Worldwide Market Potential and Technical Barriers
for the Export of Stone Fruit
We are going to take the globe, spin it and cover the major export market regions. Nick Kukulan will be taking a look at marketing opportunities and trends. Because we are speaking about stone fruit, we will be drawing on a lot of information from California in order to compare the marketing activities from both California and Washington. Mike Willett will cover barriers to export of our products that may be due to phytosanitary issues, import taxes or other issues. These issues are summarized in Table 1. We recognize that there are many experts in the room that have a lot more experience and knowledge on the subject than we do and encourage you all to speak up. We will welcome your questions and comments during the end of the presentation.
First let's define what we mean by stone fruit. Botanically, this category includes cherries, peaches, nectarines, apricots and plums. For purposes of this discussion we will consider cherries separately in each country and lump the rest of the species together as soft fruit (peaches, nectarines, apricots and plums). We will start by taking a look at some production comparisons between California and Washington. Unfortunately, similar statistics are not available for Oregon.
The top five export markets in order of volume are: Japan, Taiwan, Canada, UK and Hong Kong. Bings represent three million of the 1997 volume. The balance of the crop is primarily represented by new varieties; Brooks, Tulare and Garnet which have been planted in San Joaquin Valley, California, as far south as Bakersfield. These new varieties grow well in the San Joaquin Valley, producing large sized, good quality fruit, with good flavor. Being planted south of the primary growing area in Stockton/Lodi, these areas are producing fruit early in May. The Hollister/Gilroy area produces excellent quality Bings, but suffers from weather problems, an expanding Silicon Valley and the big unknown "when will Washington start each year?"
Washington produced around six million packs in 1997, which was a record volume. One third of the crop was exported, around 1.5 million packs.
The top five export markets in order of volume are: Canada, Taiwan, Japan, UK and Hong Kong. Rainier cherry exports were over 125,000 packages which represents a significant increase in volume. Lapins is the new late season variety but it is still unclear if they have the eating and shipping quality to have a place in the export markets.
Peaches, Nectarines and Plums
Washington produced about two million fresh packs of peaches, nectarines, plums and prunes in 1997. Only Canada and Taiwan take significant volumes of Washington stone fruit exports.
Now let's spin the globe and first take a look at our neighbor to the south.
Perhaps the biggest surprise is that Mexico took 100,000 packs of apricots in 1997, but again this was second in volume to 1994 when 170,000 packs were shipped. The fact that Mexico loves apricots could be good news for the Washington apricot growers looking for new customers.
Cherries: California gained access to the Mexican market in 1997 and shipped less than 2,000 cartons due to delays in resolving technical quarantine issues. Washington shipped less than 6,000 packs in 1997. I think that both states have great expectations that Mexico will become a significant market for cherries.
Peaches, nectarines and plums: Latin America represents a very important market for California shippers of peaches, nectarines and plums. The combined markets of Guatemala, Panama, Venezuela, Colombia and Ecuador take about 400,000 cartons. Brazil remains the big unknown market. We all see a huge population; a country developing its infrastructure; has stabilized its economy from the years of incredible inflation; yet is still fraught with credit and payment issues. Another down side is the expense and length of time to transport produce by ocean container, which stretches the reasonable shelf life of tree fruit. Quarantine concerns dominated the 1997 season in Brazil. Currently peaches, nectarines and apricots shipped by air from California must be fumigated to control the Pacific Spider Mite.
Last season Spain, Portugal and Italy dominated the Brazilian market with their soft fruit. These European countries enjoy the advantage of quicker and cheaper sea transportation. The quality and condition of tree fruit from Europe were mixed so it remains a question as to which Northern Hemisphere producers will supply the market.
Cherries: Latin America takes small volumes of California and Washington cherries. The relative high cost of shipping cherries by airfreight and the sensitive handling requirements of the product make it difficult to ship in any significant volume. This will likely improve gradually over time.
Let's move on to the most important region for the sale of Washington and California tree fruits... the Pacific Rim.
Taiwan represents the number one volume export market excluding Canada for both Washington and California soft fruit and cherry shippers.
Peaches and nectarines: Taiwan imported four million cartons of California peaches, plums and nectarines in 1997, a record volume. The biggest growth has been in peaches and nectarines, which represented 2.3 million cartons. Of this volume it is estimated that 70 to 80% are white flesh varieties. This consumption represents 50% of the California white flesh volume. This volume is expected to double annually for the coming years with all the production from the new acreage destined for Taiwan. Washington has planted the desired white flesh varieties of peaches and nectarines first grown in California and these, in turn, have moved in volume to Taiwan. Growers in both states can look to our experience with growing, packing and marketing Fuji apples as a road map for how to handle the white flesh peach and nectarine revolution.
The challenges include the following:
Growing, packing and selecting fruit which meets the exacting requirements of buyers from Taiwan. This includes proper packing, including strength of packages and padding of delicate fruit to avoid bruising. Choosing the right type of pack for the right variety. Nectarines typically move in volume fill cartons vs. panta packs for peaches.
Grading and selection of fruit is critical to get the exact color and appearance. This can get as refined as the intensity of the blush and the correct shade of background color.
Selection of white flesh varieties is very complex. We have moved from low acid to sub acid varieties. Varieties have been tried and quickly discarded when they do not meet exacting taste requirements of the Taiwan consumer. This presents a tremendous challenge to growers in California and Washington to know what varieties to plant for the future and which ones to discard.
As volume increases, the Taiwan market becomes more and more selective regarding sizes that are acceptable. In the early days of white flesh varieties, a packer could expect to clean their cooler from smallest to largest pack. This is no longer the case. Taiwan will have the luxury of only taking the sizes they want for their market as our volumes rapidly increase.
In summary, tree fruit growers in both California and Washington will have to develop the domestic market for white flesh varieties just as they have for Fuji apples. The pressure will be on tree fruit marketers to develop these domestic markets for white flesh peaches and nectarines. There should be no reason why good tasting fruit won't sell if priced competitively. It also seems likely that other markets in the Pacific Rim will have interest in white flesh varieties once prices reach levels competitive with yellow varieties.
Cherries: In 1997 Taiwan imported 155,000 cartons of California cherries and from Washington state over 440,000 cartons, three times California's volume. One amazing statistic is that Taiwan is Washington State's largest consumer of Rainier cherries, beating out Los Angeles by 30 tons in 1997! Washington State may have good reasons to worry that other Pacific Rim Fuji apple growers may knock them out of the Taiwan market once Taiwan joins the World Trade Organization. However, we don't see any other Northern hemisphere cherry producers that will take away Washington state's cherry crown in the near future.
Peaches, nectarines, plums and apricots: California has been pushing for years to have more reasonable quarantine standards for shipping nectarines to Japan but this effort continues to be stalled. There might be some potential in the future.
Hong Kong and China
Peaches, nectarines, and plums: Hong Kong imported over 1.2 million packs from California in 1997. Two thirds of the volume consists of plums, mainly black skinned varieties. On rare occasions, in years when California has crop failures, a few vans of Washington nectarines moved to Hong Kong. As Washington stone fruit volume increases, Hong Kong may be come a bigger outlet.
Cherries: Hong Kong, known as the gateway to China for most USA produce, is the fifth ranked importer of cherries from both Washington and California. Washington's volume of 250,000 cartons is five times that of California. Most cherries shipped to Hong Kong stay in Hong Kong, which is contrary to most other USA produce exports to Hong Kong. Cherries, being highly delicate, do not stand up to the generally non-refrigerated transport over the border to China. In addition, China has a big volume of lychees, peaches and other summer fruits that dominate the local market.
New Zealand and Australia
This summarizes some of the major market regions for both Washington and Californian tree fruit.
Market potential and technical barriers for selected nations; by region
|Country(s)||Market Activity/Potential||Technical Barriers|
|Taiwan||Ca. 600,000 cartons of cherries from WA and CA in 1997. 4 million cartons of peaches, nectarines and plums from CA in 1997.||12% tariff|
|Hong Kong||Ca. 300,000 cartons of cherries from WA and CA in 1997. Ca. 620,000 cartons of plums, peaches and nectarines from CA in 1997.|
|Singapore||24,000 cartons of cherries from U.S. in 1997 and some peaches.|
|Malaysia||2,200 cartons of cherries from WA in 1997.||10% ad valorem tax on cherries and 5% sales tax on fresh fruit.|
|Thailand||21,000 cartons of cherries from WA in 1997.||48% ad valorem tax on cherries.|
|Korea||12,200 cartons of cherries from WA in 1997.||Cherries must be fumigated for codling moth.|
|China||Small amount of cherry exports in 1997. First year of approval for shipment. Potential big.||Western cherry fruit fly; inspection only; 48% ad valorem tax and 13% VAT.|
|Philippines||2,500 cartons of cherries from WA in 1997. Imports of peaches, nectarines and apricots allowed.|
|New Zealand||Peaches, nectarines, plums and apricots are allowed only from five counties in the San Joaquin Valley in California. Pests of concern: Fruit flies. Other stone fruits are allowed if grown in an area more than 50 miles from where fruit flies of concern occur or are the product is fumigated.|
|Australia||Market potential 40,000 cartons||Import of cherries permitted from San Joaquin Co., CA and prohibited from elsewhere. Pests of quarantine concern for the PNW include western cherry fruit fly.|
|Japan||Huge market for Western U.S. cherries. Ten varieties of nectarines are approved.||Both cherries and nectarines must be fumigated. Big interest in opening Japan to white fleshed nectarines from U.S. but access will likely be delayed until current WTO case is settled.|
|Israel||Some interest in cherries.||Phytosanitary barriers unknown; must request an import permit.|
|South Africa||Some potential for cherries||The possible presence of the fireblight bacteria Erwina amylovora on cherry fruit has been the primary obstacle followed by certain insect species. Industry is actively working to open this market.|
|EU and other western European nations.||Good market for cherries||No significant phytosanitary issues; EU import regulatory requirements of import licenses for cherries restrain trade; Significant and increasing cherry production in Europe and especially in Turkey.|
|Canada||Largest export market for peaches, nectarines, apricots, prunes and plums from the PNW.||Peaches, nectarines and apricots must be fumigated for Oriental fruit moth if sent to British Columbia. No restrictions if sent to other provinces.|
|Mexico||Ca. 600,000 cartons of peaches, nectarines, apricots and plums from California. PNW is interested in this market as well. Market opened in 1997 for cherries from California, Oregon and Washington Ca. 8,999 cartons of cherries sold in 1997 market will likely open for cherries from Idaho in 1998.||For stone fruits the phytosanitary barriers are Oriental fruit moth and apple maggot. No significant phytosanitary barrier to cherries as there is no domestic cherry industry in Mexico.|
|Central American Countries||No significant phytosanitary barriers. Costa Rica requires that an import permit be issued and occasionally that import permit requires the documentation of a Medfly trapping program but usually only if the importer intends to source fruits which could be hosts of Medfly from California along with product from the PNW using the same permit. This creates a problem for PNW state department of agriculture inspectors in the PNW where a Medfly trapping program is not necessary.|
|Brazil||Excellent market for stone fruits and cherries 12,000 cartons of cherries sent to Brazil in 1997||For peaches and nectarines: fruit must be free of peach twig borer, apple maggot, codling moth and walnut husk fly. Fruit must be free of Pacific spider mite or cultivated in an area free of Pacific spider mite. Fruit must be cultivated in an area free of apple maggot and walnut husk fly and tropical fruit flies. This only allows exports from the U.S. to currently come from Fresno, Kern, Madeira, Merced or Tulare Cos., California. Peaches and nectarines must be fumigated prior to departure if sent by air, if shipped by sea the shipment can be fumigated or certified that it is free of Pacific spider mite. For apricots: similar to peaches and nectarines; from California apricots must be fumigated for Pacific spider mite and free of codling moth if shipped by air, if shipped by sea it can be treated or certified as free of Pacific spider mite. From other states: fumigation is not required if fruit comes from an area free of Pacific spider mite or can be certified as free of Pacific spider mite. For plums, prunes and cherries, fruit must be free of and originate in an area free of tropical fruit flies and Pacific spider mite or the shipment must be certified as free of Pacific spider mite.|
|Argentina||Good potential||For cherries: Fruit must be free of peach twig borer and plum curculio. Fruit must originate in an area free of apple maggot, cherry fruit fly, western cherry fruit fly, black cherry fruit fly, cherry fruit worm and lesser apple worm.|
|Chile||Market potential unknown.||For peaches and nectarines: Stone fruits are not prohibited products. An import permit (IP) is required. Phytosanitary requirements will be listed on IP.|
Paramount Export Company
280 17th Street
Oakland CA 94612-4191
Dr. Mike Willett
Northwest Horticultural Council
6 S 2nd St, Room 903
Yakima WA 98901
Nick Kukulan, President, Paramount Export Company and Dr. Mike Willett, Technical Issues Manager, Northwest Horticultural Council
14th Annual Postharvest Conference,
March 10-11, 1998