Apr 7, 2007

California Governor Promotes Grapes to China

On a recent trade mission to China, California Gov. Arnold Schwarzenegger used his star power to promote California grapes as well as other state produce.

“He’s very popular in the Far East and he used his star power to talk about why it’s important to eat California farm products,” said Kathleen Nave, president of the California Table Grape Commission. “All the media attention he got was just unbelievable and his consumer appeal was amazing to see.”

Schwarzenegger drew hoards of Chinese wholesalers and retailers to local grocery stores, where he sampled grapes and other California produce, Nave said.

“We also had permission from him to use his image in some of our promotional materials, which was also a big boost,” Nave said.

In 2004, California exported $456 million worth of farm products to China, making it the state’s fifth largest overseas market. With a population of 1.3 billion people and a growing middle class, China is an attractive market for California producers, who are looking to export even more product there. Right now, citrus, grapes, wine and raisins are the main California agricultural products that have access to China. California farmers are hoping to get other produce into the country, such as plums, strawberries and nectarines. The Chinese market has been open to California grapes since 1997.

“China is one of our top 10 markets,” Nave said. “Originally, we opened the market with large seeded grapes, but now they’re taking a lot of different varieties in seeded and seedless grapes.”

The concern now, though, is that Chinese farmers are beginning to grow California grape varieties, such as seeded Red Globes and seedless red Crimsons, which could usurp the California market share in China as well as in other neighboring countries, Nave said.

“They’re growing a lot more grapes in China than they used to, and so we need to try to maintain the market there as long as we can,” Nave said.

Since California grapes are more expensive to grow and ship to China, growers need to be able to charge a premium for them, Nave said. One thing the industry is hoping to do to lower shipping costs is open a new port to help expedite shipments. Right now, six Chinese ports are open to California grapes. If a seventh were open in southern China in Shenzhen, this could help lower shipping costs, said Susan Day, vice president of international marketing for the California Table Grape Commission.

The other thing California growers are hoping to do to reduce shipping costs is to lower Chinese tariffs on U.S. agricultural goods. Chinese tariffs are now at 12 percent, Nave said.

“We’d like to see that come down to zero through our bilateral trade negotiations,” Nave said. “It was 45 percent in China when we first opened the market, and it’s been dropping since then, but we’d like to see it come all the way down.”

Exports are a significant part of the California grape market, Nave said.

“If we include Canada, there are years we’re talking about shipping 35 to 40 percent of our volume,” he said. “Grapes are a growing industry. Every year, we do a little more volume and we’re always looking to expand existing markets.”

This year, California is expecting to produce 92 million 19-pound boxes, which will be the second largest crop on record, Nave said. The largest crop was 95 million.