One bad apple crop to raise juice prices

A customer picks up a bottle of apple juice at the fruit counter of a supermarket in Beijing.

TEXT OF STORY

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.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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