U.S. apples taking big bites out of export markets.

U.S. apples taking big bites out of export markets.

AgExporter

June 1, 1995 | Bean, Casey

U.S. fresh fruit exports reached a record $1.9 billion in fiscal year 1993/94 (October-September), up a hefty 13 percent from the year before. This year, fresh fruit exports are continuing their upward surge, with exports as of April totaling $620 million, 10 percent ahead of last year's pace.

Noncitrus fruits, by value, account for about two-thirds of all U.S. fresh fruit exports, and apples are a shining star among them, making up about 21 percent of U.S. fresh fruit export sales in 1993/94.

Exports play a crucial role in the U.S. apple industry. For example, Washington State produces about half of all U.S. apples each year, and roughly 90 percent of Washington's output is exported.

U.S. apple exports, by volume, are setting a record pace in marketing year 1994/95 (July-June) - 28 percent ahead of last year's record as of January 1995. Record shipments to Taiwan, Hong Kong, Indonesia and Brazil are more than compensating for recent declines to Mexico resulting from the peso devaluation. This brisk pace will likely slow as lower shipments to Mexico continue throughout this season.

U.S. apple exports contribute to the health of the overall U.S. economy. For this season, Washington apple exports will create $500 million in income or roughly 25,000 U.S. jobs, according to USDA projections.

Marketing Tools

Since the apple industry began participating in the Targeted Export Assistance Program and then in its replacement, the Market Promotion Program (MPP), the proportion of the total crop exported annually has risen from 10 percent to nearly 30 percent, and production has almost doubled.

It's no surprise that U.S. apples have found such overwhelming acceptance around the world, in so many different places, among so many cultures. U.S. apples consistently have the highest product quality, so they can meet increasingly stringent health standards of traditional and new markets throughout the world.

The industry uses aggressive marketing efforts to protect the U.S. market share from the competition of countries such as France, Chile, New Zealand and South Africa. U.S. growers often visit foreign sites to understand consumer demand factors in different markets and to offer advice to help importers handle and merchandise apples.

Growers and exporters have made effective use of USDA's MPP as a tool for developing and maintaining important markets. The MPP helps to defray the costs of trade shows in prospective markets and provides opportunities for potential foreign buyers to sample and learn about U.S. apple varieties and production areas.

The MPP provides apple promotional funds to two organizations: the Washington Apple Commission of Washington State and the U.S. Apple Export Council, part of the International Apple Institute. These organizations hire representatives in various countries to carry out marketing programs.

Because these representatives are on the scene in those countries, they can plan and oversee promotions that cater to the tastes prevailing in those markets. This approach works particularly well for opening and establishing new outlets.

Where the Markets Are

Over the past five years or so, Canada, Taiwan, Hong Kong and the United Kingdom have been the largest and most consistent markets for U.S. apples. New markets in Egypt and Israel, along with strong sales in Saudi Arabia, the United Arab Emirates and Kuwait, are contributing to market growth in the Middle East.

As a region, Asia is the largest market for U.S. apples, with the lion's share going to Taiwan and Hong Kong. Exports to Taiwan have surged by 21 percent to $69 million so far in the 1994/95 season.

Canada remains a key market for U.S. apples, with red delicious and golden delicious varieties accounting for the bulk of the trade. For July 1994 through January 1995, U.S. apple shipments to Canada totaled $34 million, making it second only to Taiwan as a market for U.S. apples.

Since the liberalization of its apple import policy a decade ago, Taiwan has decreased apple production by about 50 percent. Apple production in Taiwan has become limited and expensive because orchards are gradually being converted to recreational purposes for tourists or to vegetable and peach production. The United States and Canada have boosted their market shares by supplying high-quality apples priced competitively with Taiwanese apples.

Historically, Red and Golden Delicious apples made up most of the U.S. apple exports to Taiwan. But the industry now markets increasing quantities of Fuji and Gala apples to meet consumer demand for new and sweeter varieties.

Asian countries that have recently shown marked growth potential for U.S. apple exports include Indonesia, Singapore, Malaysia and Thailand. New markets that hold promise are Japan, the Russian Far East, Vietnam and China.

The Russian Far East offers significant potential for U.S. apples, a fact demonstrated by the surge in exports to Russia since the collapse of the Soviet Union: shipments to the region jumped from zero to 6,000 metric tons, valued at $3 million, between 1992/93 and 1993/94.

Although Mexico was the leading export market for U.S. apples in marketing year 1993/94, exports have declined this year from the impact of the peso devaluation last December. The U.S. apple industry will continue to seek out diversified export outlets to reduce the risks inherent in relying on a few dominant markets.

Latin America is forecast to continue to be a growth market for U.S. apples. Exports to Brazil from July 1994 to January 1995 reached $8 million, ten times the value for the same period the previous marketing year. Other Latin American countries, such as Colombia, Ecuador and Venezuela, hold out a large and unexploited market opportunity for U.S. apple exporters.

Gaining Access in Key Markets

U.S. apples made a successful debut in the Japanese market in January 1995. The first-ever commercial shipment of U.S. apples from approved orchards in Washington State was released by Japanese customs and allowed to enter this long-closed but potentially huge market.

Despite the large volume of this first shipment - 4,000 metric tons, or 250,000 cartons - clearance procedures went smoothly and the apples entered marketing channels. By April, U.S. shipments to Japan totaled 8,000 metric tons valued at $9 million, shy of the $10-$15 million mark projected by USDA and trade sources.

Nonetheless, it's estimated that Red and Golden Delicious apple exports to Japan could grow to more than $75 million within five years. The U.S. apple industry and USDA are working to obtain approval for other apple-producing areas of the United States and for other varieties of apples.

With a population of 35 million and a growing economy, Argentina offers considerable potential as a growth market for a variety of U.S. horticultural products, including apples.

During the 1994/95 season, Argentina's plant quarantine agency agreed to USDA-proposed phytosanitary import requirements that will pave the way for the entry of U.S. apples. This action is expected to open a promising new outlet for apples, particularly given the complementary nature of the two countries' domestic production.

In 1994, China officially opened its market to U.S. apples. Despite its own impressive levels of fruit production, China offers promising market opportunities. China's relatively poor post-harvest technology and transportation infrastructure limit the capacity of that nation's producers to supply their market year-round. Moreover, importers have found some success in marketing high-quality apples to the growing Chinese middle class.

Apple imports could dominate Chinese sales between March and August, when domestic production is typically of poor quality or unavailable. In addition, the traditional Chinese gift-giving times of Chinese National Day (October 1), the Mid-Autumn Festival and the Lunar New Year are prime selling seasons, and fresh fruit is a popular gift.

Import restrictions currently limit U.S. fresh fruit market access in China to Red and Golden Delicious apples from Washington, state. USDA is working with China to gain access for other states and apple varieties, as well as pears, cherries, grapes and citrus fruits.

The success story of U.S. apple exports around the world demonstrates the true value of trade agreements that phase out import barriers and provide increasing market access. Plans for access for Washington cherries and expanded access for Oregon and Idaho apples were completed in April 1995. Many countries, such as China, impose heavy tariffs on imported fruit. Other nations use stringent phytosanitary regulations to curtail imports. U.S. apple exporters will have to overcome such trade barriers - one at a time.