"Why the Fuss Over Golden Apples?"... It's Not a Matter of 'Just Not Eating Them' [Seungseop Song's Financial Light]

Apple Supply Drops 30% Due to Sharp Decline in Production
Record Warm Winter Hits Apple Growth
Food Prices Shaken by Global Warming
Concerns Over Pests Make Importing Foreign Apples Difficult

Citizens are shopping at Hanaro Mart Seongnam Branch in Seongnam, Gyeonggi-do. Photo by Jo Yongjun jun21@

I wish people wouldn’t make such a fuss about apples being expensive. If you don’t want to eat them, why not just not buy them?

We live in an era where eating apples has become intimidating. Apples have driven up overall prices, making them the fruit that the Ministry of Economy and Finance and the Bank of Korea are paying the most attention to. However, some online communities and social networking services (SNS) often post opinions like, “If you don’t want to eat them, just don’t.” Since apples are not a necessity, they argue that if the price goes up, you can simply choose not to buy them, so why make such a fuss? Is it really that simple? Considering the reasons behind the rising apple prices, it’s not a matter to be taken lightly.

Rotten Apples on a Burning Korean Peninsula

According to the Agricultural Products Distribution Comprehensive Information System, the average auction price of apples across 33 public wholesale markets nationwide was 2,730 KRW per kilogram in April last year. But in just one year, it nearly doubled to 5,590 KRW. According to Statistics Korea, the price of apples in March this year was 88.2% higher compared to the same month last year. The increase accelerated from 71.0% the previous month, marking the steepest rise since statistics began.

The fundamental cause of the apple price hike is climate change. Apples are basically fruits that grow in cool temperatures. They require an annual average temperature of 8 to 11 degrees Celsius and an average of 15 to 18 degrees during the growing season. As global warming raises average temperatures, it becomes increasingly difficult to cultivate apples. Especially at night, apples need to spend at least 1,200 to 1,500 hours at temperatures below 7°C. If nighttime temperatures are too high, apples cannot grow properly.

However, due to global warming, apple-growing regions are struggling to produce quality fruit. This is why Kim Myung-soo, Director of the National Institute of Horticultural and Herbal Science at the Rural Development Administration, said, “By 2100, apples will only be cultivable in parts of Gangwon Province.” According to the Rural Development Administration, the apple cultivation area in Gyeongbuk Province decreased by 44%, from 36,021 hectares in 1993 to 20,151 hectares last year. During the same period, the area in Daegu shrank from 447 hectares to 86 hectares, about one-fifth.

In December last year, forsythia, a spring flower, was blooming on the National Assembly grounds. Photo by Hyunmin Kim kimhyun81@

The reason apples are particularly expensive this year is also related to this. 2023 was the hottest year in Earth’s history. According to the Copernicus Climate Change Service (C3S), the global average temperature last year was 14.98 degrees Celsius. This was 1.48 degrees higher than the pre-industrial period of 1850?1900 and the highest temperature ever recorded since meteorological observations began. The average temperature in March was 9.4 degrees, the highest ever recorded for spring, and in November, just before the start of winter, Gangneung recorded 29 degrees and Seoul 26 degrees, showing abnormal heat. On December 8, some regions experienced daytime temperatures exceeding 20 degrees, marking the warmest December day on record.

Apple infected with anthrax. Photo by Gyeongbuk Province

It’s not just the heat that’s the problem. When temperatures rise and humidity increases, various pests and diseases begin to spread. Anthracnose is a representative example. It causes black spots on fruit and rot. It spreads easily in hot and humid conditions. As summers on the Korean Peninsula become longer and rainfall increases, apples inevitably become more vulnerable to anthracnose.

Importing Foreign Apples is Difficult... Watching the Price Bomb Unfold

Ultimately, apple cultivation has taken a direct hit. According to Statistics Korea’s production survey, only 394,428 tons of apples were produced last year, a 30.3% decrease from 566,041 tons the previous year. Prices are determined by supply and demand, and with supply dropping by tens of percent, prices have skyrocketed.

Of course, one might wonder, “Why are only apples rising so much?” The impact of abnormal temperatures is not limited to apples. The real reason is the lack of effective supply measures. Usually, when food prices rise, the government imports large quantities of the affected items from abroad to increase supply immediately. But importing apples is difficult. Since only domestic apples are consumed in Korea, even if production drops sharply, the price increase must be watched helplessly.

The difficulty in importing apples is due to foreign pests and diseases. When importing agricultural products into Korea, a total of eight stages of risk analysis are conducted. The Plant Protection Act strictly prohibits skipping or simplifying any of these steps. Naturally, it takes time to pass all these procedures. If imports were rushed just because apples are expensive, foreign pests could spread nationwide, causing even greater economic damage.

Japanese Aori apples. Photo by Aomori Apple TS Introduction Council

That said, apple imports are not completely off the table. Since 1989, Korea has been negotiating import agreements with 11 countries, including Australia, the United States, New Zealand, Germany, and Japan. Japan is the furthest along, currently at the fifth stage of drafting risk management plans. However, negotiations have stalled and are effectively deadlocked due to fruit flies and moths present in Japan. Korea demands risk management plans because of the risks, but for the Japanese government, agreeing would mean admitting their fruit exports are risky, making negotiations difficult.

Apple Prices Triple After Distribution

Still, one question remains. Climate crisis and difficulties in fruit imports are global issues, yet apples in Korea are particularly expensive. According to Numbeo, a national and city statistics comparison site, the price of 1 kg of apples in Korea was $6.80 (about 9,155 KRW) on the 31st of last month. Along with bananas, potatoes, and oranges, Korea ranked first worldwide. This means Korean apples are more expensive than in countries known for high living costs, such as the United States, Japan, and Singapore.

Even though the environment is similar, the reason fruit is especially expensive in Korea is attributed to the “distribution structure.” While production and imports are equally difficult everywhere, prices rise more during the distribution process in Korea. Fruits in Korea pass through wholesale markets, distribution companies (retailers), and then reach consumers. Prices at wholesale markets are determined by auction, with commissions around 4?7%. Adding labor costs, packaging, and rent can cause prices to more than triple.

Kim Byung-hwan, First Vice Minister of the Ministry of Economy and Finance, presiding over the 16th Vice Ministers' Meeting on Prices at the Government Seoul Office in Jongno-gu, Seoul, on the 5th. On this day, the government announced that it would form a task force to inspect the actual conditions of the distribution structure of agricultural and marine products. Photo by Ministry of Economy and Finance

The government emphasized examining the “agricultural and fishery product distribution structure” at an inter-ministerial vice-ministerial meeting on prices for this reason. The strategy is to check for unfair price inflation and stabilize prices as much as possible. Since the 5th of this month, a task force has been formed and started inspecting shipment and distribution practices at 32 public wholesale markets. Large distribution companies are also under investigation. After the inspection, improvement plans for the distribution structure will be prepared and announced based on the findings.

However, apple prices are unlikely to drop immediately. The current situation will only calm down if apple supply increases, but new apples won’t start shipping until July. Even then, it’s hard to say prices will definitely fall. So far, there have been no winter cold damage disasters, but summer rainfall conditions remain uncertain.

[Image source=Yonhap News]

Ultimately, simply looking at apple prices and thinking, “What’s wrong with eating less?” misses the essence of the problem. It’s not just about choosing which fruit to buy at the supermarket. Behind the current controversy over apple prices lie problems with the distribution system that inflate prices. It also reveals the side effects of human indiscriminate use of fossil fuel power generation and environmental pollution. Global warming warns us how it will change our eating habits and make price management by fiscal and monetary authorities much more difficult in the future.

Editor's NoteEconomics and finance are difficult subjects due to complex terminology and background stories. Financial Light delivers easy-to-understand economic and financial stories every week. Even without prior knowledge, these stories will ignite your interest in economics and finance.