Growing middle class given credit for export market gains
By DAN WHEAT
Taiwan has been a leading export market of Washington apples for at least 30 years and in the top three for most of that.
Large Washington Fuji have long been a prized treat in Taiwan for the Chinese New Year, which usually falls in early February.
But other countries such as India, Indonesia and Hong Kong and China, taken together, have bested Taiwan as the No. 3 export market for Washington apples recently.
Mexico has been Washington's top apple export market for most of the past 20 years. Canada has been No. 2.
Taiwan was Washington's No. 1 apple export market from 1985 through 1990, then was No. 2 and was No. 3 from 2001 until now. But it is doubtful Taiwan will ever be in the top three again, said Todd Fryhover, president of the Washington Apple Commission in Wenatchee.
New Zealand and Chile have cut into Washington's market share in Taiwan and some day Taiwan may accept apples from China, Fryhover said. Washington apple sales to India and Hong Kong-China are growing rapidly with potential for much more, he said.
Growing middle classes with greater disposable incomes in India, Indonesia and China are fueling increased sales to those countries. Not just larger but younger middle classes are looking for high-quality fruit and find it in Washington apples, Fryhover said.
Washington's market share in India exploded from 1.4 million, 40-pound boxes in 2009 to 3.3 million in 2010, a 143 percent increase, said Jon DeVaney, executive director of the Yakima Valley Growers-Shippers Association.
The biggest reason has been 9 percent growth in India's GDP in the past year and a growing middle class estimated at 250 million people, said Rebecca Baerveldt, Apple Commission export marketing manager.
That market should continue to grow this year because India's domestic apple production is down and the price of Chinese apples has gone up, she said.
China is Washington's main apple export competitor in India, but "if prices are close they prefer us for higher quality," Baerveldt said.
India bought its first Washington apples in 1999. The market has grown, despite a 50 percent tariff, largely because of India's fondness for Red Delicious, Fryhover said.
India likes Washington's smaller, striped second- and third-grade Reds because they are closer to the Red Delicious they grow, said Marc Spears, export director of Chelan Fresh Marketing in Chelan.
Shippers could not keep up with demand this past season but may do better this coming season because smaller Reds should be more abundant, Spears said.
On a $20 box of apples, freight to get it to India is $7, the duty is $13 and there's Indian transportation costs, Fryhover said.
"The importer pays all of that and our season has expanded there to year-round," he said. "Reduction of the tariff would help and we're working on that, but in the long run we need to diversify the apple varieties going in there."
However, even with predominately Reds, the market could reach 4 million to 5 million boxes in the next few years, Baerveldt said.
China is the world's largest apple producer but it consumes most of it domestically. Production is moving from Shandong to Shaanxi province, much farther inland, making future exports more costly, Fryhover said. That plus the fact China's expanding middle class likes Washington quality, bodes well for future sales, he said.
China only accepts Red and Golden Delicious but probably most of the 851,000 boxes of Gala that went into Hong Kong went into China through the black market, he said. Hong Kong bought 2,198,804 boxes of Washington apples in 2010 and China bought 784,720, he said.
"It's time as an industry we recognize China and Hong Kong as one and the same," Fryhover said. "The black market adds about $10 per box. That would be reduced if we had full access and we could be at 5 million boxes and surpass even India."