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THE ASIAN ANGLE ON U.S. HORTICULTURAL
EXPORTS
March 1998
-- Here are a few statistics on the overall make-up of U.S. horticultural product exports, with a quick view of how the Asia economic situation seems to be affecting them
-- We'll look at overall horticultural export performance in recent years -- fresh fruits and vegetables account for about one third of the total -- to gage the impact of the Asian situation on the horticultural sector
-- Then we'll check exports by country in the first months of the current fiscal year that began in October, when the impact of Asian currency devaluations began to be noticeable in export figures
-- And finally we'll review a few early comments on fresh exports by commodity
FIGURE 1. U.S. HORTICULTURAL EXPORTS FORECAST TO RISE AGAIN IN FY 1998
-- In FY 1997, U.S. horticultural exports reached $10.6, nearly quadrupling since FY 1985; no other broad export sector has experienced such a steady increase
-- Reasons for the increase the past year:
-- Exports to Canada benefited from the progressive lowering of duties under the U.S.-Canada Free Trade Agreement
-- Sales to European Union countries continued at a record level
-- Except for Japan, growth continued steady to key Pacific Rim and Latin American markets
-- Sales to Mexico continued to recover
-- For 1998, U.S. hort product exports are expected to set another record at $10.8 billion; this forecast has been reduced from $11.2 billion because of the Asian situation
-- Reduced exports to Asian countries experiencing currency devaluations should be partly offset by additional exports there and elsewhere resulting from reduced tariff and phyto barriers in line with NAFTA and the Uruguay Round
FIGURE 2. IMPORTANCE OF EXPORTS FOR SELECTED U.S. HORTICULTURAL PRODUCTS
-- Clearly foreign economic troubles affect U.S. horticultural producers and shippers
-- This chart shows how exports have become critical to the success of the U.S. horticultural industry, both fresh and processed
-- More than 70% of almonds go into export, while high percentages for many other fruits, vegetables and nuts are also shipped
-- If this trend continues as expected, exports will become even more important to U.S. producers of these and other products
FIGURE 3. CANADA REMAINS THE TOP MARKET FOR HORTICULTURAL PRODUCTS
-- At $2.9 billion, CANADA continued to be the top market for U.S. horticultural exports in FY 1997, up from $2.6 billion in FY 1996;
-- Note, that Canada's share of total U.S. horticultural exports has declined to 27% last year from 31% in FY 1992, as U.S. markets have broadened
-- Exports to the EUROPEAN UNION (EU) were $2.2 billion, up less than 1%
-- Exports to JAPAN decreased again slightly for the second straight year to $1.8 billion; MEXICO was up 30 % over FY 1996
-- Strong growth characterized sales to other Asia, led by HONG KONG
-- But as you can see from the chart, although the Asian countries have been the fastest growing countries, they account for only 7% of total U.S. hort exports, excluding relatively less affected Japan, Taiwan and Hong Kong; so the direct impact of Asia is lower in our sector generally, although there are specific exceptions as we will see
FIGURE 4. GROWTH IN U.S. HORTICULTURAL EXPORTS TO SELECTED ASIAN COUNTRIES
-- Looking more closely at Asia, you can see that over the past 5 years, exports to these countries have grown very strongly; few countries outside of this region have grown more swiftly
-- Note for example how exports to Indonesia more than quadrupled over this period; exports to Korea, the Philippines and Malaysia more than doubled
-- Much of the growth to Hong Kong has consisted of exports to China proper, which have both so far generally escaped from the economic difficulties afflicting other Asian countries
-- Naturally, with such dynamic growth in exports to Asia in recent years, the current situation will mark a sharp although probably temporary change in exports to this region
FIGURE 5. EARLY IMPACT OF ASIAN FINANCIAL CRISIS ON U.S. HORTICULTURAL EXPORTS
-- To date we have figures for the first 3 months of FY 1998 available, October through December
-- Sales to Japan have fallen 5% for the past 2 years because of the strong dollar versus the yen and Japan's relatively weak economy; this trend is continuing as sales to that country to date are down 7%
-- We've seen major slowdowns in exports to Korea, the Philippines, Indonesia and Thailand; exports to date to these countries as a group are down 22% or $32 million
-- However, sales to Hong Kong and Taiwan continue to rise; exports to date to these countries combined are up 7% or $18 million
FIGURE 6. JAPANESE HORTICULTURAL IMPORTS, MARKET SHARE 1991-1997
-- In the case of our largest export market in Asia, Japan, total imports are down because of a relatively weak economy
-- U.S. market share in Japan has been relatively flat; it decreased slightly in the past two years because of the strong U.S. dollar, a somewhat exaggerated bump in exports in 1995 because of drought, and increasing competition from China
-- China's market share in Japan has increased from 15 percent in 1991 to 23 percent in 1997. Fresh vegetables led the way. Some of this growth has been at the expense of neighboring Philippine exports
FIGURE 7. U.S. FRUIT AND VEGETABLE EXPORTS TO KOREA DOWN SHARPLY FOR FIRST THREE MONTHS OF FISCAL YEAR 1998
-- In the case of Korea, our seventh largest export market, U.S. horticultural exports to date (October-December) are down 20 percent or $13 million
-- Onions account for more than 40 percent of the decrease in horticultural sales to date, with the level of Korea's domestic onion crop playing an important role in the amount of onions imported each year
-- Other commodities adversely affected include grapefruit, orange juice and kiwifruit. Tree nuts are the only commodity group showing a slight increase
-- HTP has recommended additional funds be made under GSM-102 for horticultural products
FIGURE 8. TOP 10 U.S. HORTICULTURAL MARKETS FISCAL YEAR, OCTOBER-NOVEMBER
-- The impact of the Asia crisis is not just direct, of course, but also indirect
-- Lower demand in those countries translates into bigger world supply availability and thus lower unit prices for a number of commodities (for example, apples and citrus)
-- However, in these first 3 months, we've seen Canada and Mexico make up a considerable amount of the reduced sales to Asia; exports to both North American neighbors are up substantially from the previous year period
-- Overall, sales to all countries, October through December are running 1% above the preceding year
FIGURE 9: SELECTED U.S. HORTICULTURAL EXPORTS FISCAL YEAR, OCTOBER-NOVEMBER
-- For fresh fruit, the largest horticultural products export sector, sales are up 3%; looking quickly at the largest fresh commodity exports:
-- For APPLES, sales to Indonesia have been particularly hard hit; note that it's not just the Asia crisis affecting overall exports, however; other factors are a lower Washington State crop, reduced supplies of good quality fruit and higher U.S. prices because of lower supplies, and Mexican actions against apple imports
-- PEARS, notably, have so far been relatively affected, except for Taiwan; overall exports are expected to surpass last year's level
-- GRAPEFRUIT has suffered, since 5 of the top 10 destinations for U.S. grapefruit are in Asia, led by Japan; beyond the Asia crisis, Japan's weak economy and the heightened competition from South Africa and Israel are other factors lowering export prospects
-- For ORANGES and LEMONS, although Asia accounts for 6 of our top export destinations for oranges, and 3 of 10 for lemons, lower export prices associated with larger crops will likely offset the effects of devaluations; the impact will be much less severe than for grapefruit
-- For TABLE GRAPES, 4 of the top 10 markets are in Asia. Exports to Indonesia, Korea and Taiwan are expected to be down. The outlook for overall export sales is still unclear
-- For VEGETABLES, both fresh and processed, exports are up sharply; wine, juices and processed fruit are also higher
-- For TREE NUTS, exports to date are down because of lower sales to the EU; for almonds, by far the largest nut exported, the affected Asian nations only account for 2 out of the top 10 U.S. export destinations.
-- For all fresh fruits and vegetables, competition from other countries, including those whose currencies haven't risen as much as the U.S. dollar against the Asian countries, is definitely on the rise
-- These are our first thoughts on what will be a developing story throughout the year
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