This week, I had the pleasure of giving presentations at apple meetings in Chelan and Wenatchee focusing on the good fortune Washington apple growers are enjoying this season.
Crop failures in New York, Michigan, and Ontario, Canada, have provided unprecedented domestic demand and price support. The 2012-13 Washington apple crop is definitely one for the books, but I think we all need to understand the math when looking ahead to the 2013 and 2014 harvests.
Here’s the math:
With normal crops in other growing regions, the U.S. domestic market has represented approximately 70 million boxes of Washington apples on average over the last five years.
This season, Washington apple growers harvested 20 million more boxes than the previous record crop in 2010. Yes, that’s 129,000,000 boxes. In 2011-12, Washington exported 36.6 million boxes, the largest volume ever.
Looking ahead to next season, if Washington’s 2013-14 apple crop is 120 million packed boxes and U.S. domestic consumption is 70 million boxes, Washington will need to export 50 million boxes.
A few facts to consider:
1. U.S. domestic consumption of fresh apples has been flat or decreasing since 1980, increasing the industry’s reliance on international markets.
2. Most apple producing states are expanding production and replacing older, less consumer-oriented varieties with Gala and Honeycrisp, which lead the trend. Remember, East Coast producers have a freight advantage as 70 percent of the U.S. population is east of the Mississippi.
3. Barriers to trade in international markets are increasing. Whether it’s pest and disease issues causing market closure (as in China), new regulations restricting trade (Indonesia) or a reduction/elimination of products allowed to be used in the production process (European Union), it’s definitely becoming more difficult to comply with every country’s requirements.
4. Washington’s production potential is being realized, as evidenced by the 2012 crop. The days of 100 million boxes are over; the new norm is 120-130 million.
Certainly, there is cause for optimism as well. Studies show increased consumption of fruits and vegetables is necessary to remain healthy and reduce obesity in adults and youth. The U.S. food security system is the best in the world, providing a safe food supply. And the increasing worldwide middle class will demand an ever-increasing volume of healthy and safe fruits and vegetables as their incomes grow. But when an industry increases production 15.5 percent in one year, there could be growing pains for a few years. We have seen this type of growth before, and always built demand to equal the supply, but with pain. So you might ask: “What can I do as a small grower to stay profitable during high crop volume years?”
Good question!
Everyone knows there are only two things we can control as growers: bins per acre and packs per bin, and we’re certainly improving at bins per acre. As we all know, we’re price takers—only after covering production and packaging costs do we get paid.
The reality is, high (full) color sells, low color doesn’t. So those of us with poor coloring Gala, Fuji, and Red Delicious had better take every step to improve fruit color. This is priority number 1. We can debate how much color, but full color, or approaching that, is the key. Leave the light color in the orchard. In addition, do your best to keep your Golden Delicious and Granny Smith free from sunburn, which downgrades your fruits and reduces returns. Secondly—and I know this isn’t easy either—target your sizing to the domestic market requirements of 80s and 88s. Fruits larger than 72 and smaller than 125 dramatically reduce your returns. And, if you do make a mistake, go smaller because there are market opportunities for 125s and smaller, but very few for 64s and larger.
You are not alone, as the Washington Apple Commission and other industry organizations recognize the importance of expanding and maintaining international markets. Market access equals market opportunity. I can guarantee that the Apple Commission will put every available resource towards promoting your products in all 26 markets where we have representation.
The question is: Is this enough?
Leave A Comment