U.S. oranges take China by storm, raise alarms

SHANGHAI, China (Reuters) -- China tasted the bitterness of powerful foreign competition when it opened its farm product market just a sliver to allow U.S. citrus imports.

At nearly five times the price of local oranges, bright, shiny American oranges are snapped up as soon as they land on China's shores.

The stunning success of the sweet American oranges has provided a wake-up call for China's farm trade.

China is the world's third largest citrus grower, behind the United States and Brazil.

But both in terms of variety and yields, Chinese oranges can not compare with those of other top producers, said Jiao Bilin, deputy director of the Citrus Research Institute at the China Academy of Agricultural Sciences.

Chinese growers face greater risk of price fluctuations because orange harvests are all bunched in two to three months of the year, while U.S. oranges were harvested nearly year round, he said in an article in the Beijing Youth Daily.

Cheng Guoqiang, an economist at the Agriculture Ministry, said there was an integrated network linking U.S. orange growers to packaging, marketing and global sales.

But in China the production and distribution of farm products is compartmentalized. The Agriculture Ministry deals only with production, while the Internal Trade and External Trade Ministries oversee domestic sales and exports, he said in the Nanfang Weekend newspaper.

"The bottleneck from production to distribution puts China at a disadvantage when competing with foreign farm goods," Cheng said.

Roger Zhang, a customer liaison officer representing California-based citrus cooperative Sunkist, said more than 30 containers of oranges have made it to the Chinese market since China lifted a ban on U.S. citrus fruit last year.

A 40-foot container holds about 17 tons of oranges.

Retailing at about 20 yuan ($2.40) per kg, Sunkist oranges appeal to China's affluent urban consumers because they are juicy and exotic, he said.

"The California oranges are basically a different fruit," Zhang said. "The domestic oranges will always have their markets."

In Shanghai's Hualian supermarket, California navel oranges wrapped in cellophane sit among imported kiwi fruit and apples as well as domestic plums and other seasonal fruit.

"American oranges are selling fairly well," said a member of the store's fresh produce department. "If you want to eat oranges in summer, they're the only ones you can find."

Last month, Sunkist launched a television advertisement featuring a sun-drenched California beach and lush orange groves stretching to the horizon that delivers a message of wholesome quality.

Sunkist will soon expand the advertising campaign to billboards and buses.

The advertising is subsidized heavily by the U.S. Department of Agriculture. Under the rules of the World Trade Organization, a member country cannot subsidize farm exports, but helping pay for promotion is allowed.

China lifted the ban on U.S. citrus imports last year in a bilateral agreement that also opened the Chinese markets for wheat from the U.S. and liberalized meat import restrictions.

Citrus fruits are subject to 40 percent import duty. That will drop to 10 percent in five years after China joins the World Trade Organization.

U.S. trade sources have estimated that California orange sales in China could total $500 million in five years.

($1 - 8.27 yuan)

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