Company sheds excess capacity to better compete with Chinese concentrate


Capital Press

SELAH, Wash. -- Tree Top Inc., a major central Washington tree fruit processor, is entering its 50th year as a leaner, grower-owned cooperative, recording some of its best years financially.

Based in Selah just north of Yakima, Tree Top bought 340,000 tons of fruit and posted $37.2 million in net proceeds in fiscal year 2009 -- Aug. 1, 2008, to July 31, 2009. That compares with 267,000 tons and $44.6 million in fiscal year 2008, said Sharon Miracle, the co-op's corporate communications manager.

"This reflects two consecutive years of posting net proceeds that are in the top five best years of the company," Miracle said.

The majority of net proceeds are returned to growers for their share of fruit that is processed, she said.

The co-op has turned around financially, "right-sizing" itself to better match supply and demand, she said.

A few years ago, Tree Top wasn't doing as well. Like other U.S. apple concentrate producers, Tree Top struggled with increased competition from Chinese apple juice concentrate. For a few years, the supply of cull apples for concentrate was so short that Tree Top and other U.S. apple concentrate producers had to buy Chinese concentrate, Miracle said.

And in years of excess cullage, Tree Top had too much concentrate that couldn't compete with Chinese concentrate, she said.

Tree Top closed its Milton-Freewater, Ore., frozen apple and freezer cherry plant in March 2006. It closed its Cashmere, Wash., apple and pear juice concentrate plant on Jan. 4, 2008. It closed its Rialto, Calif., juice plant last month following "a steady decline" in work for other companies that left the plant with "an immense amount of excess capacity," Miracle said.

The Rialto closure will save Tree Top nearly $1 million in the first year and provide working capital with its sale in the future, Miracle said.

She said she's not aware of plans to close more plants.

In October 2008, Tree Top bought the Sabroso Co., which is based in Medford, Ore. Sabroso produces fruit purees, nectars and other products mostly from soft fruit and berries. With Sabroso, Tree Top offers an array of fruit-based products and has 20 of the world's leading food manufacturers as customers, Miracle said.

Beside plant closures, Tree Top is controlling expenses by contracting in advance with growers for supply rather than taking everything growers have, Miracle said.

Growers must provide and Tree Top must accept tonnage per grower based on their shares in the co-op. There's flexibility for both sides, Miracle said.

Tree Top has 1,100 grower members in Washington, Oregon and Idaho, down from 1,300 a few years ago. It also has 1,100 employees.

Chinese concentrate and the recession remain challenges, but Tree Top's leaders are optimistic that it is well-positioned to meet those challenges, she said.

Tree Top will mark its 50th anniversary in September by hosting a national Skewered Apple Barbecue Championship. Apple juice is commonly used in barbecuing by professional chefs, Miracle said. Tree Top also will publish its history through Washington State University Press.

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