California plum growers and shippers are gearing up to ship more than 500,000 boxes of plums to mainland China under a new agreement reached this year following more than a decade of effort to formally open China’s burgeoning consumer market to U.S. stone fruit.
Growers and shippers are now registering their orchards and facilities and taking steps to meet a specific protocol for exporting fruit to this promising market.
While imports are limited to plums from only five California counties, industry groups, government officials, and grower-shippers have heralded the deal as an important first step toward reopening a major market for not only plums but other California tree fruit crops as well.
“Although there is still work to be done in gaining access to China for all California counties, this is a very important step in achieving our industry’s goal to expand worldwide demand for California peaches, plums, and nectarines,” said Blair Richardson, president of the California Tree Fruit Agreement in Reedley, California.
“Any time we can open up and establish another market, it should help us,” agreed Steve Spears, who handles export sales for P-R Farms in Clovis.
Chinese consumers have long had a taste for California stone fruits, going back more than a quarter century. For years, California exporters shipped plums to Hong Kong and Taiwan that eventually found their way into mainland China. Hong Kong and Taiwan were among the top four export markets for California plums until 2004, when the Chinese government initiated a crackdown on these gray markets.
As a result, export shipments to Hong Kong virtually disappeared in 2004, from more than 862,000 cartons to less than 136,000 cartons. Taiwanese shipments dropped by half to about 342,000 cartons.
Spears said that when the Chinese halted plum shipments by cutting off gray markets, it put tremendous pressure on the domestic market for California plums.
“It definitely hit everybody hard and had a direct result on the price in the domestic market,” he said.
Reopening China should help restore market balance and lift all other export and domestic markets, he said.
Based on past demand, China should become a leading export market for California plums and hopefully nectarines and sugarplums as well, according to Gordon Smith, international programs coordinator for California Tree Fruit Agreement.
“China is the single most important new market opened to the California stone fruit industry in several years,” Smith said. “Based on the success of California plums in Hong Kong and Taiwan, potential exports this year could be about 500,000 boxes. In the long-term, China could likely become the leading plum market in Asia, and second only to Canada.”
Smith said that a major priority for the industry will be to secure access for nectarines and additional California counties, to encompass sugarplum producers to the north. The terms of the agreement limit the export of California plums to Fresno, Madera, Kings, Tulare, and Kern Counties, which distinctly excludes north San Joaquin and Sacramento Valley growers who produce fresh prunes, also called sugarplums, a delicacy in China.
Smith also expects the Chinese to open their doors to California nectarines in the near future, perhaps as soon as 2007. However, he noted that opening Chinese markets to California peaches will be more difficult. China is the world’s largest producer of peaches, which have cultural significance in China. While Chinese growing practices do not produce quality peaches on par with California, establishing open markets to California peaches remains highly unlikely, at least in the short term, he said.
California Agriculture Secretary A.G. Kawamura said opening Chinese markets to California plums is significant not only for the stone fruit industry but for all exporters of California fresh fruits and vegetables.
In 2004, California exported $456 million worth of farm products, predominantly citrus, table grapes, wine and raisins, to China, making it the state’s fifth-largest overseas market.
California would like to export more farm products to China, with its population of 1.3 billion people and a rapidly growing middle class, and China is responding by demanding more California products.
This means the market, while already ripe for California produce, is just being tapped, according to Kawamura, who visited China along with stone fruit and other commodity groups last year.
“Visiting China as part of Governor Schwarzenegger’s trade mission, we saw the consumer excitement in California agricultural products,” Kawamura said. “With the recent market access of California plums, I expect to see China as a growing market for a full range of California products.”
Smith said there are definite signs that mainland China will continue to open its doors to imported goods. Top foreign retailers such as Wal-Mart and French grocery chain Carrefour plan to accelerate store openings in China this year to strengthen their presence in the rapidly growing market. Wal-Mart, for instance, intends to open 18 to 20 new stores throughout the country in 2006, according to retail industry reports.
This activity bodes well for California growers.
Jim Stewart, president of Wes Pak Sales, Inc., said Wes Pak is also gearing up for exports to China. Wes Pak, which exports a significant portion of its fruit, is a marketer representing several grower-shippers in the Reedley-Dinuba area, as well as outside growers.
Stewart said the company plans to place all of its plum orchards under the Chinese work plan, so that, based on demand, fruit from any block that meets the country’s high quality requirements can potentially be exported. He estimates Wes Pak has about 30 plum varieties, mostly red and black, that can potentially satisfy Chinese consumer preferences.
For years, Wes Pak shipped to China via the Hong Kong gray market, and it already has experience in the market. Stewart said that, in general, Chinese consumers are willing to pay top dollar for the best quality fruit as long as it meets their demand for large size, high sugar, and good arrival.
Spears noted that while Chinese consumers demand high quality, there is also a ceiling to the price they will pay.
“The Chinese are very taste conscious and will definitely demand certain quality,” Spears said.
“But there is also a limit to how much they will pay for that quality.”