CHINA: APPLE FARMERS ENGAGED IN PRICE WAR

Mandarin/Nat Several years of bumper apple harvests have saturated world markets with the fruit, pushing global prices to historic lows. Apple farmers in China and the United States - the world's biggest producers - are engaged in a price war triggered by a flood of cheap Chinese apple juice concentrate into the U-S. The United States is about to slap protective tariffs on Chinese apple concentrate imports in a final defence of the home market. But one U-S apple farmer has found opportunity in the midst of this crisis, by selling both Chinese and American juice to a growing mainland market. The orchards of Huairou Country just north of Beijing contribute in a small way to China's growing reputation as the world's premier apple producing country. Peasant farmers here and throughout the country tend their apple fields for six months every year to earn an average annual income of 5-thousand yuan (about 600 U-S dollars) - some of the lowest wages in the world. The global economics of fruit farming have placed the innocent apple at the core of a trade dispute which pits the United States against Chinese growers and processors. In recent years, massive Chinese apple exports to the U-S in the form of concentrate have squeezed the life out of many American apple farmers. Chinese exports to America increased by more than 12-hundred percent between 1995 and 1998, from 3-thousand metric tons to 40-thousand metric tons, according to the U-S Commerce Department. After juice prices plummeted so low it wasn't worth it for some U-S growers to pick their fruit, the Commerce Department moved to end what they say is unfair pricing of imported Chinese apple juice concentrate. Pending a final review, the U-S government plans to impose a duty of up to 54 percent on most apple juice concentrate imports from China, expected to take effect by 31 January 2000. The tariff would be retroactive to 17 August 1999. All this conflict looked like a perfect opportunity to Paul Rasch. He is a fourth generation (Grand Rapids) Michigan apple farmer who decided to test his skills in China - America's fiercest competitor. His timing couldn't have been better. When Rasch arrived in the mid-90s, China was on its way to becoming the world's leading apple producer. It has increased production by 70 percent over the past 5 years, up to nearly 19 (m) million metric tons in 1998. China's over-production spelled opportunity for Rasch, who created his own brand and set up a juice production factory in the port city of Tianjin. Avoiding the complications of the export market, Rasch has turned American marketing know-how into an immediate success by selling his high-quality juice products to China's thirsty consumers. "Great Lakes" juice drinks are making their way on to the shelves of every major Chinese supermarket. With Chinese domestic demand growing, Rasch has no plans to export his juice. In fact, he is importing more and more American juice, mostly orange and grapefruit, to sell to Chinese consumers. China's mightiest economic asset - cheap, abundant labour - is a critical factor which has enabled Rasch to build a multi-million U-S dollar fruit juice business in fewer than 6 years. While U-S farmers are required to pay a minimum wage of 5.15 U-S dollars per hour for labour, Chinese planters often enlist paid family members at harvest time or hire poor villagers for only two U-S dollars per day. Low cost labour, the use of simple pesticides and repeated bountiful harvests render Chinese apple prices unbeatable on the world market. SOUNDBITE: (English) "In a situation where apple farmers around the world are getting squeezed, Chinese apple farmers are able to produce at a lower price and that's the bottom line." SOUNDBITE: (English) You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/121c97d4ebeaf3f34d658ccc69a2d8c7 Find out more about AP Archive: http://www.aparchive.com/HowWeWork