Apple tariff losses

The Washington Apple Commission building in Wenatchee, Wash. The commission is planning to spend an extra $8.4 million in federal money during the next two years to help offset tariff losses.

WENATCHEE, Wash. — An $8.4 million USDA award to the Washington Apple Commission is coming at a good time. It will help promote an anticipated large apple crop this fall and combat the loss of sales due to tariffs, the commission president says.

The commission learned Jan. 31 that it would receive the Agricultural Trade Promotion money as relief for an estimated $129 million in industry damage from Mexican and Chinese tariffs that were in retaliation for U.S. tariffs on steel and aluminum.

At the commission’s March 28 meeting, Todd Fryhover, commission president, said the plan is to spend $6.34 million — 75% — of the money in the 2019-20 sales season and $2.1 million — 25% — in the 2020-21 sales season.

“With trade issues and competition displacing us, whether the European Union or China, now is not the time to be shy. It’s time to invest. We’re lucky to have ATP to assist,” Fryhover said.

Washington apple exports to the Middle East are down because of increased competition from Europe and Turkey. Chile and other Southern Hemisphere producers compete with Washington in Southeast Asia.

Bob Mast, commission board member and president of Columbia Marketing International in Wenatchee, said competitors in markets with tariffs are doubling down on marketing efforts. Fryhover agreed saying it’s time to be “aggressive, not passive.”

The commission asked for $10.7 million in ATP money, expected to get $5 million and was delighted to get $8.4 million. Fryhover called it a “small miracle,” given it was the ninth highest award out of 57. A total of $200 million was distributed. Requests totaled $621 million.

Even before applying for the grant in November, commission staff began working on plans. The money is for export promotions and is a one-time supplement to the commission’s annual USDA Market Access Promotion award of $5.1 million.

MAP money largely goes for in-store, point-of-purchase promotions.

ATP money will allow for broader traditional and digital media advertising to raise consumer awareness and build the Washington apple brand, said Rebecca Lyons, the commission’s export marketing director. She outlined the timing of campaigns in China, India, Mexico, Thailand and Vietnam.

There will be in-store sampling of apples including of the state’s new Cosmic Crisp in Canada in the 2020-21 season, she said.

The commission will be required to track and measure success of the program to report back to USDA’s Foreign Agricultural Service.

A lot of work went into getting the ATP award but it also requires a 10% local match that could stretch the commission budget, Fryhover said.

This year’s crop is about 118 million, 40-pound fresh-packed boxes. Next year’s crop will likely be 130 million boxes or larger. Commission revenues from growers are 3.5 cents per box or $4.2 million for a 120-million-box crop.

The commission’s minimal match on MAP funding is $2 million. It has other fixed obligations of $1.65 million to the U.S. Apple Association, $540,000 to the Northwest Horticultural Council and $425,000 in building and partial staff overhead.

The commission will spend about $500,000 of the $2.5 million in reserves this year to meet a deficit and has an additional $3 million in reserves intended only for catastrophic situations, Fryhover said.

Central Washington field reporter

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