NORTHERN HEMISPHERE APPLE SITUATION
U.S. apple production in marketing year 1997/98 (July-June) is forecast at 4.7 million metric tons, slightly above last season's output. Increased production prospects in the eastern and central states offset reduced prospects for western states apple harvests.
Apple production in western states in 1997/98 is forecast at 3.0 million tons, 6 percent below last year's output, based primarily on a smaller Washington state apple crop. Apple production in Washington state, the largest U.S. apple producer, is forecast at 2.4 million tons, down 5 percent from last season. Relatively cool temperatures throughout most of the growing season have allowed fruit to size well. Washington state alone accounts for about 50 percent of the total U.S. apple crop.
Production of apples in 1997/98 in the central States is forecast at 635,030 tons, 32 percent above the 1996/97 crop. Michigan, the major producing state in the central region, is forecast to produce about 454,000 tons, 38 percent more than in 1996/97. Apple production in 1997/98 in the Eastern States is forecast at 1.1 million tons,
6 percent above a year ago. Output in New York, the second largest U.S. producing state, is forecast at 508,000 tons, up 9 percent from last season's drought reduced crop. Favorable rains during August and September have improved New York's apple production prospects.
U.S. apple exports in 1997/98 are forecast at 610,000 tons, 9 percent below last season's shipments. A slight decrease in the Washington state apple crop, the recent implementation of Mexico's anti-dumping duty on U.S. apples, and a stronger U.S. dollar vis-a-vis other countries' currencies is expected to slow overall U.S. apple exports in 1997/98. Washington state is the U.S. major apple exporting state, selling about a third of its crop to international markets. Mexico, Taiwan, Indonesia, and Canada represent some of Washington state's biggest customers. Moreover, Mexico accounts for about 15 percent of Washington state foreign sales. On September 1, 1997 Mexico's Secretariat of Commerce (SECOFI) announced a provisional compensatory import duty of 101.1 percent on Red and Golden delicious apples from the United States. The preliminary resolution was in response to a petition filed by the Chihuahua State Fruit Growers Association, which alleges that U.S. apples were being sold below their production costs, thus injuring Mexican apple producers.
On the other hand, increased apple export opportunities are foreseen for the eastern states. Larger exportable supplies in Michigan, New York, and other eastern states should expand international sales from the region. Furthermore, reduced apple production in some European countries could increase eastern U.S. apple export to markets such as the United Kingdom.
U.S. apple exports in 1996/97, the second largest on record, totaled 666,857 tons, up 19 percent from a year ago and only 4 percent below the 1994/95 record. Larger exportable supplies from northwestern states and decreased apple crops in major competitor countries improved overall U.S. apple exports in 1996/97. Taiwan, Mexico, and Canada continued to be the main destinations for U.S. apples in 1996/97.
Mexico's apple production in 1997/98 (August-July) is forecast at 450,000 tons, 13 percent above the previous year's crop. An on-season in the production cycle, favorable weather conditions, and increased use of technology in the management of the orchards have improved Mexican apple production prospects in 1997/98. The 1996/97 apple production estimate was reduced reflecting some damage in apple orchards in Chihuahua due to dry weather conditions. Chihuahua is Mexico's largest apple producing region.
The Mexican economy has been recovering from the financial crisis it suffered in 1995 and early 1996. Inflation has decreased slowly and private analysts are projecting inflation for 1997 at about 16 percent. The consumer purchasing power has been stronger and U.S. fresh fruit imports increased during the 1996/97 season. A good sign of economic recovery of Mexico and apple trade was that the tariff rate quota (TRQ) for apples was filled in 1997. The Diario Oficial (Federal Register) announced on May 21, 1997 that the safeguard for apples for 1997 under NAFTA (60,099 MT) was covered in May 1997. The duty for U.S. apples is 12 percent for the total safeguard, and 20 percent for any imports above the safeguard.
Mexico's antidumping investigation
Mexico's trade ministry initiated on March 6, 1997 an anti-dumping investigation of U.S. Red and Golden delicious apple imports. The investigation was in response to a petition filed by the Chihuahua State Fruit Growers Association, which alleges that U.S. apple imports were being sold below their production costs, thus damaging Mexican apple producers. The period of time under investigation was from January 1-June 30, 1996.
According to the investigation, SECOFI concluded that increased amounts of U.S. apples damaged the domestic industry. On September 1, 1997 Mexico imposed a preliminary anti-dumping duty of 101.1 percent on Red and Golden delicious apple imports from the United States. The 101 percent anti-dumping duty, which is applied to the declared value on import documentation, is calculated separately from the current 20 percent add-valorem import tariff. Ten companies were named as exporters, including 4 from Washington state. SECOFI should announce a final determination in or around February 1998.
This compensatory duty is likely to severely restrict U.S. apple exports to Mexico this season as importers will delay apple imports until a final decision is reached by the Mexican authorities. This situation could increase the export possibilities for other countries like Chile and New Zealand, which pay a 20 percent duty on their apples.
Mexico is an important market for U.S. apples. Exports grew from $6 million in MY 1991/92 to over $80 million in MY 1994/95 before the peso devaluation and subsequently recovered to $44 million in MY 1996/97. Red and Golden Delicious apples comprise approximately 75-80 percent of total U.S. apple exports to Mexico. Moreover, Mexico is Washington state's number one export market for apples, with some 4.5 million boxes (about 85,000 metric tons) shipped in 1996/97 (July-June).
Apple production in Taiwan in 1997/98 is forecast at 10,000 tons, 20 percent more than the 1996/97 output. However, two typhoons hit the northern and southern regions of the island during the summer and have adversely affected the quality of some apples.
Taiwanese apple imports in 1997/98 are forecast to increase slightly to 133,000 tons, due to a continued recovery of Taiwan's economy and reduced domestic supplies of good quality fruit. Apples continue to be the number one imported fruit into Taiwan. In 1996/97, imported apples accounted for 94 of the volume, and 89 percent of the value of total domestic apple consumption.
Until Taiwan joins the World Trade Organization (WTO), restrictions will remain for apple imports. Countries are subject to Taiwan import quotas except for the United States and Canada. In January 1997, Australia and New Zealand received 100 percent quota increases, while Chile and France each received 39 percent and 67 percent increases, respectively. Japan's import quota was adjusted to 2,000 tons from 600 tons. Nevertheless, import quotas issued by the Taiwan government this year totaled only 36,100 tons, approximately 27 percent of the import market. The United States, accounting for nearly a 90 percent market share, is by far the major supplier of apples to Taiwan.
A larger harvest and lower prices boosted Washington's apple exports in 1996/97 to Taiwan to a record 4.2 million cartons or about 80,000 tons. Washington Fuji enjoys a leading position among all varieties in terms of sales volume. Red Delicious has become less and less popular as the Taiwanese market continues to shift toward Fuji.
Taiwan's tariff for all imported apples remains at 50 percent
based on the cost insurance freight (CIF) reference price set by
the Taiwan Customs Department. The CIF reference price set by
Taiwan Customs, however, has been changed recently for some apple
varieties. The new structure for setting the reference price is
based on apple size. The reference price for large and medium
size Fuji, for example, was increased by 26 percent and 9 percent
respectively. This change may have a negative impact on imports
of large and medium size Fuji. Since Taiwanese importers usually
prefer the large size Fuji, this adjustment would likely shift
importers' preferences and raise retail prices on large and
medium Fuji. Fuji has become the dominant variety in the Taiwan
apple market since consumers like the taste and appearance of
Fuji better than any other variety. The new system is not
expected to affect small Fuji and other apple variety imports.
Apple production in the European Union in 1997/98 is forecast at 6.5 million tons, 10 percent below last season's output, due to a severe frost that hit Southern Europe during the spring of 1997. The frost adversely affected apple crops in France and Italy, the EU's major apple producing countries. Although to a much lesser degree, hailstorms during the summer reduced apple production in Spain, the third largest apple producer in the EU.
French apple production in 1997/98 is forecast to decrease to 1.91 million tons. The major apple varieties grown in France are Golden Delicious (907,000 tons, down 10 percent), Granny Smith (225,000 tons) and Red American varieties (165,000 tons). Gala is becoming a major variety (176,000 tons).
Italian apple production in 1997/98 is forecast to decline 12 percent to 1.75 million tons. Frost hit the trees during the flowering and fruit setting stage after an initial spring season with high temperatures. Fruit quality was also negatively affected by frost. In 1997/98 the Trentino-Alto Adige region in the North of Italy is expected to account for 55 percent of total Italian apple output, mostly Golden Delicious.
Spain's 1997/98 apple production is forecast at 858,500 tons, about 1 percent below last season. Due to the damage sustained during the hailstorms, more apples are expected to be diverted for cider production in 1997/98. About 50 percent of the apple crop in Lerida, one of Spain's most important producing regions, was affected by the hailstorms.
EU apple exports in 1997/98 are forecast at 1.84 million tons, practically unchanged from 1996/97. Imports, however, are forecast to increase 16 percent, due to the smaller harvest.
French apple exports in 1997/98 are forecast at 825,000 tons, 3 percent above 1996/97 shipments. France is the largest EU exporter, shipping mostly to the United Kingdom and Germany. However, France has also been successful in recently penetrating other markets such as Scandinavia, Eastern Europe, and Russia, the result of continuous efforts on quality and marketing. French apple exports to South-East Asia are also growing steadily. Gala and bi-colored varieties are increasingly being exported to the region. In late August 1997, the Japanese Ministry of Agriculture signed an agreement with the French Ministry of Agriculture to allow French apple exports into Japan, if certified from disease-free orchards. Sanitary inspections by Japanese sanitary experts are expected to start in the Fall of 1997. According to trade analysts, French apple exports to Asia could reach 60,000 tons annually by the year 2000.
Italy's apple exports in 1997/98 are forecast to decrease 8 percent to 300,000 tons. The smaller apple harvest is expected to reduce exports and increase imports in 1997/98. Italy's major apple buyers are Germany, Austria, and Norway.
On the other hand, United Kingdom apple imports are expected to increase 28 percent in 1997/98. Spring frosts and early summer hail caused considerable apple production losses. The main varieties of imported apples are Granny Smith, Golden Delicious, Red Delicious, Cox, Jonagold, Elstar, Fuji, Braeburn, Gala and Empire. The main U.S. apple varietals imported are Red Delicious, Empire and McIntosh.
France continues is the dominant apple supplier to the United
Kingdom, accounting for 46 percent of U.K. imports. South Africa
is the dominant third-country supplier to the United Kingdom,
accounting for 18 percent of total imports. The United States
accounted for 7 percent of total 1996/97 U.K. apple imports.
It is too early to make a reliable forecast for the Southern
Hemisphere countries for the 1997/98 season (harvest in 1998).
Forecasts will be available in the March 1998 issue of World
Horticultural Trade & U.S. Export Opportunities.
(For information on production and trade, contact
Samuel Rosa at 202 720-6086. For information on marketing contact
James Carlson at 202-720-7931)