Future funding is uncertain
Washington Apple Commission is altering its export promotion plan.
The Washington Apple Commission is adjusting its export promotion plans in case there’s a drop in federal funding for its activities. The federal Market Access Promotion program, which provides most of the money for the commission’s export program, looks likely to be fully funded for 2012 at a total of $200 million, but future funding is uncertain.
Several fruit industry groups receive MAP money. The Washington Apple Commission has been allocated $4.7 million for 2012-2013 promotions and is hoping to receive at least $4 million for the following year. About 70 percent of the cost of the commission’s export program comes from MAP and the other 30 percent from grower assessments.
MAP funding is allocated in the Farm Bill. As a federal budget-cutting measure, total funding for the 2013 Farm Bill will be reduced by $23 billion. Todd Fryhover, Apple Commission president, said it’s likely that MAP awards will be 7 to 10 percent lower in 2013. In addition, a portion of the funds (up to 10 percent of the total) will be used to cover the Foreign Agriculture Service’s costs of administering the program.
Apple Commission staff have been looking at how export promotions could be changed under different funding scenarios. Fryhover surveyed 16 Washington apple exporters to find out which export markets should be priorities for future promotions. Mexico, India, China, and Indonesia were consistently at the top of their lists, while Canada, the Russian Far East, western Europe, and the United Kingdom were at the bottom. Fryhover said 2.3 billion people live in China and India combined, and their middle-class populations were forecast to grow by half a billion people between 2005 and 2015.
“Asia and India is where we’re going to see growth for the next ten years, at least,” Fryhover told Apple Commission board members at a recent strategic planning meeting. “That’s where we’re going to see an increase in consumption.”
India takes almost 20 percent of all the Washington Red Delicious exported.
China has been exporting fewer apples to Southeast Asia in recent years because of increased demand from its own population. Apple production in the Shandong region, in eastern China, south of Beijing, has dropped below that of its other main apple-producing region, Shaanxi. Fryhover said land in the more populated areas has more value for development than farming. Shaanxi Province is in western China, and a long distance from most major cities. It might actually be easier to ship from Washington to China’s ports than from Shaanxi, shippers said, though Washington still does not have direct access into China for varieties other than Red and Golden Delicious.
Taiwan, for a long time Washington’s third-largest export market, has dropped to number six, behind India, China/Hong Kong, and Indonesia, but it is the only significant overseas market for Fuji.
Although almost 90 percent of the Washington apples exported to Indonesia are Red Delicious, Fryhover said there’s a tremendous amount of interest there in other varieties, especially club varieties.
Changes the commission is considering over the next couple of seasons include ending its presence in the United Kingdom. Fryhover said fruit is often repacked before reaching the retailer, so it loses its Washington identity. Promotional efforts have had little impact, although there is value in having a representative in the country to help out with industry issues.
The commission no longer has a representative in Canada, but will continue to attend the Canadian Produce Marketing Association’s show.
Another change being considered is to have a sole representative in Russia, rather than one in eastern Russia and another in the Russian Far East, though the difficulty is that the country is so large that it covers nine time zones. Russia has a population of 138 million, which is declining.
“I would rather put our money in growth markets and minimize some of these markets where it doesn’t make sense,” Fryhover said.