Apple exporters take on Indian tariffs, methyl bromide proposals

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Apple exporters take on Indian tariffs, methyl bromide proposals

For almost a year now, Indian authorities have been reviewing proposed health regulation changes requiring methyl bromide fumigation for fruit imports, regardless of supplying countries' disease-free origins. Exporters are hopeful Indian lawmakers can be persuaded to take a more practical approach, as the measures would add to already hefty tariffs, which stand at 50% for apples. The pome fruit has been a star in India in recent years, with the U.S., New Zealand and Chile among the top providers. Representatives from these three countries get to the core of what it takes to get over these obstacles.

Washington State Apple Commission president Todd Fryhover says his U.S. state shipped just 20 containers of the fruit to India in 2000, but exports have risen significantly since then.

"Last year was the first year that we eclipsed four million bushels of product going into that market, and quite frankly that’s pretty astounding when you look at the 50% duty and some of the other hiccups that are happening like what's been proposed with methyl bromide," he tells

"At the beginning when we started to go into India there were concerns of Washington taking movement away from the local product, but in fact what’s happened is we’ve moved in concert together.

"As our product comes in at a very expensive price, obviously with this 50% duty, the Indian product has managed to move up underneath us and take a better position with the consumer as far as net returns back to the growers."

Washington is known for its strong brand awareness campaigns in the South Asian nation, even going so far as to sign up as a sponsor of the Chennai Super Kings cricket team this year. Fryhover says part of the success has also been in the durability of U.S. apples, that have proven to hold up for longer than the domestic product.

His comment is echoed by Northwest Horticultural Council vice president Mark Powers, who highlights many domestic apples - mostly grown in the northern areas of Himachal Pradesh and Kashmir - can't make it to the country's south due to infrastructure and cold chain limitations.

"Regionally within the country there are other challenges that the domestic industry faces, while we’re actually able to send the product there in excellent condition year-round given modern shipping technologies," says Powers.

However, despite the huge effort that has gone into building up the Indian apple market, the U.S. strategy is still lacking on the trade agreement front.

"I think the challenge obviously for us in the U.S. is there are no current free trade agreement negotiations with India. Everybody was counting on the World Trade Organization Doha Development Agenda as the next big WTO round to make progress on getting countries’ tariffs down across the board, and that obviously is basically dead.

"The multilateral solution on the tariff run resides on the WTO and that isn’t going anywhere in the near term, and the bilateral tariff rate reduction issue is complicated because if they reduce the tariff on apples they have to reduce it for everybody, unless they do it under an FTA (free trade agreement).

"The domestic politics surrounding the apple tariffs in India are very sensitive. They have a significant apple industry in terms of presence in their country, and it’s not a tariff that’s going to be reduced lightly; it's a very difficult task but we need to keep on after it."

NZ talks

While the U.S.' short term negotiations are "basically dead", New Zealand's are alive and kicking.

Members of the Pipfruit New Zealand executive team recently visited India as part of a trade mission led by Minister for Primary Industries David Carter, in a bid to further free trade negotations that have been going on since 2010.

Pipfruit NZ chief executive Alan Pollard tells his country shipped just under one million cartons to India last season, represents growth of more than 42%.

Pollard says the latest visit was an NZ Inc type mission with key players across the agricultural and horticultural system, including some refrigeration companies.

"The FTA of course is in the hands of government. We’re optimistic, we got a really good response while we were up there from the state governments and the national government, but as always they are painstakingly long discussions and everyone has positions they want to protect," says Pollard.

"How long is it going to take? I don’t know, but I’d like to think that we’ve improved the dialogue by being there."

Pollard is understanding that Indian growers want to protect their industry, and believes New Zealand can help them do that.

"At the moment they’re producing about 5 (metric) tons a hectare in productivity, and they’ve got challenges around root stocks, logistics with cool chains and transportation, let alone on-orchard science and processes.

"So there’s a lot that we can do working with them to try and help boost some of their productivity, and the prize for us in the end is hopefully better access, preferably with a tariff-free window.

"We offer no risk to the industry as we’re counterseasonal, unlike other exporters there. We come in when there are very few Indian apples in the market at all."

He says the industry's relationship with Indian apple growers goes back to the 1990s, while Crown research institute Plant & Food Research from New Zealand has "done quite a bit of on-orchards work up there", assisting growers with production methods like pruning techniques.

"The industry understands what it is we have to offer. It's early days but we’ve opened dialogue with the associations, primarily so far in Himachal Pradesh, looking at what sort of things they think would be important to them.

"A lot of what they've been saying is that it’d be nice to have some kind of on-orchard activity, so we need to look at what capabilities we have for potential partnerships with some growers there, and whether that would also involve bringing people out to New Zealand to experience our growing and packinghouse and cold storage facilities here.

"There are huge opportunities to make even the smallest difference, so they understand that, and the response we’ve had so far has been very encouraging."

The view from Chile, in New Delhi

Chilean agricultural attaché in India Rodrigo Gallardo tells his country signed a partial scope agreement (PSA) in 2007, and in the five negotiation rounds since the subject of reducing apple tariffs has been "off the table".

"The unions or associations of apple producers in the states of Himachal Pradesh and Kashmir have much influence in the Indian Ministry of Agriculture, and therefore the political lines this ministry delivers to the Ministry of Trade and Industry - the institution in charge of bilateral and multilateral negotiations," says Gallardo.

"Historically India has argued that apples are an extremely sensitive a product because a great amount of family income depends on their cultivation and trade in the aforementioned states.

"Although both governments have recently agreed to start FTA negotiations in the near future, there are no indications that India will change its policy with respect to local apple industry protection, so a tariff preference for this product is very difficult to get."

Methyl bromide comments

Powers says the Indian government has received comments from around 12 trading partners in response to the methyl bromide proposal.

"The U.S. government has submitted technical comments in response to India’s notification to trading partners - it will take some time to work through and evaluate, and my understanding is that process is underway," he says.

Gallardo says the information received from Indian authorities has been unclear to date, because in his opinion the debate has been caught up between the technical and the political.

"We are monitoring the issue from close by and hope to have good news in the short term.

"The expectation is that it won't take effect, or that is to say, the Indian authorities won't apply it. To date it has not gone into effect and we are awaiting the official response to the Chilean technical comments."

However, the Chilean embassy has recommended all importers renew their import permits so they can cover the 2012-13 season.

"The import permits being emitted have incorporated the "old" requirements that don't include bromide fumigation."

Pollard says New Zealand authorities have delivered enough information to Indian authorities for them to know his country is not a risk to their horticultural industry.

"The Indian authorities have contemplated introducing compulsory methyl bromide for all fruit exported to India, and that’s because they have a fear of pests and things like that.

"We’ve been in good dialogue with them because New Zealand’s fruit production processes make us one of, if not the safest fruit in the world.

"To contemplate a methyl bromide treatment for us, we think would be unreasonable, and there’s been some good dialogue going on between the authorities in India and New Zealand on that."

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