to an operator in the sector, it is important that those having the means to do so reach the European market in priority, because it would provide promotion for the other cargos shipped by sea. 

Litchi can contribute to kick-start the 2009 strongly receding exports with expected profits of 19 million euros. The report made by the Minister for Trade, Jean Claude Rakotonirina is concerning, export’s returns are thrice inferior to imports’ expenditures.