Good Question - Economy
The Wall Street and subprime mortgage meltdown in October has touched nearly every American, resulting in tightening of credit, massive job layoffs in many sectors, decreasing demand for some products, and erosion of consumer confidence. Though farmers produce a basic need—food—even they are impacted by the recession. We asked tree fruit growers how the economy is affecting their businesses.
grower, New York
Tom DeMaree, orchardist from Williamson, New York, said that while the nation's economy closely affects the fruit industry, there tends to be a lag period. "We'll probably get through this crop year, but I'm more concerned about the 2009 crop if the economic crisis continues," DeMaree stated. "Although food may be less affected than some products, fresh fruits and vegetables, while not a luxury, are not staples, either."
But he's optimistic that with the new varieties being produced, and the high quality of the new varieties, the downward pressure on price will not be as great as in past down markets. Honeycrisp, SweeTango, and other new varieties have good eating qualities that he thinks will help drive consumer purchases.
"I'm a fruit grower, so I'm an eternal optimist," he said.
grower–direct marketer, Michigan
The Robinette Apple Haus, a fifth-generation family business established in 1911 near Grand Rapids, has been providing Michigan residents with fresh apples and fruit for nearly a century. Their farm market includes a bakery and fudge shop, cider mill, and winery producing hard cider and fruit wines, and has entertainment activities like hay rides. During the holiday months, their gift boxes of apples have been popular corporate gifts.
"We started out well this fall, but sales have been getting slower," said Ed Robinette. "We're seeing repeat business, but a lot of corporate accounts are tightening their belts. No amount of promotion or advertising can overcome a weak economy."
He attributes their success in the fall, even with high gas prices, to being located near two million people.
The Michigan State Horticultural Society's new president, Jason Fleming, said that N.J. Fox and Sons, a grower-packer-shipper of apples, processed pears, peaches, and tart cherries, has already felt the effects of the recession. "Movement was good for a while, but then we hit a wall, and everything stopped or slowed," he said, referring to fresh apple sales.
In his role at N.J. Fox, Fleming manages Aebig Apple, a 300-acre orchard in Shelby, located on the west side of the state near Lake Michigan. Aebig has a small packing shed and storage facility, with fruit marketed through BelleHarvest, one of the largest apple marketers in the East. Much of their fruit is sold to Wal-Mart.
"We've felt the impacts of high fuel, and high production inputs," he said. "Things were moving good in September, but now they really slowed down. When people can't buy everything on their shopping list, apples seem to be lower on the list."
He is optimistic that demand will come back. In the meantime, if the slowdown continues through the spring, he might change buying decisions at the farm or lay off some of his work force to cut expenses.
grower–direct marketer, Maryland
Nathan Milburn, fourth generation of the Milburn farming family in Elkhorn, Maryland, reports that they had strong sales during the fall in both their u-pick and direct market store, which is located about 1.5 hours from the beach. Milburn said that more people stayed closer to home instead of traveling to the ocean, and their on-farm market benefited from both the new terms "staycation" and "locavore."
Milburn Orchards is open from mid-June through mid-January, selling peaches, cherries, apples, grapes, and other fruits and vegetables produced on the century-old farm as well as baked goods produced on-site. About 80 percent of what they grow is marketed through their u-pick program and retail sales.
"I thought that we'd be hit hard this year with the high gas prices, but apple and pumpkin sales were up this fall," he said, adding that attendance in their entertainment component also increased. "We're a destination market, so we were concerned about farm visits and sales. But I have no reason to believe that our customers won't come back in the coming year."
The economic crisis will make Michigan farmers, and farmers elsewhere, become more efficient, predicts Trever Meachum of High Acres Fruit Farm, a grower-packer-shipper of apples, nectarines, cherries, juice grapes and other fruits and vegetables in Hartford. "We're being forced to focus on what we're good at and not try to be doing everything and growing everything."
During the last six months of high diesel costs, Meachum said that they considered each tractor pass through the orchards and looked at where they could eliminate tractor driving.
"We're looking at inputs that we can buy locally to save on freight and hauling. We're circling the wagons and tightening our belts to get through this."
grower–direct marketer, Illinois
Craig Tanner grows 35 acres of apples and 25 acres of pumpkins to sell in his Speer, Illinois, roadside market and u-pick business. He sells a variety of apples (Red Delicious, Golden Delicious, Honeycrisp, Jonagold, Jonathan) and other fruits, like peaches, and has a bakery and cider mill on the premise. He opens in July with peaches and closes for the season at the end of November. Tanner said that he didn't see a drop in sales in the fall. In fact, he posted an increase in total sales, due in part to higher prices he charged for products.
"This summer and fall, even with the high gas prices, people still wanted to do something on the weekends," he said. "Instead of spending a day at Six Flags or other amusement parks, they came to my place."
Speer is north of Peoria, which has about 100,000 residents. There are about 1.5 million people located within a 50-mile radius of Tanners Orchard.
"I expect to have another good year in 2009," Tanner said, adding that they are well established—having been there since 1947—and have developed a good reputation. He does plan to be fiscally conservative in the coming year, closely analyzing purchase decisions.