National Apple Crop Outlook

The following is a report written by Craig Harris, Dept. of Sociology, Michigan State University for the Apple-crop discussion group.  It is based on the U.S. Department of Agriculture publication FRUIT AND TREE NUTS, September 15, 1999, ERS-FTS-286 .  It was written before tropical storm Floyd hit the Northeast and the Southern Atlantic states.  Therefore, some of the statistics, especially in those areas affect by Floyd, may be inaccurate. 

U.S. Apple Crop Expected Smaller in 1999, Prices Likely To Improve USDA's August forecast for 1999 U.S. apple production was 10.6 billion pounds, down 7 percent from 1998 and 3 percent lower than the 5-year average.  Lower production forecast in most Western States will not be offset by anticipated increases in Central and Eastern States. Because of the smaller crop this year, apple prices will likely improve in 1999/2000 from
price levels during 1998/99. In addition, the expected decline in pear production, which tends to compete with apples in the fall, may place additional upward pressure on apple prices. Despite higher fresh-market exports, the season-average grower price for all apples fell 20 percent from a year earlier during 1998/99 to 12.3 cents per pound, partially due to increased production in 1998 and higher carryover stocks from the 1997/98 season.

Apple production in the Western States is expected to be 6.3 billion pounds in 1999, down 18 percent from a year ago. Smaller crops are expected in all apple-producing States in the region, except California. The Washington apple crop forecast was 5.2 billion pounds, down 19 percent from last year's record crop and maturing about 2 weeks late. Apple orchards in the State bloomed variably, with lighter blooms for Red Delicious and Fuji apples. A relatively cooler spring, some frost damage, and a reduction in crop acreage also reduced potential crop size.  Similar weather conditions prevailed in Oregon where the crop is expected to be down 11 percent from a year ago. While the California crop is also developing behind normal due to relatively cooler spring temperatures, adequate dormancy and dry weather have provided conditions for a better crop this year. Production there was forecast to increase 1 percent to 825 million pounds.

Apple production in the Central States was forecast up 12 percent in 1999 to 1.5 billion pounds. Production in nearly all the apple-producing States in the region was forecast up from last year. Throughout Michigan, where production made up 71 percent of the Central State's total, orchard blooms were generally good. Weather, especially during pollination, was mostly favorable. Although harvest in Michigan was also delayed, production was forecast up 8 percent from a year earlier.
Apple crops in the Eastern States are expected to increase 18 percent to 2.7 billion pounds. For most of the region, weather conditions have been generally favorable, especially during the bloom stage, and only minimal frost damage had been reported. Despite low moisture conditions, 1999 production is expected to be up 13 percent in New York and 27 percent in Pennsylvania. Among the other major producers in the region, production is also expected to be up in Virginia, North Carolina, and West Virginia.

The U.S. Apple Association reports that as of July 1, 1999, U.S. apple holdings totaled 17.3 million bushels (1 bushel = 42-pound unit), with fresh apple holdings accounting for 13.1 million bushels, up 18 percent from this time last year. The expected smaller crop in Washington--the largest supplier to the domestic fresh apple market--will likely push fresh-market supplies down compared with last year. Reduced supplies, coupled with an extended period to market 1998 storage apples given the late start of the 1999 fall apple crop, will help boost this year's grower prices for fresh-market apples. A 9-percent increase in fresh-market production during 1998 pushed the season-average grower price for fresh-market apples down 23 percent from, 1997 to 17.1 cents a pound.  With the larger crop last year, retail prices for Red Delicious apples in 1998/99 were about 4 percent lower than a year ago, boosting domestic demand.
U.S. fresh apple consumption in 1998/99 is expected to increase 4 percent from the previous year to about 19 pounds per person. With the smaller crop expected this year, fresh apple consumption will likely decline in 1999/2000.

U.S. imports of fresh-market apples, from August 1998 through June 1999, totaled 297.6 million pounds, 8 percent lower than the same period a year earlier. New Zealand and Chile each provided about a third of U.S. apple imports, while Canada supplied about a quarter. Apple imports were down from these major sources, except Chile where record production allowed for a 24-percent rise in shipments to the United States. During the same period, U.S. exports of fresh apples increased 23 percent, to 1.4 billion pounds, assisted in part by record-large supplies of relatively good quality fruit last year, particularly from the Pacific Northwest. Exports to key Asian markets have shown improvement over last year. Shipment volumes rose 3 percent to Taiwan, 56 percent to the Philippines, 12 percent to Malaysia, 77 percent to Singapore, and 161 percent to Japan. Shipments, however, fell by 3 percent to Hong Kong. Exports also rose 106 percent to Mexico, reflecting their much smaller harvest last year and the March 1998 lifting of the 101 percent antidumping duty on U.S. Red and Golden Delicious apples imposed by Mexican commerce officials in September 1997. Meanwhile, exports to Canada fell 5 percent, due in part to increased production. Export prospects during the 1999/2000 season may be limited by reduced production, particularly in Washington, whose crop is heavily oriented toward the fresh market.

U.S. imports of apple juice and cider from August 1998 through June 1999 totaled 272.1 million gallons, up 17 percent from the same period in 1997/98.  While U.S.-fresh apple imports are fairly insignificant compared with total U.S. supplies, apple juice imports provided between 50 to 60 percent of supplies during the 1990's. Argentina and Germany have been major sources of apple juice, providing about a third and as much as a fourth of U.S. apple juice imports throughout most of the 1990's. Imports from China have increased substantially during the same period, rising from 92,569 gallons in 1989/90 to 34.3 million gallons in 1997/98. In 1997/98, China surpassed Germany as the second-largest source of apple juice, supplying about 13 percent of total U.S. imports.

During the 1999/2000 marketing season, U.S. apple juice imports from China, most of which is in concentrate form, may be limited by possible antidumping duties. On June 28, the U.S. Department of Commerce began conducting a dumping investigation of apple juice concentrate imports from the People's Republic of China. The investigation results from allegations that China is selling this product in the United States at unfairly low prices, causing economic injury to the U.S. domestic industry. On the same day, the U.S. International Trade Commission (ITC) in Washington D.C. also conducted a preliminary hearing to gather evidence of economic injury to domestic concentrate producers. On July 22, the ITC announced its determination that there is reasonable indication that U.S. apple juice producers are materially injured or threatened with material injury by imports of certain nonfrozen concentrated apple juice from China sold in the United States at below cost.

Given the ITC determination, the U.S. Department of Commerce will continue to pursue the dumping investigation and is scheduled to announce its Preliminary dumping decision by November 15. If the Department decides that the domestic concentrate industry's complaint is valid, it will impose a tariff on concentrate imports from China as of the day of the decision. U.S. apple juice producers are requesting a 91-percent duty on concentrate imports from China. If the Department finds that large amounts of juice concentrate were imported from China during the period of the investigation, the tariff may be imposed retroactively up to a maximum of 90 days prior to the decision. If a tariff is imposed, apple juice concentrate imports from China likely will drop.

U.S. apple juice and cider exports in 1998/99 (August-June) declined 15 percent from the same period in 1997/98, to 8.2 million gallons. While exports to Japan rose 24 percent, exports to Canada fell 37 percent. Both countries, combined, make up close to three-fourths of total exports.  Despite the expected smaller 1999 crop in Washington, higher ending stocks of processing apples in 1998/99 than the previous season, and increased production in the central and