In the next three years, Washington’s organic tree fruit industry is set to grow as much as it has in the past 20 years.
Harold Ostenson, organic program manager at Stemilt Growers, Inc., Wenatchee, said that the state’s organic tree fruit production is expected to double by 2009.
"What other industry’s going to double in two years?" he asked.
He thinks Washington’s organic apple production could reach 8 to 10 million boxes (around 10 percent of the crop) within the next few years, but it won’t happen without some growing pains.
Organic apple production has had some ups and downs already. In about 2000, there was a significant shift to organic by growers who strategized that they could improve the profitability of their Red Delicious orchards by transitioning to organic, which they saw as a cheaper solution than replanting, Ostenson recalled.
After the three-year transition to organic, they found there wasn’t any more of a market for organic Red Delicious than there was for conventional. When they dropped out of the program, that led to a decline in organic production in 2005.
"The mistake was, we were getting a thousand acres of Reds transitioning into the organic program, which was a niche market," Ostenson said.
But, now, organic is quickly transitioning from a niche to mainstream. He notes that many of the biggest global food companies have bought organic companies in the past few years, and they would not be making such major investments in organic unless they thought it was more than a passing trend. For example, General Mills bought Cascadian Farms in 1999, and Coca-Cola bought Odwalla in 2001 (see "Organic Industry Structure").
Retail outlets for organic produce include supermarket chains, like Safeway and Costco, as well as the traditional organic marketers Wild Oats and Whole Foods, and there are not yet enough organic apples to supply them all. They’re eagerly awaiting more, says Ostenson.
This is good news for Washington State, which will have 90 percent of the nation’s supply of organic tree fruits by 2009, says Ostenson. It gives Washington a competitive advantage that it doesn’t enjoy with conventional fruit. For example, eastern apple-producing states, which are close to major population centers, can capitalize on the eat-local trend, but it’s difficult for them to produce fruit organically because of the high disease pressure in humid growing regions.
Ostenson wonders why it’s taking so long for Washington producers to recognize the advantages that organic offers in a region where the dry climate is conducive to low-input cultivation.
"Even ten to fifteen years ago, it was clear Washington is the place to do this," he said. "Why would you not be organic if you were in Washington, in order to get out of the same box that the rest of the United States is in?"
He estimates that about half the conventional apples produced in the state are not returning money to the grower, after packing and marketing fees have been deducted. Organic apples have been selling for almost double the price of conventional apples, and all of that premium goes into the grower’s pocket.
But growers looking at organic as a survival strategy might be disappointed, Ostenson said. "The worst thing would be for people to go organic and grow a whole bunch of apples people don’t want."
That happened when 1,000 acres of Red Delicious went organic in 2000. "The market said, ‘We don’t want organic or conventional Reds,’" he recalled.
Convert good orchards
He believes that instead of converting ailing orchards and old varieties to organic, growers should be converting their newest varieties—even club varieties—that are still bringing a good return on the conventional market. Growers are not doing that because they’re still making money on the conventional market, but they would earn even more on the organic market and protect themselves against low prices as production increases. Then, they could take their unprofitable blocks or those with old strains of Gala or Fuji and graft them over to the latest varieties, while transitioning them to organic. By the time they came back into production, they would be certified organic.
Organic consumers are interested in new varieties—as well as heirloom varieties—and will pay more for them. And while organic production is important to them, they also want beauty and taste. They are not interested in run-of-the-mill apples.
"They will pay you a lot more for what they want, and what they want is high quality," Ostenson said.
One of the biggest mistakes the industry can make is to consider organic as just an extension of the conventional program, he said. "You have to treat it as a different commodity."
Growers need to realize that just because their warehouse has done a good job with their conventional apples, that won’t necessarily be the case with organics because of the different requirements of the market.
Stemilt sells its organic fruit under several labels: Stemilt Organic, Family First Farms, and private labels.
Fruit shipped under Family First Farms must have been produced on a family-owned orchard where the family earns more than half its income from farming. Sustainability of the family farmer is a consideration," Ostenson explained.