Aug 31, 2016
Forecast: U.S. apple crop holds steady in 2016

The U.S. Apple Association has estimated the size of the 2016 U.S. apple crop: 245.9 million bushels. If it holds, the crop will be 3 percent bigger than last year’s and 3 percent bigger than the five-year average.

The estimate was announced Aug. 26 at the Apple Crop Outlook & Marketing Conference in Chicago. Two weeks before that, USDA estimated the 2016 crop at 248 million bushels.

USApple estimated that Western states will produce 157.8 million bushels in 2016, up 5 percent from last year but down 1 percent from the five-year average. Washington state, expecting 149 million bushels, will lead the way, followed by Oregon (3.9 million), California (3.5 million) and Idaho (1.4 million). Washington’s estimate is up 5 percent from 2015 and up 1 percent from the five-year average.

Washington’s harvest started about two weeks ahead of schedule, and conditions as of August were excellent, said Jon DeVaney, president of the Washington State Tree Fruit Association.

Eastern states will produce 53.8 million bushels this year, down 10 percent from last year and down 2 percent from the five-year average. New York state’s forecast is 30 million bushels, down 7 percent from 2015 but up 5 percent from the five-year average; followed by Pennsylvania (11 million), Virginia (4 million) and North Carolina (2.5 million), according to USApple.

Weather is the culprit behind the low Eastern estimates. Frost damage put some areas under stress right from the start. Summer was extremely dry. By late August, upstate New York was 7 inches below normal rainfall. The crop’s overall quality is excellent, however. The apples will be hard and sweet, said Jim Allen, president of the New York Apple Association.

Midwest states will produce 34.3 million bushels of apples this year, up 20 percent from last year and up 34 percent from the five-year average. Michigan will lead the way with 31 million bushels (up 31 percent from last year and up 49 percent from the five-year average), followed by Ohio (1.2 million), Wisconsin (952,000) and Minnesota (600,000), according to USApple.

If it holds, Michigan’s 2016 crop will be its largest ever. It also appears to be a clean crop with good size. The Michigan industry has improved its infrastructure over the last several years, which will make it easier to handle such a large crop, said Mike Rothwell, president of BelleHarvest Sales.

The U.S. industry has reason to be optimistic, said Mark Seetin, USApple’s director of regulatory policy and industry affairs. The farm gate value of apples was $3.4 billion in 2015, up 18 percent over 2014, and yield per acre continues to increase even as acreage declines. When acreage peaked at 468,000 in 1995, production was 252 million bushels. Acreage had shrunk to 316,000 by 2015, but production was nearly as high at 238 million bushels. That increased productivity is a tribute to the U.S. industry’s determination to modernize, he said.

The industry continues to shift toward fresh production. Fresh took up 69 percent of sales last year, compared to 51 percent in 1994. That shift has impacted variety selection. Red and Golden Delicious continue to decline, while Gala and Honeycrisp continue their strong growth. Honeycrisp is now the sixth most popular variety, while Gala is on pace to eventually dethrone Red Delicious as the No. 1 variety, Seetin said.

Mexico remains the U.S. industry’s top export market (12.5 million bushels in 2015), followed by Canada (7.3 million bushels), India (2.6 million), Taiwan (2.3 million) and Indonesia (2 million). In 2015, the first year of full varietal access between the two countries, China sent 116,000 bushels of apples to the United States (worth $3.1 million), while the United States sent 747,000 bushels to China (worth $18.6 million), according to USDA.

International estimates

Europe. The 2016 estimate for Europe is 12 million tons, the continent’s third largest apple crop, said Philippe Binard, secretary general of the World Apple & Pear Association (WAPA).

The 2016 estimate is down slightly from last year, but up from the five-year average. Conditions have been good overall, but European producers still face challenges, including the Russian embargo of Western products that has been in place for two years, increasing regulatory burdens and the implications of the United Kingdom’s decision to leave the European Union (the EU ships about 200,000 tons of apples to the UK, mainly from France), Binard said.

Poland, Europe’s biggest producer, is expecting its biggest crop ever: 4.1 million metric tons. The Russian embargo against Polish produce is still in place, however, and Russia was Poland’s biggest apple consumer. Italy is expecting a stable crop of 2.2 million tons, followed by France (1.5 million) and Germany (1 million). Russia’s 2016 forecast is 1.7 million tons, according to Binard.

Golden Delicious production will be down a bit (2.3 million tons), but it’s still Europe’s top variety, followed by Gala (1.3 million) and Idared (1 million). About a third of Europe’s apple crop goes to processing, Binard said.

China. The 2016 forecast for China is 43.8 million metric tons – a record. But the world’s largest apple producer has been breaking production records since 2002, said Michael Choi, president of Zhonglu America. From 2003 to 2015, Chinese production increased an average of 1.8 million metric tons per year, a 5.5 percent compound growth rate.

Acreage increases are the main driver behind China’s record yields. The country had 2.3 million hectares (about 5.6 million acres) of apples in 2015. It’s per-hectare yield, however, is very low: 18.3 metric tons, compared to about 40 for other countries. China’s eastern growing regions have modernized and yields are higher there, but in the west growers are smaller and more old-fashioned. It will take some time, but the country’s per-hectare yields have much growth potential, Choi said.

Fuji, 72 percent of production, is by far China’s top variety, but Gala and Qinguan also are popular, he said.

The Chinese market is shifting. Domestic consumption and apple juice concentrate are down, while exports are expected to double. Export volumes to India and the Philippines have almost tripled. Choi doesn’t think access to the U.S. market will have a major impact. Pricing, pesticide controls, inspections and other barriers will keep exports to the U.S. small, he said.

Canada. The 2016 forecast for Canada is 17.1 million bushels, up 17.2 percent from 2015 but down more than 11 percent from the five-year average, said Don Werden, head of sales and logistics for The Norfolk Fruit Growers’ Association.

Most of the increase will come from Ontario, which had an unusually small crop last year. The province will produce 7.1 million bushels in 2016 – considered a normal crop – up 57.2 percent from 2015. Quebec will produce 5.6 million bushels, down 4 percent from 2015; Nova Scotia 1.3 million, down 3 percent. Out West, British Columbia will produce 2.9 million bushels, up 7.7 percent, Werden said.

McIntosh is still Canada’s top variety by volume (32 percent), followed by Gala (12.9), Empire (9) and Honeycrisp (6.4). Growers, however, continue to plant more Honeycrisp, Ambrosia and Gala, replacing older blocks of Macs and Red Delicious, he said.

“Acreage is dropping but yield potential is about the same,” Werden said. “Older, low-performing blocks are being replaced by higher-yielding blocks with higher-value apples.”

Mexico. Mexico expects to produce 31.2 million boxes of apples this year, up 15 percent from 2015 and up 8.5 percent from the five-year average. Mexico’s apple consumption is growing as well. The country now consumes about 40 million boxes, said Leighton Romney, CEO of Paquime Group.

In June, the Mexican government ended an antidumping investigation and removed the tariffs it had imposed on certain U.S. apple packers. Romney said there won’t be more tariffs in the foreseeable future – though Mexican growers will continue to push for them. Romney ascribed the trade problems to “widespread corruption on both sides of the border,” which needs to be addressed at higher levels. If the two countries can do a better job working things out and continuing to boost Mexican apple consumption, there will be fewer problems, he said.

South America. Chile doesn’t do a formal estimate of its apple crop size, but USDA estimates 1.2 million tons while WAPA estimates 1.6 million. Rene Alarcon, commercial manager for Doehler North America Fruits & Vegetables, said WAPA’s estimate is probably more accurate. Chile’s production and overall exports have dropped, but it’s still a diversified exporter. Its biggest customer is the United States (12 percent of exports), but shipments to other South American countries have been growing. Nearly half of Chile’s exported apples are Royal Galas, the country’s top variety, Alarcon said.

Brazil expects 1 million tons of apples in 2016, down 20 percent from 2015, he said.

Argentina expects a 2016 crop of 550,000 tons, well down from the country’s peak production of about a million tons. Weather and economic conditions have not been conducive for Argentinian apple growers. Exports are down overall. The country primarily exports to Brazil, but Russian sales have been growing due to the embargo, Alarcon said.

Matt Milkovich

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