Oct 12, 2015

U.S. can profitably produce larger apple crops

What’s the ideal size of the U.S. apple crop?

A simple question, with no simple answer. When Fruit Growers News quizzed members of the U.S. apple industry, their answers varied – if they chose to answer at all.

Todd Fryhover, president of the Washington Apple Commission, said the ideal size is “where supply equals demand.”

It’s extremely difficult to get more specific than that, since there are so many factors involved, including free trade and market access, he said.

“The key factor, outside of marketing and promotional support, is providing consumers a repeatable positive eating experience that leads to repeat purchases,” Fryhover said. “The new varieties being propagated are doing just that.”

Mark Seetin, director of regulatory and industry information for the U.S. Apple Association, said an ideal crop size would give consumers a diverse choice of fresh varieties and processed products at reasonable prices, while at the same time giving growers, packer/shippers, marketers and processors sufficient profitability to sustain their enterprises.

That “ideal” size is a moving target, however. The U.S. industry has gotten more adept at profitably producing larger apple crops, and has done so by adapting to changes in the marketplace. It’s exporting more, for one thing. The industry exported a record 52.8 million bushels of fresh apples from its 2014 crop, which was the third largest apple crop in U.S. history (272 million bushels). The 2014 export number was 77 percent larger than the 30 million bushels exported from the 1998 crop – still the largest crop in U.S. history (277 million bushels), according to Seetin.

There’s also been a shift in the variety mix. Red Delicious and Golden Delicious comprised 57 percent of total production in 1996, a share that shrank to 30 percent by 2014. Gala, Honeycrisp, Cripps Pink and others are replacing those older varieties, Seetin said.

It’s the higher-priced varieties like Honeycrisp that are helping the U.S. industry stay profitable. In 2013, Honeycrisp sold at a 50 percent premium over the category average in supermarkets. Retailers are much more interested in varieties like that than in older ones like Red Delicious, which are falling out of favor with consumers, said Steve Lutz, vice president of marketing for Columbia Marketing International.

Jen Campuzano, director of Nielsen Perishables Group, said the apple category stands out as a great example of shifting away from a commodity focus. The apple industry developed products to meet the changing tastes of consumers – marketing to kids through character packaging, for example, and making apples more snackable and convenient by slicing them.

Citing USDA statistics, Seetin said the per-capita consumption of fresh apples reached 19.7 pounds in 2014-15, the highest consumption rate in 25 years. Combine that increase in consumption with the expanded export market, and USDA’s projection of 242.2 million bushels for the 2015 crop just might be the “ideal” size, he said.

– Matt Milkovich