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USApple Outlook 2009: Producers say crop will be smaller than USDA estimate

by Daniel Jalil | August 26, 2009
CHICAGO -- At the U.S. Apple Association Outlook 2009 Apple Crop Outlook & Marketing Conference, held here Aug. 20-21 at the Ritz-Carlton Hotel, a consensus of the apple producers and handlers present was that the U.S. Department of Agriculture total U.S. apple crop estimate of 240,786,000 42- pound units, which includes fruit for both the fresh market and for processing, was a little high.

At the end of the conference events Aug. 20, which included updates on the apple crop in Europe by Frederic Rosseneu from FreshFel Europe and Michael Choi from Zhonglu Americas on the Chinese crop, attendees broke into three groups - Eastern, Midwestern and Western - to discuss U.S. regional apple crops in greater detail and amend the USDA figures.

The adjustments were considered and the final U.S. Apple Association forecast was released the following day, indicating a U.S. crop of 234,684,000 42-pound units, a reduction of the USDA estimate of 6,102,000 boxes but still a 1 percent increase over the 2008 crop.

The largest discrepancy was seen in the important Washington state apple crop. The USDA projected 138,095,000 boxes, but growers in the state believed 132,000,000 to be a more accurate figure. That difference of opinion represented a change to the estimate of 6,095,000 alone. Other producing regions saw changes as well, but the Washington adjustment was the largest.

The USDA-projected crop ranks as the 11th largest in the nation's history (1998 ranks first with a crop of 277 million bushels). According to Mark Seetin, director of regulatory and industry affairs for the U.S. Apple Association, U.S. apple producers increased their production per acre from 1997 to 2009 by 31 percent.

Growers outside the United States have been increasing their production as well. In Europe, Poland most notably has expanded its production figures by 246 percent, largely to the detriment of other European apple crops, according to Mr. Rosseneu, who anticipates that the European deal will see a difficult start with 2008 apples still in the supply pipeline there. He noted that Russia has grown in importance as a consumer market for European producers and warned that new regulations will permit lower-grade apples to be sold on the European retail fresh market this year if they are labeled as intended for home processing.

Mr. Choi said that the Chinese crop is expected to be about 26.22 million metric tons in size, which is slightly smaller than the 2008 crop and very close to the five-year average. Roughly 65 percent of the Chinese production will be the Fuji variety, and both acreage and yield-per-acre figures are continuing to grow.

Tony Freytag of Crunch Pak LLC in Cashmere, WA, discussed the pre-sliced apple market, which he said has seen substantial growth. In 2007, he said, there were 151 UPCs for sliced apple products and the market generated about $66.1 million in annual sales; in 2009, there are over 1,500 UPCs for prepared apples, and sales are projected to be $121 million.

He noted that 33 percent of surveyed consumers indicated that they plan to eat more fresh-cut fruits and vegetables than they did last year, and 60 percent said they plan to eat at least the same amount.

Mr. Freytag noted that sliced apple products have caught on with consumers. Experience has shown that smaller-sized, snack-portion packs of six ounces or less sell best, and he noted the success of efforts like Burger King's apple french fries, a healthy alternative to french fries available in its restaurants, which he said the fast-food giant is preparing to offer under its brand at retail.

On Aug. 21, John Teeple of Teeple Farms, who serves as vice chairman of USApple, said that export market development is important for the future of the U.S. apple industry. He also noted the challenges of labor that the industry faces, saying, "Our greatest critical problem is ensuring a reliable and skilled labor supply. The very foundation of our industry and our [employees] is at risk. We need to put a face on this. We have been working on the passage of AgJobs for years. We are tired, but we cannot give up the fight."

Don Werden of the Norfolk Fruit Growers Association addressed the audience and said that the Canadian crop is projected to be 21.8 million boxes, an increase of 5.8 percent from 2008 but 12.2 percent down from the five-year average.

Kelly Jones of Paquime in Mexico said that that nation's crop is estimated to be 24.1 million boxes, up 24 percent from 2008 "with moderate fruit quality. I won't say excellent, but moderate fruit quality."

He further discussed the social climate in Mexico, noting that the reports of violence are largely true and that the country is anticipating a 6.2 percent fall in its gross domestic product in 2009. Mexico is the largest export market for U.S. apple producers.

The U.S. apple season in 2008 was generally regarded as having not gone well. The forecast was for a short crop and initial pricing was set high at both the wholesale and retail levels.

However, the crop was not short and wholesale prices quickly fell as the market opened. Retail pricing remained high throughout the season (retail pricing opened in 2008 30 percent higher than it did in 2007), and, according to Steve Lutz of The Perishables Group, apple sales were lost to grapes in the fourth quarter of 2008.

In 2008, retailers kept pricing high despite the large crop; they moved less in volume, but their dollar sales totals held as a result, he said.

Mr. Lutz urged apple handlers to get the message across to retailers that the crop is large and to set pricing accordingly. He asserted that bringing a complete category marketing plan to retailers to help them appropriately price and sell the crop would make a tremendous difference in sales and benefits to both producers and retailers, noting the success of the approach for berry marketer Driscoll Strawberry Associates.

Kay Swartz Rentzel, director of U.S. Apple's National Apple Month promotion, announced the winner of the 2008 National Apple Month Merchandiser of the Year Award, King Soopers. An event will be held at the retailer's offices that will recognize and honor the entire company with the award.

A panel discussion with Reggie Collins of Chelan Fruit Co., Robert Kershaw of Domex Superfresh Growers, West Mathison of Stemilt Growers and Mark Zirkle of Rainier Fruit Co., which was moderated by Dale Foreman of Foreman Fruit & Land Co., addressed the future of the Washington state apple industry.

The production of the four panelists' companies represents about 50 percent of the state's crop, according to Mr. Foreman. It was concluded that the recent large Northwest cherry crop, which saw large volumes of fruit left hanging on the trees and low pricing, should serve as a lesson for the coming apple deal.

With the projected large crop, the growers concluded that only the best fruit should be harvested and shipped, and additionally that marketing and influencing retail pricing will be paramount in moving the 2009 crop.