Nov 5, 2007

Fruit Tree Nurseries Shift from Speculation to Contract Growing

In the fruit tree nursery business of the past, the season often ended with a fire sale at the end of winter and a bonfire in spring.

This expensive way of doing business has been coming to an end as nurseries shift away from speculation budding toward contract growing.

“One of the significant trends in the nursery business is the reduction in speculation budding,” said Van Moore, owner of the Nursery Connection in Coloma, Mich.

“In general, nurseries are tending to carry shorter inventories,” said Wanda Heuser Gale from Summit Tree Sales in Lawrence, Mich.

That means growers need to plan ahead.

“The trees for planting in 2009 were budded this fall,” Gale said. “And the rootstocks they were budded on were planted this spring.”

So, for commercial growers, an order for trees needs to be made about two and a half years ahead of the planting date if they are to get the exact combination of variety and rootstock they want, she said.

There are a couple of reasons for the change.

First, Moore said, it’s just too expensive to go through the process of planting the rootstock, budding the scion, digging the tree and storing it through the winter only to find demand for a particular rootstock-variety combination isn’t going to sell this year.

It was more feasible back when growers were overwhelmingly planting two or three varieties on two or three rootstocks, but with the proliferation of both, the number of possible combinations can run into the thousands, Gale said.

Even without the endless combinations, nurseries can get burned – or, more precisely, wind up burning – unsold trees. In tart cherries, Moore said, the choices have been simple – the Montmorency variety on Mahaleb rootstock. But, for reasons unclear, tart cherry inventories hit the spring bonfire.

“One nursery alone burned 60,000 to 70,000 trees,” Moore said. “It just wasn’t the year to plant tart cherries.”

While nurseries still rely on brokers like Nursery Connection and Summit Sales for advice and feedback from growers, a firm contract in hand, with a few dollars up front, can add “a feeling of comfort” to nursery owners when they start the tree production process, Moore said.

As orchards become larger and more densely planted with trees, orders become larger and growing on a firm contract becomes “a sure thing for nurseries, who get a dollar or two up front to pay for the rootstock and budding,” Moore said.

The movement toward club varieties also has helped some nurseries – the ones who receive large contracts to produce a single variety on a small number of rootstocks, Moore said. The size of the planting in any given year is usually controlled by the overall managers of the variety.

The trend to less speculation budding also has led to “a trend to less and less oddball stuff,” Gale said. “Less popular varieties on less popular rootstocks are just not getting budded.”

It’s going to be easier to find Honeycrisp or Gala on Bud 9 or M.26 than to find Paulared or older strains of blush Gala on other rootstocks, Gale said.

At the same time the number of new varieties is expanding and the number of strains of some of the popular ones like Gala and Fuji is increasing, there is a reviving demand for “antique” varieties. While some antique varieties are offered by larger nurseries, many come from “a million little nurseries” that usually offer them in the small numbers that a farm marketer or backyard gardener would plant, Gale said.

To get a wholesale price of $8 a tree or less, growers really need to order at least 50 trees – and doing it in advance gives a better price, too. If you want one tree of one variety, the price will likely be $20 to $30, with a lot of that going to packing and shipping charges for a tree or two from a broken bundle, Gale said.

Dave Lower at Boyer Nurseries in Pennsylvania said the rising trend in direct marketing has resulted in smaller sales, as growers need fewer trees of any given variety.

“Sales for large acreages are becoming few and far between,” he said.

New and better varieties

For Todd Snyder at C & O Nursery in Washington, a key trend is the increasing consumer demand for new and better varieties, which has put the pressure on nurseries to find and offer them.

“Variety ownership and varietal offerings to orchardists are the key to success in today’s nursery business,” he said.

But one nursery can’t do it alone.

“To meet the goal of having the best new varieties, C & O is intensifying the benefits of membership in the INN – International New Varieties Network. With varietal development and discovery at an all-time high in importance, membership in a worldwide organization can’t be stressed enough.”

Through INN, “new varieties are being shared with other members in the group, and test blocks are located around the world to see just how these potential winners react to the different climatic conditions in different parts of the world. C & O is fortunate to be the overseer of one of these test blocks. C & O is able to keep abreast of what to present to the innovative orchardists demanding the best. While we can’t fly all over the globe, with the INN it isn’t necessary. The globe comes to us through testing, meetings and coordinated travel. Maximizing resources for the betterment of all – that’s C & O and the INN.”

Trends in general

Matt Moser at Moser Fruit Tree Sales in Coloma, Mich., said fruit tree sales have remained pretty solid for the last couple years, with commercial growers maintaining their acreage and replacing older blocks with improved strains. But there is a gradual erosion of the numbers of fruit growing operations and no new large commercial growers to try to enlarge market share.

In apples, growers are not totally convinced they need to invest in high-density full dwarf trees, especially on the rootstocks that need post or trellis support, he said.

“There is a real need for an improved semi-dwarf rootstock in the EMLA 7 or 50 percent size range. Growers are not happy with the tipping tendency of EMLA 7, and sometimes go to EMLA 106 (60 to 65 percent of full size) if their ground is well enough drained. There is no tipping tendency with EMLA 106.

“Geneva 30 would be almost the perfect replacement for EMLA 7, as it is in the same size range, is much more precocious and is fire blight immune. Unfortunately, the supplies of G 30 are very limited and both the rootstock nurseries and fruit tree nurseries have difficulty with it.”

There is a lot of interest in all the new Geneva rootstocks, he said, but supply is practically nothing. Bud 9 is the favored dwarfing rootstock for most dwarf plantings, but most of the 9s are acceptable, too.

“Probably the most demand in apples is for the newer strains of Gala, such as Brookfield and Gale, to replace older strains. In early Fuji, September Wonder is one of the best. Banning and Aztec Fuji in regular season are replacing older strains, especially BC#2. They are bright red and full colored – not muddy looking. Honeycrisp is still very popular and in demand, but I think supply is finally starting to catch up with demand. Also, growers are learning how hard it is to grow good Honeycrisp – probably the most challenging variety to raise.”

In sweet cherries, the story is still Gisela rootstocks, he said. Growers need to order a couple years ahead to try to get what they want.

“Even with the approximately $3.50 royalty, I am convinced that it is the way to go,” he said. “I imagine, though, that in a couple years, the sweet cherry bubble will burst, prices will go down somewhat and the boom will return to something more normal.”

Peach growers still seem to be in a quandary over what varieties to plant, he said.

“Peaches are the perfect example of my old adage that ‘you learn all the good things about a new variety in the first year, but you learn a new thing bad about it every year thereafter.’”

Commercial growers are working their way through all the new varieties, including the Stellars and Flamin’ Furies, he said.

“Club varieties leave me as confused as many growers,” he said. “As a fruit tree broker, I really am almost completely cut out of the market, since most of the people and organizations that own the club varieties hold such tight control that only they can sell and market the trees. Even some of the nurseries feel that they have been put into the secondary marketing position, and just grow the trees on contract to the clubs.

“I can’t see how all the new varieties being clubbed can be successful. I think most will not pan out, as there is a limit to shelf space and consumer interest. Growers will always carry the ultimate risk in joining these clubs. Isn’t that they way it always is in the fruit business?”