Washington Apple Commission: Variety is the key to success for Washington apple growers

The Washington apple industry is complex, subject to influences outside grower control, and is contracting. Growers must have expertise in horticulture, finance, human resources, government policy and marketing to make the best decisions possible.

Long past are the days of “gentleman farming” as the world economy provides consumers with multiple choices from several different countries daily. Competition is fierce on the world stage, and growers need as much information as possible to compete, remain profitable and continue to be relevant.

Markets are signaling consumer interest is moving away from mainstream apple varieties. Changing purchasing habits toward new, improved varieties are providing an exceptional eating experience. As a new variety is introduced to the market, mainstream varieties are displaced – first, to the international markets, and second, to the burn pile.

Increased volumes also dictate a short lifespan for poor coloring varieties, off sizes and low grades. Decreasing retail shelf space and increasing new varieties, limit growers’ sales opportunities.

One primary driver domestically, beyond new varieties, is packaging. High graphic pouch bags are increasing consumer consumption, creating excitement in the apple category for retailers. New packaging has a downside on production efficiency – hardware and software lag behind demand, but the upcharge today is sufficient to cover operational expense.

The unanswered question is, can consumer interest and volume increase in alternative packaging provide the resources to keep pace with demand at price levels that growers need?

Washington’s volume exceeds domestic demand, necessitating international sales to the extent of 40+ million bushels in 2016-17 – we are dependent upon these sales to balance demand and optimize grower returns. New varieties require higher prices to support the capital invested to develop high-density plantings.

Purchasing power is generally in the $18 to $22 per bushel range internationally, but future varietal growth sets prices closer to $30 and more in the short term. As the industry aggressively supports varietal diversification, market penetration is limited once prices exceed $24. Packaging is less a factor in most overseas markets because the additional cost is out of the reach of most middle-class consumers.

We also need to understand and appreciate strengthening competing regions, specifically the European Union and China. The northern hemisphere is abundant with apple-producing nations – the EU grows three times the volume of Washington, with China being the “bully” on the block at nearly 2.2 billion bushels.

The world apple market is, at least from the northern hemisphere perspective, over populated and extremely competitive. Our competitors are planting new varieties and often have supporting governmental price mechanisms that provide a competitive advantage.

Closer to home, East Coast apple producers aggressively are replanting to new varieties – in many circumstances, the same varieties Washington growers are planting. It’s not unusual to see new proprietary varieties grown in several states, or countries, for continuity of supply.

Contemplate the inland freight advantage of New York, Pennsylvania and Michigan to over 200 million U.S. consumers, and Washington has several strong competitors in the East.

What does all this mean? The pace of change within the Washington apple industry has hit overdrive. Real change, which frequently is seen in the rearview mirror, is happening today as we speak. A grower’s best tool is to gather, engage, inquire and request input from anybody who can and is willing to assist. Nobody can do it alone.

Knowledge is as critical to an apple grower’s future success just as hard work, no debt and luck. It’s not enough to be the best, as Washington’s reputation suggests, because change is happening all around us.

This story was originally published April 1, 2018 at 6:14 PM with the headline "Washington Apple Commission: Variety is the key to success for Washington apple growers."