May 18, 1997 in Nation/World

Apple Bonanza Turns To Mush Rising Dollar, Fumigation Damage Crush High Hopes For Sales To Japan

Imbert Matthee Seattle Post-Intelligencer
 

In early 1995, with much fanfare, the first Red and Golden Delicious apples from Washington state reached grocery stores in Tokyo.

The shipments seemingly ended a decades-old battle to crack the Japanese market. Exuberant exporters predicted they would sell $75 million worth of apples in Japan by the end of the century.

Barely two years later, the sale of Washington apples has come to a virtual standstill, the apparent victim of a rising dollar, damage from a mandatory fumigation program and another simmering dispute over market access.

The Clinton administration last month went to the World Trade Organization to challenge the Japanese government’s quarantine requirements as an unfair trade barrier.

“In the area of agricultural exports, apples are now at the top of the (negotiations) agenda,” said Jay Ziegler, spokesman for the U.S. Trade Representative in Washington, D.C.

The setbacks, which have forced most Washington growers to withdraw from the Japanese market, disappoint industry representatives.

“We really didn’t expect this to happen,” said Jim Archer, manager of Northwest Fruit Exporters, a nonprofit group of apple packers and shippers in Yakima. “With all the euphoria in the first season, there were still some wise heads who warned it would be difficult. They were right.”

The first year, when the dollar was at a record low against the Japanese yen, about 16 Washington apple packers sold 500,000 boxes of Red and Golden Delicious, the only varieties allowed into Japan under a 1994 trade agreement.

Last year, the number dropped to 55,000 boxes. This year, growers are expected to ship fewer than 15,000 boxes, Archer said. That is minuscule compared with the 4.5 million cartons Washington exporters plan to sell this year to Mexico, their top market.

Japan’s weak economy is one of the reasons. In the past two years, the dollar has risen from 80 yen to 125 yen, an increase of more than 50 percent. That wiped out the 20 percent to 30 percent price advantage Washington’s apples had over Japanese varieties.

An even bigger obstacle is the quarantine Japan requires for imported apples to keep out disease and insects. Washington state growers and U.S. government officials claim the program is a trade barrier in disguise, put up to protect Japan’s $1.6 billion apple industry. Japanese officials in Washington, D.C., deny the charge.

Under the 1994 agreement, U.S. exporters agreed to fumigate their apples against the codling moth, an insect that lays its eggs inside fruit. They use a methylbromide spray, which was tested against the insect but not for its impact on the apples’ look, taste and shelf life, said Doug Pauly, operations manager for Northern Fruit Co., a grower and packer in Wenatchee.

“There weren’t any consumer taste panels,” Pauly said. “We were presuming methylbromide wouldn’t affect the quality of the apples.”

That turned out to be wrong. The spray accentuated the apples’ bruising and changed the flavor, he said.

Japan also requires Washington’s growers to keep their orchards at least a quarter-mile from pear trees and other fruits that could carry fire blight, a rare disease Tokyo fears could transfer to apples.

That shuts out 35 percent of the state’s 3,500 apple growers from the Japanese market because they have mixed orchards, said Jim Thomas, head of the Washington State Apple Commission.

Then there’s the lesser apple worm. Japan requires prospective exporters to set traps for the worm, which is rarer than fire blight in the Northwest. If any worms are trapped, the orchard is disqualified from exporting apples to Japan, Thomas said.

And if those methods fail to eliminate the culprits, Tokyo wants exporters to keep their apples in cold storage for 55 days, he said. “There are just so many redundant hoops to jump through.”

The quarantine, fumigation and accompanying inspections by officials from Japan’s Ministry of Agriculture, Forestry and Fisheries are also expensive, particularly if their cost is spread over smaller shipments, Archer said.

Kaoru Yoshimura, an agricultural expert at the Japanese Embassy in Washington, D.C, said U.S. growers proposed the methylbromide spraying and Tokyo approved it, but his government is open to other safe options.

Finally, there is the question of access for additional apple varieties, which is at the heart of the latest U.S. trade complaint against Japan.

Red and Golden Delicious aren’t the most popular varieties with Japanese consumers. Fujis, Galas, Braeburns, Jonagolds and Granny Smiths are in higher demand. State growers based their optimistic sales projections two years ago on the assumption they would get quick export approval for those varieties.

But Tokyo continues to require years of elaborate quarantine testing against insects and disease, which has so far only been completed for Washington’s Red and Golden Delicious, said Bill Bryant, chairman of the Seattle-based international affairs management firm Bryant Christie Inc.

U.S. trade negotiators, however, said insects such as the codling moth and apple worm don’t discriminate between different fruits, while fire blight reportedly already exists in Japan, according to some scientists.

Yoshimura denied Japan has fire blight and said his government “is not intent on delaying the process of approving additional varieties because Japanese growers know they have to compete with imports.”

He blamed the poor performance of Washington apples in Japan on the stronger dollar and efforts by Japanese growers to boost their quality in the face of competition from the United States and New Zealand.

If consultations with Japanese trade negotiators don’t produce market access for the excluded varieties in the next two months, the Clinton administration will seek a ruling from a WTO dispute panel on the issue.

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