Market Price Analysis for Washington Organic Apples and Pears in 2003-2006

By: H. Holly Wang and Yuanlong Ge

Organic tree fruit production has attracted a significant interest over the last decade. Total US sale of organic food was about $13.8 billion for 2005, and is growing at near 20% annually (OTA, 2006). Fresh fruits and vegetables are the largest category of organic food sales (Dimitri and Greene, 2002). The state of Washington is the leading state in organic apple production, accounting for about 38% of total US organic apple acres. Certified Washington State organic apple acreage increased from well below 500 total acres in the late 1980s to 7,642 acres in 2006 with an additional 4,100 acres in the transition process. Pear is another major fruit grown in Washington, occupying about one third of national acreage. Certified organic pear acreage is 1,251 acres with 276 acres in transition (Granatstein, Kirby and Feise, 2007).

Updated Project

In this updated project, we estimate an inverse demand function to reveal the price response to quantities for organic apples and pears separately from 2003 to 2006. This demand function includes multiple grade fruits so that the cross grade effect can be evaluated. Specific objectives of this paper include, (1) estimating the percentage of low grades fruits marketed in recent years; (2) investigate the general price respond to quantities supplied to market; (3) studying the relationship between crop size of the lower grade fruits and the price response of higher grade fruits; and (4) analyzing the price boosting effect from a reduction in lower grade supplies.

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