Hockey star Wayne Gretzky has a simple explanation for his success: “I go where the puck is going.”
Correct anticipation is a basic requirement in every successful business, agricultural economist Dr. Desmond O’Rourke told growers at the B.C. Horticultural Forum in Penticton, British Columbia, Canada, in November.
But how do you know here the puck is going to be in the apple industry?
Change doesn’t happen in a vacuum, he said. It happens over time. To keep abreast of change, growers need to do a lot of reading and listening.
“You have to keep looking up, and looking forward,” said O’Rourke, who is president of Belmont, Inc., in Pullman, Washington.
Growers need to look at what their target markets are going to be. The revenue side of the business is where profitability lies, since costs are standard across the board.
Mainstream markets are increasingly dominated by large retailers who are looking for classy products at value prices, along with plentiful promotional and merchandising support.
“If you don’t have promotional money for the variety, you’re not going to get it on their shelves,” O’Rourke warned.
The large retailers like close relationships with their big suppliers, and their preferred suppliers want desperately to hold on to that status with the retailer. The suppliers are looking for growers who can meet the specifications that will keep the retailers happy.
“As a grower, you have to decide if you want to be a supplier to the mainstream, which requires high quality at low price,” he added.
If not, there are other niches to pursue, such as farmers’ markets, direct marketing, agritourism, and convenience stores. O’Rourke sees a big opportunity for smaller operators to build supply chains with convenience stores, which traditionally have not handled much fresh fruit.
Each grower must conduct a regular assessment of their apple business and ask themselves why they’re in the business, he said. If it’s for the income, the income must be greater than what they could earn in another occupation. There must be an adequate return on investment.
If they’re building a nest egg for retirement, they need to be aware of whether the value of the business is increasing or decreasing. “Don’t allow your investment to become degraded by staying too long in the business,” he warned.