The red (sometimes green), fleshy, juicy, and sweet fruit apple has captured the hearts and minds, not to mention the taste buds, of people all over the world. It comes in second behind bananas in terms of global annual consumption, with production standing at a staggering 88 million metric tons. Its many health benefits, like protection against chronic illnesses like cancer, diabetes, and heart disease, have made it popular among the health-conscious populace.
But there is a catch with apples: despite the large production quantities the world over, it is an expensive fruit. It seems to defy the common law of economics that prices tend to be cheap when there is enough supply to match demand. Multiple countries around the world, like the US, the EU, China, India, Turkey, etc., produce it, yet the prices are rising like there is a shortage. So what is going on here exactly?
1. Unexpected Declines in Production
While the trajectory of fruit production has steadily gone up in the last couple of decades, there have been unexpected decreases in some local productions as well. For example, 9&10 News reports that the US state of Michigan, one of its top apple production regions, has seen a production decline of about 17% YoY between 2021 and 2022. Such decreases can wreak havoc on the supply chain and cause sharp spikes in apple prices that may take time to come down.
2. Pandemic-related Downturn
The lockdowns that ensued following the spread of COVID-19 globally affected the production, distribution, and consumption of apples everywhere. The European Union, where apples are the most widely produced fruit, is a prime example. Despite efforts by producers and the industry at large to stabilize the supply-demand curves, prices have gone up to produce and store the fruit.
In the world's hotter regions, the effect has been more pronounced since, despite its long shelf life, they have witnessed the loss of apple stores to natural degradation. The need to invest in cooling solutions to maintain the apple’s freshness has caused rates to spike. And if those countries are exporters, it means the places importing them have also seen price increases.
3. Rogue weather events
There has been a rise in rogue, extreme weather events impacting the production and distribution of apples worldwide. Random rainfall patterns and higher-than-normal temperatures in normally cooler regions of the world where apples are grown have influenced the fruit's growth rates and harvest cycle.
These events also adversely affect the supply chain; for example, hurricanes can cause shipping delays in the Atlantic region, increasing prices due to reduced supply. A 2010 study in India shows that the productivity of apples was adversely affected in its main growing regions due to cloud bursts, hailstorms, and a rise in average temperature in winter.
4. Regulatory Reasons
Regulations have a strong impact on the price of goods everywhere. And price fluctuations are occurring with every policy change. The US is a great example of this, where the previous Trump administration’s crackdown on illegal immigrants with tougher border protection policies made the labor shortage and high production costs worse. This continued through the pandemic as travel was restricted and farmers didn’t have the cheap labor they needed to harvest the crop.
The net effect was higher than normal harvest costs, and the rejection of some apples was due to their not meeting the required food standards. The latter comes into play with imported apples when the consignment doesn’t match the standards set by the importing country. Due to rejection, the number of apples on the market will go down, which will cause apple prices to go up
5. Rising Equipment Costs
It’s not just the labor and crop side of things that are affecting the price of apples. The equipment used for the production, processing, and distribution of apples and apple products has also gone up. The Agricultural Economy Barometer by Purdue University, which looks into all things agricultural and their impact on the economy, found that 44% of farmers delayed making investments in large farm equipment in the short term due to high prices. Such delays also result in the downfall of production. Additionally, it indicates that the used older equipment is breaking down more frequently, with the end user bearing the cost of repair in the form of higher prices.
While there may be many reasons behind the rise in apple prices, the good news is that people are working to bring them down. More research is being done on producing more climate- and pest-resistant seeds to combat those problems, and the post-pandemic supply chains are getting back to normal. So, you can likely look forward to your next apple milkshake while keeping things real on the financial front.
