the sweet and sour of apples and cranberries

In the dance of supply and demand, every fruit tells a story.

As fall wanes, a tale of two harvests unfolds: apples in ShaanXi and cranberries across the globe. Their stories, though diverge in market realities and cultural perceptions, offer a vivid insight of market dynamics from agricultural pracise.

Apples of ShaanXi: A Struggle Against Odds

In the rugged terrain of ShaanXi, family-owned apple farms face a relentless battle. The market here features a complex weave of decentralized transactions between the apple farmers and the merchants, dancing around fluctuating demand and unpredictable, competitive pricing.

The Market Dynamics: Farmers vs. Merchants

At the heart of this dynamic is a tense competition between farmers and merchants, each striving for marginal gains in this hardly lucrative business. Farmers, aiming to maximize profits, often resort to strategically freezing their apples to sell later in the year when supply is scarce (compared to harvest season) and apple prices potentially rise. Merchants, on the other hand, aim to purchase high-quality apples at the lowest possible price.

This decentralized and unorganized supply chain, driven by individual utility optimization, results in a market where farmer’s bargaining power is minimal and the market is highly volatile, but neither party feels comfortable. Farmers cheat the merchants and mix up good/bad apples, while merchants are becoming more and more picky. Each party place minimal trust upon the other.

Farmers’ Struggle Against Odds

For the apple farmers, it’s a constant balancing act between risk, quality, and quantity. Despite their efforts, the business is far from lucrative. Even in the best years, an apple farm’s annual sales might barely reach ¥200,000 for the entire family.

The farmers find themselves playing against probabilities on two fronts: the unpredictability of nature, where extreme weather, pests, and diseases pose constant threats; and the overwhelming forces of supply and demand, where their minimal bargaining power often leads to hasty or ill-informed decisions about whether to sell immediately or store the apples in hopes of better future prices.

A Hard-Fought Livelihood

The farmers, despite being owner of their land, but feels more like slaves of their apple trees. Tirelessly working in a business that barely sustains their livelihoods and the future of their children, it’s really like their lively hood being at the mercy of elements beyond one’s control. Yet, this poignant reality is underscored by the sarcastic yet resonant comment beneath an article about some of their stubborn and plight:

Keep hoarding it, don’t sell. The price will definitely catch up to the iPhone 16.

But the problem isn’t really the shortminded-ness of the farmers. When a design of a market fail, it shouldn’t be the strategic agent to take all the blame, isn’t it?

Cranberries: A Success Story

Contrastingly, the world of cranberries tells a tale of innovation and success. Ocean Spray, a leading cranberry cooperative, epitomizes this narrative. Accounting for 65% of the world’s cranberry supply, the company exempt from antitrust regulations due to a 1922 federal law, benefits from collective scale and power:

This would be unusual in most industries, but it’s surprisingly common in agriculture. The model for Ocean Spray, Dairy Farmers of America and Land O’Lakes became popular because of a 1922 federal law that exempts cooperatives from antitrust regulations, allowing farmers to pool their resources for scale and collective power.

Ben Cohen, These People Are Responsible for the Cranberry Sauce You Love to Hate

Ocean Spray’s model is a unique fusion of traditional agriculture and modern business strategies. It has invested many millions in innovations and have world-class scientists and marketing teams working around it, likecreating novel food products and even, leveraging social media trends:

Ocean Spray hired two granfluencers, including one the same age as the cooperative itself, to ask their millions of followers on social media the holiday’s most polarizing question: Team Homemade or Team Canned?

Impressive.

Looking Ahead…

I love both of these fruits, in terms of eating. The resilience and innovation seen in the cranberry industry could potentially inspire a transformation in the apple orchards of ShaanXi. The hope is that, with time, these apple farmers will find ways to modernize and thrive, just as their cranberry counterparts have.

Reference

1. [The cranberry article] Cohen, B. (2023, Nov. 17). These People Are Responsible for the Cranberry Sauce You Love to Hate. The Wall Street Journal.
2. [The apple article] 贞观club. (2023, Nov. 17). 为了把苹果卖上价，关中平原的农户每年都在做赌注. 网易订阅.