of apples in order to supply the present demand for processed apples 

 and to build up an inventory. During small crop years, the processor 

 depends heavily on carry-over stocks. 



If the price elasticities of demand on the two markets are different, 

 it is possible, within the bounds of economic theory, for the apple in- 

 dustry to differentiate between the markets by using the processing out- 

 let as a "buffer" for annual variations in crop size. At the present time, 

 accurate data are not available for testing the significance of the differ- 

 ence between the elasticities on the two markets. 



Concentration of Processing Markets 



As apple production has concentrated in rather specific regions, pro- 

 cessing has centered into an even fewer number of regions. Chart 4 shows 

 that practically half of the apples processed are processed (and presum- 

 ably grown) in Maryland, Pennsylvania, and Virginia. The second larg- 

 est processing area is New York, followed by California. It is interesting 

 here to note that while Washington and Oregon produced about one 

 quarter of the country's total crop during the period, the quantity of 

 apples going into processing from these states is relatively slight. Two 

 factors are relevant here: (1) the apples produced in the Northwest are 

 best suited to fresh use, and (2) processing facilities have never ap- 

 peared in the area in large numbers because of the competition from 

 fresh-market institutions. The Appalachian region of Maryland, Penn- 

 sylvania, and Virginia as well as New York apparently rely quite heavily 

 upon the processors as an outlet for their apples. Since the apple pro- 

 cessing industry is located in only a few production areas, this altern- 

 ative-outlet is not available to growers in most areas. 



Most of Processing Sales are Early in the Marketing Season 



In areas where apples are processed, the prospects of diverting a por- 

 tion of the crop to processing-outlets diminish rapidly as the season ad- 

 vances. The average monthly pack of canned apples and apple sauce is 

 shown in Chart 5. The pack is heavy during and immediately following 

 harvest season, and then drops off sharply. By the end of December over 

 90 percent of the total processing crop has been packed. Once an apple 

 has been placed in refrigerated storage, there is very little likelihood 

 that it will be diverted to processing use. The cost of refrigerated stor- 

 age is not warranted for apples destined for processing. Chart 6 shows 

 that the average seasonal pattern of apple processing holds true for 

 practically all areas processing apples. The only important exception to 

 this pattern of heavy packs during September, October, and November 

 is California, which produces and processes a different type of apple. 

 California is primarily a producer of an early summer apple, primarily 

 the Gravenstein variety, which accounted for one-third of the state's 

 total production in 1953 and 1954. Since these apples are harvested dur- 

 ing the summer and early fall months it is necessary that the pack of 

 apples in California be heaviest during these months. 



In a final analysis it would seem, therefore, that the quantity of 

 apples produced varies consideralily from year to year, dependent upon 

 weather condition, disease, and insect damage. The quantity of apples 



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