Export markets are where the growth potential lies for Washington apple sales, says Todd Fryhover, president of the Washington Apple Commission.
But, even though production of new varieties has been increasing, Red Delicious is likely to remain the top export variety for the foreseeable future. Last season, Washington exported more than 18 million boxes of Red Delicious.
It’s an iconic variety. No other region of the world grows those big, red, typy apples like Washington does, and that can’t be said of other varieties.
When it comes to Gala, for example, there’s strong competition in export markets from other regions, such as New Zealand, Chile, Italy, or France. “Reds are much easier to differentiate, so we can promote that,” Fryhover said.
It’s the favorite variety of consumers in upcoming markets, such as India, and, importantly, it’s available year round.
And one of the main reasons Red Delicious accounts for more than half of Washington exported apples is its relatively low price. It’s more economical to grow and pack, and it’s still affordable to overseas consumers even after freight and import duties have been added.
Marketing difficulties this season put pressure on prices of Washington’s mainline varieties. The season average f.o.b. price for Red Delicious dropped to under $15 a box, while some of the newer varieties have still been selling at good prices.
The average price for Jazz, Pacific Rose, and Ambrosia has been almost $40 a box. This spring, Honeycrisp was selling at over $70 a box.
Fryhover said the commission’s staff have been talking to importers in export markets about Honeycrisp. “But when you start talking about $70 a box, they just look at you like, ‘For one box!’”
Freight to India, Washington’s third most important export market after Mexico and Canada, can cost $4,000 to $6,000 per container, or $4 to $6 a box. A 50 percent duty is charged on the landed cost (f.o.b. price plus freight).
That doubles the cost of a $15 box of Red Delicious and puts other varieties out of the price range of most Indian buyers, particularly now that the dollar is so strong against other currencies.
“I think the biggest hurdle on the club varieties is not acceptance, it’s not quality, it’s that price point that’s going to hold it down,” Fryhover said. “It’s going to be a niche deal.”
But Fryhover said if prices of newer varieties moderate as volume increases and the domestic market becomes satiated, opportunities for exporting new varieties should improve.
Gala, a new variety 30 years ago, is now Washington’s number-two export variety with almost 7 million boxes (almost a third of the crop) exported last season, and Fryhover expects volumes to increase. More than 4 million boxes of Washington Fuji apples (also close to a third of the crop) were exported last year.
Fryhover said Indonesia, with a population of 260 million and a growing middle class, could develop into a good market for new varieties.
“Apples in Indonesia are exotic—a lot like tropical fruits are here,” he said. “Red Delicious is a major component in Indonesia and they pay good prices, but other varieties are starting to make inroads.”
Consumers there are developing a taste for Ambrosia, Jazz, Envy, and Sonya apples, he said. “You can go there and see some of this product. There’s not loads and loads and loads, but there’re pallets being put on loads to diversify that market.”
Fryhover said Indonesia and Taiwan could be good potential markets for Honeycrisp, but, as long as the domestic market is paying high prices, shippers won’t want to risk putting a $70-a-box apple on a ship for several weeks and having quality problems on arrival.
If Red and Golden Delicious production declines as a result of poor returns this season and new varieties maintain their high prices, it will be difficult to maintain exports at their current levels, however.
It would have a huge impact on Mexico, which is Washington’s largest export market, taking almost 6 million boxes of Reds and 4.5 million boxes of Goldens. Those two varieties make up about 75 percent of the Washington apples going to Mexico.
But on the positive side, China is opening this year to all varieties of apples, not just Red and Golden Delicious, as in the past.
New varieties have been going into China unofficially via Hong Kong, where importers could pay as much as U.S.$30,000 a container in kickbacks to move the fruit through the so-called gray channel, Fryhover said.
Going the legal route, apples will face a duty and value-added tax totaling 23 percent of the value. This means that Washington apples should be much cheaper for Chinese consumers than they have been.
“I’m very excited about that,” Fryhover said. •