August 06

August 2006, World Apple Report Highlights

Increasing Retail Complexity Offers New Opportunities
This article focuses on the changing retail scene in the United States. While supercenters, led by Wal-Mart, continue to expand, other formats such as limited assortment discount stores, dollar stores, warehouse club stores, natural foods stores, and eccentric formulas such as Trader Joe's, continue to grow. Traditional grocery supermarket chains are being squeezed, but are fighting back by restructuring and reorienting their appeal to consumers. Amazon.com has just announced the expansion of its online grocery offerings to 16,000 items. The buyers who best help the different retailers meet the challenges of their particular format will be most likely to win and hold their business.

The SmartFresh Conundrum
SmartFresh has been shown to help apples last longer in storage and to provide consumers with a better eating experience later in the season. However, it also allows packers to hold apples longer and market them later. It may allow greater use of regular, rather than controlled atmosphere, storage and may affect prices when Southern Hemisphere and Northern Hemisphere sales overlap. However, little hard data has been available to measure these effects. An analysis of U.S.-wide data showed no increased sales of apples from regular storage. However, comparable data for Washington State shows that the share of movement out of regular storage for the February-June period in the last two years, 2005 and 2006, was substantially higher than in the prior two years. Much more research is needed to help decision makers make optimal use of SmartFresh.

Why NAFTA Disappoints
The North American Free Trade Agreement (NAFTA) has been heavily criticized, especially in Mexico, despite the fact that it has dramatically increased trade between the U.S., Canada and Mexico, and helped both Mexico and Canada increase their share of U. S. agricultural imports. This article explains some of the reasons why trade agreements such as NAFTA disappoint. Clearly, although net trade may increase, there will be losers, and those losers will complain. Many sources of contention, such as U.S. farm subsidies, were not dealt with under NAFTA and remain a major irritant. The NAFTA partners have entered into other trade deals that have changed the competitive situation. The world has moved on. For example, China is a much more powerful competitor than it was when NAFTA went into force in 1994. Rather than tinkering with NAFTA, the partner countries need to assess what trade agreement(s) will best serve them from this day forward.

Special Statistics
United States: Movement of Fresh Apples, Selected Periods, 2002-03 thru 2005-06 Seasons (chart).
Washington State: Percent of Shipments from Regular Storage, by four-week intervals, 2002-03
to 2005-06 (table).
Top Ten International Food Retailers, 2000 and 2005 (table).
United States: Average Daily Shipments of Fresh Apples, Sep-Aug Seasons, 2003-04, 2004-05
and 2005-06 (chart).

The authoritative guide to the world apple business today.

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