Issue link: http://read.dmtmag.com/i/61297
Still, as O'Rourke noted, those prices, while stronger in Michigan by one or two cents a pound than in New York and Washington, are not close to fresh-market fruit prices. Current prices in Michigan were running about $11 a hundredweight for juice apples and $14 and up for peelers. His statistics indicate that in Michigan about 65 per- cent of the apple crop goes for processing, just slightly less than the 67 percent of 15 years ago. Meanwhile, the U.S. industry as a whole has moved strongly to fresh mar- ket. Some 55 percent were sold fresh 15 years ago, and about 68 percent were sold fresh in 2010. "You still have a long way to go," he told the Michigan growers. In general, O'Rourke paints a less than optimistic future for apples. While U.S. consumption has risen slightly over the last 15 years to about 48 pounds per per- son, all the increase has come in juice consumption— where more than 85 percent of the product is imported, almost all from China. "Per-capita consumption of fresh, canned, frozen, and dried have all fallen," he said. "Only fresh apple slices are higher, but they represent only 1 percent of the total." World apple production has grown from 50.2 million metric tons in 1995 to 71.3 million metric tons in 2009, and will continue to grow, O'Rourke said. While rising incomes in some countries will foster increased consumption, worldwide demographic changes toward smaller families and older populations are causing a decline in "core apple-buying households," those with two adults and two children. And older people eat less, he added. In the United States, incomes are high but growing slowly, and added income is not spent on basic foods. "Even when buying fruit, they prefer fresh over processed, exotic over mundane," he said. The current recession has wrought permanent changes. Many consumers have lost assets, income, and access to credit, so they have become financially stretched and more thrifty. "The experience may color buying habits for years, just as the Great Depression did," he said. Moreover, long-term residue from the recession and the large generation of young people unemployed and looking for work will affect young people's income, spending, and savings, delay marriages and formation of new households, delay births, and negatively affect con- sumption of products like apples. Expansion strategies The apple industry has tried, and is trying, many strategies to expand demand, O'Rourke said. These include lowering costs by adopting new technologies and getting larger and vertically integrated, experimenting with new varieties and strains, investing in club varieties, diversifying into other fruits, expanding into niches like organic or local, trying new products like fresh slices, and exporting more apples. By 2020, Washington State's annual fresh production will have grown by 10 to 15 million cartons, he said, and if these apples stay in the U.S. market, it will drive prices down. But to gain more sales in export may require con- cessions to countries like China, allowing more of their fresh apples into U.S. markets. "Many worry that what China did with apple juice concentrate—flood the market with low-priced prod- uct—it could also do in fresh apples," he said. On the other hand, China has been exporting less apple juice concentrate as its own citizens gain greater wealth and eat more fresh apples. "China's decisions may be crucial to world fresh and processed apple markets," he said. In the final analysis, however, O'Rourke says the real competition is not between producing states or produc- ing nations, but between the apple industry and "those other fruits and snack foods that are vying for the favor of retailers and consumers." The industry's promotional efforts are weak, he said, with well-funded programs like those once run by the Washington Apple Commission now gone. "Many inte- grated marketers continue to promote, but their goal is to win retailer business, not expand the total apple market," he said. Bottom line, he said, the apple industry will survive, as it has for centuries. The challenge for an orchardist is to be among the survivors. • www.goodfruit.com GOOD FRUIT GROWER APRIL 15, 2012 9