They arrived in the U.S. with the kind of fanfare normally reserved for visiting Bollywood royalty. The stars in question? Indian mangoes.
Banned nearly two decades ago due to concerns over excessive pesticide use, the king of fruits was recently allowed back into the U.S. market. Last month, the first shipments of Indian mangoes arrived on American soil after extensive negotiations on both sides and an agreement by India to irradiate all mango exports to the U.S. To celebrate, gala parties were thrown to herald the deal and tout the increased commerce it would bring.
Among them was an event at the Indian Consulate in New York City on June 7, hosted by the Agricultural & Processed Food Products Export Development Authority (APEDA) and the Ministry of Commerce & Industries. Noted chef-author-actress Madhur Jaffrey got in on the act as well, regaling attendees with an evocative history lesson on Indians’ love affair with the velvety fruit. Guests were plied with mango drinks, pickles, snacks, and more — and everyone left with two of the prized specimens, carefully nestled in foam nets to prevent bruising.
But all the excitement aside, what does the reintroduction of the Indian mango to the U.S. mean for the various links in the supply chain? How will it — and the subsequent opening up of the Japanese market, as well as potential others — affect mango production? India Knowledge@Wharton spoke to people closely involved in the business to explore the issues behind the mango mania.
Big Producer, Small Exporter
Although India is the world’s largest producer of mangoes — 14 million metric tons, accounting for more than half of the worldwide production of 25 million metric tons — it only exports about 60,000 metric tons. The destinations are mostly neighboring countries as well as some countries in Europe, according to APEDA. About 1,000 cultivars or varieties of mango exist, of which some 20 are considered commercially significant. Uttar Pradesh leads Indian states in mango production, followed by Andhra Pradesh, Bihar and Karnataka, according to a report by Reliance Agro Initiatives based on data from the National Horticulture Board.
The opening up of the U.S. — the world’s largest importer of mangoes — is a step toward addressing the production vs. export disparity, says Ron Somers, president of the US-India Business Council, an advocacy organization based in Washington, D.C. “We’ve been approached by a number of different groups to pursue distribution possibilities. So far, every mango has been sold even before it reaches the U.S. market, mostly driven by demand from the Indian diaspora.” Somers notes that efforts to broker the mango deal have raised the profile of the opportunity to export Indian produce on a global scale. “Growers are now meeting with transshipment companies and distributors to work out the logistics,” says Somers. “The scope is enormous, and the American market is nascent. Imagine what it could be if U.S. consumers really got a taste for the Indian mango.”
Currently, most Americans are familiar only with mango varieties that come in from countries south of the border. “Mango consumption in the U.S. is about 250,000 metric tons,” says Somers. “Most of that is currently served by Mexico and South America, with maybe a little in Florida.”
Speaking at last week’s event organized by the Indian consulate, K.S. Money, chairman of APEDA, extolled the virtues of demand-based food production. “This is an important phase in the development of Indian agriculture,” he noted. “For decades, the focus has been on the supply side. It is time to orient production toward demand. We have been producing many fruits and vegetables, but our international trade participation has been marginal. Now we have realized the importance of market requirements and meeting quality standards.” Money stated that about two-thirds of the Indian people depend on agriculture for their livelihood, so catering to the needs of global consumers could help the industry to reach growth targets set out by policymakers.
What took the agricultural industry so long to enter international markets? “Despite the fact that India was number one in production quantity in many cases, quality, logistics and infrastructure have been the weaker points,” Money noted. “It is not enough to say we produce something — we have to take care of the entire supply chain and train farmers to do what is required. We have to attend to storage, harvest, post-harvest practices, packaging, etc.”
But will this emphasis on the supply chain necessarily be good for Indian farmers and the country as a whole? That may depend on whether all export markets ask for the same product attributes. Increasing demand for mango varieties suited for Western palates and transshipment, for instance, might curb production of sweeter and/or less resilient varieties like Chausa and Langdaa, as media reports have pointed out.
Geography may also become an issue. For now, the only USDA-approved irradiation facility in India is in Nashik, in Maharashtra. “The mango is not a long-lasting fruit — it only stays fresh for so many days. Maharashtrian and Gujarati mangoes get preference because they’re closer to this gateway,” notes Somers. “It’s a bit more challenging to get them there from, say, West Bengal or Uttar Pradesh. Also, some mangoes are softer and some have heartier skin. So tests will be conducted to see which are best for shipment. The Kesar and Alphonso varieties so far seem superior, with their skin thickness.”
Media reports indicate that large conglomerates such as Reliance have entered the mango growing business. Godrej, Bharti and other large firms are also exploring their options. Somers believes that their influence will only help. “For example, in the beginning Frito-Lay had to import potatoes for their chip factory in West Bengal because the local potatoes were not so good. Ultimately they brought in seed and organized local farmers into co-ops. The farmers then got the best prices and the potato chips were superior. So getting the industry organized and more efficient for one end can help the other end. Up to now, small growers might have mostly been getting their fruit to major consumer centers in India. Now they might consider whether a portion of what they grow can go up and out,” he says.
As awareness and organization grow, Somers believes several companies on both sides of the ocean will potentially benefit from the opening up of the mango market. “This wave will not just help mangoes, but other tropical produce as well. Companies involved in the irradiation business will benefit. This includes companies such as GrayStar in New Jersey.” Somers notes that there is a huge transport opportunity, so cargo flight operators and distributors will also gain from the increase in mango imports into the U.S. Among these firms are Melissa’s/World Variety Produce, and [processors such as] Jain Irrigation [a big producer of mango pulp].”
Will the big companies change the way mangoes are produced? “In every instance where there has been organized retail, it has helped make sourcing supply more efficient,” says Somers. “I doubt it will cause much change in production trends. All Indian growers will benefit because of demand for the crop. What might happen is a slight displacement. Mango growers who have yet to access international markets might forgo the U.S. market and maybe aim for markets with no irradiation requirements. But the good news is that it causes people to think about the possibility.”
Bhaskar Savani, a Philadelphia-based dentist who was an advocate for the U.S. deal and whose family in India grows mangoes, agrees. “The multinationals will organize the market, and farmers will make decent money because they will propagate the industry,” he says. “The farmers are now learning about techniques like high-density plantations. Reliance has done that, and it is a showcase model for small farmers, who are now implementing those practices.”
Competition and Compensation
Amid all the hoopla, questions persist as to how long the Indian mango can sustain its competitive advantage. Given that the Hispanic population in the U.S. will likely be a big driver of consumer demand for mangoes outside the Indian community, it stands to reason that Latin American countries will seek to plant the Indian mango varieties. In addition, press reports have pointed out the lower freight costs of Pakistani mangoes — which may become a factor when that country’s fruits are permitted into the U.S. Indian exporters are worried that superior quality may not be enough when price becomes an issue.
Another factor that may put a damper on the enthusiasm is the value of the rupee. Indian exporters who expected a certain exchange rate when making their profit projections have been somewhat disappointed despite healthy demand for the product — both fresh and processed — in the U.S., according to a recent article in the Business Standard. As the rupee’s value vis-à-vis the dollar climbs, margins may erode. How much and how long this effect will endure remains to be seen.
So will the Indian fruit hold its ground when challenged? Price points may well be an issue, says Somers. “Assuming mangoes from Mexico get into the country via truck across the border, can we irradiate and ship mangoes thousands of miles from India and still have them compete on price? What extra differential is the consumer willing to bear for the taste and aroma? That’s for the entrepreneurs to decide.” And what happens when the quality factor is taken away, with local growers’ gaining access to desirable cultivars? “I think they may start planting Kesar mangoes in Mexico, Brazil, etc. in a few years. It is likely to happen,” says Savani. “I just hope the Indian government can put the infrastructure in place so that they can compete effectively once that occurs.” Until then, though, both mango producers and consumers are getting ready for a sweet ride.