April WAR09

April 2009, World Apple Report Highlights

Is the New World Order in Retreat?
Events of the last year have caused many to wonder whether we may be at an historic turning point in world affairs. Is the era of rapid economic growth, increasing affluence and increasing globalization coming to an end? Is the rise and rise of giants like China and India, and of minnows like Iceland and Dubai, doomed? Are capitalism and free trade in trouble? The answers to these questions have major implications for the many apple growers, packers, processors and marketers that have staked their future on expanded international trade and investment. Clearly, the situation could be made worse by protectionist policies. The current crisis is redistributing fortunes between countries. The pattern of dispersed power is likely to continue and to make consensus on trade on other issues more difficult. However, capitalism will recover.

Difficult Markets in 2009
Factors are lining up to make 2009 a very difficult year for the apple industry. Global supplies and inventories are much bigger than anticipated. At the same time, consumers have been shocked by heavy losses of assets, incomes, jobs, homes and pensions. The purchase of big ticket items has collapsed. Consumers are saving more, buying less and buying more frugally. Retailers have been slow to adjust prices downward, even though the global food crisis of 2008 has evaporated. This has helped to slow sales and increase inventories of many products including apples. Exceptional merchandising and promotional efforts will be needed to avoid an apple industry debacle.

Processing Market Challenges
The processing sector of the world apple industry has gone from glut to scarcity to glut again in about 15 months. Prices of concentrated apple juice rose rapidly after Poland's disastrous 2007 harvest, but prices were held too high, too long. As inventories built up, prices came back to earth in late-2008. The Chinese authorities imposed a temporary moratorium on CAJ production to allow inventories to run down. This is likely to lead to reduced global supplies in the 2008-09 season. In the long-term, the current imbalance will be rectified. However, industry capacity appears slated to grow much faster than demand. This suggests an urgent need for more development and promotion efforts in the apple processing sector.

Special Statistics

Major Producing Countries: Quantity of Apples Processed, 2000-2008 (chart).
Major Producing Countries: CAJ Production and Exports, 2007, 2008 and 2015 (table).
United States: Imports of Chinese Concentrated Apple Juice, by Month, 2007 and 2008 (chart).
Exporters: Gain or Loss from Exchange Rate Changes, Feb 29, 2008 to Feb 27, 2009 (table).

The authoritative guide to the world apple business today.

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