USE PRODUCT STANDARDS AS 'WEAPON'

Apple exporters hope to stay ahead in quality race

by Maya Kaneko

HIROSAKI, Aomori Pref. (Kyodo) Japan, a major food importer, has recently begun small-scale food exports in an effort to make its heavily protected farm sector more competitive. But one of the country’s most successful fruit exporters says the country needs to establish internationally recognized food quality standards as a “weapon” in global competition.

For Hisanobu Katayama, who owns an apple orchard in Aomori Prefecture, exporting his fruit to Europe and neighboring parts of Asia is nothing special. Wherever the market, he sells his apples if he can make a profit.

“Unlike industrial goods, we cannot produce apples of uniform size and quality. So, depending on consumers’ preferences, we select those that suit their needs and sell them for a profit,” said Katayama, 45, director of Katayama Ringo Co. based in Hirosaki.

His company sells about 10 tons of small apples annually to major supermarkets in Britain, including Marks & Spencer and Safeway, and larger ones in major urban markets in China, including Beijing, Shanghai and Dalian. Shipments to China, which began in 2004, are expected to reach 20 tons this year. Katyama also exports to Taiwan.

Consumers in different markets like their apples in different sizes. For instance, small apples do not sell in Japanese stores, trade at low prices — as low as 1 yen apiece — and are used to make juice. But at British supermarkets, four small apples retail for about £2 (400 yen), bringing a net profit of 25 yen per apple to the exporter, Katayama said.

In China, on the other hand, where wealthy people buy high-quality apples as gifts, large apples fetch extremely high prices. The most expensive Daikoei brand apples carried a hefty 180 yuan (2,600 yen) price tag for a single apple at a Dalian department store during this year’s lunar New Year holiday, Katayama said.

“In the Chinese market, we sell the image of Japanese apples as the best in terms of appearance, color and taste. They are like Chanel or Hermes products,” Katayama said. “We should be careful not to tarnish the Japan brand by shipping cheaper, low-quality apples.”

Katayama said his company began exporting in 1999, but not with an eye to expanding the business globally. It was a desperate measure, taken after upheaval in the domestic market in 1997 and 1998 caused apple prices to nosedive.

“We would have dumped apples in mountains or rivers, but I hit upon the idea of selling them abroad,” Katayama said. Exports now amount to between 3 percent and 6 percent of his company’s total sales.

Katayama worked for a year at an orchard in Spain in the early 1990s to teach local growers the Japanese technique of covering each apple with a paper bag while growing the fruit. The operator of the orchard was also a fruit trader, shipping products to Britain and Northern Europe. Katayama took advantage of those connections to start his own export business.

Fruit including apples, pears and mandarin oranges figure prominently in the government’s recent campaign to promote Japanese food exports. Apple exports from Japan have jumped 482 percent in value terms since 2000, reaching 2.9 billion yen in 2004, according to government statistics.

The government-backed Japan External Trade Organization is helping growers sell their fruit overseas. JETRO has put on trade fairs touting Japanese fruit in Thailand, Singapore and France. This year, it is exploring new markets in the United Arab Emirates, Poland and Hungary.

“Targeting the affluent in Asian economies, where income levels have been rising, and oil-rich countries, we can sell items under the slogan of safety and high quality,” said Hiroshi Sano, deputy director of JETRO’s agriculture division.

Sano noted that Fuji apples, originally a Japanese brand, have become commonplace. Now Japanese apples can’t compete with cheaper apples grown and marketed in China and elsewhere as Fujis.

“We should be careful about protecting trademarks concerning agricultural produce,” he said.

Katayama said support from the government and JETRO helps growers at the initial export stage, but does not provide exporters with enough information on costs and procedures, for example.

In 2002, European retailers introduced the Euro-Retailer Produce Working Group Good Agricultural Practices (EUREP GAP) quality-control standards to ensure food safety, prompted in part by the outbreak years earlier of mad cow disease in Britain.

As an apple exporter to the British market, Katayama Ringo had to obtain a certificate showing his produce met the standards. He did so in 2004, after completing a painstaking inspection process, but he had no assistance from the Japanese government with the certification. The company also has to pay fees every year to renew its EUREP GAP certification.

“China, Chile and other nations have recently established their own (quality) standards and aim to make the standards compatible with EUREP. Unless Japan follows suit, we will be at a disadvantage in global competition,” Katayama said.

Japan does not have a standardized quality certification system for food products, although major retailers, including Aeon Co., have introduced their own standards.

Katayama founded an association with other farmers last year to establish Japan GAP standards. With the introduction of GAP standards in China that are compatible with EUREP GAP, Japanese consumers may begin to see Chinese farm imports as high quality, which would pose a competitive threat to domestic producers, Katayama warned.

He also said Chile, for example, may export low-quality salmon or farm products to Japan because the country lacks GAP standards. South Korea, Mexico and Kenya have also created their own quality standards.

“The Chinese government has played a leading role in setting the China GAP. If it becomes the standard in Asia, we may be obliged to present Chinese documents when we ship to Southeast Asia,” Katayama said, urging the central government to support his efforts to create Japan GAP standards.