apple juice

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APPLE JUICE
Report to the President on
Investigation No. TA-201-59
Under Section 201 of the
Trade Act of 1974
USITC PUBLICATION 1881
JUNE 1988
United States International Trade Commission I Washington, DC 20436
UNITED STATES INTERNATIONAL TRADE COMMISSION
COMMISSIONERS
Susan W. Liebeler, Chairman
Anne E. Brunsdale, Vice Chairman
Paula Stem
Alfred E. Eckes
Seeley G. Lodwick
David B. Rohr
STAFF ASSIGNED
Office of Investigations: Stephen Vastagh
Jerald Tepper
Office of Economics: Laurie Cameron
Office of Industries: Alvin Macomber
Antoinette James
Office of the General Counsel: Catherine Field
William Gearhart
Supervisory Investigator: Robert Eninger
Address all communications to
Kenneth R. Mason, Secretary to the Commission
United States International Trade Commission
Washington, DC 20436
C 0 N T E N T S
Determination------------------------------------------------------------ 1
Views of Chairwoman Paula Stern and Commissioners Alfred Eckes,
Seeley G. Lodwick, and Anne E. Brunsdale------------------------------ 3
Views of Vice Chairman Susan W. Liebeler-------------------------------- 21
Dissenting views of Commissioner David B. Rohr-------------------------- 52
Information obtained· in the investigation:
Introduction--------------------------------------------------------- A-1
The products:
Juice A-1
apples------------------------------------~·c--------------
Single-strength apple juice----------------,-----c·_ ------------- A-4
Fresh single-strength juice----~ -----~·--•------------------- A-4
Pasteurized single.strength juic.e--'---.---·-------------------- A-4
Concentrated apple juice-----------·---o.-"------------------------ A-5
Frozen concentrated apple juice----------------------------- A-5
Concentrated apple juice--·---------------------------------- A-5
Reconstituted and blended apple juice--------------------------- A-6
U.S. tariff treatment----~------------------------------------------- A-7
The U.S. market------------------------------------------------------ A-8
Growers---------------------------------------------------------- A-9
Growing operations------------------------------------------- A-9
cost of growing---------------------------------------------- A-10
Jtiice production of growers--------------------------------- A-11
Entry into and exit from the industry------------------------ A-11
Packers---------------------------------------------------------- A-12
Processors of U.S. apples--------------------------------------- A-12
Producers of domestic juice------------------------------------- A-12
Concentrators of domestic juice---------------------------------- A-15
Reconstitutors-------------------------------------------------- A-16
Bottlers-------------------------------------------------------- A-16
U. S. importers--------------------------------------------------- A-16
Channels of distribution---------------------------------------- A-17
Transportation factors affecting demand-------------------------- A-20
Apple industry trade associations:
International Apple Institute----------------------------------- A-21
Processed Apple Institute--------------------------------------- A-21
Grower associations---------------------------------------------- A-21
Apparent U.S. consumption------------------------------------------- A-22
The question of increased imports:
U.S. imports---------------------------------------------------- A-24
Crop-year data----------------------------------------------- A-25
Quarterly data---------------------------------------------- A-25
Customs district data---------------------------------------- A-25
U. S. exports----------------------------------------------------- A-29
The question of serious injury:
U.S. plant closings---------------------------------------------- A-30
U.S. production, capacity, and shipments:
U.S. production and utilization of apples------------------- A-31
U.S. production capacity for apple juice and CAJ------------ A-34
Single-strength domestic apple juice--------------------- A-38
CAJ------------------------------------------------------ A-39
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CONTENTS
Information obtained in the investigat ·.on--continued
The question of serious injury--continued
U.S. production, capacity, and shipments--continued
Production and movements of CAJ and single-strength apple
juice made entirely of U.S.-grown apples------------------ A-41
Imports and purchases of juice apples and CAJ by producers
of domestic juice------------------------------------------ A-45
Imports and purchases of CAJ by reconstitutors-------------- A-45
Inventories of juice apples and domestic apple juice and CAJ----- A-45
Employment------------------------------------------------------- A-48
Financial experience of U.S. growers and producers of domestic
apple juice:
U.S. growers------------------------------------------------ A-50
Large growers------------------------------------------- A-52
Small growers-------------------------------------------- A-55
Capital expenditures------------------------------------ A-57
Financial position of U.S. growers----------------------- A-59
Operations of producers of domestic apple juice------------- A-59
Capital expenditures------------------------------------ A-61
Research and development expenditures------------------- A-61
Financial condition of U.S. producers-------------------- A-61
The question of threat of serious injury:
U.S. importers' inventories------------------------------------- A-62
Foreign industries---------------------------------------------- A-63
The question of imports as a substant.ial cause of serious injury:
Market penetration----------------------------------------------- A-68
Prices---------------------------------------------------------- A-68
Apple juice------------------------------------------------- A-68
Juice apples------------------------------------------------- A-70
Concentrated apple juice------------------------------------- A-72
Exchange rates--------------------------------------------------- A-76
Factors other than imports affecting the domestic industry------- A-79
Competitive efforts against imports---------------------------------- A-79
Small growers--------------------------------------------------- A-80
Large growers---------------------------------------------------- A-80
Producers of domestic apple juice-------------------------------- A-81
Adjustment if relief were to be granted------------------------------ A-81
Small growers--------------------------------------------------- A-81
Large growers---------------------------------------------------- A-82
Producers of domestic apple juice------------------------------- A-82
Other comments of producers:
Producers of domestic juice and/or CAJ--------------------------- A-82
Growers---------------------------------------------------------- A-83
Appendix A. Notice in the Federal Register of institution of
investigation No. TA-201-59, letter from the United States Trade
Representative, and list of witnesses appearing at the hearing-------- A-85
Appendix B. Excerpts from the Tariff Schedules of the United States
Annotated (1986), schedule l, part 12, subpart A---------------------- A-93
Appendix C. Certain apple growers' comments on their operations that
were supplied voluntarily with the return of the Commission
questionnaire---------------------------------------------------------- A-97
Appendix D. Statistical tables------------------------------------------ A-99
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CONTENTS
Figure
Packer's tally to grower for season's pack of fresh market apples and
culls (juice apples) of one variety, Washington State, 1984 crop------- A-13
Tables
1. Concentrated apple juice (CAJ): Distribution of purchases from
U.S. importers and directly from foreign sources, crop years
1980/81 to 1984/85----------------------------------------------- A-17
2. Concentrated apple juice (CAJ): Importers• sales of imports,
by types of users, 1981 and 1985--------------------------------- A-18
3. Single-strength apple juice: Distribution of sales by producers
of domestic juice, by types of purchasers, 1981 and 1985--------- A-19
4. Single-strength apple juice: Distribution of sales by
reconstitutors, by types of purchasers, 1981 and 1985------------ A-19
s. Apples and apple juice: Transportation costs as a share of
the price, by distances------------------------------------------ A-20
6. U.S. per capita consumption of apples and apple products, 1975-84-- A-22
7. Apple juice: Apparent U.S. consumption on a single-strength
basis, crop years 1980/81 to 1984/85 and July-January of crop
years 1984/85 and 1985/86---------------------------------------- A-23
8. Apple juice: U.S. production, imports, apparent U.S. consumption,
and Producers' Price Index, crop years 1975/76 to 1984/85-------- A-24
9. Apple or pear juice: U.S. imports for consumption, by principal
sources, crop years 1980/81 to 1984/85--------------------------- A-26
10. Apple or pear juice: U.S. imports for consumption, by principal
sources, July-September, October-January, and crop year to date,
1984/85 and 1985/86----------------------------------------------- A-27
11. Concentrated apple juice (CAJ): U.S. imports for consumption
from specified major suppliers, annually and by quarters,
crop years 1980/81 to 1984/85, July 1984-January 1985, and
July 1985-January 1986------------------------------------------- A-28
12. Apple or pear juice: U.S. imports for consumption, by principal
U.S. Customs districts, 1980-85---------------------------------- A-29
13. Apples: U.S. production and utilization, crop years 1980/81 to
1984/85----------------------------------------------------------- A-32
14. Juice apples: U.S. production, by principal States and by crop
years, 5-year averages 1970/71 to 1974/75, 1975/76 to 1979/80,
1980/81 to 1984/85, and annually 1980/81 to 1985/86-------------- A-33
15. Apples: Smaller U.S. growers• production and sales, crop years
1980/81 to 1984/85 and July-December 1985------------------------ A-35
16. Apples: Larger U.S. growers• production and sales, crop years
1980/81 to 1984/85 and July-December 1985------------------------ A-36
17. Apples: Age of trees in 1985 on large and small apple farms------- A-37
18. Apples: Expected production and share of juice apples in expected
production, by farm sizes, 1986-90-------------------------------- A-37
Ill
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CONTENTS
19. Apple juice and CAJ: Production, shipments, and inventories of
domestic apple juice and CAJ made entirely from U.S. apples,
crop years 1980/81 to 1984/85, July-December 1984, and July-
December 1985----------------------------------------------------- A-42
20. Apple juice, single-strength equivalent: Estimated U.S.
production based on the production of juice apples, by principal
States, crop years 1980/81 to 1985/86---------------------------- A-44
21. Apples and apple juice: Purchases and imports by producers of
domestic apple juice, crop years 1980/81 to 1984/85, July
December 1984, and July-December 1985---------------------------- A-46
22. Apple juice: Reconstitutors• purchases and imports, crop years
1980/81 to 1984/85, July-December 1984, and July-December 1985--- A-47
23. Apples: U.S. growers• inventories as of Dec. 31 and Mar. 31,
crop years 1981/82 to 1985/86------------------------------------ A-48
24. Apples: Full-time and part-time employment and unpaid employment
on U.S. apple farms, crop years 1980/81 to 1984/85---------------- A-49
25. Average number of U.S. production and related workers engaged in
the production of apple juice, and hours worked and wages and
total compensation paid to such employees, fiscal years 1981-85
and interim periods ended Dec. 31, 1984, and Dec. 31, 1985-------- A-51
26. Income-and-loss experience of large apple growers on the overall
operations of their farms on which apples are grown, 1981-85----- A-53
27. Income-and-loss experience of large apple growers on their total
apple operations, 1981-85---------------------------------------- A-55
28. Income-and-loss experience of small apple growers on the overall
operations of their farms on which apples are grown, 1981-85----- A-56
29. Income-and-loss experience of small apple growers on their total
apple operations, 1981-85---------------------------------------- A-58
30. Selected balance sheet items for U.S. apple growers, as of the
end of accounting years 1981-85---------------------------------- A-59
31. Income-and-loss experience of 10 producers on their operations
producing domestic apple juice, accounting years 1982-85--------- A-60
32. Selected balance sheet and financial ratios for producers of
domestic apple juice on their overall operations, as of the end
of accounting years 1982-85-------------------------------------- A-62
33. Apples: World production for all uses in selected regions and
countries, by crop years, 5-year averages 1970/71 to 1984/85
and annually 1981/82 to 1985/86---------------------------------- A-64
34. Apples: Supply, utilization, and share of production processed,
by countries and crop year---------------------------------------- A-66
35. Concentrated apple juice (CAJ) (69-72 degree Brix): All apples
produced, apples used for CAJ, capacity to produce CAJ,
production of CAJ, and exports of CAJ to the United States,
by sources, 1981-85---------------------------------------------- A-67
36. Index of prices of apple juice produced from domestically grown
apples and imported concentrate, 1975-84------------------------- A-69
37. Index of weighted-average prices of apple juice reported by
producers--------------------------------------------------------- A-70
38. Prices of apples, by uses, crop years 1975/76 to 1984/85----------- A-71
39. Selling and purchase prices of juice apples, crop years 1981/82
to 1984/85 and July-December 1985--------------------------------- A-72
IV
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CONTENTS
40. Quarterly purchase and selling prices of juice apples, July 1981-
December 1985----------------------------------------------------- A-73
41. Estimated unit values of imported concentrated apple juice from
all sources, crop years 1975/76 to 1984/85 and July-December
1985-------------------------------------------------------------- A-73
42. Estimated unit values of imported concentrated apple juice from
largest suppliers, crop years 1982/83 to 1984/85 and July-
December 1985----------------------------------------------------- A-74
43. Purchase prices of domestic and imported concentrated apple
juice, crop years 1981/82 to 1984/85 and July-December 1985------- A-74
44. Quarterly purchase prices of domestic and imported concentrated
apple juice, July 1981-December 1985------------------------------ A-75
45. Quarterly purchase prices of imported concentrated apple juice,
by sources, July 1981-December 1985------------------------------- A-76
46. Exchange rates: Nominal-exchange-rate equivalents of selected
currencies in U.S. dollars, real-exchange-rate equivalents, and
producer price indicators in specified countries, indexed by
quarters, January 1981-December 1985------------------------------ A-77
Note.--Information that would reveal the confidential operations of
individual concerns may not be published and therefore has been deleted from
this report. Such deletions are indicated by asterisks.
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REPORT TO THE PRESIDENT
ON INVESTIGATION NO. TA-201-59
APPLE JUICE
UNITED STATES INTERNATIONAL TRADE COMMISSION
June 13, 1986
Determination
On the basis of the information developed in the subject investigation,
the Commission has determined !J that apple juice, not mixed and not
containing over 1.0 percent of ethyl alcohol by volume, provided for in item
165.15 of the Tariff Schedules of the United States, is not being imported
into the United States in such increased quantities as to be a substantial
cause of serious injury, or the threat thereof, to the domestic industry
producing an article like or directly competitive with the imported article.
Background
The United States International Trade Commission instituted investigation
No. TA-201-59, under section 20l(b)(l) of"the Trade Act of 1974 (19 U.S.C.
225l(b)(l)), in order to determine whether the above described apple juice is
being imported into the United States in such increased quantities as to be a
substantial cause of serious injury, or the threat thereof, to the domestic
industry producing an article like or directly competitive with the imported
article. The investigation resulted from a request received by the Commission
on December 27, 1985, from the United States Trade Representative.
Notice of the institution of the Commission's investigation and of a
public hearing to be held in connection therewith was given by posting copies
of the notice in the Office of the Secretary, U.S. International Trade
Commission, Washington, DC, and by publishing the notice in the Federal
Register of January 24, 1986 (51 F.R. 3266). The hearing was held in
!J Commissioner Rohr dissenting.
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Washington, DC, on April 17, 1986, and all persons who requested the
opportunity were permitted to appear in person or by counsel.
This report is being furnished to the President in accordance with
section 20l(d)(l) of the Trade Act of 1974. The information in the report was
obtained from responses to Commission questionnaires, fieldwork and interviews
by members of the Commission's staff, other agencies, information presented at
the public hearing, briefs submitted by interested parties, the Commission's
files, and other sources.
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