Nov 23, 2010
12:59 PMOut of the Orchard
Colombia market vulnerable
Having just returned from Colombia, Washington's largest South American apple market, I realized I was witnessing the deterioration of a very important partner of Washington's apple growers. Not only has Colombia exceeded 400,000 cartons of imports from Washington, the consumer preferences by variety and size enhance grower returns. Galas are the preferred variety, followed closely by Granny Smith and Red Delicious, and smaller sizing interest (113/125 & 150/198) provides options other than bags prior to Christmas.
The true erosion of the Colombian market is due to the lack of progress by the U.S. Congress to ratify the Colombia Free Trade Agreement (FTA). For well over a yea, Congress has not acted to ratify the FTA with Colombia while Canada and the European Union have moved swiftly to enact their own FTAs. Canada has negotiated and ratified an FTA with Colombia effective January 1st, 2011, providing their apple growers the ability to ship duty free. The EU has negotiated, but not yet ratified,an FTA for their fruits as well. Without ratification of the Colombia/US FTA, Washington's apple growers will be at a 15% disadvantage compared to Canada and the EU, not to mention Chile.
To put things into dollars and cents, assume we sell a carton of apples at $20 fob + ocean freight ($5/carton) = $25 landed in Buenaventura - the Port in Colombia. The effective cost to the importer is $28.75.
Although this doesn't seem like a huge duty, please remember Chile, Canada, and the EU will all be at zero. In addition, transit times from the EU are 8-10 days versus 21-25 from Washington - not to mention that fob values from the EU are less than Washington. Without an FTA, Washington's apple volumes will drop by a minimum of 50%.
Two things are very clear to me after returning from Colombia; we're very lucky our crop is short this season--next season could be a very different story. We need every market to ensure the success of our growers and can't be put into a competitively disadvantegous situation. And secondly, Congress needs to move on the slate of three FTA's (Colombia, Korea and Panama) currently waiting ratification, while aggressively pursuing other FTA's worldwide.