Required Report - public distribution

**Date:** 9/15/2005

**GAIN Report Number:** CA5063

CA5063

**Canada**

**Fresh Deciduous Fruit**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Gary C. Groves

U.S. Embassy

**Prepared by:**

George Myles

**Report Highlights:**

This report summarizes the production prospects for the 2005 Canadian
apple and pear crops and highlights trade and policy developments within
the tree fruit sector that impact U.S. apple and pear exports to Canada.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Ottawa \[CA1\]

\[CA\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Section I. Situation and Outlook 4](#section-i.-situation-and-outlook)

[Apples 4](#apples)

[Planting Trends and Varietal Shifts
4](#planting-trends-and-varietal-shifts)

[Pears 5](#pears)

[Section II. Trade 6](#section-ii.-trade)

[Apple Imports 6](#apple-imports)

[Fresh Apple Imports from the U.S., by State
7](#fresh-apple-imports-from-the-u.s.-by-state)

[Apple Exports 8](#apple-exports)

[Pears 9](#pears-1)

[Imports 9](#imports)

[Exports 9](#exports)

[Section III. Consumption 10](#section-iii.-consumption)

[Per Capita 10](#per-capita)

[Prices 10](#prices)

[Apple Storage Holdings 10](#apple-storage-holdings)

[Section IV. Policy Developments 10](#section-iv.-policy-developments)

[Canadian Growers Want Trade Action Against U.S. Apples
10](#canadian-growers-want-trade-action-against-u.s.-apples)

[Historical Summary of Anti-Dumping Cases Against U.S. Apples
11](#historical-summary-of-anti-dumping-cases-against-u.s.-apples)

[Suspension Lifted On Imports Of Chinese Apples
11](#suspension-lifted-on-imports-of-chinese-apples)

[Resumption Of Fresh Pear Trade From China
11](#resumption-of-fresh-pear-trade-from-china)

[Ya Pear Workplan Announced 11](#ya-pear-workplan-announced)

[Replant Programs 11](#replant-programs)

[Nova Scotia 11](#nova-scotia)

[B.C. Orchard Replant Program To Continue
12](#b.c.-orchard-replant-program-to-continue)

[Growers Push for National Replant Program
12](#growers-push-for-national-replant-program)

#  Executive Summary

-   The 2005 Canadian apple crop is forecast at 360,000 metric tons,
    almost 3% lower than the 2004 crop and more than 15% below the
    2000-2004 five-year average. According to Statistics Canada, apple
    bearing area in Canada has declined 16.8% since 2000.

-   Fresh apple imports from the United States reached a record 115,002
    metric tons during MY2004/05. The U.S. market share of total
    Canadian fresh apple imports climbed to 79% from 70% the previous
    year. Imports from Chile, New Zealand, and South Africa were all
    lower.

-   The Canadian Food Inspection Agency revised its plant health
    directive D-02-07 to allow imports of fresh apples from the province
    of Shaanxi, China under a two-year trial period.

-   Canadian apples have generally failed to remain competitive in the
    global market. Even with a significant increase in exports in
    2004/05, total Canadian apple exports are less than half of their
    average level during the mid-1990s.

-   Industry sources indicate that Canadian apple growers have been
    pressing the Canadian government for safeguard measures on imports
    of U.S. fresh apples, predominantly those from Washington State.
    However, the CBSA, the government agency that is responsible for the
    administration of the Canada's anti-dumping and countervailing
    actions, has not disclosed if it has received a formal grower
    petition.

-   For 2005, improved weather conditions during the growing period are
    expected to boost Canadian fresh pear production close to the
    2000-2004 five year average. Total fresh pear output this year is
    expected to reach about 15,300 metric tons, up almost 6% from a year
    ago.

-   In 2004/05 Canadian fresh pear imports slipped to 70,789 metric
    tons, down 7.8% from their level a year earlier, but the U.S.
    remained the top supplier of fresh pears to Canada accounting for
    62% of total.

-   In early 2005, Canada lifted the suspension on imports of Asian
    pears (*Pyrus pyrifolia)* from China under Plant Health Directive
    94-32 but the import of Ya pears (*Pyrus bretschneideri)* remains
    prohibited. A workplan to develop a protocol for the import of
    Chinese Ya pears to Canada was signed as part of a Canada/China
    bilateral agreement in September 2005.

# Section I. Situation and Outlook

## Apples

Preliminary apple industry estimates indicate that the 2005 Canadian
apple crop is expected to reach about 360,000 metric tons, almost 3%
lower than the 2004 crop but more than 15% below the 2000-2004 five-year
average. Of the five apple producing provinces (listed in order of
production ranking), Ontario, British Columbia, Quebec, Nova Scotia, and
New Brunswick, only Nova Scotia is anticipating an increase in apple
production during 2005 compared to a year ago. Despite the reduced
production potential this year, quality is reported to be good. In
Ontario, hot dry conditions affected apple orchard yields, but color and
flavor are reported to be very good.

### Planting Trends and Varietal Shifts

Statistics Canada reports a 16.8% decline in the apple bearing area
between 2000 and 2005 (from 24,973 hectares to 20,766 hectares). Despite
cultural practices that include higher density plantings, Canadian apple
production in recent years has been in decline. Urban pressure on
orchard land, higher costs of production, and lower profitability has
resulted in smaller producers leaving the industry and a decline in the
area cultivated for apples.

The main varieties (percent of total 2004 crop in parenthesis) basis,
are: McIntosh (35%), Red Delicious (11%), Empire (8%), Gala (7%),
Spartan (6%), Cortland (5%), and Golden Delicious (4%). Of the main
varieties, the production of McIntosh, Gala, Golden Delicious, and
Spartan show an increase over the previous five year average. The others
are in decline. In the minor variety category, the trend is to Fuji
(2%), Ambrosia (0.5%), and Granny Smith (0.4%).

## 

![](media/image2.wmf)

## Pears

For 2005, improved weather conditions during the growing period are
expected to raise fresh pear production close to the 2000-2004 five year
average. Output is expected to reach about 15,300 metric tons, up almost
6% from a year ago when cool, wet weather conditions reduced the total
crop potential in Ontario. Ontario growers reported some tree damage
from extreme winter temperatures, but a good bloom under favorable
pollination conditions, followed by a sunny, hot summer has increased
pear crop prospects.

In Ontario, the top three varieties are Bosc, Bartlett, and Clapp. In
British Columbia, the main pear varieties are Bartlett and Anjou.
Combined, Ontario and British Columbia account for more than 95% of
total Canadian fresh pear production.

![](media/image3.wmf)

##  

# Section II. Trade

# 

## Apple Imports

Canadian fresh apple imports in MY2004/05 rose almost 8% to 146,297
metric tons from 135,920 metric tons during MY2003/04. Almost all of the
increase in fresh apple imports was due to increased imports of U.S.
fresh apples. Fresh apple imports from the United States increased
sharply to 115,002 metric tons, up more than 20% from the 2003/04 level
of 95,306 metric tons.

Bolstered by strong demand for U.S. fresh apples, the U.S. market share
of total Canadian fresh apple imports in MY2004/05 climbed to 79% from
70% the previous year. Imports from Chile, New Zealand, and South Africa
were all lower. Imports from China were flat.

![](media/image4.wmf)

## Fresh Apple Imports from the U.S., by State 

The following table shows Canadian apple imports from the United States
by major state of origin for the past three marketing years. In
MY2004/05 Washington State remained the dominant supplier accounting for
almost 89% of total. While most states exported fewer fresh apples to
Canada during 2004/2005, exports from Washington State increased more
than 30% to 101,836 metric tons.

### ![](media/image5.wmf)  {#section-3 .unnumbered}

### 

## Apple Exports

Canadian apple exports rebounded from their dismal export performance
during MY2003/04 and rose 15% to 47,842 metric tons in 2004/05. In
addition to lower crop outturns in recent years due to lower acreage and
weather vagaries, Canadian apple exports have generally failed to remain
competitive in the global market. Even with the significant volume
increase in exports in 2004/05, total Canadian apple exports are less
than half of their average level during the mid-1990s.

## 

![](media/image6.wmf)

## 

##  

## Pears

### Imports

Canadian fresh pear imports during the past two years were lower than
the record level imported during 2002/03 when the Canadian fresh pear
harvest crop was reduced by unfavorable weather conditions. In 2004/05
Canadian fresh pear imports slipped to 70,789 metric tons, down 7.8%
from their level a year earlier, but the U.S. remained the top supplier
of fresh pears to Canada accounting for 62% of total. Canada resumed
imports of certain Asian varieties of pears (*Pyrus pyrifolia*) from
China in January 2005 after the Canadian Food Inspection Agency
determined that they represent a low risk for the entry of the fungal
disease into Canada, but has not lifted the suspension on Ya pears
(Pyrus bretscheideri) from Hebei and Shandong provinces in China (see
Policy Section for more information on the importation of fresh pears
from China).

## 

![](media/image7.wmf)

### Exports

## 

Canadian pear exports are insignificant.

# Section III. Consumption 

## Per Capita

### 

![](media/image8.wmf)

## Prices

## 

Weekly fresh apple and pear prices on major Canadian wholesale markets
and daily market prices for Toronto and Montreal are available
electronically at Agriculture and Agri-Food Canada's (AAFC) InfoHort
website at: http://www.agr.ca/misb/infohort/infohort_e.html

## Apple Storage Holdings

Agriculture and Agric-Food Canada reports that total Canadian apple
storage holdings on July 1, 2005 were 28,697 metric tons, 4% above the
year earlier level of 27,605 metric tons. Agriculture and Agric-Food
Canada reports the quantity and type of apples in storage in Canada, by
province. To view this data, visit the following AAFC web link:

http://www.agr.ca/misb/infohort/data/storage/appdistindex.html

# Section IV. Policy Developments

## Canadian Growers Want Trade Action Against U.S. Apples 

Industry sources indicate that Canadian apple growers have been pressing
the Canadian government for safeguard measures on imports of U.S. fresh
apples, predominantly those from Washington State. However, the CBSA,
the government agency that is responsible for the administration of the
Canada's anti-dumping and countervailing actions, has not disclosed if
it has received a formal grower petition. Citing low market prices,
Canadian growers are allegedly seeking anti-dumping duties under the
Special Import Measures Act, the legislation that governs Canada's
countervailing and anti-dumping laws. Under the Canadian system, the
Canadian Border Services Agency (CBSA) only discloses those petitions
that it feels warrant a formal investigation. At the time of writing of
this report, the CBSA had not officially launched an anti-dumping
investigation into imports of U.S. fresh apples. It may not do so if it
determines the growers' case lacks merit.

## Historical Summary of Anti-Dumping Cases Against U.S. Apples

Canada initially imposed anti-dumping duties on imports of all U.S. Red
Delicious apples in 1989. That initial case expired in February 1994.
Another case was launched later that fall (1994) on both Red and Golden
Delicious apples but the Canadian International Trade Tribunal only
found injury against Red Delicious and applied anti-dumping duties to
U.S. Red Delicious apples in January 1995. The anti-dumping duty did not
apply to imports between July 1 and September 30 each year. Following a
review of the (second) case, the CITT rescinded the anti-dumping duties
on February 8, 2000. Generally, the way the anti-dumping duty worked was
that if U.S. f.o.b. export prices to Canada were below a certain
calculated price per 42 lb. box, Canada applied a dumping duty equal to
the difference between the export price and the calculated price

## Suspension Lifted On Imports Of Chinese Apples

During the fall of 2004, the Canadian Food Inspection Agency (CFIA)
revised its plant health directive #D 02-07 to allow the importation of
fresh apples from the province of Shaanxi, China under a two year trial
period following a successful on-site CFIA audit inspection of their
Quality Management System. Importation of fresh apples from Shaanxi
province were previously suspended due to interceptions of quarantine
pests.

## Resumption Of Fresh Pear Trade From China

In January 2005, The Canadian Food Inspection Agency (CFIA) removed the
suspension on Asian pears from China under Plant Health Directive 94-32.
Early last year the CFIA suspended the importation of all pears (*Pyrus
pyrifolia*) from the provinces of Hebei and Shandong, respectively, due
to interceptions of an exotic fungal disease (*Alternaria* sp.). In
early September 2004, a delegation from CFIA travelled to China to
exchange scientific information on this organism. Based on the
observations of the CFIA delegation in China and additional information
provided by the Chinese government, the CFIA concluded that the
importation of Asian variety of pears (*P. pyrifolia*) represent a low
risk for the entry of the fungal disease into Canada. Only Asian pears
(*P. pyrifolia*) from approved orchards in Hebei and Shandong provinces
are permitted entry. Only Fragrant pears (*Pyrus* sp. nr. communis) from
approved orchards near the city of Korla in the Xinjiang province are
permitted entry. The importation of *P. bretschneideri*, Ya pears, is
currently suspended (see Ya Pears, below).

## Ya Pear Workplan Announced 

# 

As part of a multi-sector bilateral agreement between Canada and China,
the Canadian Food Inspection Agency and the General Administration of
Quality Supervision, Inspection and Quarantine of the People's Republic
of China have agreed on a workplan to establish phytosanitary
requirements for the export of Ya Pears from China. According to the
CFIA, a Quailty Management System will be developed and and an on-site
audit of Chinese Ya pear operations will be undertaken to ensure the
safeness of Ya pears exported to Canada.

## Replant Programs

### Nova Scotia 

In April 2005, the provincial government of Nova Scotia announced
C\$235,000 in funding for an orchard renewal program to assist the
province's apple growers in replacing older apple trees with new ones.

### B.C. Orchard Replant Program To Continue

In early 2005, the province of British Columbia reaffirmed its
commitment to the Provincial Orchard Replant Program by providing
C\$4.65 million to fund it. Originally introduced in 1990, the replant
program is designed to assist the B.C. tree fruit industry with the
removal of older plantings and replacement with new high-density
plantings of higher value varieties. The program, which was scheduled to
expire this year, has been highly successful for B.C.'s tree fruit
industry. It is estimated that government assistance will have resulted
in 10,625 acres replanted with new varieties by the end of 2005.
According to provincial authorities, new varieties now account for more
than 50 per cent of grower returns, especially for Gala apple and late
season cherries.

### 

## Growers Push for National Replant Program

Fruit growers, particularly those in Ontario and Quebec, are pushing for
a replant program of national scope. Their proposed plan urges
governments to develop a National Revitalization Plan for the Canadian
apple, grape and tender fruit industries that would assist in the
removal of unwanted varieties and replace them with the varieties in
demand by the marketplace. The industries envision a plan that would be
equally cost shared among producers, participating provinces, and the
federal government.

VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
U.S. Embassy homepage. To view the website, log onto
[http://www.usembassycanada.gov](http://www.usembassycanada.gov/); click
on Embassy Ottawa offices, then Foreign Agricultural Service. The
FAS/Ottawa office can be reached via e-mail at: <agottawa@usda.gov>

###