Oct 11, 2012
10:57 AMOut of the Orchard
Will We Miss It?
With 300,000,000 middle-class consumers—and growing—China is Washington State’s fourth-largest export market and has been identified as the number-two growth market for Washington apples in the next five years.
But U.S. apple exports to China have been halted since August 9 because no new import permits have been issued that allow direct importation of Washington Red and Golden Delicious into China for the 2012 season. At bilateral talks between China and the United States held in California in September, the Chinese government confirmed no new import permits would be issued until specific concerns are addressed by USDA-APHIS and our industry. This was the first time industry was told our access was closed.
Will we miss that market? Maybe not this season, but it’s an opportunity taken away, meaning more apples to be sold elsewhere and the delicate balance between supply and demand thrown to the wind.
Export opportunity plays a significant role in grower prosperity through distribution of product worldwide to support supply and demand through price stability. Clearly, selling all our apples domestically or internationally isn’t a realistic option, so a delicate, almost daily balance between export and domestic exists to capture the highest return possible for growers.
But what happens if market opportunity is manipulated, if markets that play significant roles in distribution close?
Shipments into China are difficult to track, because the system isn’t transparent and rules are meant to be “bent.” Direct shipments of Red and Golden Delicious move into Chinese ports, but Reds, Goldens, Galas, and Granny Smiths also go through the “grey market” channel from Hong Kong to Guangzhou, China. Total shipments in 2010-2011 (direct and grey market combined) were 3 million cartons versus 2.5 million in 2011-2012. However, direct shipments in 2010-2011 were 784,720 cartons versus 408,539 in 2011-2012—down 47.9%.
Politics play an important role in every calculated move the Chinese make. Often agreements are not adhered to by the Chinese, unsubstantiated phytosanitary concerns justify their closure in their minds, and grey-market fees (US $21,138 per container) further restrict importation in an already murky trade landscape. Access—not our access to China, but China’s access to the U.S. market—is the number-one agricultural issue for China.
So, will the market open for Washington apples? Maybe, but at what cost? Will the Chinese find a way to get our product into China? Absolutely! Are importers willing to pay $21,138 or more per container to transit the grey-market channel? Probably, but what if that grey-market cost continues to escalate? And if it does, will we miss it? Absolutely.