$17 Japanese Apples For a Ka-Ching Dynasty

"The more expensive it is, the more they want it," says Japanese orchard farmer Hisanobu Katayama. (Sachiko Sakamaki - The Washington Post)

To push into new markets, the Japanese government is doubling its agricultural export marketing budget to $11 million next year. But critics chide Japan for doing so while maintaining high tariffs on foreign food, which can reach up to 800 percent, for instance, on rice. High domestic farm subsidies, meanwhile, amount to about 1.4 percent of the gross domestic product, a figure greater than the entire value of Japan's annual farm production, according to a 2004 WTO report.

Japanese consumers have paid the price. Tokyo residents, according to a recent government survey, pay 13 percent more than New Yorkers, 22 percent more than Londoners and 42 percent more than Singaporeans for food.

Some fear Japan's efforts in the high-end food market are merely a way to disguise new subsidies to farmers. Yet other longtime critics of Japan said a focus on boutique fruits could provide Japan's farmers a cushion as import tariffs drop.

"Look, the odds are against them when it comes to large-scale agriculture; it's just too expensive for them to do it," said Flavio Soares Damico, head of the Agricultural and Commercial section of Brazil's Foreign Ministry. Brazilian officials have noted it costs Japanese farmers in Okinawa $1,000 to produce a ton of sugar, compared with production costs of $100 to $200 for farmers in Brazil. "But smaller-scale, high-end produce is a real alternative for them. And it is something they do well."

Perhaps nowhere is that more true than in Hirosaki, a village in Japan's apple-growing region of Aomori, about 370 miles north of Tokyo. In the foothills of snowcapped mountains here, apple exports have grown from 2,000 to 15,500 tons over the past decade.

This is the home of Japan's cornucopia of luxury fruit. The fragile Mutsu apple, individually covered in bags on the branch until one month before harvest, when they are unwrapped and sunburnt a glossy pink. The Sunmutsu, softball-size and the pale shade of late daffodils. The mammoth Sekai Ichi, its peel a deep red with glorious crimson starbursts. Though the best retail for more than $15 each, most apples grown here can be bought for less than $1.50.

Despite their high prices, Japanese apples have succeeded in places like Taiwan, which had long been dominated by U.S. apple growers. Japan has taken 15 percent of the imported apple market there over the past four years as wealthy Taiwanese have shown themselves willing to pay more for Japanese-grown fruit.

The battle for survival will depend equally on the ability of Japanese farmers to maintain their lead at home. In the 1990s, U.S. farmers gained hard-fought entry for Red Delicious apples in Japan, which were offered at lower prices. Nevertheless, few Japanese bought them, citing inferior taste. Last month, however, U.S. producers won a fight in the WTO to expand exports in Japan to a wider variety of American-grown apples, including Japanese Fuji apples now grown in Washington State.

Katayama, however, is confident that Japanese farmers will prevail.

"A [$1] apple tastes like a [$1] apple," Katayama said. "A [$5] apple is more juicy, more sweet, more beautiful to look it. They are a completely different fruit, and consumers who can afford it will want the best."

Special correspondent Sachiko Sakamaki contributed to this report.