U.S.-South Korea trade agreement offers potential export boost

05/08/2012 03:09:00 PM
Vicky Boyd

The signing of the U.S.-South Korea free trade agreement March 15 offers grower-shippers the potential to capitalize even further on a market that’s already receptive to U.S. cherries.

The trade pact reduced or eliminated tariffs on several agricultural products. Among those was the elimination of the 24% duty on U.S. cherries, said Mark Powers, vice president of the Northwest Horticultural Council, Yakima, Wash.

“That’s awesome news for our cherry exporters and growers,” he said. “That’s 24% on the landed value. At the consumer level, that’s 75-90 cents per pound. That tax adds to the price of the product.”

The tariff amounted to about $7.5 million, he said.

“If you take off the expense of that tax, and you increase sales, obviously all of that benefits our going back to the growers,” Powers said. “Prices will be reduced, hopefully all the way back to the consumer.”

Powers said the tariff elimination means some Korean consumers who may have been priced out of cherries will now be able to afford the fruit.

South Korea already was a large importer of U.S. cherries, taking in 351,478 20-pound carton equivalents in 2011.

Overall, the Northwest cherry industry exported 31% of the 2011 crop, or 5.75 million boxes.

How many cartons South Korea will take this season remains to be seen and will largely depend on the crop size, Powers said.

About 30% of Washington Fruit & Produce Co.’s cherries go export, said Chris Falk, who’s involved with sales for the Yakima-based firm. Depending on the market, the cherries are packed mostly in 20-pound bulk cartons, but some go in 5-kilogram cartons.

With the recent implementation of the U.S.-Korea free trade agreement, Falk said he sees additional opportunities.

“Korea’s a market that’s been growing steadily, even with the relatively high import duties.” Falk said.

Bullish on exports

Not only are many grower-packer-shippers optimistic about Korea, but they say they’re bullish on overall export opportunities.

About 30% of Yakima-based Domex Superfresh Growers’ crop goes export, and Loren Queen, marketing and communications manager, expects that sector to continue to grow.

“Asia, with its up-and-coming economies, has been doing quite well,” he said. “Globally, as more people move into the middle class, we’re seeing growing demand from Asia, in particular, with our cherries here.”

Some Asian countries also view cherries as more than just a summertime fruit, Queen said. Residents treat them as a gift to give and as an honor to receive.

“We sell a lot of gift boxes,” he said, adding the corrugated containers range in weight from 2.5 to 5 kilograms.

The United Kingdom also is a strong export market for Superfresh Growers, he said.

Exports comprise about 30% of Chelan Fresh Marketing Inc.’s cherry shipments, said Mac Riggan, vice president of marketing.

Many markets favor the 20-pound bulk carton because it has fewer air spaces than a carton filled with clamshells. The goal is to pack as many cherries into a cargo hold as possible.

Riggan said Taiwan is a huge market, and China, Australia, Vietnam and South Korea are growing for the Chelan, Wash.-based firm.

Suzanne Wolter, director of marketing for Rainier Fruit Co., Selah, Wash., said she is withholding judgment on export opportunities for this year’s crop.

“It remains to be seen what happens with freight costs, oil prices and the value of the dollar two months from now. My crystal ball isn’t that clear,” she said.

Borton and Sons Inc., Yakima, ships a fair amount of its crop export, although Dave Whiteside, salesman, said the market can be volatile.

“It can be strong, then go weak,” he said.



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