Explain the effect of heaton apples appearance and firmness, and also affect storage capabilities. (Foreign competition makes selling these apples for juice not profitable).

Final Project, and deal with the topic of supply and demand and markets The final project, should be between 6 -8 double spaced typed pages long. It should include a bibliograph, footnotes citing acknowledgemnets, and an introduction and conclusion.“ Sample Final Project.”( Note: This is a sample and not a complete project.project should be more extensive than this sample. )Product:Washington/>/>Apples including all varieties and sizes suitable for sale as FRESH (for instance, Red and Golden Delicious). Includes only apples from the state of Washington/> and does not include apples from Washington/>/> that are suitable only for canning, jelly, juices, etc. Washington/>/> sells 75% of its apples fresh.

Price:During the past two years, the price has varied from a high of $1.00 per pound to a low of 86 cents per pound. Price varies with the time of year. The highest prices usually coming in July and August. Prices have also been increasing over the past five years. Total sales for 1997 was $816,872,000.

Elasticity:Demand is probably inelastic.

Determinants of Demand:

1. Substitutes- (Americans eat 19 lb. of apples annually, while Europeans eat 46 lb.)

• citrus fruits, grapes, melons, peaches, pears, etc. (damage to these crops will help apples)

• Apples from other states and countries – Washington/> produces 54% of U.S./>/> apples, but competition exists in California/>, New York/> , Michigan/> , Pennsylvania/>/> , etc. Most of the states send less than 50% of their apples to the fresh market. Apples are produced for export in New Zealand/> , Chile/> , France/> Turkey/> , China/> , Argentina/>/> and others (most of this production is for juice). Many of these other countries harvest at different times of the year than Washington/>/> . These countries usually do not produce apples that store as well as Washington/>/>’s because their nights are not as cool and their apples are, as a result, not as crunchy.

2. Overseas Markets- top markets overseas are Mexico, Hong Kong, Taiwan, Indonesia, Saudi Arabia, Malaysia and Brazil. Twenty-eight percent of Washington/>/> apples go to export. Currency fluctuations, strict sanitary regulations and inspections, and tariffs are barriers to entry. Taiwan/>/> is the most important importer. Mexico/> requires apples from Washington/>/> be cold stored for 90 days to eliminate pests and also has delays in inspection. Other nations have been dumping apple juice in the U.S./>/> In overseas markets, Washington/>/>/>/> apples are more expensive and higher quality than other apples. Economic problems in Asia/> have hurt because price becomes more important.

3. Income- heaviest purchasers are homes with household incomes of 30-50,000 (lowest is 20K-30K). Purchasing declines slightly with incomes higher than $50,000.

4. Consumer Preference- Consumers perceive Washington/>/>/>/> apples as having overall better quality than apples from other states. Consumers believe they are crisper, sweeter, juicier (quality). The preference has been growing. Less than 25% of consumers know they are getting Washington/>/>/>/> apples. Consumer’s are becoming more interested in growing area, taste and nutrition information, and usage and recipe ideas.

5. Health Conscious- Apples are low fat and calories, high fiber, and have stringent quality standards, Apples reduce the risk of lung cancer. Apples are the number one fruit of choice for lunch and snacks.

6. Demographics – 94% of consumers bought apples in the last year. Demand increase with age and the typical buyers are 45 years old. Apple usage is heaviest after the age of 35 due to growing families and health concerns.

7. Wholesaler and Retailer Preferences- 99% rated Washington/>/> apples as excellent or very good. Apples have continued to gain market share. In fall and winter, retailers purchase fewer Washington/>/> apples and substitute regional or local apples.

8. Convenience – (portable) Families with working parents are heavy users. People pressed for time and looking for value.

Determinants of Supply:(short-term, trees take years to bear fruit)

1. Weather – wind and hail damage (usually isolated), heat is very bad for apples appearance and firmness, and also affect storage capabilities. (Foreign competition makes selling these apples for juice not profitable).

2. Controlled Atmosphere storage – apples and other produce keep longer in a reduced oxygen environment. Apples can be kept 12 months or more.

3. Most (CA) apples are shipped between January and September.

4. Labor Costs – It does not pay to harvest apples unless at least 70% can be sold as fresh. Higher labor costs will increase this percentage.

IF-THEN

1. If there is damage to other citrus crops (frost, etc.), then the demand for apples will increase.

2. If other countries improve the quality of their apples, then demand will decrease.

3. If relations with Mexico can be improved and their economy is stable, then demand should increase.

4. As U.S. income increases, the demand for Washington/>/> apples will increase. Declines at higher incomes can be offset through better consumer education at these levels.

Elasticity Estimates

1. Reductions in the price of citrus fruits should not have a great impact on purchases of Washington/>/> apples. Apples have been gaining market share.

Supply and Demand Curves ( if you find it technically feasible to do them.)