Todd Fryhover, president of the Washington Apple Commission, says the industry needs to increase demand.
The Washington Apple Commission is strengthening its export program in anticipation of larger volumes of apples coming onto the U.S. market in the next few years and wants shippers to support its efforts by using the Washington logo on their apple stickers and cartons.
This season, Washington State produced 129 million packed boxes of apples—about 20 million more than ever before. Yet the industry has enjoyed one of its best seasons ever with f.o.b. prices averaging more than $25 a box.
Washington’s good fortune has been largely at the expense of apple growers in other parts of the country, such as Michigan and New York, whose 2012 crops were decimated by spring freezes. Michigan harvested less than 3 million bushels, compared with a normal crop of 25 million, and New York picked 14 million boxes, barely half its average production, giving Washington an opportunity to fill the market.
“We dodged a bullet,” said Todd Fryhover, president of the Washington Apple Commission. “It’s been a fantastic year—the best year we’ve ever had.”
Though the 2012 eastern crops might be an aberration, large crops in Washington are not. Production is expected to continue to increase because of new plantings.
The Apple Commission is gearing up for a 120-million fresh crop in the coming season. With Michigan forecasting to produce 40- to 45-million-box crops in the next five years and New York 50 million boxes within the next three years, Washington growers could find themselves in a much more crowded domestic market, Fryhover said.
A portion of Michigan and New York apples go to processors, but the trend is to ship more into the fresh market.
“We’re going to have to increase demand,” he said.
The domestic market, which has been fairly flat, has taken 73 million boxes of Washington apples on average over the past decade. If the total Washington crop is 120 million boxes, the industry will need to ship 47 million boxes into the export market—10 million boxes more than ever before.
The commission is putting an additional $500,000 from reserves into export promotions for the coming year. The total export budget will be $6.65 million, of which just over $2 million will come from grower assessments and $4.6 million from federal Market Access Program funds.
Rebecca Lyons, the commission’s international marketing director, said no single market can absorb the increasing apple volume. The commission’s strategy will be to increase immediate export sales while continuing to build the Washington brand in order to expand markets for the long term.
But Fryhover said the commission’s efforts could be more effective if there was a clearer connection between its promotional materials and the apples that are on sale. Its promotions feature the Washington apple logo and most are designed to enhance the reputation of Washington apples in the minds of consumers.
But the fruit on the retail market is often sold under the packer or marketer’s brand name without any Washington identification. If packers used stickers on the apples with the generic Washington logo, consumers would be able to identify them, he said.
“If we have all these promotional programs in place and we’re out there trying to increase international consumption, it doesn’t work as effectively if the consumer can’t look at the fruit and align it with our activities. If the point-of-sale materials show Washington and we have our logo on them, and the product doesn’t have the logo, how do they know it’s the same product?
“Generic stickers are less expensive, identifiable by consumers, and tie in with the Washington Apple Commission’s activities and point-of-sale materials,” Fryhover added.
Unlike in the domestic market, where Washington dominates, it is a minor player in the international marketplace, requiring brand support to be identifiable and promotable.
The apple sticker is valuable real estate, and he acknowledges that there are logistical reasons why packers might not use the generic logo. For example, there might not be room for the Washington logo on a sticker, along with the producer’s brand, and the packer might not want to have inventories of two different stickers.
Another barrier is that it takes time to switch over from one type of sticker to another on the packing line. Yet another is that when the fruit is packed, the shipper might not know whether the fruit will be sold on the domestic market, where the Washington brand is no longer promoted, or on the export market.
But many of the apples exported from Washington go in what are known as heavy packs, which are not shipped to the domestic market, Fryhover said. Packers began exporting heavy packs (which contain several more pounds of apples than the standard 44-pound carton) many years ago to minimize tariffs, which are assessed on a per-box basis.
The practice continues today. Statistics show that during the 2011-2012 season ten million boxes of Red Delicious and two million boxes of other varieties were shipped in heavy packs, Fryhover said.
“That’s twelve million boxes that you know when they go across the packing line are going export.”
He also appealed to shippers to use the Washington logo on export boxes. This is particularly important in markets like India, where the retail market is not well developed. Importers control the market, and most fruit is distributed through wholesale markets to local markets.
Washington has competition in India, Fryhover pointed out. “China’s in this market. The Southern Hemisphere’s in this market. Having the logo on the box is critical for identification. If they’re in the wholesale market and they see our big billboard we paid thousands of dollars for and they don’t see the logo on the box, how do they associate the two things?
“If you don’t have the logo on the box, please go back and look at it, and see if it’s something you could consider,” he added. “It just gives us support for the programs we have.”
Fryhover said the commission will do all it can to promote apples overseas during the coming years when supplies could exceed demand.
“I’m going to put every resource over the course of the next three years—the financial resources of the growers plus MAP money—to try to make a difference. Together, let’s give this thing a shot.”