Jun 27, 2017Growers seek best way to supply fruit to cidery market
Hard cider production is up nationwide, and it seems like you can’t turn anywhere without running into another story about the demand for apples to fill all of those bottles. Growers should think very carefully about steering production towards intentional production of cider apples, because the production and economic factors can be very different than growing fruit for fresh market.
For over a century, researchers, Extension educators, packers and growers worked hard to minimize the production of cider fruit, and as a result, our production and market systems have been developed for growing and selling blemish-free fruit ready for consumption by the end consumer. The easiest way for growers to begin to meet demand from cideries is to divert low-grade or “sound” (rot- and puncture-free) cull fruit from packing operations to that market.
Growers in Vermont have recently reported mean prices of $5.75 to $7 per bushel for utility-grade dessert cultivar fruit from cideries, which is up from the $2-$3 paid just a few years ago. The increase in price for utility fruit is helpful to support a fresh-market operation where the majority of the crop sells for $16 or more per bushel, but orchards should not expect to be profitable solely on $7 apples.
The viability of the dessert-cull fruit model for orchards demands that as much fruit as possible be sold for a higher price before sending a portion of the crop to cideries. Recent analysis conducted by myself and University of Vermont Research Specialist Florence Becot indicates that if production inputs – including pruning labor and spray applications – were reduced in order to save on input costs, orchards that increase the proportion of dessert cultivar fruit sold to cideries will see reduced profitability in proportion to the amount of fruit sold to lower-priced markets.
This is the result of simple economics: quantity sold times price per unit equals total sales, and, in the big picture, those costs were a relatively small component of overall farm management costs.
Recent work in Vermont indicated that reduction in both pesticide and pruning inputs had relatively little effect on fruit grade in the commercial orchards we worked in. There is a large caveat to consider, in that the conditions in the study orchards were unique to each particular operation and for the season.
For example, 2016 experienced record hot, dry weather, with a resultant reduction in apple scab and other fungal diseases including sooty blotch and flyspeck that our reduced IPM treatments were expected to allow to increase. Also, the “cider IPM” blocks were interspersed with typical “fresh market IPM” blocks on the same farm.
Management of insect pests in other areas of the farm, as well as in past seasons, likely prevented substantial increases in populations that would cause greater damage in the cider IPM treatment. Reductions in pruning intensity in another study had relatively little effect on fruit grade distribution, but dry conditions likely reduced shoot growth and subsequent shading on the less-pruned trees, thus reducing differences between the treatments. A second season of research in 2017 will confirm whether greater effects from reduced inputs may be observed in those orchards.
In our long-term profitability model, $8 bushels did not recoup costs of establishing tall spindle orchards within 20 years, unless over 1,000 bushels per acre were guaranteed from year three through the end of the orchard life. There is a gamble in assuming that prices paid for dessert apple cultivars by cideries would remain that high without a contract, especially given that fruit can be found for much cheaper in the spot market. High-value specialty cider apples could change the economic framework of cider apple production, if we could only find the best way to grow those fruit, horticulturally and in terms of juice quality for best cider making.
Presently, specialty cider apples such as European bittersweet cultivars (e.g. Dabinett, Yarlington Mill) are being purchased in relatively large amounts for $18 to $24 per bushel. If those prices are input into the same long-range model with similar high yields and precocity, tremendous profits are to be expected. However, simply changing the price received for dessert apples and specialty cider cultivars in the same model outputs unrealistic projections.
The highest-valued European cider apples are not yet fully adapted to high-input, high-output tall spindle and similar training systems, and a lack of well-managed cider cultivar orchards of mature age in the U.S. has slowed development of recommendations for specific cultivars and management practices.
Two important factors, lower annual yield relative to dessert cultivars and biennial bearing habit, greatly affect potential profitability. For a tall spindle orchard of cider cultivars sold for a conservative $16 per bushel, a shift in annual yield from 1,000 to 800 bushels at maturity reduces net discounted profit at year 20 by 39 percent, and delays the break-even year from year seven to year eight.
If bienniality is added into the model, year 20 profitability is reduced 88 percent, and the orchard does not break even until year 15. These models also assume that the price for specialty cider apples will remain at $16 for the life of the orchard, which cannot be guaranteed without developing a long-term contract with a cidery.
One mitigating practice that improves profitability in light of potentially lower and/or biennial yields is the establishment of lower-cost, lower-density orchards. While vertical axis and even free standing central leader trees have substantially lower establishment costs than tall spindle, their expected precocity is also lower. This is a built-in resilience mechanism for those production systems, in that reduced yield, precocity, or biennial bearing habit do not as greatly affect the long-term profitability of lower-density systems.
More questions than answers remain re-garding the best way to supply fruit to the cidery market. Growers would be best to work closely with potential buyers of both fresh and cider fruit to ensure that prices expected will be paid, and that a market will exist for the life of the orchard.
— Terence Bradshaw, FGN correspondent