The next issue of WORLD HORTICULTURAL TRADE AND U.S. EXPORT OPPORTUNITIES will be available electronically after 3:30 pm on March 3, 1997.
U.S. exports of horticultural products to all countries in November reached $927.6 million, up 6 percent from the same month a year earlier. Ten out of 15 categories of horticultural exports registered increases. Categories with the most significant increases in November were canned vegetables (up $8.0 million or 15 percent); fresh vegetables (up $7.7 million or 10 percent); frozen vegetables (up $4.0 million or 12 percent); wine (up $3.9 million or 18 percent); and miscellaneous products (up $35.4 million or 18 percent). The categories with the most significant decreases were tree nuts (down $3.2 million or 3 percent); canned fruit (down $3.1 million or 16 percent); and hops and products (down $2.7 million or 20 percent). During the first 2 months (October-November) of fiscal year (FY) 1997, the total value of U.S. horticultural exports was $2.0 billion -- 9 percent above the same period last year.
GSM-102 Credit Guarantee Program: No activity since last publication The GSM-102 program makes available financing for the sales of U.S. agricultural commodities overseas. USDA does not provide financing, but guarantees payments due from foreign banks. USDA typically guarantees 98 percent of the principal and a portion of the interest. The GSM-102 program covers credit terms from 90 days to three years. Under the program, once a firm sale exists, the qualified U.S. exporter applies for a payment guarantee before the date of export. The U.S. exporter pays a fee calculated on the dollar amount guaranteed, based on a schedule of rates applicable to different lengths of credit periods. The CCC-approved foreign bank issues a dollar-denominated, irrevocable letter of credit in favor of the U.S. exporter, ordinarily advised or confirmed by the financial institution in the United States agreeing to extend credit to the foreign bank. The U.S. exporter may negotiate an arrangement to be paid as exports occur by assigning the U.S. financial institution the right to proceeds that may become payable under the guarantee, and later presenting required documents to that financial institution. Such documents normally include a copy of the export report. If a foreign bank fails to make any payment as agreed, the exporter or the assignee may file a claim with USDA for the amounts due and covered by the guarantee. USDA will pay the U.S. bank and will take on the responsibility of collecting the overdue amount from the foreign bank. The following table presents FY 1997 allocations by country and product along with registrations through January 10, 1997, for various horticultural commodities and products. Repayment terms vary under the program, from 90 days to 3 years. Cautionary information for use of the accompanying table: The table reflects only exporter applications for guarantees that have been entered into the GSM 102 computerized system. At any given time, exporter applications are in process, and not all of those received have been entered into the system. Moreover, all applications are initially entered into the system on a provisional basis until price reviews have been completed, the guarantee fee has been received, and the written guarantee has been issued. Thus, some applications now in the system may in the future be removed, and the commodity balances correspondingly increased. For details on terms and authorizations, see the footnotes to the table. Note: The GSM will consider requests to establish a GSM-102 program for a country or region or amend an authorized program to include horticultural commodities and products which are currently not eligible. (For further information on the GSM-102 program for horticultural commodities, contact Yvette Wedderburn Bomersheim, 202-720-9903). Supplier Credit Guarantee Program: No activity since last publication The new Supplier Credit Guarantee Program (SCGP) is unique because it covers short-term financing extended directly by U.S. exporters to foreign buyers and requires that the importers sign a promissory note in case of default on the CCC-backed payment guarantee. The SCGP emphasizes high-value and value-added products, but may include commodities or products that also have been programmed under the GSM-102 program. Note: The GSM will consider requests to establish a SCGP for a country or region or amend an authorized program to include horticultural commodities and products which are currently not eligible. (For further information on the SCGP for horticultural commodities, contact Yvette Wedderburn Bomersheim, 202-720-9903).
WORLD TRADE SITUATION AND POLICY UPDATES
New Zealand approves access for Florida grapefruit; U.S. asparagus also now cleared for entry New Zealand's Ministry of Agriculture issued a new Import Health Standard on January 16 that clears the way for the entry of Florida grapefruit, effective immediately. This action successfully concludes a market access initiative that had involved the collective input and support of USDA's Animal and Plant Health Inspection Service (APHIS), the Florida industry, and FAS. While welcoming the development, Florida industry contacts point out that current, high shipping costs could constrain the development of the market in the near term. However, one industry source estimated that New Zealand could develop into a 300,000-400,000 carton market over time for Florida grapefruit (approximately 5,700 tons - 7,700 tons). U.S. exports of grapefruit to New Zealand in the first 11 months of 1996, presumably sourced from California and Arizona, totaled 1,741 metric tons, with an associated value of $2.8 million. U.S. and New Zealand quarantine officials have finalized the terms of a technical agreement which will permit U.S. fresh asparagus to enter New Zealand, beginning with the coming season. The country represents a promising new market for an industry that has seen its exports expand significantly in recent years. For first 11 months of 1996, U.S. asparagus exports to all destinations totaled 14,161 tons, valued at $51 million. Israel increases import fees on U.S. almonds Israel began in early December 1996 to assess increased fees on imported U.S. in-shell and shelled almonds of approximately $4,000 and $6,000 per metric ton, respectively. Previously, fees assessed were approximately $750/MT for in-shell almonds and $1,000/MT for shelled product. In a December 31 letter to Israel's Ministry of Agriculture, the U.S. Economic Counselor in Tel Aviv cited the quadrupling of the duties and noted that it had been the USG's understanding that, under the November 1996 bilateral trade agreement, "U.S. product would enjoy a status at least as equal to that existing in 1995." The letter requested "Israel reinstate the conditions of entry existing prior to the recent change in levies." In a response dated January 13, the GOI's Ministry of Agriculture stated Israel is "currently applying the Agreement exactly as written." FAS is continuing to review U.S. options under the agreement. U.S. almond exports to Israel for the 12-month period ending October 1996 were valued at over $11 million. U.S. International Trade Commission launches study of competition in the U.S. and Canadian potato industries The U.S. potato industry believes that unfair competition with Canada exists in the North American market for fresh potatoes and processed potato products. Total exports of fresh potatoes and potato products in fiscal year (FY) 1996 reached $1.2 billion, down from $1.3 billion a year earlier. In FY 1996, the value of U.S. potato exports to Canada was $114 million, a gain of 2 percent from the previous year. In FY 1994, total exports of fresh potatoes and potato products hit $1 billion, while exports to Canada peaked at $119 million. Specifically, Canadian government policies and industry pricing practices concern the U.S. potato industry. Therefore, at the request of the U.S. Trade Representative, the International Trade Commission (ITC) has begun an investigation of the structure and performance of the U.S. and Canadian potato industries. The ITC will examine the domestic and international trade characteristics of the potato sectors in both the United States and Canada. Known legally as a Section 332 investigation, this inquiry will involve extensive research, including interviews with industry and government officials. The Trade Act of 1930 authorizes the ITC to conduct investigations, at the request of the Executive or Legislative branches of the U.S. Government, to analyze the factors affecting international trade in particular products. Production of this potato study has two principal benchmarks. First, the ITC will hold public hearings starting on April 30, 1997 to gather data and information from interested parties. Then, the ITC anticipates completing its work by the end of July 1997. EU rescinds higher duty assessment on canned corn The European Union (EU) has reverted to its pre-Uruguay Round policy of assessing import duties on drained weight for canned sweet corn according to the Agriculture Counselor's office in Brussels (USEU) office. The EU had effectively increased its duty on canned corn in July 1995 with the publication of its Uruguay Round tariff schedule showing canned corn duties assessed on net weight, which includes water. In response to repeated approaches to the Commission by USEU, this issue was placed on the agenda for the December EU Agriculture Council meeting and passed by the ministers. The change in policy became effective on January 1, 1997. U.S. exports of canned corn to the EU stood at $34 million in fiscal year 1996, versus $33 million in fiscal year 1995. California Governor raises fruit pesticide issue while in Indonesia, USG to submit formal comments on proposed system California Governor Pete Wilson, visiting Indonesia as part of an Asia trade mission, raised the issue of Indonesia's proposed pesticide certification scheme for imported fruit during a January 15 meeting with the GOI's Minister of Industry and Trade, according to the U.S. Agriculture Counselor in Jakarta. The Governor expressed concern over a possible pre-shipment certification requirement noting that the certificates would not improve safety, but would result in additional costs to exporters, and likely Indonesia's consumers as well. In response to the GOI's earlier WTO notification, the USG intends to submit formal comments by the January 20 deadline. U.S. fresh fruit exports to Indonesia for the 12-month period ending October 1996 were valued at nearly $45 million, up 22 percent from a year earlier. UnitedStates/European Union wine derogations extended The European Union (EU) Agricultural Council met in Brussels on January 20, 1997. The EU Agricultural Ministers extended the U.S./EU Wine Accord through, derogations of regulations 1873/84 and 2390/90 until the end of 1997. The terms of U.S.-EU wine trade are governed by the 1983 Wine Accord, which expired in 1993. Under the 1983 Accord, the United States obtained temporary derogations from EU restrictions on certain enological (wine-making) practices and from certain cumbersome certification procedures. Since the Accord expired, the EU has extended these derogations several times; however, the Commission noted that this would be the last extension of the Wine Accord. Representatives from the EU and the United States are tentatively scheduled to meet in Washington, D.C. on February 4 and 5 for further discussion on U.S.-EU wine trade issues.
U.S. Brandy Exports Should Rebound with the Phasing Out of the European Union's Distillation Program and Trade Barriers
During 1982-1992, the European Union (EU) produced an average of 24 million proof hectoliters of excess wine. In order to help support EU wine producers in the face of high carryover stocks, the EU implemented a distillation program to convert the excess EU wine into brandy and alcohol. Some of the excess wine was converted to brandy. The result of the distillation program was the production of inexpensive brandy flowing into the world market. During the distillation program, it was difficult for U.S. brandy to compete on a price basis; U.S. brandy exports flattened. In addition, countries like Japan implemented trade barriers that further limited U.S. brandy exports. U.S. exports are forecast at 2.4 million proof liters in 1996, down 14 percent from the 1995 volume. High tariffs and excise taxes, coupled with a recession in Japan, decreased U.S. exports to this market. As progress is made under the Uruguay Round to reduce trade barriers in countries like Japan and the EU phases out its distillation program, the U.S. brandy industry should be in a strategic position to capitalize on a $6.6 billion world brandy market. Brandy is defined as alcohol distilled from grapes and aged in oak barrels. Distillation takes place in all of the major grape producing regions. France, Spain, Italy, Eastern Europe, the Commonwealth of Independent States (successor states to the Former Soviet Union), Latin America, and the United States produce a substantial amount of brandy. Statistical data on annual worldwide brandy production are not available. There is a direct relationship between wine production and brandy production. The European Union (EU) produces approximately 65 percent of the world's wine. During the period 1982-1992, the EU produced an average of 24 million proof hectoliters of wine in excess of demand. This excess production created what was know as the EU "winelake." To help support EU wine producers in the face of high carryover stocks, the EU implemented a distillation program in the form of subsidies to convert the "winelake" into brandy and industrial alcohol. The result of the distillation program was the production of inexpensive EU brandy flowing into the world market. By 1994, EU wine production had declined by 20 million proof hectoliters. In 1995, wine production in the EU stabilized at the 1994 level. During the distillation program, EU brandy was selling at a very low price, which made it difficult for U.S. brandy to compete on a price basis. As the wine surplus was reduced, the EU scaled back its distillation program. In 1996, the EU did not implement a distillation program to eliminate surplus wine. As a result of the improved wine supply/demand balance in the EU, the production of inexpensive surplus brandy products should be reduced or possibly eliminated. This should put the U.S. brandy industry in a strategic position to capitalize on a $6.6 billion world brandy market. U.S. brandy exports could climb back up to the 1991 level of 3.09 million proof liters. From 1986 to 1991, U.S. brandy exports increased 90 percent, from .31 million proof liters in 1986. However, as more inexpensive EU brandy (produced in earlier years) saturated the market, U.S. brandy exports started to flatten. Brandy consumption outside of the United States is estimated at approximately $6.6 billion. In 1995, U.S. brandy consumption represented a $634 million business, approximately 7 percent of world consumption. The United States remains a net importer of brandy. On a volume basis, U.S. imports were eight times as much as exports in 1995. However, calculated on a value basis, the United States imported approximately 26 times as much brandy as it exported. U.S. brandy imports for the period January through November 1996 were up 4 percent from 1995. France supplies 72 percent of U.S. brandy imports, approximately $250 million. The Market Access Program helps the U.S. brandy industry to capitalize on a worldwide market Worldwide brandy sales have remained constant in the last several years. There are a number of large brandy markets outside the United States which provide an opportunity to increase U.S. brandy exports. As the presence of inexpensive surplus brandy products and trade barriers are reduced, U.S. brandy industry should be in a position to expand exports. In addition to standard brandies, U.S. producers have begun to develop "boutique brandy" products which compete with cognac, the "gold standard" for grape spirits on the world market. U.S. producers are now offering VSOP, XO and varietal brandies to the world market. While U.S. brandy exports for 1996 are estimated to have decreased 14 percent to 2.42 million proof liters, the U.S. brandy industry is positioning itself to capitalize on an $6.6 billion worldwide brandy market. The U.S. brandy industry is using funds made available through the Market Access Program (formerly the Market Promotion Program) to help fuel international demand of U.S. brandy and boost sales to a number of markets. In 1996, the industry used MAP funds to finance generic and branded activities, such as consumer promotions, advertising, and other trade-related activities in Canada, Germany, Japan, Taiwan, and the United Kingdom. The largest markets for U.S. brandy are Japan, United Kingdom, Mexico, and Canada. These four markets account for approximately 83 percent of total value and 78 percent of total volume of U.S. brandy exports for the period January to November 1996. The chart on page 16 highlights the major destinations for U.S. brandy exports. U.S. brandy exports to Japan have slowed Japan is the largest market for U.S. brandy exports. Almost all of Japan's brandy is imported. In 1995, Japanese brandy sales were 30.12 million proof liters. Bulk imports accounted for approximately 77 percent, 23.2 million proof liters. The balance of the imports was bottled, approximately 6.9 million proof liters. The United States supplied 5.64 million proof liters of brandy to Japan in 1995. The Japanese brandy market for U.S. brandy posted robust gains in the late 1980s and early 1990s, peaking in 1993 at 1.95 million proof liters. U.S. brandy exports to Japan declined 17 percent between 1993 and 1995 due to the prolonged Japanese recession. U.S. brandy exports to Japan slowed even more in January through November 1996, down 46 percent from the same period in 1995. Another constraint which limits U.S. brandy exports to Japan is the favorable excise tax provided to domestically produced spirits (primarily "shochu"). Based on alcohol strength, the tax on brandy is ten times the tax rate for shochu. In 1987, a GATT panel determined this excise tax structure is illegal. Japan refused to comply with the GATT ruling for 9 years. A second GATT panel ruling in 1996 again determined that the Japanese excise tax regime is illegal. There are indications that Japan will implement changes in its tax structure in early April 1997. Japan has also participated in the GATT Uruguay Round agreement to eliminate tariffs on brandy. Tariffs will gradually be eliminated over 10 years commencing in 1995. The tariff and excise reductions provide an excellent opportunity for U.S. brandy to penetrate the 30 million proof liter Japanese brandy market. U.S. brandy gaining ground in the United Kingdom In 1989, the United States began exporting brandy to the United Kingdom. In 1994, the United Kingdom emerged as the second largest market for U.S. brandy. Exports for 1995, totaled 500,628 proof liters. U.S. brandy exports to the United Kingdom for the period January through November 1996 are up 17 percent from 1995. U.S. brandy exports to the United Kingdom are forecast at 600,000 proof liters in 1996. The United States has an approximately 1 percent share of the brandy market in the United Kingdom. The United Kingdom imports 100 percent of its domestic brandy needs. Brandy consumption in the United Kingdom is around 21.6 million proof liters (3.0 million 9-liter cases). Direct imports of brandy are expected to remain sizeable. Brandy holds a 7.9 percent share of the U.K.'s total spirits market. Of this, cognac accounts for 3.5 percent, Armagnac 0.2 percent and brandy/marc 4.2 percent. It is estimated that 56 percent of brandy consumers are male and 44 percent female. Approximately 52 percent are age 50 and over, 26 percent age 35-49, 14 percent age 25-34 and 7 percent 18-24. Despite the inroads the U.S. brandy industry has made in the U.K. market, there are a number of obstacles that limit U.S. brandy exports, most notably competition from the heavily subsidized EU suppliers. France dominates the U.K. market, supplying 92 percent of the U.K.'s brandy. France has an advantage in the U.K. market because both countries are EU members. French product enters the United Kingdom without a customs tariff. Products from outside the EU face a high tariff which was $8.00 per case prior to January 1995; the tariff is scheduled to transition to zero in 2004. Although U.S. brandy faces stiff competition from EU suppliers, the reduction of trade barriers coupled with the industry's dedication to a long term marketing strategy should allow the U.S. to move into a more competitive position in the U.K. brandy market and increase its market share. U.S. brandy exports to Mexico limited by economic recession and broom retaliation Mexico's recent economic recession caused brandy consumption to fall 9 percent in 1995. U.S. exports fell 63 percent from 117,864 proof liters in 1994 to 43,248 proof liters in 1995. Imports, high-priced in U.S. dollar terms, fell 45 percent in terms of volume to only 24,472 proof hectoliters in 1995. The fall in consumer purchasing power also affected domestic production, which fell 7 percent in 1995. Mexico has traditionally imported brandy from Spain and cognac from France. Brandy imports are dominated by Spain. Spain has increased its share of imports from 67 percent in 1993 to 98 percent in 1995. Mexico imported a total of 24,472 proof hectoliters in 1995 valued at $12 million as compared to 44,633 proof hectoliters in 1994, valued at $21.4 million. Imports have been steadily diminishing as a share of brandy consumption because of the high cost of imports as a result of the peso devaluation in December 1994. In 1993, imports represented 10 percent of consumption but by 1995 imports represented only 3.8 percent of consumption. A modest recovery is expected in 1996. Imports are not expected to recover completely until the year 2000. Imports from Spain will most likely remain steady since Mexicans hold Spanish brandy in high esteem. U.S. brandy exports for the period January through November 1996 are up 130 percent from the same period in 1995, to 89,394 proof liters; however, U.S. brandies account for less than 2 percent of the import market. The fall in purchasing power has caused Mexicans to shift to low-quality brandies and low priced products, such as beverages made from a mixture of cola and brandy which will continue to limit U.S. brandy export opportunities. Likewise, the fall in consumer purchasing power has made consumption of tequila and rum more popular at the expense of brandy. Brandy faces growing competition from softer drinks, such as beer and wine. The fall in purchasing power, competition from softer drinks coupled with Mexico's decision to increase its tariff on brandy from 0 to 20 percent in retaliation against U.S. actions to assist the broomcorn broom industry against Mexican import competition will further limit U.S. brandy exports. Canada remains a key market opportunity for U.S. brandy despite sales and marketing constraints Canada is the fourth largest market for U.S. brandy exports. The United States exported 105,200 proof liters of brandy to Canada in 1995. U.S. brandy exports for the period January through November 1996 are down 5 percent from the same period in 1995. In spite of U.S.-Canada Free Trade Agreement (FTA), the U.S. brandy industry continues to face formidable barriers such as discriminatory cost-of-service fees and other non-tariff barriers. Quebec, Ontario, and British Columbia represent the three largest markets for U.S. brandy; however, provincial monopolies seriously restrict U.S. access to the Canadian brandy market. For example, provincial monopolies established arbitrary charges to reflect higher costs of handling imported spirits vs. domestic spirits; this translates into a 15 percent higher charge on U.S. brandy. Through powers vested by liquor control and/or licensing legislation, provincial government authorities regulate all aspects of brandy imports, such as prices, distribution systems, and types and number of outlets which sell brandy. There have been two GATT panel rulings indicating that Canada's practices are not legal. Since imported and domestic pricing structures are different due to the cost-of-service charge, domestic products can always undersell imported brandy at the retail level. Canadian brandy consumption has been declining at a rate of 5 percent per year for the past several years. On a per capita basis, annual spirits sales dropped steadily between fiscal year 1990/91 and 1994/95 from 5.28 proof liters to 4.32 proof liters. Brandy has been declining at approximately the same rate as other spirits. However, the value of brandy sales has remained constant due to a shift in a consumer preference for higher valued products. Volume of U.S. exports to Canada is down by 6 percent for the period January through November 1996 from 97,754 proof liters in 1995; however, value of U.S. brandy exports to Canada are up by 20 percent from 1995. Despite the decrease in the volume of U.S. exports and marketing constraints in Canada, the U.S. brandy industry hopes to capitalize on the Canadian consumer demand for "new" and "different" products in the brandy and grappa brandy categories. U.S. brandy is beginning to make headway in the larger provincial brandy markets of Ontario, Quebec, Alberta and British Columbia. As the EU subsidy program for brandy is considerably reduced because of major reduction in wine production, EU prices will rise and thereby open the door for increased exports from other countries, especially the United States. The EU remains the largest supplier of brandy to Canada. Canada imported 80 percent of its brandy from the EU for the period January through October 1996. France is by far the dominant force in the Canadian brandy market. U.S. brandy represents only 5 percent of Canada's brandy imports; however, as the worldwide demand-supply situation reaches a point of equilibrium, the U.S. brandy industry should be in a strategic position to capitalize on the Canadian brandy market. The Future of U.S. Brandy New products, foreign demand, and market promotion combined with inroads made under the Uruguay Round should improve export opportunities for U.S. brandy. The Uruguay Round "Zero for Zero" Agreement by the Quad Four (United States, EU, Canada, and Japan) will reduce and eventually phase out high tariffs on brandy. Currently, U.S. brandy faces tariffs of 50 percent to 150 percent around the world. However, the U.S. tariff on brandy is less than 1 percent. For example, the United States has a tariff of 95 cents per case; however, the EU tariff is ten times higher, $9 per case. Under the "Zero for Zero" agreement and subsequent agreements at the Singapore Ministerials , brandy tariffs will be reduced to zero by 2000 and 2004. Also the 45 member International Office of Vine and Wine (OIV) has adopted a resolution to extend the agreement to all countries. The EU and the United States are requiring more countries to comply with the "Zero for Zero" agreement as a pre-condition for accession to the World Trade Organization. As excessive tariff rates are lowered to the U.S. level and the worldwide demand-supply situation reaches a point of equilibrium, the U.S. brandy industry should be in a strategic position to penetrate the $6.6 billion world brandy market. For further information on supply, distribution and trade, contact Yvette Wedderburn Bomersheim at 202-720-9903. For information on marketing opportunities contact Ted Goldammer on 202-720-8498.
Avocado exports by selected foreign countries are forecast to increase by 2 percent in 1996/97. Export increases by Chile, Israel, South Africa, and the United States will likely more than offset reduced shipments from Mexico and Spain. Israel, the world's largest avocado exporter, is forecast to increase exports by 12 percent. Chile's exports are forecast to increase by 24 percent as that country is trying to diversify its markets in Argentina and Europe. Depending on the size of the domestic crop, opportunities for U.S. avocado exporters in 1996/97 to Europe, Canada, and Asia could also improve because of lower exports from Mexico. Selected Country Avocado Outlook Avocado production in six major producing countries in 1996/97 is estimated at 1.0 million tons, down 12 percent from 1995/96. A 20-percent decline in Mexico's production is expected to be partially offset by increases in Chile, Israel, the United States, and South Africa. Selected country exports are forecast to rise 2 percent in 1996/97 above the previous year. Despite the 20 percent decrease in production in Mexico, Mexican exports are only forecast to decline by 9 percent, thus keeping world exports near their record level in 1995/96. All other producing countries, except Spain, are forecast to increase exports in 1996/97. Chile Avocado production for the 1996/97 season (January-December 1997) is forecast at a record 59,400 tons, up 6 percent from the 1995/96 output. Production is forecast up in 1996/97 as a large number of orchards are reaching bearing age and area is expanding. Production is projected to surpass 90,000 tons by the year 2000, with the Hass variety comprising approximately 70,000 tons of the total. The increase in plantings reflects the stimulus provided by high producer prices during the past few years and a favorable export climate. Harvested area should continue to expand over the next 5 years as previously planted trees mature Chilean avocado exports in 1996/97 are forecast to increase by 24 percent to 21,600 tons. The United States continues to be Chile's largest export market. However, the avocado producers association has been advising its members to diversify markets. Many producers in Chile expect exports to the United States to decline somewhat given the possibility that Mexico will gain access to the U.S. market. Promotional campaigns aimed at the domestic market and Argentina have been successful this past year. Producers and exporters contribute U.S. $.01 per kilogram exported towards foreign market promotional campaigns. The Chileans also expect to export more avocados to Europe. Good international prices have helped improve export opportunities. Consumption in 1996/97 is forecast at 37,800 tons, 12 percent above the previous year's revised estimate. Larger supplies and promotional campaigns contributed to the increase. The Chilean Government does not provide direct subsidies or special tax incentives for avocado production. Avocados and other fruits and vegetables do benefit from the recently created $10 million Export Promotion Fund for agricultural products. Israel Avocado production in 1996/97 (October/September) is forecast at 85,000 tons, up 9 percent from the revised 1995/96 estimate because of favorable weather. However, declining profitability and water scarcity are likely to keep output below the 100,000-ton mark for the foreseeable future. The area planted to avocados is estimated at about 8,000 hectares. Because of high production costs and water shortages, some plantings in marginal areas have been uprooted over the past several years. Despite these difficulties, production by the year 2000 is projected to stabilize at approximately 90,000 tons, of which approximately 70 percent will be exported. The Ettinger, Fuerte, Hass, Nabal and Reid varieties are the significant varieties grown in Israel. Prices to growers are reported to have fallen by almost 20 percent due to low currency exchange rates. Israel is expected to continue to be the world's largest avocado exporter in 1996/97 Exports from Israel are forecast to reach a record 55,000 tons in 1996/97, an increase of 12 percent over the 1995/96 volume. Higher domestic production, combined with reduced Spanish and Mexican supplies are likely to boost Israeli exports. France continues to be Israel's largest market, accounting for over 50 percent of total exports. Israel has tried to diversify its markets. In 1996/97 Israel is expected to invest in sales promotion efforts in its European markets. Germany, the second largest export market, has been increasing its imports from Israel in recent years and now purchases about 15 percent of Israel's avocado exports. Other European customers include the United Kingdom, Scandinavia, Belgium-Luxembourg, and Switzerland. Spain and Mexico have been Israel's primary competition in the European markets. South African avocados also compete in Europe beginning around April. If Mexico gains approval to export avocados to the United States, Israel would face less competition with Mexico in Europe. As the Mid-East peace process progresses, it is hoped that ties with neighboring countries of the Middle East (especially the oil-rich Persian Gulf states) may lead to increased exports of Israeli avocados and other fruits and vegetables to the region. Israel is also planning to develop avocado markets in the Pacific Rim countries. Consumption of avocados in Israel rose by 33 percent in 1995/96, and is expected to increase further in 1996/97 because of increased supply and subsequently lower prices. The local marketing board, FPMBI, continues to conduct advertising campaigns to increase domestic consumption. As a result, the domestic market, which previously served as a dumping ground for export rejects, currently demands higher quality fruit. Government policy on avocado exports has remained unchanged in spite of continued efforts by the Fruit Production and Marketing Board to include this crop in the Israeli government system of price "safety nets" for key crops. The Ministry of Agriculture continues to provide grants of 40 percent or less for new plantings in preferred regions of the country. Japan Avocados were introduced to Japan in the early 1970's . There is no domestic production. Because Japan's strong domestic demand and favorable exchange of the dollar against the yen, Japan continues to be a desirable market for the sale of quality fruit. Japanese imports of avocados are forecast to increase about 20 percent to 5,700 tons in 1996/97. Currently, only the Hass variety is marketed to Japan. The United States and Mexico are currently the only suppliers of avocados to Japan. U.S. avocados usually face stiff price competition from Mexico. While the favorable exchange of the dollar against the yen has helped U.S. export prospects to Japan, Mexico's much lower valued peso has helped increase Mexican market share. Though of lower quality, Mexican avocados are also usually lower priced than those from the United States and are favored by a lower rate of import duty (5 percent for the United States compared to 3 percent for Mexico) on a CIF basis due to Mexico's status under the Generalized System of Preferences. Recent market prices of U.S. avocados in Japan have reached 313 yen per kilogram compared to last year's price of 254 yen (CIF). Mexican prices were about 193 yen compared to last year's price of 180 yen per kilogram. Although U.S. and Mexican avocados do not compete in the same season, the Mexican season is increasingly encroaching on the U.S. season especially from January to March and in August. This year, however, with reduced supplies forecast for Mexico, U.S. avocados may have an opportunity to expand exports to Japan. Challenges for expanding consumption in the future in Japan will be to further educate the Japanese consumer and local handlers (especially regional distributors outside the big cities) on the health benefits of avocados, and when to deliver, eat, and how to use them. In- store promotions and menu presentations at the beginning of the U.S. avocado season are highly recommended. At present, most avocados in Japan are sold at the retail level and are prepared either plain or in salad plates with vegetables. In addition, the Japanese have begun to use in avocados in new ways (ie. milk shakes, spring rolls, soups). Avocado use in the food service industry including restaurants and hotels, is still small (about 20 percent) but has very good potential for the future. Promotional efforts should aim at this area of the food marketing system and should increase consumer awareness and knowledge of avocados. Currently 80 percent of avocados in Japan are consumed in the Tokyo and Osaka areas. The Japanese prefer the larger size 24 avocados which constitute 70 percent of avocados on the market. This year's prices of California 24's were approximately 2,000-2,500 yen per tray, wholesale, and 150 to 250 yen per fruit, retail. Mexican avocados ranged from 1,400 to 1,600 yen per tray and 100 to 150 yen per fruit. Mexico Production to fall sharply in 1996/97 Mexico is the world's largest producer of avocados. The 1996/97 crop (harvested August 1996 through July 1997) is forecast at 635,000 tons, down 20 percent from the revised 1995/96 estimate because of excessive rainfall, hail, and low temperatures during the flowering season of the Michoacan crop. The inclement weather caused early fruit drop, lower yields, and smaller-sized fruit. The area planted to avocados in 1996/97 is forecast at 93,000 hectares, virtually unchanged from last season; harvested area is forecast up slightly, to 90,100 hectares. Harvested area is likely to remain stable over the next few years because the state of Michoacan, which accounts for approximately 85 percent of Mexico's annual avocado output, has run out of land suitable for avocado cultivation. However, given the significant number of new trees planted in the late-1980's and early-1990's, total production is expected to expand approximately 30 percent between 1998 and the year 2000 as trees reach full maturity. Avocados are also grown in the states of Nayarit, Puebla, Morelos and Mexico. Farmgate prices for export-quality fruit are averaging 60 to 70 percent above last season, well above the 26 percent rate of inflation. The average farmgate price for 1996/97 is estimated at about 1,200 pesos per ton (US$156 per ton) for the peak season (November through April). During the off season (May through September), growers may receive over 2,500 pesos per ton (US$325 per ton). Growers have succeeded in commanding superior prices this season because of the short crop and price negotiations. In addition, total production costs have remained fairly stable this year. Usually the most expensive inputs include agro-chemicals, fertilizer, electricity for irrigation, and finance costs for production loans. Labor costs are growing more slowly. Decreased Mexican exports may signal additional U.S. export opportunities Avocado exports in 1996/97 are forecast to decrease by 9 percent to 40,000 tons due to the expected smaller harvest. This sharp decline comes after Mexican exports of avocados rose dramatically, 69 percent, from the 1994/95 to the 1995/96 season. This was mostly due to a large supply of avocados. Mexico also continues to export processed avocados to the U.S. market. Processed products include guacamole, paste and avocado oil. In 1995/96, exports of processed avocados have decreased 1 percent to 14,899 tons. Because of the strong demand for processed avocados in the United States, exports are likely to rise again when more Mexican avocados are available. The vast majority of avocado production in Mexico is sold to the fresh domestic market. Exports of avocados currently account for only about 6 percent of production. Europe (especially France), Canada, and Japan are Mexico's largest export markets. Mexican export data show shipments to the United States. Currently, only Alaska is permitted to import avocados from Mexico. The remainder are likely transshipments to other countries (ie. Canada). Future growth in the Mexican avocado industry will depend in great part on the growth in exports. Growth in the Mexican avocado industry partially depends upon future access to the U.S. market. According to sources within the Mexican industry, about 15-20 percent of the fruit now produced is considered to be of export quality. USDA's Animal and Plant Health Inspection Service (APHIS) currently is reviewing public comments on the proposed opening of the U.S. Northeastern market to Mexican avocados during the winter months (November to February). On the Mexican side, SAGAR, the Mexican inspection agency, in September published a new phytosanitary regulation in order to establish phytosanitary requirements and procedures for transporting fresh avocados within Mexico. The goal of this action is to facilitate exports by protecting the major growing regions from pest infestations. Consumption of avocados in Mexico is expected to decrease 20 percent in 1996/97 to 595,000 tons. Decreased supply and higher retail prices are the primary factors. However in 1995/96, the Michoacan Avocado Commission and SAGAR conducted a 3 month (TV, radio, and press) advertising campaign to increase domestic consumption. Another similar campaign is expected in 1996/97. Avocados for the domestic sector pass through wholesale distributors which sell to local supermarkets, hotels and restaurants. Handling and spoilage problems are reportedly steadily decreasing. The government does not have support policies for avocados. However, avocados, along with other fruits and vegetables, benefit from the government's Agricultural Debt-Relief Program (FINAPE). FINAPE is a program for restructuring overdue and non-performing loans in order to reduce the size of monthly payments on the existing debts of agricultural and aquaculture producers. This program has helped particularly those who were hurt by the inflation rate in 1995 after the peso devaluation. Although Mexico permits the import of avocados, because of current prices and the peso devaluation, avocado imports are not generally competitive in Mexico and only small amounts have been shipped. Mexico maintains its 20 percent tax on imports of avocados with the exception of the United States, where under NAFTA regulations there is a mutual tariff of approximately 9.24 cents/Kg in 1995. This tariff (08.04.40.01) will be phased out in 10 years. South Africa The 1996/97 (November/October) avocado crop is estimated at a record 57,000 tons, up 8 percent from 1995/96. Rains during the later part of 1995 significantly improved production in 1995/96 and alleviated irrigation water shortages experienced prior to the 1995/96 season. Dams are currently full, which means that water supplies should be available for the next few years. The South African avocado industry is in an active growth mode. As of the 1995/96 season, 30 percent of the area planted to avocados had not yet come into production and 48 percent had not yet reached full production. Consequently, output is projected to increase over the next few years, even if the rate of new plantings slows. Avocados are harvested year-round in South Africa, depending upon the variety, with most of the crop harvested from July through October. The Fuerte and Hass varieties normally account for about 75 percent of the South African crop; the remainder is comprised of the Ryan, Edranol, and Pinkerton varieties. Approximately 11,050 hectares are planted to avocados in South Africa, mainly in the Eastern Transvaal which is 55 percent of the plantings. The second largest production area is the Nelspruit Burgershall area that contains 23 percent of the plantings. The avocado industry in South Africa is very technically advanced. Production starts in the nursery where cloned Phytophthora (root rot) resistant rootstocks are produced from the Duke variety on which the desired variety is grafted. This nursery procedure is complex and costly. Soil preparation is based on sampling and most avocado production is irrigated. About 70 percent of South African avocados are exported. All South African export efforts are aimed at meeting the import requirements of the European markets. This includes size, quality, harvesting techniques, transportation, and post harvest handling. EU tariffs are still troubling to South African exporters The South Africans are still negotiating with the EU for a zero percent tariff rate. A reduction from 4 to 3.5 percent (December 1 to May 31) and from 8 to 6 percent (June 1 to November 30) was finally granted under the General System of Preferences (GSP). Negotiations are continuing as they attempt to gain the standard benefits granted to all other GSP countries, except South Africa. South African exports in 1996/97 are expected to rise 9 percent above the previous level due to the higher production forecast. Exports are usually contracted with private traders with the subtropical arm of UNIFRUCO, the big deciduous fruit exporter, as a major player. Practically all of South Africa's avocado exports go to the EU. In 1995/96, South Africa's primary markets were Belgium (14,619 tons), Switzerland (8,495 tons) the United Kingdom (3,167 tons), and France (836 tons). Domestic consumption of avocados in 1996/97 is forecast to rise modestly by 5 percent to 22,000 tons. Approximately 30 percent of the crop is consumed domestically. Fresh avocados are usually marketed through municipal markets but direct contracts are becoming more popular. South Africa does not generally import avocados. The low internal prices combined with a 5 percent duty on imports, effectively limits shipments from overseas. Only small quantities from nearby countries are able to cross the border. The South African Grower's Association (SAGA) looks out for the interests of the industry and is financed by a voluntary duty on exports. SAGA also finances research and negotiates with government officials. Export volumes are coordinated with fifteen export companies; five companies handle about 90 percent of the trade. The industry does not receive any government assistance since losing the 6 percent GEIS export incentive that was available before the Uruguay Round. Spain Avocado production in 1996/97 (July/June) is forecast at 34,000 tons, 15 percent below last year's output of 40,000 tons because of an off-year in the bearing cycle and lingering drought damage sustained by orchards during the past few years. The area planted to avocados is forecast at 8,500 hectares, down slightly from 1995/96; harvested area is forecast up slightly, to 8,000 hectares. Although avocados are harvested October through June, the bulk of the crop is harvested between November and January. Spain's avocado industry is concentrated in Andalucia (mainly in the provinces of Granada and Malaga), which accounts for about 90 percent of the total area under cultivation. The balance of the crop is produced in the Canary Islands and, to a lesser extent, in the Levant. The total area devoted to avocado production will likely remain stable over the long term, varying with the availability of irrigation water supplies. The primary avocado varieties grown in Spain are the Hass, Bacon, and Fuerte. Hass accounts for almost 80 percent of the total production and is the most popular. Although, some producers have recently tried growing the Gwen and Fuerte varieties because of their higher yields and earlier ripening qualities. Spanish avocado producers use high quality seed imported mostly from California between December and January. Spanish avocados are marketed from October to June in Peninsular Spain and from September to March in the Canary Islands. Export prospects declining in 1996/97 Exports in 1996/97 are forecast to fall 20 percent to 25,200 tons due to short supplies. Spain exports primarily to EU countries with France taking about 80 percent of the total. The remainder is exported to Scandinavia and Switzerland. Competition with Israel for sales to the EU are expected to be tight for Spain given Israel's increased export forecast. Spain and Israel ship during the same export season each year. Thus far in the 1990's, avocado consumption has remained at a fairly low level. However, additional avocados are forecast to be sold in the domestic market as consumption rises by a modest 5 percent in 1996/97. Consumption could expand with the help of promotional information and educational campaigns. Avocados are still considered relatively unfamiliar to the Spanish. Currently, avocados are eaten in dips, fresh in salads, or with seafood. Continued openings may exist for U.S. avocado exports Spanish avocado imports in 1996/97 are forecast to increase 11 percent to 3,000 tons. Most of the imports are obtained from South Africa and Mexico which do not compete with the Spanish crop. Spain's declining production and exports may offer openings for U.S. exports to Spain and its traditional markets. In 1995/95 the United States exported 67 tons of avocados to Spain. The best opportunities exist in summer between July and September when there are no avocados available from the Spanish crop in the local market. Imports of U.S. fresh avocados must be accompanied by an APHIS phytosanitary certificate. There are no government subsidies for avocados in Spain. However, the regional autonomous governments in avocado producing areas reportedly have special credit programs available for avocado producers to purchase inputs such as seed and fertilizer. Dominican Republic The Dominican Republic is poised to become the world's third largest avocado producer Avocado production in 1996/97 (June/May) is forecast at 97,940 tons, up 31 percent from 1995/96 because of improved weather and an increase in bearing area. If this forecast proves correct, the Dominican Republic will replace Israel as the world's third largest avocado producer. Exports account for about 15,000 tons. Production for export primarily occurs in the Mao and Bani areas. The Dominican Republic is the second-largest exporter of avocados to the United States, after Chile. Although the cost of some inputs is high, labor is relatively cheap and continued growth in the industry is expected as global awareness and demand for avocados expands. In 1995/96 Dominican avocado exports to the United States rose 5 percent to a record 6,118 tons. Given the rapidly increasing production of avocados, it is likely that exports to the United States will increase again next season. Commercial production of avocados began in 1966. Production of avocados occurs nearly year-round (June through April) in the Dominican Republic, but the main harvest period runs from early-November through late-December. Although there are 18 grafted varieties of avocados cultivated in the Dominican Republic, the varieties most popularly grown for export include Simmonds, Popenoe, Semil No. 34 and No.43, Melendez, Hass, Hall, Booth, Lula, and Choquette. Most production for export is irrigated. Most of the Dominican Republic's exports go to the United States each year. They are marketed mostly in New York, Puerto Rico, and Miami. Dominican avocados enter the United States duty free under the Caribbean Basin Economic Recovery Act. The remainder of exports are largely sent to the European Union including to Belgium-Luxemburg, Germany, the Netherlands, France and Italy. Small amounts are also exported to other Caribbean countries and to Canada. Most producers generally prefer to sell their avocados to an exporter who assumes the risks of exporting. The Dominican Republic does not import avocados because of abundant local supplies. Although no consumption statistics are available, the local population generally consumes avocados of the Criollo variety which grow wild throughout the country. Occasionally they may consume varieties that are not exported due to oversupply in the United States or quality problems. Any imports would be subject to licensing requirements, a 25 percent CIF duty and a value added tax of 8 percent. At present, the Dominican Republic has no governmental production, marketing or export policy for avocados. United States Preliminary assessments for 1996/97 indicate production could approximate 173,000 tons, the same level as 1995/96. However, strong winds in December and the threat of January frosts may temper the initial 1996/97 projection of a 2-percent increase in the California crop. Avocados are harvested year-round in California, which accounts for approximately 89 percent of total U.S. production. The main harvest in Florida runs from July through February. The official 1996/97 estimate of total U.S. avocado production will be available from USDA's National Agricultural Statistics Service (NASS) in July 1997. U.S. exports of avocados totaled 9,444 tons in 1995/96, 29 percent below the previous year's level. Lower prices in foreign markets and increased domestic demand discouraged exports. France, which was the largest market last year, decreased its imports of U.S. avocados by 95 percent, although some U.S. avocados may have arrived via other countries. This year the Netherlands increased imports by 89 percent or 3,875 tons, accounting for 41 percent of total U.S. exports. Some exports to the Netherlands may have been transshipped to other countries as well. Japan and Canada were the next largest markets accounting for 29 and 12, percent of the volume, respectively. Exports in 1996/97 are forecast to be similar to the previous year's level, about 10,000 tons, but could increase if supplies are available and the industry expands in markets where Mexico's exports may be lower due to decreased production. These possibilities exist in Japan, Canada, and in Europe. If Mexican avocados are permitted in the Northeastern United States, these export opportunities could increase significantly. U.S. avocado imports decreased slightly in 1995/96 to 21,175 tons, down 5 percent below the previous year. Most of the imports came from Chile, over 12,911 tons or 61 percent, and the Dominican Republic, 6,118 tons or 29 percent of the import total. Total imports in 1996/97 may increase slightly but will depend on the size of the U.S. crop and changes in U.S. import policy. The United States imports Mexican processed avocados. In 1994/95 over 15,000 tons were imported. In 1995/96 imports decreased slightly by 1 percent to 14,899 tons due to smaller supplies in Mexico. However imports are likely to increase again next season if Mexican production improves. This trend has captured the interest of other avocado producers who are also considering processing avocados for export to the U.S. U.S. consumption of avocados has kept pace with U.S. production in recent years. Current data suggest that U.S. demand for avocados will continue growing. The Hispanic population's familiarity with avocados and the nation's increasing interest in ethnic, gourmet and healthy foods may signal a promising future for avocados in the United States. (For further information on avocado supply, distribution, and trade, contact Stephanie Riddick, 202-720-9792. For information on marketing contact Steve Shnitzler, 202-720-8495. For information on production contact Kelly Kirby Strzelecki, 202-720-6791.
Orange juice production in the major Northern Hemisphere producing countries in 1996/97 is forecast at a record 1.16 million metric tons, 5 percent above the previous year's level, based on expected record U.S. production. These large supplies will continue to challenge the marketing ability of exporters. Northern Hemisphere orange juice exports in 1996/97 are forecast at a record based on likely higher U.S. exports. U.S. orange juice exports in 1995/96 reached a record 92,000 tons, 10 percent above the previous year's shipments. The European Union and Japan accounted for most of the expansion in U.S. sales. Promotion efforts under the Market Access Program and awareness of the good quality of U.S. orange juice helped to boost U.S. exports in 1995/96. Major Producers in the Northern Hemisphere Orange juice production in 1996/97 in selected producing countries in the Northern Hemisphere is forecast to increase by 5 percent to 1.16 million metric tons (65 degrees brix). Increased orange juice production in the United States will likely more than offset decreases in Spain, Mexico, Italy, Morocco, and Greece. U.S. orange juice production accounts for 85 percent of the total Northern Hemisphere 1996/97 orange juice production forecast. Total orange juice exports in 1996/97 for selected countries in the Northern Hemisphere are forecast at 261,852 tons, 1 percent above the previous year's shipments. Higher exports are forecast from the United States and Turkey, while orange juice shipments from all other selected countries are expected to decrease in 1996/97. Current lower orange juice prices could boost world demand for orange juice. United States U.S. orange juice production in 1996/97 is forecast at a record 980,000 metric tons, 7 percent above last season's output. More oranges will be processed in 1996/97 as a result of an expected record orange harvest in Florida, the main producing state, which will increase overall U.S. orange juice production prospects. The Florida frozen concentrated orange juice (FCOJ) yield is forecast at 1.52 gallons (42 degrees brix) per box, the same as last year's yield. Florida is expected to account for nearly 95 percent of total U.S. orange juice output. U.S. orange juice exports should continue to expand in 1996/97, with exports forecast at a record 100,000 tons, 9 percent above last season's record shipments. Major U.S. customers are the European Union (EU), Canada, Japan, and Korea. The EU accounted for 43 percent of total U.S. orange juice exports in 1995/96 (December-November). Canada, Japan, and Korea accounted for 27, 12, and 4 percent, respectively. Increased promotion efforts, under the Market Access Program (MAP), and awareness of the good quality of U.S. orange juice have boosted exports in recent years. U.S. FCOJ imports are likely to decrease in 1996/97 due to the expected larger domestic production. Domestic consumption of orange juice should increase in 1996/97 if current relatively low prices continue. Mexico Mexico's orange juice production in 1996/97 is forecast to dip slightly to 48,000 tons. Less fruit is expected to be processed this season due to a smaller orange harvest. Mexico is heavily dependent on international FCOJ prices as well as domestic prices for fresh oranges. If current relatively low international FCOJ prices continue, it will make it even more difficult for processors to compete with the fresh market for the domestic crop. Mexico's orange juice exports in 1996/97 are forecast at 46,000 tons, down 4 percent from shipments in 1995/96. Mexico filled about 92 percent of the U.S. orange juice tariff rate quota under NAFTA in 1996 and is expected to fill the 1997 quota. The United States is the main market for Mexican FCOJ, with Japan and European countries also becoming major customers. Under NAFTA, Mexico has access to the United States market for 40 million gallons of FCOJ, single strength equivalent (or 28,452 tons, 65 degrees brix) at a duty of 4.625 cents per liter. Beyond the 40 million gallon level, and up to 70 million gallons SSE, the full NAFTA rate for 1997 of 8.325 cents is applied. Assuming snapback price conditions are not in effect, the NAFTA rate would continue to be applied beyond the 70 million gallon level. However, in the event the price conditions are in snapback condition, the full MFN rate, currently 8.55 cents per liter for 1997, would be assessed on all imported volumes beyond the 70 million gallon threshold. This basic mechanism will remain in effect during the 15-year phase-in period agreed upon in the NAFTA negotiations, although the quantity trigger level will be increased to 90 million gallons SSE in year 2003. Spain Spain's orange juice production in 1996/97 is forecast at 57,000 tons, 3 percent below the revised 1995/96 level. A decline in deliveries of oranges to processors is expected due to a smaller orange harvest. Oranges used in Spain to produce juice are mainly those that cannot be marketed for fresh consumption. Most orange processing plants in Spain are located in the Valencia region. Spanish orange juice exports in 1996/97 are forecast 3 percent below the 1995/96 level based on the expected smaller production. The bulk of orange juice exports are expected to go to traditional export markets in the EU, such as France, Germany, and the United Kingdom. Orange juice exports are not eligible for EU subsidies. Strong competition from Brazil, Israel, and other key producing Mediterranean countries represent the principal obstacles to the expansion of Spanish citrus juice exports to third countries. Italy Orange juice production in Italy in 1996/97 is expected to decrease 11 percent to 30,780 tons, as a significantly smaller orange crop will likely reduce the amount of oranges delivered to processors. Italy's citrus juice industry produces juice mainly in response to EU processing subsidies rather than in response to consumer demand. Exports of orange juice are forecast to decrease only marginally, despite the smaller production, due to the continued devaluation of the Italian lira and the likely drawdown of stocks. Greece Greek orange juice production in 1996/97 is forecast at 12,000 metric tons, 7 percent below the 1995/96 output. Less oranges are expected to be processed in 1996/97 due mainly to the expected smaller orange harvest. Production of concentrated orange juice in Greece encounters strong competition from imported frozen Brazilian product. Greek orange juice exports, which are mainly destined to Eastern Europe, are forecast at 3,500 tons in 1996/97, slightly below last season's shipments. Imports of orange juice into Greece are forecast to increase slightly in 1996/97. Morocco Moroccan orange juice production is forecast to decrease sharply (53 percent) to 6,801 tons in 1996/97. Processing of Clementines will likely decrease significantly in 1996/97 because of the smaller Clementine harvest. In Morocco, the fresh export market absorbs the best quality fruit and usually provides a higher return to producers. Processing is considered the least desirable outlet as it provides the lowest return. Currently there are 2 main citrus processors in Morocco, FRUMAT and COVEM. FRUMAT is a private company owned partly by farmers and partly by local banks. FRUMAT purchases excess production in good years and all fruit not suitable for the fresh market. COVEM, the other processor, is a subsidiary of a large citrus exporting group. It has gained a significant share of the local juice market in recent years particularly in consumer oriented fruit juices. Orange juice exports in 1995/96 are forecast at 6,500 tons, down 19 percent from last season's shipments, due to the expected decrease in production. Morocco's orange juice is normally exported to the EU, mainly France and Germany. Turkey Turkish orange juice production in 1995/96 is forecast at 10,000 tons, up 19 percent from the 1995/96 output, based on the expected larger orange crop. In Turkey, about 8 percent of total orange production is processed into juice. Most of the processed juice is used for frozen concentrate. Orange juice exports in 1996/97 are forecast to increase slightly to 8,000 tons. Major Importing Countries Japan Japan's imports of orange juice in 1995/96 fell 18 percent to 90,600 tons due to reduced domestic demand. The overall market for fruit juices has been stagnating due to expanding consumption of sugar-free beverages. While fruit juice beverages were previously consumed as health drinks, today demand is shifting to low-calorie beverages as more and more people take up dieting. Japanese consumers drink only about one-quarter as much orange juice as their American counterparts, and well less than one-half as much as West Europeans. Brazil is the major supplier accounting for about 80 percent of total Japanese imports of orange juice. The United States ranks second with a 20 percent share. A Brazilian bulk orange juice storage terminal, inaugurated in 1993, has been operating at less than capacity. Japanese importers have found it more economical to receive FCOJ imports in 200 liter drums. Japanese imports of single strength orange juice (SSOJ), although small compared to FCOJ, have increased significantly in recent years. Imports of SSOJ are expected to continue strong as consumers show a growing preference for more natural and fresh orange juice taste. The United States supplies the vast majority of Japan's imports of SSOJ. Korea Korean orange juice imports in 1996/97 are forecast at 54,000 tons, about the same as last season's imports. As a result of the Record of Understanding signed between Korea and the United States on Agricultural Market Access in the Uruguay Round, orange juice imports will be liberalized on July 1, 1997, with a bound 60 percent import duty, the only remaining barrier. For January-June, 1997, Korea will provide an access quota of 30,000 tons for orange juice. The access quota for 1996 was 55,000 tons. Brazil and the United States are the primary suppliers of orange juice to Korea, accounting for about 78 and 21 percent, respectively, of total Korean imports in 1995/96. U.S. market share rebounded slightly in 1995/96. This may reflect some movement toward purchasing for quality instead of strictly on a price basis as an increasing number of consumers switch to higher quality juice. Major Producers in the Southern Hemisphere It is too early to make reliable forecasts for Southern Hemisphere countries in 1996/97 (1997 harvest). Brazil Brazil's 1995/96 (1996) orange juice production estimate (marketed in 1996/97) is unchanged from the previous forecast. However, Brazil's orange juice export forecast for 1996 (Brazilian marketing year July 1996 - June 1997) is reduced from 1.075 to 1.050 million tons based on likely lower exports to the United States due to the expected larger U.S. production. According to industry sources, there are approximately 1,030 FCOJ extractors in Brazil, with 80 percent of total industry capacity currently in use. Some producers have been investing in new citrus processing plants (eg., Sucorrico, Kiki, and Frucamp). The investments are a result of the delicate relationship between producers and traditional processing plants, due to the end of the master contract for purchasing oranges. Sucorrico, a company comprised of 100 orange growers, started its crushing activities last September. Some traditional and new companies have been investing in the domestic Brazilian market and are leasing and buying fresh orange juice extractors. Many food companies, such as Nestle and Parmalat, are marketing not from- concentrate orange juice, taking advantage of consumer awareness of these companies. The company Sucocitrico Cutrale Ltd. purchased two juice processing plants from Coca-Cola Foods in Florida. The plants will be managed by a new company, Cutrale Citrus Juices USA, Inc., which will continue supplying orange juice for the Coca-Cola brand named Minute Maid. In September, 1996, the Government of Brazil eliminated the 8.45 percent value-added tax (ICMS) on exports of raw materials and "semi-manufactured" products, including orange juice products. According to industry officials, the ICMS exemption represents annual savings of approximately US$110 million to the citrus industry or US$0.39 per 40.8 kilo box. (For more information on supply, distribution, and trade, contact Joseph Somers at 202-720-2974. For information on U.S. marketing opportunities, contact Ted Goldammer at 202-720-8498.)
Citrus exports in 1996/97 from selected countries in the Northern Hemisphere are forecast at 6.2 million tons, down 4 percent from last year's shipments. Exports from Spain, the world's largest fresh citrus exporter, are forecast to decrease 8 percent due to weather- reduced orange and tangerine harvests. The United States, the world's second largest fresh citrus exporter, is expected to increase exports 7 percent in 1996/97. Higher U.S. orange exports will partially offset likely lower Spanish orange shipments. However, a record U.S. grapefruit crop and increased competition from Israeli Sweetie grapefruit will challenge exporters to expand current markets and find new ones. These factors underline the importance of market promotion efforts under the Market Access Program. Citrus for processing in the Northern Hemisphere in 1996/97 is forecast to increase 2 percent to a record 15.3 million tons. The United States, which accounts for 73 percent of total citrus processed in selected countries of the Northern Hemisphere, is expected to account for the bulk of the increase. Summary Northern Hemisphere The preliminary 1996/97 forecast for Northern Hemisphere citrus production is 44.6 million tons, down slightly from 1995/96. Northern Hemisphere orange production for 1996/97 is forecast at 24.98 million tons, down 2 percent from 1995/96 based on declines in Italy, Mexico, and Spain. Tangerine production is projected at 11.78 million tons, virtually unchanged from 1995/96. Grapefruit production is forecast at 3.7 million tons, up 8 percent from 1995/96 because of a significant increase in the U.S. harvest. Lemon production is forecast down 2 percent, to 2.6 million tons, because of smaller crops in Greece and Italy. Production of other citrus, mostly limes, is forecast to increase 5 percent, to 1.5 million tons, due to substantially larger output in Mexico. Total fresh citrus exports in 1996/97 are forecast at 6.2 million tons, down 4 percent from the 1995/96 volume. Spain and the United States are the major citrus exporters in the Northern Hemisphere. A decrease in Spanish and Moroccan exports is expected to offset likely higher U.S. exports. Reduced orange and tangerine crops, which account for the bulk of Spain's citrus exports, will likely limit its citrus export availabilities in 1996/97. However, citrus shipments from the United States, which are dominated by oranges and grapefruit, are forecast at a record of 1.25 million tons, up 7 percent from last year's shipments. Increasing market promotion efforts, rising demand from leading U.S. customers, and the relaxation of import barriers in potential markets are expected to benefit U.S. citrus shipments in 1996/97. The majority of U.S. citrus exports will continue to go to traditional markets in the Far East, North America, mainly Canada, and the EU. Citrus processing in the Northern Hemisphere in 1996/97 is forecast to increase 2 percent to a record 15.3 million tons. The United States, which accounts for 73 percent of total citrus processed in selected countries of the Northern Hemisphere, is forecast to process a record 11.2 million tons of citrus in 1996/97, mostly oranges. A record Florida orange and grapefruit crops are spurring the increase in processing. United States Total citrus production in the United States in 1996/97 is forecast at 15.62 million tons, up 8 percent from last season's harvest. If realized, the U.S. 1996/97 citrus crop will be the largest crop on record. Orange production in 1996/97 is forecast at 11.4 million tons, up 6 percent from 1995/96. The majority of this increase is due to the increased production of grapefruit and processed oranges in Florida. Total U.S. citrus exports in 1996/97 are forecast at 1.25 million tons, 7 percent above the previous year's shipments. Exports of oranges in 1996/97 are forecast at 560,000 tons, up 10 percent from last year's revised-down figure of 508,000 tons. The reported good quality of the fruit is anticipated to boost U.S. total orange and grapefruit exports in 1996/97. Orange and grapefruit exports account for about 90 percent of total U.S. citrus sales in international markets. Continuing Market Access Program efforts, increasing demand from leading U.S. customers, and the elimination of import barriers in international markets are expected to continue to benefit U.S. orange and grapefruit shipments in 1996/97. Strong demand continues from major U.S. customers in the Far East, North America, and the EU. Spain The Spanish Ministry of Agriculture estimates the total Spanish citrus crop for 1996/97 at 4.0 million tons, 10 percent below last year's output. Orange production is expected to be down 16 percent; tangerines, down 9.5 percent; and lemons, down 0.4 percent. The drop in citrus production in 1996/97 is due to the result of tristeza and caterpillar miner pest. Despite production being down, fruit quality and sizes are reportedly good, due to rains in September. Spain is the world's largest citrus exporter, accounting for 37 percent of total Northern Hemisphere exports. However, smaller orange and tangerine harvests are expected to reduce Spain's citrus exports by 9 percent in 1996/97. Most Spanish citrus is exported to other European Union countries, which account for 84 percent of total citrus exports. The bulk of these exports are expected to go to traditional markets such as Germany, France, Holland, Belgium, and the United Kingdom. Italy Total Italian citrus production for 1996/97 is forecast at 2.6 million tons down 25 percent from the previous year. This significant drop in production is the result of very unfavorable weather conditions. Blood orange varieties account for most of the decrease in the orange harvest. These oranges represent sixty percent of total orange production. Blond oranges such as Valencia, Navel, and Ovale apparently were less affected by the unfavorable weather. Citrus fruit consumption in Italy is affected by supply and prices, as well as competition from other winter fruit. The 1996/97 marketing year will be affected by reduced domestic supplies, which will be partially covered by higher imports. Exports are forecast at 135,000 tons, down 22 percent from last year's volume. Egypt Egypt's fresh citrus production is forecast at 2.2 million tons, up 3 percent from last year's output. Orange production accounts for well over half of the total fruit production in Egypt. Orange production is centered in two large geographic regions, the fertile Nile delta, and the newly reclaimed lands. Navel oranges are the predominant variety. Egypt's orange exports are forecast at 210,000 tons, up 2 percent from last year's shipments. Exports to the European Union continue to be limited by the uneven quality of Egyptian oranges. Egypt's oranges are not price competitive in the international market compared to oranges from Spain and Morocco. The high price of Egyptian oranges are the result of several factors: declining productivity, the abolishment of government subsidies on insecticides, and high shipping costs. Private sector participation in the export business however is likely to improve the quality of Egyptian exports and thus attract more diverse destinations, including the possibility of greater sales to Western European markets. Turkey Production in 1996/97 is forecast at 2.0 million tons, up 16 percent from the previous year. Lemon, mandarin, orange, and grapefruit production is expected to increase by 7,15, 20, and 25 percent respectively, due to the combination of good weather and increased area. Citrus area in Turkey is expanding at a rate of about 5 percent annually. The expansion is driven by domestic demand, including demand from the growing tourist industry, as well as export demand, particularly for lemons and tangerines. Expansion of all varieties, particularly mandarins and grapefruit is expected to continue for the foreseeable future. Many observers believe that Turkey has the capacity to at least double citrus area and expect farmers to continue to shift to citrus due to its more attractive returns compared to field crops, particularly in the main citrus areas of Cukurova. Production for processing is expected to continue to play a relatively minor role in the industry. Citrus exports in 1996/97 are expected to increase to 400,000 tons, up 7 percent from the previous marketing year. The European Union continues to be Turkey's main export destination for fresh citrus. Exports of second grade produce to the Former Soviet Union continue to increase. Greece Greece's citrus production in 1996/97 is forecast at 1.06 million tons, down 2 percent from the revised 1995/96 output. Oranges account for about 80 percent of total Greek citrus production. The principal orange varieties grown in Greece are Washington navels, Common variety, Valencia, and Navelina. Total citrus exports in 1996/97 are forecast to decrease 4 percent to 395,000 tons based on the smaller harvest. Greece continues to face strong competition from other Mediterranean basin countries in promoting and selling its citrus produce in the European Union and abroad. The EU continues to subsidize exports to Eastern European countries, including shipments to Russia. However, this subsidy was lowered in October and November of 1996 and is expected to diminish as the season progresses. Morocco Total citrus production in 1996/97 is expected to drop by about one fifth, to 1.1 million tons, from the year before. The main reason for this decline is the alternate bearing nature of the citrus trees. Citrus exports are forecast to fall 19 percent to 460,000 tons. In February 1996, Morocco signed an Association Accord with the EU which allows Moroccan agricultural products, including fresh citrus and juice to continue to receive preferential duties when exported to the EU. More recently, Moroccan exporters have been concerned by the EU decision to require EU citrus importers to obtain an import certificate for fresh citrus fruit imported from non-EU countries. This EU requirement may discourage some customers from importing from Morocco. Cyprus Citrus production in Cyprus for 1996 has changed little from the previous four years. For the 1996/97 marketing year, production in fresh oranges is forecast to decline to 150,000 tons, down 9 percent from the previous output. This drop in production is due to dry weather conditions. Cyprus fresh orange exports are forecast to drop by 13 percent to 70,000 tons in 1996/97. Cyprus' exports primarily to Europe. The Turkish Republic of Northern Cyprus (TRNC), prohibited by law from exporting to the European Union, exports most of its citrus to Turkey. Currently, the Government of Cyprus is moving towards a support system similar to the Common Agricultural Policy as accession talks for joining the EU begin in 1998. China Both China's fresh orange and fresh tangerine production are forecast to increase 6 percent to 1.8 million and 5.6 million tons respectively in 1996/97. Area planted for citrus crops continues to increase in most provinces as farmers seek new cash crops. In addition, a combination of rising consumer income and crop diversification has led to China's increase in total fruit production. Production increased in every province except Guandong. China's wealthier urban consumers have one of the highest per capita levels of fresh fruit consumption in the world. Fruit is consumed with most meals and is popular as a snack. Rising incomes are increasing the number of consumers who can purchase fresh fruit. However, a growing availability of processed snack foods is creating competition in the fresh fruit market. Total citrus exports, mostly tangerines, are forecast at 156,000 tons, in 1996/97, up 7 percent from last year's volume. Tangerine exports are forecast at 140,000 tons, up 8 percent from 1995/96 shipments. China's main export markets remain Southeast Asia and the Former Soviet Union. Although fresh citrus imports face phytosanitary barriers and high tariffs, substantial amounts of U.S., South African, and Australian navels and Valencia oranges are transshipped through Hong Kong to China. Tariffs are very high, but it can be assumed from the selling price of the citrus in the wholesale market, which is not much above the Hong Kong price, that the official tariffs are rarely collected. Mexico Mexican citrus production is forecast to decrease 3 percent in 1996/97. Oranges account for the overall decrease in citrus output. Orange production is forecast at 2.8 million tons, down 7 percent from the previous year. Dry weather conditions that affected the northern states of Mexico affected overall yields. Tangerine production is forecast to remain at the same level as last year. Grapefruit production is forecast to increase 3 percent to 150,000 tons in 1996/97. Lime production is forecast to increase 9 percent to 960,000 tons in 1996/97 because of better weather conditions and more trees coming into production. Fresh orange consumption in Mexico is forecast down 7 percent in 1996/97 due to lower supplies. However, as the Mexican economy recovers, consumer purchasing power is expected to be stronger. Exports of fresh oranges in 1996/97 are forecast at 8,000 tons, down 11 percent from the previous year. The United States is the largest export market for Mexican oranges. Mexican exporters are also exploring Asian markets such as Hong Kong and Japan. Mexican imports of U.S. oranges could increase significantly given the reduction in the Mexican tariff. Japan Japanese total citrus production in 1996/97 is forecast at 1.6 million tons, 8 percent below the 1995/96 output. The tangerine crop which comprises the majority of the citrus production is forecast at 1.5 million tons, down 8.5 percent from the previous year's output. The decrease in production is due largely to poor flowering and pollination caused by the cold weather in early Spring as well as fruit drop during the summer. A decline in the area harvested continues the long-term trend of contraction in Japan's once dominant mikan industry. The aging farm population and product substitution losses to juice and processed "snack" food are undoubtedly key factors in the downtrend. Japan's total citrus imports in 1996/97 are forecast at 564,000 tons, up 7 percent from the previous year's level. The United States remains the dominant supplier of fresh oranges, grapefruit, and lemons to Japan. However, the United States is faced with two key competitors in the Japanese fresh orange market: Australia and South Africa. Fresh oranges from both countries have been gaining a steady reputation among Japanese traders in terms of both quality and price. Suppliers in these countries tend to ship after the main growing season for U.S. oranges, but may increasingly be encroaching on the traditional sales period for California fruit. Israel is the United States' largest competitor in Japan for grapefruit. Imports from Israel have increased approximately 26 percent from last year. The majority of Israel's exports to Japan are the green-skinned "Sweetie" grapefruit. It is estimated that imports from Israel will grow 10-12 percent, reaching 25,000 tons. The future of the United States' export success will depend heavily on the quality of fruit and on continued marketing efforts to expand the range of uses. Korea Korean tangerine production in 1996/97 is forecast at 550,000 tons, down 11 percent compared to the revised 1995/96 estimate of 615,000 tons. However, production in 1996/97 is much higher than was expected in the spring, as ideal summer and fall weather helped offset frost damage which occurred during the spring blossom season. The favorable weather also contributed to good quality fruit. Planted area is forecast at 25,500 hectares, up slightly from the revised upward 1995/96 figure. However, producers in the Cheju Province are expected to continue a vigorous tree- thinning program. This program comes as a result of growers' decisions to improve tangerine quality in order to compete with high-quality orange imports. Cheju Province accounts for more than 90 percent of total Korean tangerine production. Korea is expected to export 3,000 tons of tangerines in 1996/97, compared to the revised 1,000 tons shipped in 1995/96. Canada and Russia are the main destinations for Korean tangerines. Korea obtained USDA/APHIS approval in 1995 to export tangerines to the United States under guidelines in the official protocol agreement. Korea is hoping to expand their export shipments to the United States. For 1996/97, Korea hopes to export 300 tons to the United States. Korea imported oranges for the first time, other than for the hotel trade, in 1994/95 under terms of its Uruguay Round agreement. A total quota of 15,000 tons for oranges was assigned in 1994/95. U.S. orange and grapefruit exports to Korea increased sharply in 1995/96 as a result of this agreement. However, there were a number of problems that arose with the initial oranges imported in 1995. The key issue was the timing of imports and the import clearance delays. Significant progress has been made on both of these issues, leading to a much smoother import clearance process throughout 1996. The Korean quota is 25,000 tons for the first six months of 1997 until liberalization in July 1997. Revised Southern Hemisphere It is too early to make reliable forecasts for the Southern Hemisphere countries for the 1996/97 season (harvest in 1997). Total citrus production in selected countries in the Southern Hemisphere in 1995/96 (harvest in 1996) has been revised up from the January forecast to 42.2 million tons. In Brazil, the 1995 citrus crop for the entire country has been revised to 17.6 million tons, down slightly from the previous year's output of 17.8 million tons. Fresh orange consumption has been revised down 3.5 percent due to a decrease in production. South Africa's 1995/96 orange crop has been revised up 7.7 percent from 850,000 (1994/95) to 930,000 tons. It is forecast that 1996 production increased due to young trees that came into production, and the good rain conditions that fell into the drought prone provinces of Mpumalanga and northern Transvaal. Total 1995/96 citrus production in Argentina is revised down by 11 percent to 1.8 million tons. The drop in production is due to prolonged drought in citrus producing zones and frosts. For further information on supply, distribution, and trade contact Debbie Seidband, Horticultural and Tropical Products Division, (202) 720-6877. For information on U.S. marketing opportunities, contact Ted Goldammer at 202-720-8498. For information on production contact Kelly Strezlecki, Production Estimates Division at (202) 720-6791.
U.S. fresh vegetable exports (including potatoes) in fiscal year 1996 were valued at $979 million, the third largest export value in history, but down 14 percent from the record in FY 1995. Although the value of vegetable exports was down considerably because of lower unit values, and a recovery in Japanese and Korean production, the volume of exports dropped only 3 percent from the previous year. Canada was once again the top market for U.S. vegetable exports, followed by Japan, Mexico, EU-15 and other Asian countries. Lettuce, tomatoes, onions, broccoli, asparagus, bell peppers, celery and cauliflower topped the list for all U.S. vegetable exports. As consumer incomes rise and modern supermarkets appear in emerging markets, particularly in Asia, opportunities for other types of vegetable products such as pre-cut vegetables likely will appear. The potential for expanding U.S. sales of tomatoes, peppers and eggplants into Japan appears possible as both governments work to overcome existing trade barriers. Canada remains top U.S. market for fresh vegetable sales In fiscal year 1996 (October 1995 to September 1996), the value of U.S. vegetable exports to Canada, the top market, declined 15 percent to $648 million, due mainly to lower export volumes and lower unit values combined with inelastic demand. In addition, increased competition from Mexico for vegetables such as tomatoes, cauliflower, broccoli, lettuce and asparagus, reduced U.S. shipments to Canada. Canada remains the most important market for U.S. fresh vegetable exports, but its share of exports has fallen from three quarters to two-thirds in recent years. Lettuce and tomatoes top the list of vegetables sold to our northern neighbor. Bell peppers, broccoli and onions round out the top 5 U.S. vegetables sold. U.S. vegetable exports to Asia slow, but opportunities remain good Although U.S. exports of fresh vegetable sales to Asia slowed in FY 1996, good opportunities remain for top quality vegetables in Japan, Hong Kong, Taiwan, Singapore and Korea. The greatest demand for U.S. fresh vegetable products in Asia are linked to traditional export items, such as lettuce, broccoli, asparagus, onions and celery. U.S. exports to Japan in FY 1996 were down 20 percent to $166 million from a record $207 million in FY 1995, due mainly to the E-Coli crisis in Japan which impacted heavily on imported vegetables. Because of the E-Coli problem in August 1996, the Japanese government imposed a new health inspection program on 13 imported vegetables. Vegetables generally eaten raw were affected the most. The commodities affected included: lettuce, broccoli, garlic, burdock root, tomatoes, peppers, cabbage, asparagus, ginger, onions, carrots, and shallots. The United States is currently not permitted to export fresh tomatoes and peppers to Japan because of prevailing phytosanitary issues. During the past 5 years, Japan has accounted for more than 75 percent of all U.S. fresh vegetable exports to Asia. The top four U.S. vegetables exported to Hong Kong were lettuce, onions, celery and broccoli. U.S. exports of these four vegetables to Hong Kong and Taiwan combined increased 85 percent from $16 million in FY 1992 to more than $30 million in FY 1996. Lettuce continues to top U.S. vegetable exports In FY 1996, U.S. exports of lettuce totaled 286,000 tons valued at $133 million, up 4 percent in volume but down 28 percent in value from the previous year. Exports to Canada, the top market, valued at $104 million, declined 34 percent from FY 1995. However, exports to Hong Kong, the number two market, valued at $11 million, were up 22 percent from FY 1995. Exports to Mexico, valued at $6 million, rebounded 50 percent from FY 1995, which was down as a result of the value of the U.S. dollar relative to the devalued Mexican peso. Exports to Singapore and Taiwan have registered significant increases from FY 1992 to present. Onions exports down In FY 1996, U.S. onion exports, including sets, valued at $83 million, were down 37 percent from FY 1995, mainly due to reduced shipments to Japan, Canada, Korea and Mexico. These markets accounted for over 80 percent of the total U.S. export value of onions in FY 1996. Improved weather conditions and a larger domestic harvest in Hokkaido, Japan was the primary factors that lead to reduced U.S. onion shipments in FY 1996. Hokkaido onions are normally brought to market in the early part of the season (September and October). Decreased value of U.S. onion exports to Canada and Mexico were largely due to lower volumes shipped. Broccoli, celery, asparagus and peppers also down In FY 1996, U.S. exports of broccoli valued at $84 million were down 7 percent from the previous year. Exports to Canada, the top U.S. market, accounting for about 48 percent of the total value in FY 1996, declined 20 percent from FY 1995. However, U.S. broccoli exports to Japan, the second largest market, increased 9 percent from the previous year. U.S. exports of celery in FY 1996, valued at $39 million, dropped by 32 percent from FY 1995, due largely to lower unit value in product shipped to Canada. Canada accounted for 72 percent of U.S. celery exports in FY 1996. However, U.S. celery shipments to Hong Kong, the number two market, valued at $5.8 million, up 5 percent from FY 1995, increased for the fourth consecutive year. U.S. exports of fresh asparagus, valued at $52 million, declined 22 percent from FY 1995, primarily due to the lower unit value and smaller shipments to Japan, the top U.S. market. The unit value of asparagus shipments to Canada, the second largest market, declined by 14 percent. Reduced shipments to Japan were caused largely by the E-Coli crisis. During the same period, U.S. asparagus exports to Switzerland, the third largest market, valued at almost $7 million, increased 75 percent above FY 1995. Greater market potential for U.S. fresh green asparagus in the EU, especially in France, are possible, provided that prices are competitive. The primary suppliers of imported asparagus, mostly white, to France is Spain, Greece, Italy, Peru and Morocco. Fresh asparagus in France is mainly marketed from mid-March to the beginning of July. In FY 1996, U.S. exports of bell peppers valued at $46 million, declined 6 percent from FY 1995. Declining unit value was the main factor for this decrease. Canada accounted for 98 percent of all U.S. fresh pepper exports in FY 1996. Tomato exports also slow U.S. exports of fresh tomatoes in FY 1996, valued at $100 million, down 9 percent from the previous year, continued a downward trend for the third consecutive year. This decline in value was due mostly to reduced unit value in exports to Canada and Mexico. Mexican exports of vine-ripe tomatoes to Canada have also impacted on the share of the Canadian market. Canadian imports of Mexican tomatoes have grown from $8.9 million in CY 1993 to US $25.7 million in January to October 1996. Canada accounted for 94 percent of the total value in FY 1996, while, decreased value of U.S. exports to Mexico, continue to reflect on the 1994 peso devaluation. Access for U.S. fresh tomatoes to Japanese market possible in 1997 U.S. fresh tomato exports to Japan are currently banned, due to Japanese concerns over the possible transmission of tobacco blue mold (TBM). However, due to long standing efforts of USDA and Japanese officials to address the TMB issue, it is possible that U.S. fresh tomatoes could gain entry into the Japanese market later in 1997. Japan's tomato production consists primarily of hothouse tomatoes. For further information call Emanuel McNeil at (202) 720-2083.