Over the past years an increasing number of Chinese businesspeople have been flocking to the world's fruit-growing regions in search of direct purchases to cut out middle men.

This has been the case recently in Mildura, Australia. 

"Later last year, those who traded Australian seedless red grapes made quite some money, which led to what we see right now," says David Yang, CEO of Australian produce firm Royal Fresh.

For Yang, who has more than 10 years of produce trading experience in Australia, the reasonable farm gate prices for Australian seedless red grapes at the moment should be around AUD$30.

And while Chinese buyers are trying to undercut intermediaries, according to Yang the sudden influx might actually drive prices even higher.

"For example, I have booked a deal at the price of AUD$28 from farmer A. Now farmer B comes to me and offers AUD$34 to get my deal," he says.

"He received a price offer at AUD$37 but guess what? He doesn't have enough supply. In order to avoid any other go-betweens, farmer B is willing to sell grapes to buyers like me at an even higher price.

"Here in Australia, we usually book our deals as early as November in the previous year. The mark-up in price is understandable, because when they come at this time it would take farmers extra efforts to secure the supply."

Yang attributes this phenomenon to the lack of experience amongst many new Chinese buyers.

The quality of grapes depends on soil conditions, the variety, harvesting and a range of factors, plus buyers must take the 25-day shipping time into account and fruit preservation techniques during shipping.

"If you come here and buy the substandard goods, or other varieties instead of the Red Globes, then how can you expect the farmer to call off the collaboration with exporters? They need the exporters to sell these less-than-premium goods to the Middle East or the Philippines," Yang says.

"The more cash your bring with you, the higher the price and the heavier damage for your own business.

"They try to control the source of supply with the purpose of securing stable quality at a lower price. Unfortunately, it's a self-defeating cause."

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www.freshfruitportal.com