Organic on the rise
Prices for organic apples will moderate with increasing production.
The marketing outlook for organic tree fruit is healthy, but organic marketer Matt Miles cautions conventional growers against making the switch to organic just for the money.
Miles, who is with L&M Companies, Inc., of Selah, Washington, said his company expects to handle more organic fruit in the future, but it looks for good growers who embrace sustainable production practices, not growers who are looking for organic premiums to get them out of trouble.
"You can't use organic as a method to maintain old varieties that should have been replanted or top-worked years ago," he said.
In the 1990s, there was a significant switch from conventional to organic as growers tried to maintain profitability at the ranch level instead of updating their orchards, he recalled.
"If that's the reason you're entering organic, organic is not the answer," he said. "If you're looking for salvation on a 25-year-old block of Red Delicious, I'm not the right guy."
Miles has been marketing organic fruit for the past 12 years. He began his career as a produce broker with C.H. Robinson in Seattle, and in 1996 joined Snokist Growers, Yakima, Washington, where he was put in charge of organics. "Truthfully, no one else wanted to handle it," he admitted.
The cooperative had 3,000 bins of organic apples (mostly Red Delicious), about 2,000 boxes of organic nectarines, and 3,000 boxes of organic cherries.
"Nobody really paid attention to organic," he recalled. "There was a small niche in natural food stores, but, back then, Whole Foods Market was not the buyer it is today."
In 2000, when Miles moved to Inland Fruit Company, Yakima, as organic sales specialist, most of the organic growers at Snokist moved with him. Inland had been marketing most of its organic fruit through brokers, and Miles's focus was to bring sales back in house, instead of spreading them out into multiple hands, with the goal of putting more money back in the pockets of the growers.
By then, the organic market was showing a strong trend towards new apple varieties, and the company recruited growers who could supply those varieties.
In 2005, Miles and the organic growers moved again. The growers took their fruit to Clasen Fruit and Cold Storage, Inc., Yakima, and Miles joined L&M, Clasen's marketer, as organic sales specialist.
"That's when everything really took off," Miles said.
L&M is one of Washington's major marketers, both in the conventional and organic sectors. About 10 percent of the fruit it handles is organic. It sells organic apples from Clasen and Broetje Orchards, organic pears and cherries from Congdon Orchards, and organic stone fruits from Valicoff Fruit Company.
"L&M is an extraordinary company," Miles said. "It really backed the organic department to a level we have never really experienced. L&M has jumped in and said, 'This is the right deal. Sustainability is the key to the future.'"
However, growth of its organic program has been based on the demand from its customers, he emphasized. "We don't want to oversupply the industry single-handedly."
Last year, Washington produced 3.7 million boxes of fresh organic apples. It's forecast that the state's production will increase by more than 50 percent in the next couple of years and that organic cherry production will double. However, those estimates might be on the low side. Since the National Organic Program was introduced in 2002, growers have not been required to register acreages in transition to organic, unless they want to market the fruit as certified transitional. So, the actual acreage in transition is unknown.
Demand for organic foods has been growing at a rate of 20 percent per year. Organic produce now amounts to about 2.5 percent of total produce sales. For the past few years, demand for organic apples has outstripped supplies, resulting in retail prices between $2.99 and $4.99 a pound and healthy returns for growers.
One more year
However, the situation is likely to change as a large volume of organic apples comes on line in the next couple of years, Miles warned. "I think we have one more year where demand will continue to outpace supply. We're going to reach the point where supply and demand meet, and our industry has a unique ability to cross that line and keep going on the supply side."
The exceptional returns that growers have been receiving are likely to adjust to a level that's still profitable for growers on most varieties, and lower retail prices should stimulate consumption of organic fruit. "I don't think we've even touched the tip of the iceberg," he said.
But growers considering organic production need to be realistic in their expectations and have the right varieties, Miles stressed. Successful organic growers will be those who have maintained their farms well conventionally and produce high-quality fruit. They will be wanting to improve their growing methods and be looking for new products to market.
What consumers look for, above all, in organic produce is flavor, he added. While Red Delicious still accounts for 25 to 30 percent of Washington's conventional crop, the variety has not fared well on the organic market. Gala is the number-one organic apple, followed by Fuji, Granny Smith, and Golden Delicious. Pink Lady and Jonagold don't top the list, only because there is not sufficient volume being produced. Since SmartFresh (MCP) can't be used on organic apples, Jonagold is not sold beyond February.
L&M imports organic apples and pears from Argentina in the off-season. It's a way to maintain shelf space at the store and provide longer availability for the consumer. The company's philosophy is that it's better to deliver a good-eating piece of fruit in the right season than to try to hold organic fruit for 10 to 12 months, which is difficult because use of certain postharvest antioxidants and fungicides is prohibited in organic.
Miles said the conventional sector doesn't consider organic as a threat, yet, but by the time it reaches 15 or 20 percent of the market, conventional producers are going to be wondering where their business went. "I would not want to be caught off-guard and not realize the trends in the industry."
Miles sees the continuing shift to organic as a positive trend. "If we're worried about the increase in organic or transitional fruit in the next few years, we should be happy that more of the industry is using sustainable practices. From the marketing side, we need to increase avenues to sell it."