Market and Economic Analysis of Apple Concentrate Production

Kurmai, Viktória

Keywords: apple juice, apple concentrate, competitiveness, foreign trade, cost-benefit analysis, Q15

In this study, I had two different objectives. The first was to examine the market demand for apple concentrate and the second was to examine whether the apple concentrate production is profitable or not. To determine the market demand I used secondary data: the databases of Eurostat, Faostat and study papers of foreign multinational apple concentrate producer companies. The primary data were collected from a Hungarian apple concentrate producer company of great importance in this sector, and the farm level cost-benefits analysis was also made.
The world’s apple concentrate production is approximately 1.4-2.1 million metric tons for market year and 50% of this production is realised in China and Oceania, while 30% is produced in Europe. The EU 28 import on average 570,000 metric tons of apple concentrate. From this, 45,000 tons are Hungarian exports, mainly marketed to Germany and Austria. Even at European level, the opportunity to increase the market share is given. The world market price of apple concentrates varied between 0.65 and 2.20 €/kg in the last ten years. In the domestic market, the price change had a lower range (0.6-1.2 €/kg). The world market price of apple concentrate is determined by China, which is the largest producer. European prices are established at the Chinese level. At least 50% of the direct cost of apple concentrate production is the cost of apples produced for industrial purposes. More than one quarter of the direct costs – excluding raw material cost – is the cost of concentration. Beside the different prices of apples for industrial purposes, the cost of apple concentrate is between 198 and 493 HUF/kg, at an average dry extract content level. In recent years, the highest price of the finished product on the domestic market was 360 HUF/kg. Profit can be only realised at a price of 30 HUF/kg for apples for industrial purposes. It is certain that if the price of the concentrate is 180 HUF/kg, the processing activity is in deficit. Where the price of the apple concentrate follows the price of apples for industrial purposes, higher changes do not occur in the cost-related profitability. Calculating with the last five years’ average prices (25. 3 HUF/kg price of apple for industrial purpose and 354 HUF/kg price of finished product), 13% of cost-related profitability was available for the investigated company involved in apple concentrate production. Processing and selling by-products can increase the net revenue of apple concentrate by 8-10 HUF/kg.