“The US is experiencing its largest apple crop ever,” says Don Roper with Honeybear Marketing. Washington, the country’s largest growing state, is seeing a production increase of nearly 40 percent, resulting in a total production volume of close to 140 million boxes. With the Midwest and the Northeast growing regions experiencing average historical production levels, the country is faced with its largest combined crop in history.
Farm gate pricing down
As a result of record national production, all growing states are seeing an average selling price to the trade that’s down anywhere from 12 to 25 percent, depending on the variety, size, and grade. “There is significant downward pressure on pricing of certain varieties, resulting in lower costs of goods to our trade partners,” commented Roper. “We are seeing a subsequent increase in sales volume, but when comparing total dollar sales this year to last year, the overall dollar trend is down.”
Coupled with a large production volume comes high-quality product as a result of a favorable growing season. “All in all, this is a beneficial situation for the retailer as they can focus on lowest landed cost programs,” shared Roper. While demand is showing an increase from last year, supply is outpacing it. “We just have more supply than demand,” he commented. “As marketers, we are working with our key retail partners to continue to deliver aggressive retail promotions that drive consumer demand. However, with every type of apple being offered in every flavor and many different types of packaging, how much further can demand be stretched? “In my view, apple consumption is as high as it can be. We just have too much supply.” With a very strong crop this year, the expectation is for lots of promotional opportunities to happen now through the end of the summer.
Increased exports
As supply outpaces demand, shippers are looking for different ways to sell their apples, including sales outside North America. Shipments to Asia are up significantly this season. From Taiwan, demand for Fujis is strong and Vietnam has substantially increased its Gala imports. “Things are a little slow due to Chinese New Year, but the expectation is for business to pick up again post CNY.” While Asia is the largest export destination, demand from South America is up as well. All in all, exports from Washington state are up 95 percent over last season.
Looking forward
This season is very challenging for apple growers. They are faced with low apple prices and are bearing the risk that the selling price won’t cover the costs. In addition to the costs of growing, they need to pay for the fruit to be picked, packed, and marketed. Many growers won’t be able to get their expenses covered this year and Roper fears production will stay elevated for a while. “Unlike row crops, apples are a permanent crop. You don’t take them out and you can’t simply switch to another crop. It’s a cycle, it may take three years for production to adjust.” In addition, there currently are a lot of young high-yield orchards in the ground that will come to full production in the years to come.
For more information:
Don Roper
Honeybear Brands
[email protected]
www.honeybearbrands.com