A free trade agreement was signed between the two countries in 2014, with Australian cherry exporters to be subject to zero-tariffs in China from Jan. 1, 2019.
Huang Xianhua, general manager of Shanghai Oheng Import & Export Co., told Fresh Fruit Portal Australian cherries would therefore be on a level playing field with Chile in terms of tariffs.
Chile signed an FTA with China in 2005, and sends the vast majority of its cherries to the Asian country.
Xianhua added that Australia’s higher production costs compared to Chile would be partially offset by its relative proximity to the market, while will save freight costs and make the country more competitive.
Australia is expected to produce a record 18,000 metric tons (MT) of cherries this year, with a little under half due to be exported, according to a USDA forecast. Meanwhile, Chile is expecting to export similar volumes to last season, which saw a huge export rise to 180,000MT.
And according to Xianhua, Chile faces numerous challenges with cherries.
“The processing capacity during the peak of harvest is insufficient, production is easily affected by weather conditions, and the quality is inconsistent, but they are hesitant to invest in protection such as rain nets if the investment it too big,” he said.
U.S.-China trade war
Xianhua also said that the U.S.-China trade war has led to a poor performance of U.S. cherries in the Chinese market this year. China has risen tariffs on the fruit by 40% over recent months, with the latest round coming into effect on July 6.
“This is an enormous cost and is unable to completely be shifted to the consumer end. In the end, the importers have to pay this extra bill,” he said.
Many importers stopped bringing in U.S. cherries while those who continued have run into difficulties, he said.
Other origins have been unable to fill the supply gap, he added.
“There is no [country] that can fully replace it. Canada’s supply is still limited, and Central Asian’s season is too early, also the quality is not good enough and they also have to worry about cold treatment,” he said.