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As a fully integrated, year-round supplier of fresh fruits and vegetables, apples are an important part of Raleigh, NC-based L&M Cos.

"L&M handles a full line of apple varieties as well as organics," said Keith Horder, director of business development for Washington state, where the company's apples are produced. “All our apples are produced in Washington. This year we’ll handle 105 million cartons. This is higher than normal, but our percentage of the overall crop is about the same as last year.”

Mr. Horder said that apple movement for the year has been very good to date.

“Prices are lower than initially projected,” he said. “I believe this is because of some condition issues in some of the earlier fruit. We’ve been seeing a lower- than-normal push to sell high-quality fruit, and some organizations, including L&M, dealt with some internal quality issues early in the season. In the last few weeks of December, quality improved considerably, so going forward we expect the quality to remain good.”

Mr. Horder explained that following the harvest, lower-quality fruit is sorted and companies try to sell it first because it doesn’t hold up as well in storage. Once that fruit has moved through the system, higher-quality stored apples are sold.

“Prices started to increase right around the first of the year as the better quality fruit started moving,” he added. “There are a few issues that are affecting apple sales for the better this season. The freeze in Florida affected citrus and strawberries, and retailers need other fruits to compensate for the shortages. Apples and pears, which are abundant this time of year, help to fill the void. Washington apples are good quality, and consequently are always in demand.”

Organic apple demand has leveled off over the past two years, but Mr. Horder said it’s not just because of the economy. There is more production today, so supplies are greater. The economic downturn only brought the issue to the surface faster than expected.

“It’s all about supply and demand,” he added. “If there is more organic production to keep up with the demand, prices tend to level off. As the economy strengthens, I think we’ll see the demand for organics increase and possibly even regain the growth the category had a couple of years ago.”

L&M ships apples across the United States and to foreign markets. Mr. Horder noted how countries want different varieties and sizes of apples.

“Asian markets prefer smaller apples, but the Russian market likes larger sizes,” he said. “As an exporter, it’s important for us to put the right size apples in the right markets.”

Until this year, L&M sourced all its apples from grower-partners in Washington. This year it entered into a partnership with a supplier of conventional Reds, Fujis, Goldens, Galas and Granny Smith apples.

“It’s our initial entry into growing apples,” said Mr. Horder, “but we hope it will lead to bigger and better things for L&M in Washington.”

The cost of transportation is an issue that L&M, like all other produce suppliers in the country, is constantly battling. The availability of trucks to transport products is also a challenge today.

“These issues have to affect movement at some point, and retail pricing has to reflect the increases that companies are forced to pay today,” said Mr. Horder.