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Department of agriculture Fo re | fe Nn JAX | rl Cu Itu re 


Foreign Agricultural Service 


(@lel(ele)- am Eclsic) 


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What it Means for U.S. Exporters 














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——_ 







SELLE aw 











Marketing News 


2 Foreign Agriculture 





U.S. Cooperators Boost The U.S. Feed Grains Council and the American Soybean Association are in the second 

Barley Consumption in Tunisia year of a promising program which encourages early weaning of Tunisian sheep to a diet of 
whole barley, soybean meal, vitamins and minerals. The program could revolutionize 
Tunisian sheep production through increased litter sizes, higher meat yields and more 
frequent lambing. It could also lead to expanded barley and soybean meal consumption. The 
cooperators are conducting similar programs for the dairy and beef sectors, also likely to 
increase consumption. Tunisia will purchase barley and soybean meal according to 
foreign aid availability, credit, price and subsidy programs. 





New Storage Idea The American Plywood Association (APA) is undertaking an intensive promotional effort 
From APA in Europe throughout Europe for its 1,100-liter plywood bin. The bin, a sturdy, reusable wooden 
container lined with an aseptic bag, is the result of considerable design and field efforts 
by Association engineers and U.S. bin fabricators. The bin was introduced to potential 
overseas users—producers and processors of liquid or semi-liquid agricultural goods—at the 
Technoconserve exhibition in Parma, Italy, in November 1985. 


M. G. Robert Verhorst, based in APA’s Antwerp office, represented the Association at the 
Technoconserve fair. He reporis that the bin attracted much attention from the tomato 

paste industry, as well as from fruit crush, fruit concentrate and olive oil firms. Further 
inquiries have been received from European users on the possible use of the bins for animal 
fats and small fish. The bin also has many industrial packaging applications. 


For design and other information on the bin, contact any of the APA’s European offices, 


located in London (Tel. 01629-3437), Antwerp (Tel. 3 449 6472) and Hamburg (Tel 
40 353047). 





Variety Meats Featured at Last spring, U.S. Meat Export Federation staff in Mexico held a dinner featuring U.S. beef 

MEF-Sponsored Dinner and pork offals at the U.S. Ambassador's residence. The dishes, prepared by a renowned 
local chef, were of U.S. origin and included pate, tripe a la mode, head cheese, garlic salami, 
ox-tail soup, tongue gelee and pickled pork feet. 


Attending the dinner were 35 of Mexico's food industry leaders, including importers, 
supermarket personnel, distributors and independent operators. The Mexican market for 
variety meats is a significant one, as Mexico imported 59,880 metric tons of variety meats 
from the United States in 1985. 





USW Hosts Yugoslavian Future wheat trade between Eastern Bloc nations and the United States may be 

Wheat Marketing Conference more promising as a result of a recent U.S. Wheat Associates—sponsored marketing 
conference in Yugoslavia. U.S. Wheat hosted the two-day round of information sessions 
for grain trade officials from Yugoslavia, Romania and Bulgaria. The sessions were aimed 
at outlining the current world supply and demand situation for wheat and providing 
foreign officials with the details they need to participate more fully in U.S. government 
export programs. 


Among other items addressed at the conference were trends in world wheat consumption, 
the workings of the U.S. grain inspection system, current U.S. farm legislation and the role 
of U.S. farmer cooperatives in wheat export marketing. Of particular importance to the East 
Europeans were trends in financing wheat imports, the economic factors affecting ocean 
transportation, U.S. market opportunities for European products and the future role of 
long-term grain supply agreements. 








Volume XXIV No. 10 October 1986 3 








The Magazine for 

Business Firms Featu res 
Selling U.S. Farm 

Products Overseas 


Portugal’s Accession: How Will It Affect Trade Ties With U.S.? 
Published by 


U.S. Department of Agriculture 7 . 

Foreign Agricultural Service The future of U.S.-Portuguese agricultural trade has been clouded by Portugal's 
accession to the European Community. 

Managing Editor 

Lynn K. Goldsbrough 


(202) 382-9442 California’s Table Grapes Enjoy a Great Year 


me aren Exporters of high-quality U.S. table grapes experienced a record-shattering export 
year—and prospects over the near term look good 

Writers 

David Garten 

=dwin N. Moffett 

Flobert Moser 

per American sweets exporters will face heavy competition from European Community 

Jennifer M. Smith nations in selling goods to West Germany. 


U.S. Sweets Exporters Face Long Road in German Market 


Associate Designer 


Sylvia Duerksen Hong Kong Is Tops at Cracking U.S. Shell Eggs 


Victor Newman 


Although Chinese homemakers prefer brown eggs, U.S. white eggs are big on the 


, ‘ menus at hotels, western-style restaurants and fast food outlets. 

ext of this magazine may be reprinted 

freely. Photographs may not be reprinted 

without permission. Contact the Design 

Director on (202) 447-6281 for instructions Taiwan Holds Opportunity for U.S. Citrus Sales 

Use of commercial and trade names does 

not imply approval or constitute e . 
endorsement by USDA or the Foreign Taiwan's imports of oranges, grapefruit and lemons have been growing steadily. 
pe acerca ahi The United States supplies a good share of those imports 

Agriculture has determined that publication 

of this periodical is necessary in the 

transaction of public business required by 

law of this Department. Use of funds for 

printing Foreign Agriculture has been D rt t 

approved by the Director, Office of epa men Ss 

Management and Budget, through March 31 
1987. Yearly subscription rate $16.00 
domestic, $20.00 foreign, single copies $2.75 
domestic, $3.45 foreign. Order from 
Superintendent of Documents, Government 
Printing Office, Washington, DC 20402 


Marketing News 


Fact File: The Targeted Export Assistance Program 


Country Briefs 








Portugal’s Accession: How Will It 
Affect Trade Ties With U.S.? 


4 Foreign Agriculture 





By Homer Sabatini 


The accession of Portugal to the 
European Community (EC) on Jan. 1, 
1986, has raised a number of questions 
about the future of U.S. agricultural trade 
with the Iberian Peninsula. U.S. exporters 
are concerned about the status of 
traditional exports as well as expansion 
in new product areas. 


Many of the expected changes will be a 
result of the integration of Portugal's 
agriculture into that of the Community. 
Integration of Portugal's agricultural 
sector into that of the EC began March 1, 
1986. About 85 percent of Portuguese 
agricultural production will have a two- 
stage transition period of five years 
each—10 years in all. 


The major products in this group are 
grains, rice, dairy products, beef, pork, 
poultry and eggs, fresh fruits and 
vegetables and wine. For most of these 
products, EC rules are introduced 
gradually, and mostly after the end of the 
first period. 


Another group of products, such as 
processed fruits and vegetables, tobacco, 
seeds, mutton, goat meat and cotton have 
a one-stage, seven-year transition period. 
For these products, the EC regime for 
imports from third countries was adopted 
upon accession, while alignment of duties 
will be gradual. 


Fats and oils have a 10-year transition 
period with special limitations on seed oil 
consumption and oil and meal imports in 
effect during the first five years. 


Impact of Accession on U.S. Farm 
Trade 


The principal U.S. exports to Portugal— 
grains and oilseeds—are the very 
commodities that will be most adversely 
affected by Portugal’s membership in the 
EC. 


The Community's trade policy measures 
will erode the U.S. grain market and 
threaten to prevent the growth of 
Portugal’s oilseed imports. On the other 
hand, Portuguese accession into the EC 
should not necessarily have an immediate 
and direct adverse impact on U.S. exports 
of commodities such as cotton, tallow, 
hides and skins. 


In these cases, especially cotton, 
competition from other countries will 
generally outweigh EC trade 
impediments. (EC retaliatory measures 
against U.S. tallow imposed in response 
to U.S. action on EC steel do not apply to 
U.S. exports to Portugal.) 


For a variety of U.S. exports, this is the 
likely scenario for trade in the near to 
medium term: 


Grains and Rice 


During the first phase of the transition 
period, Portugal is formally committed to 
buying at least 15.5 percent of its grain 
imports from the EC. It also must grant 
import levy preferences to the EC on an 
increasingly larger portion of its grain 
imports. 


These preferences apply to the private 
portion of the grain trade, which is 20 
percent of total grain imports in 1986 and 
an additional 20 percent in each of the 
following years. 


Through 1990, the non-private imports will 
continue to be made by a government 
agency and will not be subject to an 
import levy. The levy on private imports is 
determined by bids on tenders opened by 
Portugal’s grain commission. The firm that 
offers the highest levy wins the bid. 








October 1986 5 


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6 Foreign Agriculture 





Since EC grain is higher priced than grain 
from third countries, importers of EC grain 
could not be expected to offer levies 
higher than those on imports from third 
countries. 


Therefore, a corrective element has been 
introduced to offset the difference 
between the EC and the world price. In 
addition, imports from the EC have a 


preferential element of 5 ECUs per metric 
ton. 


There is widespread feeling in Portuguese 
grain circles that the EC Commission 
could turn the corrective element into an 
additional preferential element. The first 
tender for 70,000 tons of corn by the 
private sector was opened in June 


In 1991, the Portuguese grain system will 
be fully integrated into that of the EC. 
Imports from third countries will pay the 
full EC levy while imports form the EC will 
be levy-free. 


Corn is the principal U.S. export to 
Portugal. Through 1985, the United 
States was virtually the sole supplier of 
Portugal's corn imports, but Argentina 
made some sizable sales in January 
1986. For the next few years, CCC credit, 
if available, should help the United States 
retain its predominant position in 
Portugal's corn import market. 


However, in about two years, Portugal’s 
use of corn could well drop by half from 
the 1984/85 level of 2 million tons 
because of increased use of non-grain 
feed ingredients and, more importantly, 
increased use of EC barley and feed 
wheat. Furthermore, corn from the EC will 
likely displace part of the imports from 
third countries. 


The Portuguese government aims to 
reduce the country’s dependence on corn 
and to re-orient livestock rations from corn 
to ingredients more prevalent in the rest 
of the EC. On the other hand, as Portugal 
tries to bring about this switch, for the 
next two or three years, there might be 
some limited export opportunities for U.S. 
barley and sorghum. 


U.S.-Portuguese Trade 


Portugal imports about 60 percent of its 
food needs and all its fiber 
requirements. With the help of USDA's 
Commodity Credit Corporation (CCC) 
credit programs, the United States was 
the largest supplier of agricultural 
products to Portugal prior to accession. 
In 1985, U.S. exports to Portugal were 
valued at $428 million, accounting for 
roughly 35 percent of the Portuguese 
import market. 


The U.S. share was down from nearly 
half of Portugal's total farm imports just 
a year earlier. One of the primary 
reasons for the drop was high U.S. 
prices due to the strong U.S. dollar. 


Although Portugal has less than 10 
million people and the lowest per capita 
income in Western Europe (about 
$2,150 per year), during most of the 
past decade it was a major and growing 
market for U.S. agricultural products. 


Two product groups—grains (including 
rice) and oilseeds—account for 92-93 
percent of U.S. farm product exports to 
Portugal. Cotton, tallow, hides and skins 
and tobacco account for another 6-7 
percent. 


The remaining 1 percent or so consists 
of some 125 products or groups of 
products of varying degrees of 
importance. 


The U.S. farm bill signed in December 
1985, a weakened dollar and quality 
control measures should help restore 
U.S. competitiveness in the Portuguese 
market. 


Nevertheless, while Portuguese farm 
imports should hold steady this year, the 
U.S. share of the import market will 
likely show a further drop because of 
new and serious trade impediments 
resulting from Portugal’s accession to 
the EC. 











Sales of corn gluten feed should also 
expand, if no policy restrictions are 
imposed. But the value of these 
anticipated gains, if they occur, will be far 
smaller than the anticipated loss in corn 
sales. 


In wheat, the U.S. position as the 
predominant supplier will be gradually 
eroded by EC competition. Canada also 
entered the Portuguese wheat market 
recently. In 1986/87, the United States 
should still be able to supply about 80 
percent of the import market if CCC credit 
remains available. 


For the time being, Portuguese imports of 
U.S. hard red winter wheat (normally 
some 250,000 tons a year) should not be 
affected by Portugal's accession to the 
EC. However, for the longer term, the 
unknown factor is whether wheat gluten 
from the EC wil reduce the need for hard 
red winter wheat. 


CCC credit, more competitive U.S. prices 
for the portion of imports not subject to 
the levy and promotional activity at the 
consumer level could help brighten 
prospects for U.S. rice, which have 
suffered considerably in recent months. 


Oilseeds 


Expansion of the Portuguese soybean 
market is threatened by EC-imposed 
quantitative restrictions on imports of 
oilseeds based on estimated Portuguese 
domestic consumption requirements for 
vegetable oils. These measures will be in 
place for the first five years after 
accession. 


Based on an estimated domestic soybean 
oil consumption for food use requirement 
of 42,000 tons for March-December of 
this year, Portugal will be allowed to 
import 240,000 tons of soybeans without 
restrictions in 1986. Imports above this 
amount are permitted provided that all the 
oil produced is exported. 








8 Foreign Agriculture 


The EC also has introduced quotas on 
imports of oilmeals for domestic use 
(110,000 from third countries and 118,000 
from the rest of the EC), but there are no 
restrictions on the domestic use of meal 
obtained from oilseeds crushed in 
Portugal. 


The United States maintains that the 
quantitative restrictions on imports of 
oilseeds and products cannot be justified 
under the General Agreement on Tariffs 
and Trade. It also fears that the domestic 
soybean oil consumption quota could 
become restrictive. Because of these 
concerns, last May the United States 
introduced quotas of its own on imports 
of some EC products, including 
Portuguese wines. 


However, the U.S. quotas will not be 
restrictive if the EC/Portuguese quotas 
are not. A future upward revision of the 
soybean quota is not excluded, as all 
quotas are subject to quarterly review. 


The EC maintains that all these 
quantitative restrictions will be eliminated 
at the end of 1990, but extreme U.S. 
vigilance will be required to prevent the 
quotas from becoming restrictive and to 
make certain that they do not set a 
precedent for curbs on U.S. exports of 
soybeans and products to the entire EC. 


In addition to policy constraints, the 
United States also faces strong 
competition from Argentina and Brazil in 


the Portuguese soybean market. The U.S. 


share of the market dropped from virtually 
100 percent in 1983 to less than 50 
percent in 1985. 


RABSLOSS 


It will be extremely hard to reverse this 
trend, but more competitive pricing and 
imaginative promotional initiatives might 
help. EC policies hinder overall market 
growth, but it will be up to the United 
States to regain the share of the market 
lost to foreign competition. The same 
considerations apply to sunflowerseed. 


Cotton 


Portugal is one of Europe's largest 
consumers of cotton and an important 
exporter of fabrics. Traditionally, the 
United States has supplied 10-14 percent 
of total raw cotton imports, but purchases 
of U.S. cotton came to a halt in the 
second half of 1985, mostly because of 
high U.S. prices. 








October 1986 9 





Traders are confident that prospects will 
start to brighten this fall. With more 
competitive U.S. prices, a weakened 
dollar and stepped-up promotional 
activity, the United States should be able 
to regain part of its lost market share in 
1986-87, and possibly enlarge it later on. 


Livestock and Products 


The main markets are likely to remain 
hides and skins and tallow, as well as 
sausage Casings and semen. U.S. hides 
and skins are preferred to those of EC 
and domestic origin. Most imports are 
made through brokers in the Netherlands, 
with little direct contact between U.S. 
exporters and Portuguese importers. 


Increased contacts and better credit terms 
(to match those offered by European 
competitors) could help boost U.S. sales. 
Imports of tallow vary widely from year to 
year, depending on local production. 


In 1986/87, domestic production should 
be relatively high, but there may be 
stronger overall demand for tallow for 
exports of soap to other EC members. 


Semen has been actively promoted. 
Though the total value is small, near-term 
prospects remain fairly good, and 
opportunities could develop for embryos. 


High-Value Products 


About 13 percent of Portugal's agricultural 
imports consist of processed products, 
but only about 3 percent of agricultural 
imports from the United States are in this 
category. 


Actually, the share of processed products 
in Portugal's total farm imports has 
declined during the past decade as 
Portugal has developed its own oilseed 
crushing facilities. 


Development of the market for high-value 
U.S. products will be an uphill struggle 
and a long-term proposition. Per capita 
income is low, and the country is small 
U.S. exporters will have to be willing to 
respond to rather small orders and to do 
business with small companies with 
relatively little experience in international 
trade. EC suppliers wil! have a built-in 
advantage. 


Furthermore, Portugal's entry into the EC 
could stimulate the development of food 
processing industries and production of 


Portugal at a Glance 
Land 


Some 92,000 square kilometers, 
including the Azores and Madeira 
Islands; 49 percent arable; 31 percent 
forest; 6 percent meadow and pasture; 
14 percent waste, urban, inland water or 
other. 


People 

Population: 10,095,000 (July 1986), 
including the Azores and Madeira 
Islands, average annual growth rate 0.5 
percent. 

Language: Portuguese 

Literacy: 80 percent. 

Labor Force: 4.5 million (1984); 37 
percent services; 36 percent industry; 27 
percent agriculture; 10.6 percent 
unemployment (December 1984). 
Government 


Official name: Portuguese Republic. 


Type: Republic, first government under 
new constitution formed July 1976. 


high-priced horticultural crops, not just to 
service the small Portuguese market, but 
principally to export to the rest of Western 
Europe. Nevertheless, with appropriate 
promotional and follow-up activities, a 
small market for typically U.S. high-value 
products might gradually be 

developed. Lj 





The author is U.S. agricultural counselor 
in Lisbon 


Capital: Lisbon. 

National holiday: April 25. 
Economy 

GNP: $19.2 billion (1984). 


Agriculture: Generally underdeveloped; 
main crops—grains, potatoes, olives, 
grapes for wine; deficit foods—sugar, 
grain, meat, fish, oilseeds. 


Major industries: Textiles and 
footwear, wood pulp, paper, cork, 
metalworking, oil refining, chemicals, 
fish canning, wine. 


Exports: $5.2 billion (f.0.b., 1984); 
principal items—cotton textiles, cork and 
cork produts, canned fish, wine, timber 
and timber products, resin, machinery, 
appliances. 


imports: $7.8 billion (c.i.f., 1984); 
principal items—petroleum, cotton, 
industrial machinery, iron and steel, 
chemicals. 


Major trading partners: 58 percent 
European Community, 9 percent United 
States, 2 percent Communist countries, 
18 percent other developed countries, 
11 percent less-developed countries. 














10 Foreign Agriculture 


By Scott Horsfall 


Exporters of California table grapes just 
experienced a banner year in overseas 
markets. Export sales reached a new high 
during the past marketing year, breaking 
the old mark set in 1982. Such success 
doesn't happen overnight. This month, 
Scott Horsfall, director of advertising and 
foreign market development of the 
California Table Grape Commission, tells 
FOREIGN AGRICULTURE how the 
Commission works to bring high-quality 
U.S. table grapes to consumers around 
the world. 


Q. How did the California Table Grape 
Commission come into existence and 
what role does it play in promoting 
exports? 


A. The California Table Grape 
Commission is the marketing and 
promotion arm of California's fresh grape 
industry. Established in 1968, the 


California Table Grapes 
Enjoy A Great Year 


Commission is a quasi-governmental 
organization which represents all of the 
state’s growers of fresh table grapes. 


The Commission's domestic advertising 
and merchandising programs are well 
known, but it has not overlooked the 
foreign marketplace. For almost as long 
as the Commission has been in 
existence, it has devoted an important 
part of its efforts to export promotion. Last 
season, we conducted promotional 
activities in 15 countries. 


Q. How many members belong to your 
organization and how does the 
Commission help them with 
exporting? 


A. The Commission represents all fresh 
grape producers in California, about 1,100 
today. Exports are promoted through 
merchandising programs in many 
countries throughout the worid. These 
programs are designed to increase 
demand for U.S. grapes in the target 
countries. 





Q. How substantial is the export 
growth of California table grapes in 
recent years? 


A. The table grape industry in California 
has just enjoyed its most successful 
export season ever. In 1985/86, some 
38,479 metric tons of grapes were 
shipped to export markets, 58 percent 
more than the previous year and 24 
percent more than the old record set in 
1982. 


The new record capped a decade of 
steady growth in table grape exports. Ten 
years ago, the U.S. grape industry 
exported just 15,985 tons of grapes to 
offshore markets. Since then, exports 
have grown at an average rate of 14 
percent per season 


Q. What triggered last season’s record 
export sales? 


A. Although we'd love to say that the big 
increase in exports came as a direct 
result of our promotional campaigns, we 
must realistically look at a few other 
factors as well. 


First of all, we saw a 30-percent reduction 
in the value of the U.S. dollar during the 
course of the 1985/86 marketing season 
This helped boost exports dramatically, 
especially in markets like Europe and 
Japan where the strong dollar has been a 
constraint on sales for several seasons 


In addition, the huge domestic crop 
resulted in a lowering of shipping costs 
throughout the season. This served as a 
further price incentive to foreign buyers 


And we promoted more heavily than 
ever in 1985/86. New programs in 
Singapore, Malaysia and Taiwan, as well 
as increased activities in Japan, Hong 
Kong and Panama, helped push exports 
to each of these markets to record levels 


Q. Where are your largest export 
markets? 


A. Hong Kong is far and away the leading 
export market for California table grapes 
In 1985/86, we shipped over 18,000 tons 
of grapes to Hong Kong—a 104-percent 
increase over the previous season 








October 1986 11 





To put this in perspective, the per capita 
consumption of California table grapes in 
Hong Kong last year was 7.7 pounds. In 
the United States, the per capita 
consumption of a// grapes—both domestic 
and imported—was only about 6 pounds. 


Our other leading markets are also in the 
Far East, the region which has shown the 
most sustained export growth in recent 
years. Singapore, Taiwan, Japan and 
Malaysia are all expanding markets for 
California grapes. 


In Central America, Panama continues to 
increase imports of fresh grapes despite 
economic and political uncertainties there. 


Q. What about markets in Europe and 
elsewhere? 


A. Last season, our exports to Europe 
reversed a five-year slide and began to 
show some renewed signs of life. 


The lower dollar and a general boycott of 
South African grapes led to the increased 
interest in California grapes. Exports rose 
from 642 tons in 1984 to 2,026 tons in 
1985/86. 


Although we still have a long way to go to 
recapture market shares lost in Europe 
last season's gains were a welcome 
beginning. Prospects for the immediate 
future also look very good in Europe 


Unfortunately, shipments to the Middle 
East failed to turn around. Despite lower 
prices and increased promotional 
activities, exports to Saudi Arabia and its 
neighbors fell for the fourth successive 
season. 


When the Middle East economies were 
doing well a few years back, shipments of 
California grapes soared. However, the 
continuing worldwide oil glut has put 
these economies on shakier ground, and 
we found it harder to compete with the 
inexpensive grapes which are grown in 
the region, even though our quality is far 
superior. 


In what was an excellent overall season 
for grape exports, this was the single 
negative development. 


Q. How would you describe the typical 
growth market for U.S. table grapes 
today? 


A. Generally, table grape exports are 
growing in countries that have stable, 
healthy economies. Because grapes are 
relatively expensive, many governments 
and importers consider them 

unessential,” which leaves them way 
down on the lists of required imports. For 
this reason, developing and third-world 
countries have not been good grape 
markets. 


Q. Who are our biggest competitors? 


A. It used to be that California's grape 
exporters enjoyed a marketing “window” 
in the autumn and early winter months. 
During this period there was little 
competition from other countries. 


This is no longer the case. Worldwide 
grape production has risen dramatically— 
as has the emphasis many countries now 
put on exports. 


California's “window” no longer exists. As 
a result, our growers are becoming more 
export-conscious. To compete 
successfully, we have to continue to 
provide the finest quality grapes available 
in the world. And we have to promote 
vigorously and effectively. 


In Europe, we compete during the early 
season with fresh grapes from Spain, Italy 
and Greece. These grapes are heavily 
subsidized by the European Community, 
which makes the competition harder for 
us. 


During the late fall and early winter 
months, competition is increasing from 
Southern Hemisphere producers, such as 
Chile, South Africa, Australia and 
Argentina. The growing seasons in these 
countries start earlier each year, and 
competitors, such as Spain, continue to 
improve their cold storage facilities. 


So, competition is going to become even 
more fierce in the future. 








12 Foreign Agriculture 


Q. How many other U.S. states 
produce and export table grapes? 


A. California produces about 97 percent 
of all fresh table grapes grown in the 
United States. The rernainder is produced 
in Arizona. It is safe to say that virtually all 
exports of U.S. fresh table grapes are 
grown in California. 


Q. How extensive have your market 
promotion activities been in recent 
years? 


A. We have seen a real expansion. In the 
past three years we have begun 
significant new programs in Taiwan, 
Japan, Panama, the Middle East, 
Singapore and Malaysia. With the 
exception of the Middle East, each of 
these campaigns already has begun to 
pay big dividends. 


In Panama, for instance, we began 
promoting table grapes on television and 
in local newspapers three seasons ago. 
Since then, each successive season has 
seen a new record for grape exports to 
Panama. 


Our goal was to publicize the fact that 
grapes from the United States are 
available at times other than the 
traditionally strong Christmas season. 
Since our TV campaign began in 1984, 
our exports to Panama during September, 
October and November have doubled. 


In Japan, where exports had long been 
sluggish, our new retail-oriented 
promotions have helped spur sales to 
record highs. We believe Japan is now on 
the verge of becoming a major U.S. grape 
market. 


Q. What are your promotion plans for 
the future? 


A. We plan to take full advantage of the 
current positive export environment by 
aggressively pursuing marketing activities 
worldwide. Our 1986 foreign marketing 
plan is our most aggressive ever, thanks 
in part to the increased funding we have 
received under the Targeted Export 
Assistance (TEA) program administered 
by the Foreign Agricultural Service. 


The TEA money is intended to help the 
grape industry overcome the negative 
effects that European subsidies and other 
unfair trading practices have on U.S. 
grape exports. It has allowed us to launch 
a major promotional campaign in Japan, 
and to considerably strengthen most of 
our other existing programs. 











As | mentioned, Japan appears poised to 
become a major factor in the grape export 
picture, and we're spending the largest 
portion of our TEA money there. The 
program targets both the retail trade and 
consumers, and it is the most extensive 
campaign we have ever undertaken. 


In Hong Kong, a new program of in-store 
promotions with the increasingly important 
retail trade began earlier this year. This 
program complements our ongoing media 
advertising campaign in this crucial 
market. 


In addition, this year will see a 
continuation—and, in many cases, an 
expansion—of existing market 
development programs in the Far East, 
Central America and Europe. However, 
we are putting our Mideast program on 
hold for the time being, at least until the 
market there becomes more promising. 


Q. How would you describe the export 


outlook over the next few years? 


A. Exports are going to become more 
and more important to California growers. 
As crops continue to increase, as imports 
continue to put pressure on our early and 
late-season crops, and as production in 
peak growing periods continues to prove 
too great for domestic demand, we must 
look more to exports to market our crop. 


The immediate future certainly looks 
positive. All the conditions that led to our 
big year in 1985/86 are still in place, and 
we anticipate another banner year. 
Perhaps it may be even stronger since 
quality is reported to be better this 
season. 


So, | would say the export outlook for U.S. 
table grapes is excellent. A favorable 
exchange rate certainly helps, but the 
strongest factor is that we have a product 
which is highly prized throughout the 
world. Foreign demand is growing, and 
that augurs well for the California table 
grape industry. & 





The author is Director of Advertising and 
Foreign Market Development, California 
Table Grape Commission, Fresno, Calif. 
Tel. (209) 224-4997. 








U.S. Sweets Exporters Face Long 
Road in German Market 


14 Foreign Agriculture 





By Hilton P. Settle 


West German consumers have a sweet 
tooth worth about $80 per person, but 
U.S. exporters who hope to cater to it 
should expect heavy competition from 
other European Community (EC) 
countries 


West Germany's per capita consumption 
of chocolate, candy, sweets, cookies and 
crackers, other snack articles and ice 
cream stands at about 51.3 pounds per 
person 


Per capita consumption levels were 
highest for chocolates, amounting to 
approximately 15 pounds per person. 
Consumption levels nearing 12 pounds 
were also reported for both candy and 
sweets, and cookies and crackers. These 
three food categories accounted for more 
than two-thirds of all 1985 snack food 
consumption in West Germany, and 77 
percent of the money spent on snack 
foods 


Sweets Sector Highly Competitive 


The sweets sector of the West German 
market is marked by stiff competition, 
which generally results in low prices on 
the domestic market, especially for 
chocolates. 


Germany itself produced about 1.4 million 
tons of chocolate, candy, sweets, cookies 
and crackers, snack articles and ice 
cream in 1985, up 2 percent from the year 
before 


About 19 percent of total production, or 
261,000 tons, is estimated to have been 
exported during 1985—an increase of 
nearly 18 percent over that of the 
previous year. The value of these exports 
increased 18 percent to almost $740 
million 


Nearly two-thirds of the exports went to 
other EC countries, primarily France, the 
Netherlands, Belgium, Luxembourg and 
the United Kingdom. The remainder went 
to another 125 countries around the 
world, of which the United States and 
Switzerland were the most important. 


At the same time, Germany also imports 
a sizable amount of sweets and snack 
items. Imports in this sector during 1985 
rose nearly 9 percent to 280,000 metric 
tons, However, nearly 80 percent of the 
imports originated from other EC 
countries, reflecting the high duties that 
third countries generally face in exporting 
to the West German market. 


Due to the heavy competition and 
relatively high import duties, U.S. 
companies interested in exporting these 
products should work with a potentially 
interested importer to obtain relevant 
market and tariff information. 


While some shipments of chocolates and 
candies from the Unites States are taking 
place, the greatest potential exists in the 
snack foods area and in supplying raw 
materials to product manufacturers in this 
sector. 


Germany imported 157,000 tons of raw 
ingredients, including nuts, dried fruits, 
fruit fillings, egg products, flavorings and 
spices in 1985. U.S. companies interested 
in exporting these products should 
contact the U.S. Agricultural Trade Office 
in Hamburg for lists of potential importers. 


Annual Sweets Fair in Cologne 


In addition, companies interested in this 
sector may wish to visit, or exhibit at, the 
International Sweets and Biscuits Fair 
which is held annually in Cologne 


A total of 15,500 trade visitors from 83 
countries attended the 1985 fair, where 
878 firms from 39 nations exhibited 


Exporters interested in participating in the 
International Sweets and Biscuits Fair in 
Cologne, West Germany, on Jan. 25-29, 
1987, should contact 


Mr. Hannes Bucerius 
Messe-und-Ausstellungs-Ges. m.b.H.- 
Koehin 

Phone: (221) 821-22-14 or 821-29-02 
Telex: 8873426 mua d 

Cable: Intermess Koeln & 





The author is U.S. agricultural trade 
officer in Hamburg, West Germany. Tel 
(011-49-40) 341-207 








Fact File: The Targeted Export ee 
Assistance Program 








The Food Security Act of 1985 authorized a new export promotion effort called the Targeted 
Export Assistance (TEA) Program. Under the TEA program, the U.S. Department of Agriculture 
(USDA) uses surplus stocks from the Commodity Credit Corporation (CCC) to partially 
reimburse agricultural organizations for export promotion programs they undertake. The 
specific goal of the program is to help producers who are disadvantaged by the unfair trade 
policies of competitor nations. USDA gives first consideration for TEA programs to agricultural 
products which have been found, under Section 301 of the Trade Act of 1974, to have had 
their exports adversely affected by a foreign government's policy. The law requires USDA to 
spend at least $110 million in funds or CCC commodities for each fiscal year from 1986 
through 1988. 


How the Program Works 


The TEA program is administered by the Foreign Agricultural Service (FAS) and funded 
through the issuing of CCC certificates under agreements between CCC and U.S. trade 
associations, state marketing organizations or private companies. These organizations conduct 
foreign market development projects for eligible commodities in specified countries. There are 
two basic types of TEA programs: a generic promotional program with nonprofit agricultural 
associations and state organizations, or a brand-identified or high-value promotional program 
with private U.S. firms. 


Program proposals may be developed by FAS, trade associations or state marketing 
organizations. Once approved, program agreements are drawn up and signed by the 
participating organization or private firm and CCC. The TEA participant then submits an activity 
plan to FAS describing specific activities and proposed budgets, which are reimbursable with 


CCC certificates. These certificates may be redeemed for commodities from CCC stocks or 
sold. 


When FAS approves the activity plan, the organization can request an advance of CCC 
commodity certificates equal to 40 percent of the dollar amount stated in the agreement. No 
further certificates are issued until the organization submits expense claims sufficient to offset 
the original advance. 


Afterwards, certificates are issued on a reimbursement basis up to the dollar limit in the 
agreement. 


TEA Programs in Operation 


As of August 21, USDA has approved proposals for 18 TEA programs worth nearly $70 million. 
Activities financed by the programs vary from commodity to commodity. For example, a 
program to promote exports of U.S. wood products to Japan has financed the construction of 

a three-story wood demonstration building featuring advanced timber technology. The 
demonstration unit will provide the focal point for a promotional and technical program. 


The goal of a promotion program targeted to Algeria is to promote exports of U.S. feed grains, 
soybean meal and dairy cattle to that country by helping the Algerians develop livestock and 
poultry production industries. The export assistance will be used to build model beef, dairy, 
poultry and sheep farms and a feedmill. 


Some TEA programs have been in operation for several months and have already produced 
results. For example, the TEA program for canned fruit, approved in April, helped increase 
exports by the next month. U.S. exports of cling peaches to Japan during May exceeded 
exports for the entire previous season and pushed the yearly total for Japan 176 percent over 
last year. 














16 Foreign Agriculture 





A brief summary of each TEA program is presented below. 


Potatoes: The National Potato Promotion Board is undertaking a $2-million program for frozen 
potatoes in the Pacific Rim countries of Japan, Hong Kong, Taiwan, Malaysia and Singapore. 


California and Arizona Citrus: Private U.S. firms are participating in a TEA program totaling 
$8.5 million to promote California and Arizona fresh and processed citrus in the Pacific Rim 
countries of Japan, Hong Kong, Singapore, Malaysia, Taiwan, Korea and New Zealand. 


Raisins: The California Raisin Advisory Board is conducting a $6.3-million promotion effort in 
Western Europe and Pacific Rim countries. 


Wainuts: The Walnut Marketing Board is spending $9 million on market promotion in Western 
Europe, Japan, Taiwan and Australia. 


Canned Fruit: The California Cling Peach Advisory Board is using $2.5 million to promote 
canned peaches and fruit cocktail in Japan and Taiwan in 1986 and has a $5.1-million program 
approved for Pacific Rim and Middle East countries in 1987. 


Almonds: Qualified industry participants will receive $900,00G to promote almonds in Western 
Europe, Japan and Korea. 


Wine: The Wine Institute is receiving $2.3 million to promote wine in Japan, the United 
Kingdom, Hong Kong and Singapore. 


Wood Products: The American Plywood Association is spending $1.95 million promoting 


wood products in Japan in 1986 and has a $653,000-program approved for the United 
Kingdom in 1987. 


Dried Prunes: The California Prune Board is receiving $4 million to promote dried prune 
exports to Western Europe. 


Florida Citrus: The Florida Department of Citrus is spending $4.6 million to promote fresh and 
processed citrus exports in Western Europe and the Pacific Rim. 


Feed Grains, Soybean Meal and Dairy Cattle: FAS and three organizations—the U.S. Feed 
Grains Council, the American Soybean Association and the Holstein-Friesian Association of 
America—will carry out a three-year, $9-million export market promotion program for feed 
grains, soybean meal and dairy cattle to Algeria. Funds will be used to develop livestock and 
poultry production in that country. 


Poultry and Eggs: The USA Poultry and Egg Export Council will work on a $6-million program 
to expand poultry and egg exports to Pacific Rim and Middle Eastern countries. 


Wheat: U.S. Wheat Associates will receive $1.1 million to expand wheat exports to developing 
countries. 


Washington Apples: The Northwest Horticultural Council will use $1.4 million to expand 


exports of Washington State apples to the United Kingdom and Scandinavian, Pacific Rim and 
Arab Gulf countries. 


Dry Peas and Lentils: The U.S. Dry Pea and Lentil Council will spend $2.5 million to expand 
exports of dry peas and lentils to the European Community, Colombia and India. 


Table Grapes: The California Table Grape Commission will receive $350,000 to expand 
exports of California table grapes to Pacific Rim countries. 


Feed Grains: The U.S. Feed Grains Council will spend $2.1 million to expand exports of U.S. 
feed grains and feed grain products (corn, sorghum, barley, corn gluten and malt). 


For more information on the TEA program, contact: Beth Callanan, FAS. Tel. (202) 447-5521. 








BSE SD 
Hong Kong Is Tops 
At Cracking U.S. Shell Eggs 





By Michael L. Humphrey 


While most people think of Hong Kong as 
a small market, it is, in fact, the largest 
export market for U.S. shell eggs. In 
1985, the United States exported over 7 
million dozen shell eggs valued at $4 
million for food use in Hong Kong. That 
market alone accounted for half of the 
volume and 40 percent of the value of 
total U.S. exports of shell eggs for food 
use. 


Hong Kong consumers enjoy a variety of 
shell eggs, including fresh hen and duck 
eggs, dyed eggs for special occasions, 
eggs cooked in salt or tea leaves, pigeon 
eggs and preserved duck eggs. Fresh 
hen eggs, however, are the most popular 
item. 


Each consumer in Hong Kong eats an 
average of 215 fresh eggs and 20 
preserved or dyed eggs each year. 
According to Hong Kong import statistics, 
the territory annually imports more than 
1.2 billion fresh shell eggs valued at $52 
million. In addition, Hong Kong produces 
4.5 million dozen hen, duck and goose 
eggs and 12 million dozen quail eggs 
annually. 


Chinese eggs dominate the fresh egg 
market with more than an 80-percent 
share. Thailand became the second 
largest supplier in 1984, following a nearly 
eightfold increase over 1983 shipments. 
The United States is currently the third 
largest supplier with a 7.5-percent market 
share in 1985—up from 6.8 percent in 
1984. Egg imports from the Netherlands 
also showed a dramatic increase in 1985. 


Chinese Prefer Brown Eggs 


The Chinese, who constitute 95 percent 
of Hong Kong’s population, prefer brown 
eggs over white. In fact, 90 percent or 
more of the fresh eggs consumed are 
brown. The major outlets for white eggs 
are hotels, western-style restaurants and 
fast food shops. 


Chinese consumers prefer the deeper 
color of brown egg yolks—often 
considered essential to the color of many 
Chinese dishes. Chinese-style 
restaurants also find that brown eggs are 
more popular with customers. 


Chinese eggs have a unique odor that 
can be an advantage or a disadvantage, 
depending on the consumer. 


To the Chinese consumer, the odor is 
indicative of a “good egg” and is an 
important reason, in addition to a price 
advantage, for the popularity of Chinese 
eggs. The odor, however, is a major 
reason why Chinese eggs are not 
accepted by hotels, western-style 
restaurants and fast food outlets. 


U.S. Brown Eggs Fail To Compete 


Virtually all eggs imported from the United 
States are white. This is due in part to the 
fact that the availability of European 
brown eggs at lower prices has made 
U.S. brown eggs uncompetitive. 


Packing and grading of U.S. brown eggs 
is also difficult because unlike U.S. white 
eggs, U.S. brown eggs vary markedly in 
size. Eggs from medium to extra large are 
packed in the same carton, resulting in 
frequent breakage of larger eggs. 
Wholesalers or retailers in Hong Kong 
also must sort the eggs by sizes, which 
creates extra work. 


October 1986 17 


Importers point out that with alternative 
suppliers now available, U.S. brown eggs 
cannot compete without improvement in 
the method of packing. 


In the white egg market, however, U.S. 
eggs have enjoyed a distinct advantage. 
Hotels, restaurants and institutions 
recognize the consistent high quality of 
U.S. eggs 


Another advantage is that U.S. eggs can 
be kept for a comparatively long time. The 
shipping time of 14 to 16 days from the 
U.S. West Coast, compared to 30 days 
from Europe, also has given U.S. white 
eggs a competitive edge. 


However, U.S. white eggs now face 
growing competition from European eggs. 
The U.S. market share of the hotel and 
restaurant market dropped from 92 
percent in 1981 to 58 percent in 1985, 
while the EC market share increased from 
zero to 28 percent in the same period. 
Because of this loss of market share due 
to subsidized competition, USDA recently 
announced an Export Enhancement 
Program to facilitate the sale of 44 million 
eggs to Hong Kong. 








18 Foreign Agriculture 


Structure of Trade 


Hong Kong has about 15 egg importers. 
The largest is the Hong Kong Eggs and 
Products Company, which monopolizes 
the import of Chinese eggs, both fresh 
and preserved. Others import from 
different sources. 


There are 42 wholesalers under the Hong 
Kong Eggs and Products Company. 
Wholesalers are located in three small 
areas in Hong Kong: Egg Street and 
Saiyingpun on Hong Kong Island and 
Kam Lam Street in Kowloon. 


Retailers, hotels and restaurants all buy 
from these wholesalers although some 
hotels and supermarkets buy directly from 
importers. 


At the retail level, eggs are sold through 
the wet markets, hawkers, grocery stores 
and supermarkets. About 70 percent of 
eggs are consumed in the home and the 
remaining 30 percent goes to hotels, 
restaurants, fast food outlets and 
bakeries. 


Most eggs on the retail market are not 
refrigerated and customers are allowed to 
choose each individual egg and examine 
the product under light. Some of the U.S. 
large white eggs, however, are offered in 
one-dozen packs in air-conditioned 
supermarkets. 


Major Suppliers Compete 


Major suppliers to the Hong Kong egg 
market are making greater efforts to 
increase the competitiveness of their 
products in order to maintain or expand 
market shares. 


To promote sales of Chinese eggs, the 
Chinese Eggs and Products Company 
recently held a “lucky draw’”—a popular 
promotional activity in Hong Kong—with 
prizes in solid gold for winning retailers 
Attractive posters are designed to 
promote both fresh eggs and preserved 
Chinese eggs. 


The European countries apparently are 
trying to increase sales by maintaining 
low prices. 


Although brown eggs continue to 
dominate the market, the rapid expansion 
of fast food outlets in the territory could 
help boost the demand for white eggs, 
making the prospects for shell egg 
imports brighter. & 





The author is the U.S. agricultural officer 
in Hong Kong. 








Taiwan Holds Opportunity 
For U.S. Citrus Sales 


By John T. Hopkins 


Taiwan's imports of citrus fruits have been 
growing steadily over the past few years. 
But U.S. exporters will have to work hard 
to counter aggressive competition from 
other suppliers. 


While oranges are Taiwan’s most 
significant citrus import, it appears that 
grapefruit (most of it from the United 
States) will overtake orange imports in the 
next few years if trends continue. U.S. 
lemons are also popular in this market. 


On a value basis, the United States 
supplied the bulk of Taiwan's citrus 
imports last year, accounting for 
approximately two-thirds of the oranges, 
nearly three-fourths of the grapefruit and 
virtually all of the lemons imported. 


Grapefruit Shows Strong Growth 


Taiwan's imports of grapefruit have 
shown the strongest growth among all 
citrus imports in the past four years 
Taiwan imported more than 1,300 metric 
tons of grapefruit in 1985, about 17 times 
the level of only three years earlier 


Local production of grapefruit has also 
grown, reaching nearly 2,600 tons last 
year. Unlike oranges, locally produced 
grapefruit do not present much 
competition for imported fruit because of 
a short production season (October- 
December) and a taste that is slightly 
more sour than imported grapefruit 


Two or three years ago, grapefruit was 
almost unknown in Taiwan and the 
country itself produced only about 500 
tons. But during the past year, sales have 


October 1986 19 


surged as the fruit was touted in 
newspaper articles as a “health” or diet 
food. The result has been nothing short 
of spectacular. 


One importer has stated that two years 
ago he was importing only 20 40-foot 
containers a year. That number has 
grown to 30 each month. In general, most 
importers in Taiwan predict continued 
very strong growth for grapefruit this year. 


Most of the imported U.S. grapefruit 
comes from California, with smaller 
amounts from Arizona and Florida. The 
type imported from the United States is 
primarily Ruby Red; South Africa’s Star 
Ruby is considered to be tough 
competition for the U.S. variety and is 
backed by an aggressive marketing 
campaign by South African exporters. 








20 Foreign Agriculture 





The Florida grapefruit are famous in 
Taiwan for being slightly “ugly” in 
appearance (due to easy scarring), but 
very delicious in taste. Unfortunately, the 
Florida growing season comes a little too 
early in the year for Taiwan, and ocean 
freight is too high, according to importers. 


Interestingly, the biggest competitor for 
grapefruit sales in Taiwan is not local 
grapefruit, but local watermelon, 
according to importers. In contrast to the 
United States, where grapefruit is 
associated highly with breakfast, 
grapefruit in Taiwan is considered a cool, 


juicy snack for summer afternoons, similar 


to watermelon. 


This year, the local watermelon crop is 
expected to be bad because of untimely 
rains, which should encourage grapefruit 
imports. 


Orange Output Surpasses Imports 


Unlike grapefruit, local production of 
oranges far outstrips imports. Oranges 
are the only citrus fruit exported in 
significant quantities. Production of 
oranges and orange-like citrus (Valencias, 
satsumas and tangerines) accounts for 
about two-thirds of Taiwan's total citrus 
output. 


Orange imports show a strong correlation 
to local production. Imports this year are 
expected to drop because of a very good 
local orange crop (up 18 percent from last 
year), as well as poorer crops and higher 
prices in the United States. 


South Africa is expected to take a larger 
share of the market than in the past 
because of some new marketing 
techniques. For example, in the past, 
imports were paid for with local currency. 
This year, however, South African 
suppliers have agreed to share profits or 
losses with local importers and will cover 
up to one-half of any losses incurred, 
according to one importer. 


South Africa supplies good-quality 
oranges similar to those from the United 
States, although last year’s shipments 


were considered too sour. South African 
oranges are lighter in weight and less 
juicy than those from the United States, 
but they are cheaper and reportedly have 
a longer shelf life. 


Slow but Steady Lemon Imports 


Lemons are not commonly used in 
Taiwan's cooking; most consumption is 
used in production of lemonade and 
similar drinks served at market stalls. 
Domestic production has been gradually 
decreasing while imports have shown a 
slow, but steady, increase. These trends 
are expected to continue over the next 
few years. 


The United States has consistently held a 
larger share of the market (94 percent in 
1985) for lemons than for any of the three 
types of citrus Taiwan imports. 


Tariffs, Freight Are High 


Fresh and chilled lemons, oranges and 
grapefruit all face 50-percent import 
duties (c.i.f.) in Taiwan, except during 
March 1-September 30, when the duties 
are reduced to 25 percent. 


Increases in ocean freight rates are 
unnaturally magnified by tariffs because 
duties are applied to the c.i.f. cost of 
goods. Since last year, ocean freight on 
one container of citrus (West Coast to 
Taiwan) has risen from $3,000 to $3,500, 
according to an importer. 


Prices for most citrus in Taiwan are now 
somewhat depressed because of heavy 
local production in 1985 


Non-Tariff Barriers Still Hamper 
Imports 


Besides the 25-50 percent import duty, 
improvement in several other areas (on 
both the Taiwan and U.S. sides) could 
boost imports, according to several 
importers in Taiwan. 


Importers must first apply to Taiwan 
authorities for permission to import a 
certain amount of fruits. The authorities 
can, and sometimes do, refuse 
permission to satisfy opposition from local 
growers. 











According to regulations governing 
payment of import duties, smaller 
shipments of goods are allowed more 
latitude in discrepancies between what 
the invoice says the goods cost and what 
the authorities estimate they should cost. 


This forces importers to break large 
shipments into smaller deliveries so that 
a 10-container order for citrus might have 
to be broken down into five deliveries of 
two containers each, on separate vessels, 
with separate documents, etc. This 
increases shipping and handling costs to 
importers. 


Many local importers are forced to buy 
their fruit through U.S. West Coast 
middlemen because importers say that 
large U.S. suppliers are unwilling to ship 
smaller orders necessary to break into a 
growing market. 


This system, along with the long shipping 
time between the West Coast and 
Taiwan, means that it takes three to four 
weeks for goods to arrive after orders are 
placed. This affects competitiveness and 
freshness of U.S. fruit. 


Personal Contacts Are Important 


Personal contacts are very important 
when doing business in Taiwan. For 
example, representatives of Japanese 
and South African companies make 
frequent selling trips to Taiwan. These 
representatives work closely with 
importers, even the smaller ones, to 
supply fruit with taste and other 
characteristics suitable to the local 
market. 


Local importers are interested in obtaining 
more information from the United States 
about the fruit available in different 
seasons from various areas, as well as 
the fruit’s characteristics (juiciness, 
sweetness). = 





The author is chief of the agricultural 
affairs section at the American Institute in 
Taiwan in Taipei. 





October 1986 21 


United States Supplied Bulk of Taiwan’s Citrus Imports in 1985 





Percent 


Lemons 
Total imports=323 metric tons 


United States 93% ————_ 


South Africa 7% 





Oranges 
Total imports =3,358 metric tons 


United States 61% 


South Africa 25% ——————— 


Swaziland 11% - 





israel 3% 





Grapefruit 


Total imports =1,329 metric tons 


United States 72% —— 


Swaziland 28% — — 








Country Briefs 


22 Foreign Agriculture 





China 


Wood Imports May Drop 
As Domestic Supplies Rise 


Chinese wood imports could drop more than 10 percent in 1986. This decline—the first in 
seven years—is the result of increased domestic supplies, a high 1985 import level and 
reduced foreign exchange availability. However, China will be unable to attain self- 
sufficiency in wood over the next 15 years and the log import market is bright, especially 
for traditional suppliers such as the United States. The Soviet Union, Chile and Canada 
will continue to be the principal U.S. competitors. The outlook for lumber imports is 
unclear and increased market development work is needed in the processed wood 
products area. 


The Chinese wood products sector is changing. The break-up of the state monopoly in charge 
of log purchasing and marketing has led to changes throughout the production, processing 
and distribution systems. The past year has seen an increase in free-market prices and in the 
volume of logs brought to market, especially from collective and privately run forests in the 
south and southeast. Excessive cutting continues to worry Chinese foresters, and the 
establishment of fast-growing tree plantations is a priority project. 


Demand for wood in both urban and rural areas continues to grow despite restrictions on 
wood use in certain types of construction. The promotion of substitute building materials 

has been effective, but continued substitution will depend somewhat on relative price 
differences among wood, concrete, plastic and steel. Increased rural disposable income tends 
to be invested in new and larger housing. There probably will continue to be 9-10 million rural 
home starts each of the next five years. 


Demand for furniture is also growing, as is demand for furniture inputs such as lumber, 
wood-based panels and veneer. Wood-based panel production is being emphasized 
because it uses wood wastes and is suitable for furniture —David Schoonover, U.S. 
Agricultural Counselor, Beijing. 





Hong Kong 


Australia, New Zealand 
Try New Meat Packaging 


Sales of fresh meat from New Zealand and Australia have been given a boost in Hong Kong 
by the introduction of controlled-atmosphere packing. These meats were heavily promoted 
during June by Wellcome Supermarkets, the second largest supermarket chain in 

Hong Kong. 


The controlled-atmosphere packing process involves hygienically sealing the meat in a 
bacteria-reduced package. The meat is dated and can be kept fresh for four to five days 
under refrigeration. These meats are particularly appealing to Chinese customers who 
generally prefer fresh rather than frozen meats. The beef, lamb, pork and poultry 
packaged this way are priced competitively with other fresh meats. 


Beef and lamb from New Zealand and Australia can be flown in daily and packed locally for 
same day sales. While pre-packaged fresh meat will displace some frozen meat sales, it is 
also likely to displace sales from the fresh meat case. The availability of meats which can 
be kept fresh at home for several days should increase overall fresh meat sales in 
supermarkets. 


The sale of controlled-atmosphere packaged beef in the major supermarket chains is not 
likely to have an immediate impact on U.S. beef sales. U.S. beef, due to its high price, is 
generally not available in these outlets. However, in the longer run, the freshness factor of 
these meats could enhance the quality image of Australian and New Zealand meats which 
have gradually been replacing U.S. beef in the Hong Kong market. 


New Zealand beef, in particular, poses a growing threat to the position of U.S. beef in the 
restaurant sector. The possibility of using chilled containers for New Zealand beef 

would sharply increase New Zealand's competitiveness. Currently, ocean rates for 

U.S. beef compare favorably with ocean and air rates from Oceania, although air freight from 
the United States is higher. — Michael L. Humphrey, U.S. Agricultural Officer, Hong Kong. 








~== Foreign Agriculture 


Do you need 


information 
about 


Overseas markets and buy- 


ing trends? 


New competitors and 
products? 


Trade policy developments? 


Overseas promotional 


activities? 





—————) 


Foreign Agriculture 


Foreign Agriculture | 
se 


A Business Perspective 
Exporting to Egyot 


i 


Ht aly Usd tt 
oe 
HH RH 
tt 





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SRA SSSR AAR Ee RRR BE |_| 
Street Address 
Sag se 
City 
Benet 
Country 


BRSevee 


Reet BREST Nee 





BBGrseant 





SEBEL E Pa eee 


State Zip Code 


Ll Ui. 








Bake 











United States 
Department of Agriculture 
Washington. D.C. 20250 
OFFICIAL BUSINESS 


Penalty for Private U 





A alicem OE TSS 

Bulk Rate 

Postage & Fees Paid 
USDA-FAS 

Permit No. G-262 











FA SERIAZ00SBISSDUEOO3R 
SERIALS PROCESSING 

XEROX UNIV MICROFILMS 

300 N ZEEB RD 

ANN ARBOR MI 48106