China—Friend or Foe? The largest producer of apples in the world also has a great thirst for imported products.
China is the single largest market in the world with 1.3 billion consumers and double-digit growth in its gross national product for the past ten years.
China's thirst for imported products is increasing at a record pace, paralleling the rise in personal incomes. In addition, China is the largest producer of apples in the world and a major competitor to the growers of Washington State. China's economic success makes Washington apple growers ponder the big question: What level of competition will China be to Washington in the future, and is there an opportunity for Washington apples in China? An easily asked question, but an extremely difficult question to answer!
Being the largest producer of apples in the world, China can be a formidable competitor to all apple-producing regions, not only Washington. And indeed, China has displaced a large portion of Washington apples in many markets including Asia and the Middle East. However, Washington has maintained its export volumes over the last several years at between 22 and 32 percent. In addition, Washington's average price for Red Delicious has improved significantly this season compared with 2006 and 2005. So, how has Washington maintained its Red Delicious export volumes, and why are prices increasing?
It could be argued that the strong U.S. domestic market is the primary reason for increased grower returns. Or, that the weakened U.S. dollar has given the importers of Washington apples a financial incentive, through lowering the actual cost of importation. Or even, that fewer packers and marketers in Washington State have solidified the pricing structure of Washington apples. All these factors may have contributed to the recent success of Washington's growers, but we have yet to identify the real reason Washington growers are "out of the red"—Red Delicious that is. Washington's Red Delicious is incomparable to any other region's Red Delicious. In fact, Washington is the premium provider of Red Delicious in the world, no competition.
After making a thorough investigative trip throughout China, I saw evidence to suggest that Washington has considerable potential to increase sales of Red Delicious and Gala. To the largest producing country of apples in the world? How can this be?
This season, through July 1, Washington has exported almost 800,000 cartons of Washington apples into China, up 46 percent from 2006. In addition, more than 70 percent of the Washington apple imports into Hong Kong move directly into China, so the total is probably around 1.4 million cartons.
Although the only varieties that China can legally import from Washington State are Red and Golden Delicious, Gala and Granny Smith are big sellers in China, flowing north through Hong Kong to cities in China. Gala has huge potential in China for Washington growers, but a lack of official access continues to keep a lid on the true potential of this huge consumer marketplace. Access to China for Washington Galas is very important considering all the new plantings of Gala in the state. How many Galas have you planted? What is the true import potential of China? Only open trade and time will tell, but I predict more than 2 million boxes of all varieties.
As Washington's variety face-lift continues through new orchard plantings and the continued evolution of trees per acre, rootstocks, and cultivars, our industry has filed away the success story of Washington Red Delicious. In the largest consumer market in the world, the varieties of interest and expansion are Red Delicious and Gala. And not just any Red Delicious or Gala, but those of Washington State.