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Washington Apple Industry Rebuilds

posted on March 15, 2002

The activity level in commodity pits has been heavy as the market weighs record usage of corn and soybeans against the abundance of current supplies. Traders also must ponder the prospects of a drought that could curb this year's crop yields.

In other sectors of the agricultural economy, interest is shifting from greater production to capturing more value in existing output.

A case in point, as producer Sid Sprecher found last autumn, is the effort of the Washington State apple industry to rebuild from some serious setbacks.


Washington Apple Industry Rebuilds

Sliced apples packaged in a convenient re-sealable bag, it is one facet of a quiet revolution that Washington apple growers hope will resurrect the state's billion-dollar industry.

Growers have endured three straight years of below-cost returns. In the last 12 months 20 thousand acres of trees, about ten percent of the state's orchards have been removed. But amid the economic rubble the industry on multiple fronts is restructuring itself.

Many of the orchards that have been removed will return to production, with higher yielding trees, but more notably bearing different varieties of apples. According to Washington State Apple Commission President Welcome Sauer, the effort is part of a serious industry wide retooling to meet shifting consumer demands.

Welcome Sauer: "what we have found is that consumer demand for some of these new varieties of apples has been so strong that there's fairly reasonable money to be made in these as compared to what they've been doing in the past."

The commitment to more varieties is significant, both financially and culturally to the state's apple growers. Ten years ago 70 percent of the apples grown in Washington were Red Delicious. Today Red Delicious represents only 40 percent of total output as production has broadened to include at least ten varieties of varying colors, profiles and flavors.

Welcome Sauer: "I personally believe we will see an increase in apple consumption as a result of consumers discovering their new favorite apple flavors and I think when people discover their favorite flavors they will eat more and more apples. "

Established in 1937 the Washington Apple Commission is the promotional arm of the industry. Financed by assessments on growers and packers the Commission promotes the benefits of the state's apples, and to that end does extensive and continuing consumer research.

Greater product diversity in the industry requires more promotion. That fact is not lost on the commission or some of the producers of the new varieties who realize the entire apple market has become a mosaic of niche markets.

Pacing sync: v/o over apple shot

Ron Everts, Apple Grower: "It is very distinct in its color pattern. "

Take for example the introduction of Australian-bred "Pink Ladys". The apple not only looks a bit different, its taste is less sweet and more complex than traditional varieties. Even its boosters like grower Ron Everts say it may not be for everyone.

Ron Everts: "It has a lot of flavor and the tartness comes through and it's kind of one of those that after you eat it then the sweetness kind of comes out to you. Some of the people describe it, if you actually put a piece of the flesh of the apple in your mouth you'll almost get a fizz..."

But it has found a devoted following in Europe and its Washington growers think it has similar potential in the U.S. To that end Pink Lady USA was formed.

The organization sets quality standards that apples must meet to be marketed under the flowing heart pink lady logo and it levies an assessment on packers to finance a promotional campaign. The intent says marketing director Gary Bailey is to better coordinate production and promotion.

Gary Bailey: " ... we've noted that unless you give strong emphasis to the introduction and promotion of these new varieties you get this quick imbalance between supply and demand and things go out of sync rather quickly."

Promotion aside, several years of little or no profit have exacerbated an irritant common to other sectors of agriculture, the declining share of the retail dollar.

The apple industry says that of an average of 99 cents a pound for apples at the checkout counter, less than 27 cents is captured by those who pack or grow the fruit. The industry wants more.

Bruce Grim, Washington Apple Grower's Marketing Assoc. "So, any change that impacts the retailer's ability to retain profits from the apple category is obviously something I assume is not going to be in their, they're not going to be wild about it. But if they want to have a healthy apple industry in the state of Washington we simply are going to have to demand and get more for our product."

To that end the Washington Apple Grower's association, a marketing coop was formed to provide intelligence gathering so members -- growers, handlers and sales agents could anticipate demand and price the fruit more effectively to retailers.

Bruce Grim: "What we're trying to do it bring those people together informationally and link them so that we know what size crop we have, where the crop is going to peak in particular sizes and grades and discuss what type of a price range needs to be in place to establish this profitability back to the farm."

The organization represents 70 percent of the state's apple production and it could well make a difference to the industry's bottom line over the course of time. But even as the growers association collects market information, technological innovation is in play that could rapidly expand apple consumption.

Slug: apple slicing

In Wenatchee, Washington production lines are ramping up to meet burgeoning demand for "Crunch Paks, consumer friendly bags" containing fresh apple slices promise to change the industry. The apples in the breathable plastic bags are cored, sliced and dipped in a solution of vitamin C, calcium, and other minerals to keep them from browning. Production has been increased twice since last summer and demand from a relative handful of stores where the fruit slices have been placed has been nearly overwhelming. The innovation could have a profound effect on the market.

Welcome Sauer: We found in a Florida school district in a controlled test that they conducted, they increased their apple sales eighty percent in the schools that served fresh cut apples as compared to the schools that served only whole apples.

The convenience of the crunch paks is apparent, so too may be the economic benefit. In a one pound bag selling for $2.50 are five apples cored, sliced and unblemished. Not surprisingly those who process and sell the Crunchpaks are excited about the potential.

Craig Carson, Crunch Pak: "Probably the best model to look at would be the lettuce industry where fifteen years ago they were probably at the point that we are today with sliced apples. And today I would guess close to seventy percent, maybe even greater than that of the lettuce sold in the United States is sold as bagged lettuce."

However, success can sometimes breed its own challenges. Most of the state's apple industry is set up to handle and market whole apples, if sliced apples were to become as wildly successful as they seem they might, it could change the standards to which fruit is grown, handled and sold. And that would mean an industry, already in full adjustment would need to reinvent itself again

Tags: agriculture apples industry news Washington