Export success lifts Washington apple market

09/16/2011 02:47:00 PM
Tom Karst

CHELAN, Wash. — Taking about a third of the Washington apple crop, exports are an essential element of the success story of apple marketers and growers.

With ample supplies of smaller fruit expected this year and a total crop that is expected to be from 105 million to 110 million cartons, exports should be strong again in 2011-12, said Tim Evans, general manager for Chelan Fresh.

The low U.S. dollar has propelled apple exports to record levels, with the traditional markets such as Canada and Mexico performing well in addition to red hot new markets such as India.

“Exports have been real good for apples this year,” said Charlie Pomianek, manager of the Wenatchee Valley Traffic Association, Wenatchee.

“If it isn’t going to be a record, it will be very close,” he said.

By the end of July, Washington marketers had exported 35 million boxes of apples, just shy of the all time record of 36 million boxes.

Through the end of July, Washington had shipped about 9.2 million boxes to Mexico, just shy of the 9.9 million box record.

Rebecca Baerveldt, export marketing manager for the Wenatchee-based Washington Apple Commission, said the tight markets at the end of the 2010-11 season probably limited some export sales.

“I think the consensus is that we could be shipping more fruit overseas, but we just don’t have it,” she said in mid-August.

About a third of the Washington apple crop is shipped outside the borders of the U.S.

Baerveldt said the growth potential of export markets contrasts with the generally flat demand for apples in the domestic market.

As crop sizes increase, Baerveldt said, marketers need to find additional export markets.

The lower value of the U.S. dollar has primed the pumps for exports, she said.

What’s more, Baerveldt said exports have been buoyed by the emergence of two powerhouse apple importers — India and China.

Baerveldt said the Washington Apple Commission has export programs in 27 countries, with promotion programs focusing on the quality of Washington apples.

India

“We are running a campaign that highlights the healthy origin of Washington apples, a ‘nature-approved’ campaign. India has really expanded and has room to grow,” she said.

Though the market for direct shipments to India has been active for ten years, the recent growth of the middle class in that country has spurred sales for imported fruit, particularly for red delicious apples.

In addition to pent up demand from India’s middle class, Baerveldt said the rapidly developing retail sector has also caused competition for new produce items for consumers.

As of the end of July, apple exports to India were rated at 3.3 million boxes, which is 143% above last year at the same.

Baerveldt said the “truly amazing” growth in the India market has come despite a 50% duty on imported apples.

Given the growth in the last year, Baerveldt said the Indian market may have the potential for 4 million to 5 million boxes.

Mexico

Mexico has been the biggest market for Washington exporters, though it was saddled with a 20% tariff for most of the 2010 season.

Even though overall exports were up 14% to all markets, Mexico exports were off 5% from a season ago, Baerveldt said.

The retaliatory tariff was reduced to 10% earlier in the summer and some industry sources expect the final half of the tariff to be removed at the end of the year.

Asia, Middle East

Baerveldt said shipments into Hong Kong were up 30% this year, and a part of those shipments were fueling “gray market” demand in China.

Baerveldt said that the late harvest season might put a crimp in early season export shipments.

Ramadan, the Islamic month of fasting, was expected to drive export demand in Indonesia through the end of August.

“That is a market we should be shipping more into if we had the fruit,” she said.

Autumn festivals in Thailand and other Southeast Asian countries are expected to drive demand in the early part of the season.

“They are trying to get what they can, and it is just a matter of trying to get that product to them,” she said.

Washington exports increased 25% to Asia in the 2010-11 season, in part filling the vacuum of a lower Chinese domestic crop.

With rising incomes in China, the price of the domestic apple crop in China rose, making the fruit less competitive in Asian export markets.

“China has pretty much always competed on lowest cost as their market position,” she said.

“When that is no longer true, it is no longer significantly less than the Washington apples and that has driven a shift to Washington apples.”

Lower imports

One part of the strength of the U.S. apple market during the 2010-11 season has been a decline in the volume of apple imports.

Pomianek said through early August, U.S. imports of apples this year were 5.7 million boxes, down from 9 million boxes at the same time a year ago.

The Honeycrisp, arguably the hottest variety in the U.S., finds limited export business, said Randy Steensma, president and export marketing director of Nuchief Sales Inc., Wenatchee.

“We have shipped three, four, five pallets orders overseas because they hear of the apple and the buzz of the apple, but as the prices moderate into the low $40 range and into the $30 per carton, we will ship more that direction,” he said.

“When we quote a Honeycrisp at $45 or $50, they say ‘wow’,” he said.

“They don’t want 10 pallets or a containers, and we don’t actively encourage it.”



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