The Fruit Growers News - September 2001


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Apple Industry Hopes for Seller’s Market

By Karen Gentry Associate Editor
To view a PDF of the 2001 U.S. Apple Production table, click here.
With predictions for the smallest U.S. apple crop since 1988, apple industry representatives are optimistic about marketing and prices this year.

John Rice from Rice Fruit Company in Pennsylvania, served as master of ceremonies at the U.S. Apple Association (USApple) Apple Crop Outlook and Marketing Conference in Chicago, ended the meeting on a positive note. He told the audience on Aug. 17 that this year may even be a seller’s market.

“In terms of crop size, it looks like we’re moving from a buyer’s market to a seller’s market, which should help growers make back some of the losses they’ve sustained over the past five years,” said Jim Cranney, vice president of USApple.

National production of apples will be down 15%, according to USApple’s forecast of 215.1 million, which is also 16% lower than the five-year average. USApple’s estimate is significantly smaller than the USDA estimate of 228.9 million bushels. The 2001 forecast for apples, based on results of discussions at the conference, compares to last year’s production of 253.5 million bushels.

With a loss of 20,000 acres, weather calamities and an off-production year, the state of Washington is expected to come in at 113 million bushels, compared to USDA’s forecast of 116.6 million bushels. USApple’s forecast for Washington is 20% lower than last year’s production of 140.4 million bushels. USApple estimates that over 130 million bushels will be sold as fresh market apples nationally.

Pennsylvania should overtake California as the fourth largest apple producing state, based on USApple forecasts. California is expected to produce 6.4 million bushels, 59% less than 2000 and 61% less than USDA forecast of 16.5 million bushels for 2001. Pennsylvania is forecast at 11.5 million bushels, up 2% from last year, according to USApple. New York and Michigan are expected to be up in production this year - New York up 3% with a 24.5 million bushels and Michigan up 19% with a 24.1 million bushels forecast. Total production in the East is expected to be down 4%, up 15% in the Midwest and down 24% in the West, according to USApple.

The U.S. apple industry continues to deal with dramatic structural changes in the world economy and the global apple market. Growers face retail consolidation and relentless marketing pressure from other apple exporting countries. China was again on the minds of the industry at the outlook conference this year. China has increased its apple production five-fold from four million metric tons to over 20 million since the 1990s. China is also beginning to effect the world fresh apple market.

For the first time in recent history, production of Red Delicious and Golden Delicious will make up only 43% of total U.S. production, down from 50% last year, according to USApple. Production of new popular varieties including Braebrun, Cameo, Fuji, Gala, Honeycrisp and Pink Lady is expanding to meet consumer demand.

Washington diversion plan
Participants at the outlook conference were abuzz with the news that the Washington Apple Commission had just appropriated $5 million to encourage the diversion of apples from the fresh market for the remainder of the 2000 crop sales season.

At a meeting Aug. 8 in Yakima, Wash. the commission approved the money for the program and administered a bid process in late August that will pay growers up to four cents per pound to divert apples from the fresh market.

The commission expects at least 2.9 million boxes of apples remaining from the 2000 crop to be eliminated from inventory. It’s expected that most of the fruit will be sold to processors. Growers will also receive the sales proceeds and some apples could be donated or dumped.

Commissioner Don Weippert of Yakima, chairman of the organization’s domestic marketing committee, proposed the plan to the board. “We’re anticipating at least a four-million box carryover from the 2000 crop into the 2001 crop,” said Weippert. “This program will help us ensure high-quality fruit for consumers and better order in the marketplace during that transition period.”

The diversion program is new to the apple commission, but other commodities have used product diversions frequently. This past year, Idaho potato growers formed a cooperative called the Potato Management Company and carried out a voluntary diversion, which removed about four million cwt. of potatoes from the market.

“The apple commission has never done this before, but it fits our mission,” said Welcome Sauer, commission president. “We’re chartered to improve the market for apples, and this is tactic that could help do that,” he said.

The incentive will be awarded to the lowest bidders until allocated funds are exhausted or the bidding period ends. All apple varieties from the 2000 crop may be offered. Growers had to provide proof that the fruit has been diverted before payment will be made. Pre-sized fruit of Washington fancy grade or better was eligible.

Bids were accepted between Aug. 13-22. Bids were expected to be awarded Aug. 27, according to Greg Batch, spokesperson for the commission. He said matching funds from the Washington Department of Agriculture and/or USDA were also a possibility.

Funds for the program come from a combination of cost-savings programs and unallocated dollars in the commission’s budget. “We could save this surplus for a rainy day, or we can use it now to help the industry,” said Weippert. “It feels like it’s raining pretty hard right now.”