Sun, October 31, 2010
Business > Economy

Apple prices surge pleases Chinese growers, angers consumers

2010-10-31 09:41:24 GMT2010-10-31 17:41:24 (Beijing Time)  Xinhua English

JINAN, Oct. 31 (Xinhua) -- While price hikes of Apple products affects only fans of smartphones and computers, the recent price hikes of apples, the eating kind, has caused concerns among more than one billion people in China.

The prices of apples rose to an unprecedented high in late October, which has boosted the incomes of the nation's apple planters, but added financial pressures to domestic consumers as China's inflation rate recorded a 23-month record high in September.

"Despite it being the harvest season, the average purchase price of apples increased by 1.6 yuan (about 24 U.S. cents) to 2 yuan to about 6.3 yuan to 6.6 yuan per kilogram. This has been rarely seen in my 30-year experience in apple marketing," said Yu Zhaojiang, a fruit trader.

Yu operates a fruit trading company from Yantai, a port city in east China's Shandong Province, one of the nation's major apple growing bases.

Retail prices for apples of premium quality have even reached 15 to 20 yuan per kilogram in supermarkets in China's largest cities, such as Beijing and Shanghai.

Indeed, data collected by Xinhua indicate that, nationwide, retail prices of apples have surged more than 20 percent year on year as of Oct. 25.

Some low-income residents can no longer afford to purchase apples, complained Yu Dayou, a citizen of Jinan City, the provincial capital of Shandong.

An online poll surveying 23,622 people, launched by China's portal website Sina.com.cn reported Sunday that 81.4 percent of the respondents said soaring apple prices have brought "significant effect" to their lives.

However, it is not all bad news since higher prices have been warmly greeted by apple growers in Shandong.

This year's incomes will doubled thanks to the soaring prices, said Yu Shiyong, a farmer from Er'jiacun Village in Yantai, who was busy picking apples to avert possible losses brought on by the looming cold weather. Yu plants 4 mu (about 0.27 hectares) of apples, with total output standing at 10,000 kilograms per year.

Gong Juncai, who plants 3 mu of apples in Weihai, another coastal city in Shandong, said he will pocket 20,000 yuan in net income this year, up at least 5,000 yuan from last year.

Further, revenues generated from growing apples in Yantai's Guanshui Township are set to increase by 300 million yuan from 2009, said Dong Ruilin, deputy secretary of the Guanshui Township Committee of the Communist Party of China (CPC).

According to Dong, Guanshui Township raked in 700 million yuan in fruit farming last year.

Apple dealers from across the country have also taken steps to replenish their inventories.

Xu Hu, an official in charge of administration for the Guanshui wholesale market for fruits and vegetables in Muping of Yantai, noticed that twice the number of apple dealers traded apples at the market in September and October compared to the two months one year earlier, accordingly.

In fact, the volume of daily apple transactions has been exceeding 200,000 tonnes, Xu said.

Angry urban consumers believe hot money speculation is again to be blamed, just as what had happened earlier with garlic, mung bean and ginger.

The online survey launched by Sina.com.cn showed, 34 percent of the respondents attribute the price hikes to hot money speculation.

The nation's agricultural commodities markets experienced one bull run after another this year, which were widely reported as being caused by hot money speculation.

But experts said the chance of speculation in apple pricing is slim, and attributed tight supplies, caused by extreme weather this year in major apple growing areas, as the main reason for the price increases.

Other factors include the increase in farming costs and a general rise in prices of consumer goods, according to experts.

"Currently, there is no evidence proving that large amounts of hot money have tapped into the apple market. Speculating on apples needs substantial capital and brings with it large risks, because China's apple output is huge and the producing areas are scattered," said Zhao Peice, the head of the Apple-Based Business Association of Yantai, adding that the recent apple price jumps are driven by supply shortages.

Yang Jie, a professor at China's Apple Project Technology Research Center, echoed what Zhao had said, noting that continuous chilly weather this spring, together with frost damage and a hailstone disaster, caused a fall in apple output in the nation's production areas, including Shaanxi, Shanxi, Henan, Hebei and Liaoning provinces, and in turn pushed up prices.

Besides added costs in cold storage and transportation, the prices of apples are likely to climb to new highs during the next year before the harvest season comes, said Gong Jiabin, an apple dealer in Weihai.

China's consumer price index (CPI) reached a 23-month high of 3.6 percent in September. According to Sheng Laiyun, the spokesman for the National Bureau of Statistics, surging food prices caused by adverse natural conditions was the main reason for the accelerated CPI in September.

Feng Qunli, a researcher with the Shandong Academy of Social Science, said the nation's diminishing land resources and rising labor costs would lead to continuous prices hikes in agricultural products in the long run.

It is, however, conducive to increasing farmers' incomes and guaranteeing a sustainable and healthy development in agriculture, said Feng, who added that the government should also step up efforts to crack down on hoarding and speculation and to stabilize farm produce prices.

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