January, 1999

Chinese trying to enforce floor price in fear of losing suit

The Chinese government is trying to make its apple juice concentrators stick to its floor price for exports over fears it will lose the antidumping suit the U.S. is about to file, according to a Chinese document.
“Since 1995 export of apple juice concentrate has been increasing rapidly but the price declines year by year,” states a document from the China Chamber of Commerce for Import and Export of Foods, Native Products and Animal By-Products to the country’s apple juice concentrators. “Once the anti-dumping action establishes the cost of surrogate country and it is applied to calculate the product cost, we will lose the whole U.S. market. Other markets will be affected consequently. At last the apple juice industry will sustain a fatal impact.”
Imports of apple juice concentrate from China have increased 953% over the last three years, while the price of Chinese concentrate has fallen by 53% to about $3.50 to $4 a gallon. In November the China Chamber of Commerce held a meeting with concentrators and set a floor price of $4.50 a gallon for low acid and $4.75 a gallon for high acid concentrate - a 15-30% hike - to try and take steam out of the U.S. Apple Association’s intent to file an anti-dumping suit. The price didn’t immediately rise, though, because some Chinese concentrators had long-term contracts at lower prices.
In early December the Chinese officials once again met with apple juice concentrators in the country urging them to convince their U.S. buyers to tear up the contract and use the new pricing, according to the China Chamber of Commerce document dated December 7.
“A patient pursuing must be excised, and let the customer know the situation we are confronting and necessity for limiting the price in order to get their understanding and support,” the document says. “As everybody knows, the U.S. is preparing an anti-dumping action against Chinese apple juice concentrate. Since 1995 export of apple juice concentrate has been increasing rapidly but the price declines year by year.”
The document goes on to tell the concentrators three reasons to use when trying to persuade their foreign customers to buy at the new floor price. It reads as follows:
1) International trade should be built on the basis of real mutual preferences and benefits. Only this way can we maintain a long-term and stable beneficial relationship. Now our apple industry confronts a very stern situation. If Chinese apple juice can no longer be exported to the U.S., the ones suffering losses is exporters and importers both in China and U.S. The new floor price adopted is originated from a specific, special situation and has been discussed by the industry and serves as an emergency measure. It is not that some companies intended to dishonor the contract, nor is it by governmental instruction.
2) If some companies carry on their contract and ship the low price products into the U.S., it may lead the others to follow example. As a result, the price will cut back and interrupt the market which has tended to be stable and the potential anti-dumping case consequently will be successful, which will bring both U.S. and China a great loss.
3) Now the Chinese apple juice concentrate industry is in a very difficult situation. If the customers can cooperate with Chinese exporters of apple juice concentrate to weather the critical situation, the loss to the customer will be compensated in other ways agreed by both parties.
The Chinese government is also telling the concentrators that they must prove they have a contract if they want to sell concentrate at lower than the floor price.
“If the persuasion does not work, the exporters are required to present the contracts, export declaration forms and foreign exchange receipts to the Chamber file,” the document reads. “If anyone back dates its contracts or conducts similar deception and be found, the Minister’s First Order of Foreign Economic Relations and Trade in 1996 will be applied strictly to and no mercies will be given.”
The Chinese are also said to be considering another increase in the floor price of apple juice concentrate in early 1999, said USApple President Kraig Naasz.
“Again it is clear by their actions, that our efforts are being taken seriously and while we are thankful for any interim impact of a positive nature the Chinese action might have on the current processing market, we won’t take that gain to the bank unless it is secured through the bringing of an anti-dumping case.”
The suit is coming closer to reality as funding and support for it is being gathered by USApple. On November 19 USApple endorsed a proposal to proceed with the anti-dumping suit and recently formed the Coalition for Fair Apple-Juice Concentrate Trade (FACT). It will be comprised of both those in the U.S. processing community who have standing to file the case as well as those interested in supporting the case financially which will cost $1 million to $1.5 million to pursue.
Organization endorsing the formation of FACT include:
• Knouse Foods Cooperative.
• Michigan Apple Committee.
• Michigan State Horticultural Society.
• Michigan Processing Apple Growers Association.
• New York Apple Association.
• New York State Horticultural Society.
• Washington Apple Commission.
• Washington State Horticultural Association.
• Tree Top Inc.
At the same time state departments of agriculture in Washington, New York, Michigan, California, Pennsylvania, North Carolina and Virginia have said they will provide assistance through the funding of economic research needed for the petition.
“Funding is coming together rather quickly,” Naasz said. “We are moving as expeditiously as possible to raise necessary funding so we can begin preparation of filing the petition.”
U.S. apple growers are suffering severe economic losses as their juice-apple markets are being displaced by low-cost imported concentrate. Between 1995 and 1997, prices received by U.S. growers for juice apples fell 39%, according to U.S. Department of Agriculture statistics.
Growers received on average $153 per ton for 1995-crop juice apples, versus only $93 per ton for 1997-crop apples. While official data aren’t yet available for 1998-crop apples, prices have fallen as low as $10 per ton in some parts of the country, a 93% decline from 1995-crop prices.

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