Because of an increasingly competitive U.S. market, the salvation of the Washington apple industry will be overseas markets, and the industry will need to become more export oriented than in the past, says agricultural economist Dr. Desmond O’Rourke.

O’Rourke sees little promise in the domestic market, where per-capita consumption of fresh apples has been declining, even though Washington apple shipments have been on an upward trend over the past decade.

Overall per-capita apple consumption (fresh and processed) has been fairly stable at around 48 pounds over the past two decades, but O’Rourke said this is because of increasing amounts of juice from imported Chinese apple concentrate being consumed in this country. Average apple juice consumption increased from the equivalent of 20.7 pounds per person in 1991 to 25.1 pounds in 2009, USDA ­figures show.

Per-capita consumption of fresh apples in the United States has fallen by 16 percent (from 19.6 pounds per person to 16.4 pounds) over the past 20 years, U.S. Department of Agriculture statistics show. To calculate per-capita consumption—the amount of apples each person consumes, on average—the USDA takes total U.S. production, adds imported apples, subtracts exports, and divides that number by the population. And the population has grown by 24 percent in the past two decades.

Fresh shipments

Washington’s domestic fresh shipments have increased by 25 percent since 1990. With the increasing population, that’s kept the average consumption of fresh Washington apples in the United States fairly level, at just under 10 pounds per person. O’Rourke said most of the drop in average U.S. consumption is a result of lower production in other growing areas of the United States.

Apple production in the eastern United States (primarily New York) peaked in 1992 at 72 million boxes and has dropped to under 62 million.  (Those figures, from the U.S. Apple Association, include both fresh and processing apples.) Central U.S. apple production (primarily Michigan) declined from just under 40 million boxes in 1995 to 21.4 million in 2008. California production has fallen from a high of 21.3 million boxes in 1999 to just 6.3 million in 2009.

Varieties

O’Rourke says some of the older varieties, such as Romes and Jonathan apples, have lost their appeal. Washington orchardists’ switch to newer varieties has helped keep them in the game. In 1993, Red and Golden Delicious made up 83 percent of the Washington fresh apple crop; in 2009, those two varieties made up only 44 percent of the crop.

“They have converted from the old Reds and Goldens to new varieties. They have moved much nearer to consumers,” O’Rourke said. “Washington would have had the same type of decline in per-capita consumption as the rest of the United States if it had not invested so much in ­infrastructure and developed all these new varieties.”

However, he doesn’t expect the increasing number of apple varieties to expand the total apple market. “Most varieties we put on the market are substitutable, and I don’t think the consumers know the difference,” he said.

O’Rourke believes the apple industry has paid too much attention to the supply-side characteristics of the new varieties and too little attention to the demand side and their potential appeal to retailers and consumers. In established markets, it’s difficult to find new varieties unique enough to stand out among all the varieties already available. However, it might be possible to find a specific variety that would appeal to 100 million people in India, he suggested. “Those are the sort of specific demographics you have to start looking at when you develop new varieties.”

Continual change

Growers, packers, marketers, and support services will have to continually adjust their thinking processes, their goals, and their practices to deal with changing demand at the national and global level, O’Rourke stresses.

The major fresh fruits (apples, oranges, and bananas) are just a tiny part of the snack options available to people in the United States. Bite-size and exotic fruits are becoming more popular, and innovative snack foods are continually being introduced by large corporations with vast financial resources and dedicated promotional and marketing budgets.

In comparison, the Washington Apple Commission has been unable to promote apples on the domestic market since a federal judge ruled its mandatory assessments unconstitutional in 2004. Marketers have moved to fill the void, but the money for promotions is collected and spent by individual companies with individual retailers. The net effect, O’Rourke believes, is to shift consumer purchases of apples from one retailer to another and, despite all the advice people are given about eating more fresh fruits and vegetables, total demand for apples is not growing. ­Without a major promotion program for apples, consumers are likely to continue to switch to other types of snacks, O’Rourke believes.

International markets

Conditions in international markets are radically different from the domestic market, however. They show great promise because of their increasing wealth and the ability of more of their populations to buy fresh foods like apples.

It is predicted that within ten years, China will have the world’s largest gross domestic product, just ahead of the United States, with India in third place. By 2030, China, India, and Brazil will have 3.5 billion people—10 times the population of the United States—and India and Brazil produce comparatively few apples.

Upward trend

Although exports fluctuate from year to year, depending on exchange rates and other trade factors, Washington apple exports have been on an upward trend since 2004, with a record 36 million boxes (34 percent of the crop) exported two ­seasons ago.

Although the Washington Apple Commission had to end its domestic promotions in 2004, its export promotion program continued. Growers, who had been paying an assessment of 25 cents a box before the lawsuit, now pay the commission 3.5 cents per box. The commission has about $6 million annually to spend on promoting Washington apples overseas. O’Rourke said this is far below the critical level needed to tap into the exploding opportunities.

“It’s totally unrealistic to expect that you can have a major increase in global demand without a major increase in global market promotion,” he said. “The markets in India, Indonesia, Mexico, and China are going to continue to grow, and somebody is going to continue to dominate them. There are huge rewards waiting in the overseas markets, but the Washington apple industry has to be more aggressive in pursuing them.”