Organic Apple Price in Response to Crop Size Supplied to the Market
by Holly Wang and Yuanlong Ge*
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A significant interest in organic tree fruit production has developed over the last 10 to 15
years. Total US sales of organic food and beverages were estimated at $9.0 to $9.5 billion for
2001, representing between one and two percent of total US food and beverage sales. Although
the percentage is small, growth rates for organic products are 10 to 20 percent per year, well
above growth rates for conventional food products (Greene and Kremen, 2003). . .
The state of Washington dominates commercial apple production in the US, accounting for well over 50 percent of total US production. Washington Apples have historically enjoyed national and international recognition (WASS, 2002). Washington is also the leading state in organic apple production, accounting for about 38% of total US organic apple acres. . .
In this project, we estimate an inverse demand function to reveal the price response to quantity. This demand function includes multiple grade apples so that the cross grade effect can be evaluated. Specific objectives of this paper include, (1) estimating the percentage of low grades apples marketed in recent years; (2) studying the relationship between crop size of the lower grade apples and the price response of higher grade apples; and (3) predicting the price boosting in this year (or the future) by a reduction in lower grade supplies.
*Holly Wang is an associate professor in the School of Economic Sciences. Yuanlong Ge is a graduate student in SES, Washington State University. This work is a technical report to WSU Center for Sustaining Agriculture and Natural Resources, College of Agricultural, Human and Natural Resource Sciences, WSU.
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