Industry runs risk of too many apples
WENATCHEE, Wash. — The Washington apple industry may be headed for a huge crop this fall, busting the record 128.8-million-box crop of 2012.
There’s talk it could top 140 million boxes, leading to the question: Are big companies risking overproduction?
“We’re always striving to overproduce and create years of problems and poverty,” said Mike Robinson, general manager of Double Diamond Fruit Co. in Quincy.
“It’s a cyclical business on apples and cherries. You can’t have a run like the last two or three years of really good profits without everyone planting,” he said.
“This fall’s crop will be ginormous. The weather has been absolutely favorable. No frost. Huge bloom. New blocks everywhere. The only thing constraining availability of crop will be availability of people to pick it,” Robinson said.
History has proven the industry overproduces, said Dale Davis, director of special projects at Chelan Fruit Cooperative.
“We go through cycles,” Davis said. “We’ve been there before and will be there again, but we always manage to weather that and become bigger and better at what we do.”
The industry is bullish on finding and expanding markets at a pace that will ensure profitability to growers, said Bruce Grim, executive director of the Washington State Horticultural Association and manager of the state’s apple, pear and cherry marketing associations.
“Whether that’s a good idea or not, time will tell,” he said. “You can barely get a tree from a nursery unless you order three years ahead. One marketer in the southern district called the amount of new planting frightening.”
The industry logged record high prices with the largest crop on record in 2012, because Midwest, East Coast, Canadian, European and Mexican apple crops were light that year.
The average price of all Washington apple varieties in 2012 was $24.41 per 40-pound box, according to the Washington Growers Clearing House Association. Other highs have been $22.71 in 2011, $19.79 in 2010 and $21.40 in 2007. Production costs roughly range from $15 to $18 per box and have been driven up by labor and fuel.
The Midwest and East came back with larger crops in 2013 but will be down again this year, “so I’m optimistic of the outcome even if we have a 140 million-box crop,” Grim said.
The industry is erring toward believing the sky is the limit, but logical constraints on sustaining growth are demand, enough labor to pick larger crops and water supply, Grim said.
“Regardless of the cause, the planet is getting warmer,” he said. “So with hotter summers and colder winters, how do we manage water long-term, forward?”
Desmond O’Rourke, agricultural economist who has long watched the apple industry, said big investments in new packing lines and storage make sense at recent low interest rates. Investing in orchard expansion is riskier, he said.
He noted the 2012 USDA Agriculture Census shows Washington tree fruit acreage climbing back up to where it was in 1997 before apple prices crashed. There were 318,256 acres in 1977, 299,174 in 2007 and 315,456 in 2012.
That’s a significant turn-around, O’Rourke said, given the cost of orchard development. Depending on cost of land and other factors, growers have said it ranges from $15,000 to $30,000 per acre.
Crops of 140 million boxes are not sustainable because Midwest and East Coast crops will be larger again, China has quit taking our apples and there are market troubles in Indonesia and India, he said.