May WAR 09

May 2009, World Apple Report Highlights

Downturn Challenges Organics
The current severe economic slowdown has dramatically curbed the growth of organic products. According to United Fresh's "Fresh Facts on Retail", for the fourth quarter of 2008, U.S. retail sales of organic fruits were up 5.6% and of organic vegetables up 0.3%, far from the much touted 20% growth rate of the recent past. The Fresh Produce Journal reported that TNS Worldpanel data for the year ended February 22, 2009 found sales of organic fruit in the UK down 20.2%, organic vegetables down 9.1% and organic apples down 21.4%. Premiums for organic products remain above 30 percent, which may have contributed to reduced purchases. However, premiums remain necessary to cover the additional costs of organic production. The organic sector now has additional competition for socially-conscious consumers from fair trade, free range and other eco-labeled products. To retain its key customers, the sector needs vigorous efforts in market development and promotion.

Energy Policy and Economic Sense
This article argues that much debate on energy is strong on emotion and weak on logic. Problems of resource exhaustion, energy dependence or the need for alternative energy sources are poorly defined and lead to unwise policies. Government targets are often set at unrealistic levels, but when they are not reached, the government response is to add more carrots (subsidies) and penalties (sticks), further distorting markets. A new study by McKinsey & Company indicates that reductions in carbon emissions and energy savings from more efficient use of current energy sources would be many times those possible from alternative energy sources such as wind or solar energy. Because the apple industry is a major user of energy in production, processing and distribution, it needs to push for energy policies that are based on sound science, not irrational fear or irrational hope.

Doha Round Failure Could Be Costly
A new study by Antoine Bouet and David Laborde of the International Food Policy Research Institute shows that failure of the Doha (WTO) negotiations would prevent a US$336 billion increase in world trade. If that led to increased protectionism, it could cost the world a further US$728 billion. In addition, failure of Doha would be a negative sign for international cooperation in other key areas such as climate change or the war on terror. Thus, while it appears that it is costless for countries to drag their feet or openly block WTO negotiations, the world pays a high cost in foregone opportunities. Poorer countries are hurt most.

Special Statistics

United States: Organic Price Premiums and Share of Sales for Fresh Produce Items, 2006 (table).
United States: Assessment of Energy Alternatives Through 2030 (table).
United States: Average Weekly Organic Price Premiums for Selected Advertised Produce Items, October 2008- March 2009 (table).
China: Share of Exports of Fresh Apples and CAJ, by World Region, Calendar Years, 2000-2008 (table).
United States: Trajectory of a Recession: Quarterly Changes in Real GDP, compared to
Same Quarter Previous Year (Chart).

The authoritative guide to the world apple business today.

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