Marketplace, CA
12-12-07
One bad apple crop to raise juice prices
Customer holds a bottle of apple juice in Beijing
The Chinese don't drink much apple juice, but they produce two-thirds of the
world's supply. This has been a bad year for China's apple crop, which is going
to hurt us at the check-out counter. Jeff Tyler reports.
KAI RYSSDAL: There were some new numbers on the trade deficit today. Higher
oil prices and imports for the holiday helped pushed the trade gap to its highest
level since July. That and the way the world economy works brings me to a story
about apples. Actually, apple juice. And China. The Chinese don't drink much
apple juice. Yet they produce two-thirds of the world's supply of it. This has been
a bad year for the Chinese apple crop. Which is going to hurt us at the check-out
counter. Marketplace's Jeff Tyler explains.
JEFF TYLER: The U.S. is the world's biggest apple juice importer. But now,
domestic consumption in China is rising. And independent consultant Desmond
O'Rourke says other countries are also increasing their appetites for apple juice.
Desmond O'Rourke: The demand is growing fairly rapidly, particularly in
Russia, because of the oil wealth that they now have. So we get a big increase in
demand, and at the same time a shortage of supply.
Bad weather hurt crops in China, as well as Poland and Hungary. On top of
supply issues, prices are getting pushed up by speculators. O'Rourke says it's
similar to the mania seen in the petroleum industry.
O'Rourke: Essentially, people aren't so much concerned about what's
available on the market today as what might be coming along. In other words,
nobody ever wants to get caught short.
And prices may be headed even higher. Iowa State University economics
professor Helen Jensen says U.S. companies are pressuring Chinese suppliers
to ensure the safety of imports.
Helen Jensen: As those manufacturers look closely at the sourcing of their
products, they're also looking at making requirements in contracts for imported
products that are likely to add costs.
In this country, Desmond O'Rourke says domestic apple growers benefit from
rising juice prices.
O'Rourke: A year ago, they were getting about $40 a ton. Currently, they're
getting between $180 and $200 a ton.
Eventually those higher prices will affect consumers. In the last few years,
O'Rourke says retailers have become more willing to pass along higher food
costs to customers.
I'm Jeff Tyler for Marketplace.