Have U.S. apple and pear exports peaked?
By Geraldine Warner
Six years ago, Washington State exported a record 33 million boxes of apples--
35 percent of its apple crop. Half of those exports were destined for Asia, and most of them were
Red Delicious. Export used to be a premium market that also too pressure off the domestic market.
Times have changed. Asian consumers are looking for new apple varieties, and China can deliver them cheaply. Economic troubles in Asia and some South American countries have limited their ability to buy U.S. apples. Access to other countries is hampered by phytosanitary concerns, and exporting to Mexico--the largest market for both apples and pears from the Pacific Northwest--continues to be fraught with difficulties. Meanwhile, global apple production continues to increase, and competition in markets around the world intensifies.
It's a similar story with pears. Pear exports climbed in the 1980s and early 1990s, reaching almost 7 million boxes in 1997. Since then, the numbers have leveled off.
Are there untapped markets around the world that will take more tree fruits so that
the apple and pear industries can continue to export a large proportion of their crops?
We asked a cross-section of industry people if they think there are still gains to be
made in exports, or if the peak has passed.
BRIAN SAND, apple and cherry marketer, Orondo, Washington
Yes
"This business changes so fast, and we're a cyclical kind of business.
Fruit marketers have been targeting domestic business in the past few years, Sand noted.
"All the emphasis is on how to get more domestic business and how to get the right packaging to get in the right store domestically."
Outside factors, such as the Asian financial crisis and the strength of the dollar, have led to a situation where exporters can't make the money they used to. However, Washington apple producers still have the advantages of being well located to ship to the Pacific Rim and producing top quality fruit.
"You have all the pieces there, so if suddenly you had a little weaker dollar and some of the Asian economies took off, kaboom, the export market could be a shining star again."
KEVIN MOFFITT, pear commodity group, Portland, Oregon
No
"China is probably going to be the most frightening competition, and that will be competion in Asia."
"I see continued growth in Latin American markets to the point where we've had to adjust our upper projected targets several times in the past few years," Moffitt said. "Mexico's importing close to three million boxes of pears right now. Five years ago, we were projecting that would be the top end. I think conceivably we could sell five million boxes to Mexico.
"In addition to that, I think we're starting to see the Asian recovery and a slight weakening of the dollar. Both have hampered our pear exports in the past few years."
Moffitt acknowledged there is strong competition in export markets, particularly from China. But most of the pears China has planted and is currently producing are Asian varieties, he said. "So, at this point, for pears, we still have varieties that they don't have, and we can exploit that."
The U.S. pear industry has a competitive advantage with red pears, which few other areas produce, he added.
DICK CLEMENTS, fruit grower, Yakima, Washington
Yes
Personally, "I'm hoping that I might be wrong. I'm hoping that we haven't peaked."
"We're competing in a world market now, and my impression is that in some of our markets we might be losing some of our market share to low-cost producers," Clements said. "It's not because they have better quality. It's because they can get into some of our markets a little bit cheaper and still be profitable in their minds.
"Right now, we're just trying to maintain market share in some of our markets. Some gains have been made in some markets, and we have lost ground in other markets."
Free trade pacts among South American countries have made it more difficult to export to places like Brazil, Chile, and Argentina. Clements thinks the best opportunities are in Mexico and Canada. If the exchange rate were more favorable, he thinks more fruit would go to Canada, and he believes exports to Mexico could grow further if it were not for the difficulties related to Mexican apple growers' concerns.
But to a large extent, Washington apple export volume is driven by the size of the crop, Clements noted.
"When we have a large crop, and we can get competitive in our pricing, that's when our numbers go up, because that's when the price is right for those people to buy. When we have a short crop, exports go down."
TRACY KING, fruit marketer, Wenatchee, Washington
No
"I'm an exporter, and I think there's a future in this. I haven't gone back to school to learn a new trade. I'm going to stick in this for awhile."
"We have some really good things going for us that, I think, make it unlikely that apple exports have peaked," King said.
One is the industry's new focus on eating quality as opposed to cosmetic appearance of apples, which King believes will win consumer acceptance all over the world, both in new and existing markets.
The second is the trend towards new apple varieties. People around the world want new, different, and interesting apple varieties that have new tastes and textures.
The third positive trend is that people's standard of living is rising in just about every country where apples are exported. As their standard of living increases, they eat more apples.
"The main negative that would bode against this notion that apple exports haven't peaked is the number of competitors and the ability of folks in other countries to do a good job of growing apples, but I think overall they haven't peaked."
BILL BRYANT, trade consultant, Seattle, Washington<
No
"Why would we presume they have peaked?"
"We have a population on the planet that's continuing to grow, and we have not exhausted our markets in many of those countries where populations and incomes are growing," Bryant said. "While we will experience competition from new sources, many U.S. growers are poised to market a premium product at a competitive price."
India is a potential new market, and there's more room for growth in existing markets, such as Mexico, Bryant added.
MARK ARNEY, apple commodity group, De Witt, Michigan
Yes
"This new product MCP scares the heck out of me."
Arney thinks it will be increasingly difficult to export, partly because of the advantage that other apple-producing countries have in terms of cheap labor.
"Countries like China are becoming more advanced and as they become more sophisticated in their logistical supply chains, they're going to be more of a factor," he said. "We have already seen the impact in the Pacific Rim."
He is concerned about competitors' ability to improve quality, using new products like the fruit ripening inhibitor MCP (1-methylcyclopropene).
"While this is going to be a boon for us in this country, because it will allow us to store fruit longer and have better quality, it's going to be used by countries like China against us, and then they're going to have better quality, too. It's going to raise the bar for everybody."
Arney expects increasing competition in the domestic market, too, because other countries will produce apples cheaper.
"What people don't realize is, once you get rid of the farms and scale back to big corporations, and start importing fruit and vegetables, all of a sudden we don't have the world's cheapest, safest food any more.
"That's the angle we have to approach our government with--saying you can get apples cheaper, but, unfortunately once you get rid of us, they're going to jack the price up on us. It's going to be just like England, where they're paying all this money for food." m
