Washington apple production has been edging upwards while the total value of the crop has been going down.
Economist Dr. Des O'Rourke with Belrose, Inc., Washington, has calculated
that the more apples the state sells, beyond 60 million boxes, the less money the growers will receive.
Should the industry try to limit production? Here are some opinions:
BRUCE GRIM
marketing cooperatives manager
"It shocked me that we had that much inventory of old trees."
A grower cooperative has the right to talk about supplies as well as prices and marketing strategies, Grim said, and one of the issues that the Washington Apple Growers Marketing Association (WAGMA) will be confronting with the prospect of this fall's larger crop will be what sizes and grades of apples are likely to be profitable.
Growers can look at their pool closing returns, figure out what sizes and grades didn't make money, and tell their picking crews to leave that fruit in the orchard, he suggested.
"My message from start to finish is growers and their warehouses and shippers have to work together to solve our problems," he said. "I think this is a situation where we need to be working with growers.
"I think we have to keep taking the pulse of it to try to make an informed decision so we're not trying to move more than the market will accept at profitable levels."
Grim said this would be difficult to regulate because the money-making sizes differ from year to year, so there needs to be some flexibility.
"If you set a hard and fast rule, there may be years when some of those small sizes--like this year--bring good money, or another year it might not be worth picking."
Concerning tree removal, Grim noted that last year's Washington fruit tree survey showed that 53,000 acres of Red Delicious trees--65 percent of the total Red Delicious acreage--were planted in 1985 or earlier, when there weren't many high-coloring strains. That should be a warning to growers that those trees need to be removed, he said.
But he believes federal money could be spent in better ways than to support a tree removal program. Growers need to voluntarily get rid of trees that are losing money.
RICHARD THOMASON
grower, Brewster, Washington
No
"If we're regulating who can raise how much, I want to be on the committee that decides!"
The problem with setting standards or changing the rules to control supplies is they will favor some groups or individuals while doing drastic harm to others, he said. Some people are likely to have to sacrifice their own entities for the good of the industry.
Concerning tree removal, Thomason said there are a number of ways that could be accomplished. It could be industry funded or subsidized by the federal government. But any reduction in production would need to be nationwide, if not international, he added, because a drop in domestic supplies will leave an opening in the U.S. market for other apple-producing areas to target.
"Every country wants to get in here with their products," he said. "If we suddenly reduce our supply significantly such that the price goes up in a large amount, that's going to be a huge attraction and it will bring in more outside fruit."
TOM BATCH
grower, Manson, Washington
Yes
"If we're going to be profitable in the future, we're going to have to look at these things...."
There's strong grower support for a cutoff date beyond which the previous year's apple crop could not be sold, and this would help get supply and demand more in balance, Batch said. Bills have been introduced in the Washington State legislature to accomplish that, although state attorneys fear that preventing producers from shipping apples at the end of the season could constitute a government taking.
Batch said the other way to do it is through a marketing order, and there are numerous marketing orders in the United States that seem to be effective.
MARK TUDOR
grower, Grandview
No
"I think we need to allow the market to dictate what's able to be moved through the marketplace."
Tudor believes the industry should allow the economic forces to play out. A marketing order to control volume would have to be a national regulation, and he does not think it would work. The idea of a tree-pull program to give struggling growers an exit strategy has some merit, he said, though there would have to be stipulations that the land be kept out of production for a number of years.
"Quality is a whole other issue," he added. "I think quality does need to be regulated."
BARCLAY CRANE
grower-packer, Brewster, Washington
Yes
"I asked the marketers that I respect the most, 'What's the single thing that would help you the most?' and the answer was, 'Less tonnage, less competition, less fruit being quoted, less desperation.'"
In 2000, Crane pushed for a privately funded program to provide incentives to remove unprofitable orchards. The plan had the support of the Washington State Horticultural Association, but lost momentum in the face of some packer opposition, he said.
Crane wants to see orchardists remain independent and not get tied up in government regulations to control supply. His idea was to offer subsidies to growers on a first-come, first-served basis with no qualifications required and no questions asked.
A tree removal program would provide an exit strategy for orchards producing poor fruit that is a burden on the marketplace, he said. Based on the phone calls he had, he believes thousands of acres of trees would have come out--enough to impact the market.
But those who had already spent money taking out their weakest blocks wondered why they should pay for someone else to do that.
And, Crane acknowledges, new plantings would soon make up for removed acreage, so it would be a temporary fix.
He likes the idea of negotiations between growers and shippers before the fruit is delivered to the warehouse, because it would establish a value for the fruit before it goes into the system and is packed. This could help control supplies because if the packer had to pay a deposit to the grower on receipt, fruit that wasn't worth anything wouldn't get packed, he believes.
DR. DES O'ROURKE
ag economist
Yes
but... "It's obviously the right direction to go. Whether you're talking about the steel industry or the apple industry, if you have overcapacity, you have to somehow reduce that capacity."
However, Dr. O'Rourke sees no way to accomplish that easily.
A national effort would have antitrust implications, he said. The apple and pear marketing cooperatives in Washington State might be able to do it, but a reduction in Washington supplies would leave an opening in the market for other regions, such as British Columbia.
A tree-pull program would be expensive, and it is asking growers to forego income for a number of years, whereas growers are always hoping that the economics will be better next season and that their trees will generate a profit in the coming year.
Tree-pull schemes have been tried in Europe. O'Rourke said French growers who pulled out trees have complained that growers in other areas haven't, so, in effect, the French growers have been helping them.
