Tree fruit export outlook looks mixed

Grim

Fruit growers look to exports to reinforce domestic prices

By DAN WHEAT

Capital Press

The Northwest typically sells about 30 percent of its apples, pears and cherries overseas, which strengthens domestic prices by lessening the amount of fruit sold in the U.S.

Despite the recession, the outlook for exporting the 2010 crops remains positive, Bruce Grim said. That's partly because of the relative weakness of the dollar, which increases buying power in other countries.

Grim is manager of Washington apple and pear marketing associations, the Mid-Columbia Pear Marketing Association and the Northwest Cherry Marketing Association and is executive director of the Washington State Horticultural Association, all based in Wenatchee, Wash.

Exports have been good but not super, said Desmond O'Rourke, a retired Washington State University agricultural economist and private consultant in Pullman. A lot of foreign markets are not growing and, given the recession, exports will be a challenge if crops continue to be large, he said.

Apples

The makeup of crops always impacts exports, Grim said, noting the 2009 apple crop had less small-sized fruit, which is preferred overseas, keeping export prices strong. An abundance of small fruit the year before held prices down, he said. He's hoping for better size balance in the 2010 crop.

Grim said additional acreage and newer blocks coming into production may cause this year's apple crop to be the largest ever at 118 million to 120 million, 40-pound boxes. That would pressure prices downward, but Grim said there's lots of factors that can hold crop size in check: frost damage, poor pollination and weather damage. This year's dry weather increases chances of sunburned fruit, he said.

Even if the crop is closer in size to the 102.5 million boxes of 2009, "we still need to export 30 million plus boxes to allow growers to be profitable," Grim said.

Washington produces about 65 percent of the nation's fresh apples and 50 percent of apples used in processed goods.

Todd Fryhover, president of the Washington Apple Commission, noted a record 35.3 million boxes of apples were exported from the record 108.2-million-box 2008 apple crop and that exports from the 2009 crop could finish out at 33 million boxes or more.

"I think we've set a new export pace," Fryhover said. "For two years in a row we're at our best exports in history."

He thinks the 2010 crop could see another 35 million boxes exported.

"We're building demand and we have the fruit to support it," he said.

The large 2008 crop forced marketers to export more. Prices were dropped to do it.

"New consumers put their mouths around Washington apples, were hooked on the quality and came back this season for more," Fryhover said.

As of March 15, export movement was 2.1 percent ahead of last year, he said.

There was a huge increase in sales to Mexico in the first two weeks of March -- 677,000 boxes versus 413,000 a year ago -- after the 47 percent tariff on Golden and Red Delicious was lifted there, he said.

The end of the tariff bodes well for 2010 apple crop exports, as does the possibility of less Chilean fruit because of infrastructure damage from the Feb. 27 earthquake.

Pears

There are a couple of export challenges for pears.

Brazil traditionally is the No. 3 export market for Northwest pears, following Mexico and Canada. But Northwest pear exports to Brazil could fall as much as 20 to 30 percent this coming fall and winter because of a new 10 to 30 percent tariff on pears and other goods from the U.S., said Kevin Moffitt, president of The Pear Bureau Northwest in Portland.

"We shipped 512,000 boxes of pears to Brazil this year, up from 268,000 a year ago, so it's a big market," Moffitt said.

The tariff, on about 100 U.S. manufactured goods and agricultural products, is in retaliation for U.S. cotton subsidies, Moffitt said. It means it will cost $3 to $5 per box more to ship pears into Brazil when the Northwest crop is harvested this fall and that will cause sales to fall. September through January is the prime season for Northwest pears in Brazil, then Argentina takes over.

A 20 percent tariff in Mexico continues as the other challenge. Despite the tariff, the Northwest is on track to sell a record-tying 2.6 million boxes of pears to Mexico this season. Prices have been lowered to move a record 2009 pear crop.

Moffitt said it's too early to know how the Mexican tariff will play out in the coming season.

Cherries

Normally the Northwest exports about 28 percent of its cherry crop, which it did again last year even with a record crop. Marketers are always looking to increase that as increased acreage continues to mean large crops.

Canada and Taiwan are the top markets, and the greatest potential for growth is in China and Mexico, said B.J. Thurlby, president of Northwest Cherry Growers and the Washington State Fruit Commission in Yakima.

A growing middle class in China is boosting sales there and with the country's huge population and good economy, Thurlby foresees continued growth. The commission will spend close to $350,000 in promotions there this year, up from $170,000 last year. The commission is moving from retailers in just top-tier cities to second-tier cities, he said.

"We're just scratching the surface in Mexico," Thurlby said. "They have 110 million people. We had no access until five years ago. Our shippers are familiar with it. It's a matter of getting retailers and consumers to take a chance, and when they do they'll say 'great.'"

Russia is a small, but new, market, and Brazil has potential if the tariff ends, he said.

The European Union was down last year because of good crops in Spain, Greece and Turkey, he said.

Japan likes cherries in June and has been getting more from California and less from the Northwest because of that, Thurlby said. Late Northwest crops the last two years have not helped, but an earlier crop this year might cause Japan to rebound, he said.

Washington's top apple exports

Millions 40-pound fresh-packed boxes

2008 2007 change

Mexico 10.5 8.6 22%

Canada 5.4 5.3 1%

Taiwan 2.3 2.1 8.4%

India 1.9 .8 118%

Indonesia 1.8 1.5 22%

Hong Kong 1.3 1.1 24%

United Kingdom 1.1 1.0 6%

The total of these and all other export countries was 35.4 million boxes in 2008 and 28.6 million in 2007, an increase of 23.5 percent.

Source: Wenatchee Valley Traffic Association and Yakima Valley Growers-Shippers Association.

Northwest's top pear exports

Millions 44-pound fresh-packed boxes

2008 2007 change

Mexico 2.1 2.6 -20%

Canada 1.1 1.4 -20%

Brazil .230 .449 -49%

Russia .279 .349 -20%

The total for these an all other export countries was 4.8 million boxes in 2008 and 6.4 million in 2007, an decrease of 25 percent.

Source: Wenatchee Valley Traffic Association and Yakima Valley Growers-Shippers Association.

Northwest's top cherry exports

Millions 20-pound fresh-packed boxes

2009 2007 change

Canada 2.2 1.6 41%

Taiwan .810 .650 25%

China .495 .073 571%

Hong Kong .450 .226 99%

Japan .301 .363 -17%

United Kingdom .295 .310 -5%

Australia .260 .145 78%

South Korea .254 .276 -8%

European Union .180 .279 -36%

Mexico .120 .066 81%

SE Asia .119 .098 21%

Total 5.6 4.1 36%

Source: Northwest Cherry Growers

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