It’s hard for a grower to leave part of the crop in the orchard, after nurturing the fruit through the whole growing season. And it’s hard to believe a grower can be better off taking less fruit to the warehouse—particularly if their neighbors just harvest everything.
For a number of years, the Washington tree fruit industry has been encouraging orchardists to leave small or low-grade apples in the field as a way to manage the crop size statewide, reduce the volume of poor fruit going to market, and perhaps boost f.o.b. prices.
But a software program developed by Dr. Clark Seavert, agricultural economist at Oregon State University, shows that removing cull or low-grade fruit in the orchard, rather than at the packing house, can dramatically improve a grower’s profits over the life of the orchard, regardless of any industrywide benefits or improvements in f.o.b. prices.
Seavert developed the Excel-based program, called A Grower’s Technology Economic Assessment Model (TEAM) to help growers assess the financial benefits or otherwise of employing new technology in the orchard. For example, it can show whether the capital investment in equipment, such as picking platforms, is recouped by lower labor costs.
But TEAM has other potential uses, and Seavert demonstrated for the North Central Washington Fieldmen’s Association this spring how the program can be used to assess whether it makes financial sense to spend extra money to have crews sort out low-grade or small fruit or culls in the orchard, rather than put them in the bin and take them to the packing house.
It’s not an accounting system. It uses numbers derived from university cost-of-production studies for expenses, but growers can substitute their own numbers—either real or hypothetical. It calculates the profit and the return on investment for the planting or enterprise.
Seavert demonstrated that by leaving more culls in the orchard and only taking, say 45 bins per acre to the warehouse, rather than 50 bins, the overall return on investment would be significantly higher, even if the cost of harvesting rose from $20 to $28 a bin because of selective picking.
“You’ve shown here, in numbers, that leaving that in the field is the best option by far,” observed Noel Adkins, general manager for orchard operations at Dovex Fruit Company, Wenatchee, Washington.
Tom Auvil, with the Washington Tree Fruit Research Commission, noted that Auvil Fruit Company is prepared to leave 40 bins per acre in the field if the fruit doesn’t meet the size, color, or other requirements for the marketing program. To do that might mean spending three times as much to supervise the harvest crew than a normal operation would in order to make sure that only target fruit goes into the bin.
There’s no way a grower can make money sending nontarget fruit to the warehouse, because packing charges have gone up so much, Auvil added. “These fixed warehouse costs are now a big part of our life,” he said. “It’s about $140 a bin to deliver processing fruit to the packing house floor. The days are gone when we would take it all to the warehouse.”
Jeff Heath, horticulturist with Stemilt Growers, Inc., Wenatchee, said packing charges have increased because warehouses have had to invest in new technology, such as computerized sorting and sticker machines. The cost of applying SmartFresh (MCP) adds $8 per bin.
“Our frustration is we do a lot of this, but we don’t add anything on the other end. The customer demands it. Food safety—that’s another cost. We do all this, but we don’t get money on the f.o.b. I think that’s a lot of the frustration in this industry now.”
The TEAM program inserts inflationary factors over a 20-year period. For example, it assumes that labor costs will increase by 3 percent annually, though growers can insert their own numbers if they prefer.
Marketers need to realize that f.o.b. prices for apples need to increase over time, just as costs do, Heath said. “There are more and more people in the industry who have no tie to the fruit or the land or the profitability of the enterprise,” he noted.
“They have to realize that $18 a box this year has to be $18.50 next year, and $19 the year after.”
But Adkins said if fruit is available and can be bought for $10.50, then that’s the market price. The only control growers have is to reduce the volume available so prices rise in response to a more limited supply.
Lee Gale with Northwest Wholesale, Wenatchee, said trying to reduce supplies is just a way of buying time for the industry, and the long-term goal should be to increase f.o.b. prices.
Tim Smith, WSU Extension educator for north central Washington, said the industry is discussing how to encourage growers to leave unprofitable fruit in the field, but he wondered if there is enough emphasis on helping growers not to produce that fruit in the first place so it doesn’t compete on the tree with the better fruit.
Adkins said growers need to know before the growing season begins how many bins of large, top-grade fruit they need to produce, and do a bud analysis so they can prune, thin, and hand thin accordingly and not end up with fruit that doesn’t make the grade.
East Wenatchee horticulturist Fred Valentine noted that pruning or thinning off the crop is a much less expensive option than leaving the crop on until harvest. But Washington State University Extension has diminished, and there’s less guidance for growers on how to grow quality fruit than there was 20 years ago.
Smith noted that there are fewer private field horticulturists than there used to be, also. “There’s nobody working with the small growers. The word is not getting out.”
Seavert said the costs of pruning and thinning are marginal compared to the gains that can be made from growing a higher percentage of target fruit.
He is working on a Windows-based version of TEAM that should be available to growers later this year. For information about TEAM and other decision-making tools for fruit growers, check the Web site at www.oregonstate.edu/dept/ mcarec under “Extension materials.”