There was muted optimism as the Washington apple industry ended a trying 2014-15 season and harvested a significantly smaller crop this fall.
The U.S. Apple Association estimate compiled in August shows a total national crop (fresh and processing) of 235 million boxes, down from 272 million a year ago. The Eastern crop is forecast down 6 percent from last year, and the Midwestern crop about the same as last year, but the Western crop was expected to be down 18 percent from last year.
The Washington crop was forecast at 121 million boxes of fresh apples. Though a large drop from the 140 million boxes shipped last season, it is still the third largest crop ever harvested in Washington, just behind the 2012 crop of 128 million boxes, which returned record profits to growers.
The past year was a different story.
Exports were hampered by several factors including: the closure of the China market for part of the season; a major slow-down at West Coast ports; the strengthening value of the dollar, which made U.S. apples more expensive; and disruptions in export markets because of phytosanitary requirements and a food safety scare triggered by contaminated caramel apples.
“Last year really took its toll,” reflected Todd Fryhover, president of the Washington Apple Commission, which handles export promotions on behalf of the industry. “It was a very difficult season for everybody. You could do everything you could do, but it was not enough. Every time you turned a corner there was a different challenge that faced you.”
As a result, returns for mainstream varieties were dismal. The season-average f.o.b. price for Red Delicious was less than $14 a box and the average for Golden Delicious was around $14.50 a box.
The average Gala f.o.b. was just under $20 a box. Assuming a break-even price of $20 for growing and packing, only Cripps Pink/Pink Lady, Ambrosia, Honeycrisp, and the more minor varieties were profitable.
While struggling to market last year’s record crop, Washington producers faced a new set of challenges in growing the new crop, including record high temperatures and drought. Part of the reason volume is so much lower this year is the small size of the apples overall because of the heat.
But Fryhover believes the industry in general is optimistic about the coming season.
“I think we’re re-engaging ourselves,” he said. “Once we start talking about our crop with our retail partners in the U.S. and export markets, I think that renewed enthusiasm will be there.”
For one thing, there will be fewer Red Delicious to sell. This year’s crop is estimated at 31.6 million boxes, down from 42.9 million last season.
Although Red Delicous has been dropping as a percentage of the crop, last year’s volume was the highest since 2000 because of the good fruit set, larger than normal fruit size, and high production overall.
Back in the early 1980s, Red Delicious accounted for more than 70 percent of the total Washington crop. This year, it will be a mere 25 percent and the volume will be the shortest in over a decade.
Smaller fruit size is also good news because most export markets prefer apples in sizes 100 or smaller. But the downside of a smaller volume of Red Delicious is that the iconic Washington variety helps the industry get into a lot of international markets. It is still Washington’s No. 1 export variety, accounting for about half of all Washington’s apple exports last season, and there’s not much competition from other regions.
Golden Delicious, which was Washington’s No. 2 variety from the 1950s until 2003, when it was eclipsed by Gala, is dropping quickly. This year’s crop, estimated at 8.6 million boxes, will be the smallest volume since 1973.
And that’s a positive sign, says Fryhover, as the industry tries to find an equilibrium between supply and demand for the variety. Further drops in production are likely in view of recent unprofitable returns.
“If you had to choose one variety that’s being taken out faster than any other, it’s Golden,” he said. He expects production to bottom out at 5 to 6 million boxes, of which half will probably be exported to Mexico.
Fryhover sees good opportunities overseas for Gala, which is extremely close to overtaking Red Delicious as Washington’s No. 1 variety, a position held by Red Delicious since it toppled Winesap in the 1940s. Washington is estimating a Gala crop of 29.2 million packed boxes this season, just 2.4 million shy of the Red Delicious estimate.
If the industry is to sell crops in the 150-million-box range again, at least 60 million will need to be exported, Fryhover says, as 90 million boxes is probably an optimistic estimate of how many Washington apples the domestic market can take.
So that will mean that the percentage of Red Delicious apples exported will need to increase from 50 to 65 percent and Gala will have to be a more significant export variety as it moves into the No. 1 slot.
Last year, the state exported 8.8 million boxes of Galas, and Fryhover said the target is to see 15 million shipped into export markets within the next couple of years as overseas consumers become more familiar with the variety.
Prospects for Fuji overseas seem less promising as China is a major producer of the variety and an active exporter to Southeast Asia. Taiwan, to which China does not have access, is a good market for Washington Fujis, but there’s a limit to how many that market can take. Of the 4 million boxes of Fuji apples exported last year, 78 percent went to Taiwan.
Last season, Mexico, Washington’s largest export market, took almost 15 million boxes of Washington apples, mostly Red and Golden Delicious, but Mexico will have a large crop of its own this year.
Fryhover foresees opportunities for Fuji in Mexico, but it’s a competitive market, and consumers there will need to be wooed with well-colored Fujis, rather than lower grades, he said.
Prospects for other varieties overseas are more limited. The tart Cripps Pink apple, for example, would have less appeal than sweet varieties for Asian consumers. And Honeycrisp, which sold for an average of $54 a box last year, could be too expensive for traditional marketing challenges, though it might be a good fit for online food retailers in China.
And then, producers are going to find the domestic market a safer bet for their newer proprietary varieties. There’s good demand and they can ship to customers in a few days, rather than a few weeks, and feel confident of getting paid.
But some shippers and marketers are beginning to lay the groundwork for the larger crops that loom. The industry knows it can produce at least 150 million packed boxes, the volume harvested a year ago. Fryhover said Columbia Marketing International (CMI) has begun introducing Ambrosia to international markets, though there might not be an immediate need.
This year’s crop may be shorter, but there’s no place for complacency, he said. “It’s going to require the Apple Commission in particular to work harder just because we know what the potential is for next year. •
U.S. crop forecast is down 14 percent
The U.S. Apple Association forecast the nation’s apple crop at 234.8 million bushels this year, down from 272.2 million last season, with most of the decrease in Washington State.
The size of the Washington crop was pegged at 143 million bushels (fresh and processed) slightly below average but 18 percent lower than last year’s crop. California’s crop is estimated at 4.8 million bushels.
New York, the second largest producing state, will produce 26.2 million bushels this year, 7 percent below average and 15 percent smaller than last year.
Michigan, which has experienced erratic production for the last several years, will produce 24 million, about the same as last year but 28 percent larger than the five-year average.
Pennsylvania’s crop was estimated at 12.5 million bushels, 6 percent over last year and 9 percent above average. —R. Lehnert