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B.C.'S STRATEGIC PLAN stymied W hen the British Columbia Fruit Growers' Associa- tion launched its strategic plan four years ago, the priorities were to develop new varieties, increase fruit quality, strengthen market position, attract and retain human resources, and increase prof- itability. No factors served to hijack those goals more drastically than the impact of the rising Canadian dollar and the sluggish economy. "In a perfect world, we'd say the strategic plan was the answer to all our issues, but at the same time we've been blind-sided by the world economic downturn, the rise of the Canadian dollar, and all those other factors," says BCFGA President Joe Sardinha. Farming is a $2.5-billion industry in British Columbia, yet, according to Statistics Canada, in 2010 the industry lost $87 mil- lion. Farmers have been facing higher land, building, and fuel costs, along with adverse weather. It was the only province in Canada to have negative income last year, the worst performance in the country. By far the worst hit of the province's crops is the apple. Final prices for last year's apple crop will be about 16 cents a pound, slightly above previous years but still about six cents below the cost of production. British Columbia's 765 tree fruit growers produce about 30 per- cent of the apples grown in Canada. The total quantity ranges from 150,000 to 215,000 tons, or 3 million to 3.5 million boxes. Apples represent about 80 percent of all B.C. tree fruit production. British Columbians consume 25 percent of the apples grown in British Columbia while the bulk of the rest is sold throughout western Canada with smaller amounts going to eastern Canada and the United States, Mexico, the United Kingdom, Iceland, and Asia. About 85 percent of the apples grown in British Columbia are sold by BC Tree Fruits, part of the Okanagan Tree Fruit Coopera- tive. The organization markets and distributes a variety of B.C.- grown fruit, including apples, pears, cherries, peaches, apricots, prunes, plums, and blueberries. Chief Executive Officer Gary Schieck of BC Tree Fruits estimates they will pack about 200,000 bins of apples this year, a decrease of about 100,000 bins from a decade ago and 10,000 from last year. That translates into about 3.2 million boxes, compared with a projected 110 million boxes in Washington State, he said. Declining acreage The recent trend away from apple production is part of a longer-term pattern that saw, during the past three decades, total "The current situation puts the industry at risk and that could have a huge hit on the economy and businesses that rely on the industry," he said, adding that the industry contributes about $200 million a year into the valley's economy. According to the government of British Columbia Web site, about 98 percent of B.C. apples are produced by about 800 growers in the Okana- gan-Similkameen valleys. British Columbia produces about 30 percent of the apples grown in Canada. However, a drive through Okanagan orchards reveals one "For Sale" sign after another as growers are reaching the end of their credit limits. "Every place along my road here is for sale," says Stearns. "Nobody is buying. Maybe two orchards in the last three years have sold. What do you do? I don't expect to sell half of mine, but if I could, it would at least give me a chance. I know it's a stupid business, but it's all I know right now. I'm turning 60 next year; what am I going to do? I'm caught between a rock and a hard place here. Where can I go to work? I'd have to go back to school. I'm not sure that's going to happen. I don't know what I'm going to do, I really don't." Creative thinking Cartier, whose area of research is industry competitiveness, says he doesn't think the industry is dead in the water, but more creative thinking may be required to save it. "I think they have to move further down that road of value-added, dif- ferentiate their products to add more value to what they're growing," he www.goodfruit.com tree fruit acreage in the Okanagan drop from 23,000 to 14,000. There are now more than 10,000 acres in wine grapes, 8,800 acres in apples, and about 3,300 acres in cherries, according to the BCFGA. In an effort to coun- teract increasing costs caused by a shrinking industry, apple packers are attempting to reduce overhead by consolidating packing house infrastructure. Packing houses in Summerland, Osoyoos, and Naramata have been closed, and plans have been announced to shut down facilities in Kelowna in 2014, leaving just two packing houses in Winfield and Oliver. "We're going to have to find some more storage and packing Joe Sardinha efficiencies in the industry; we're going to have to improve fruit quality at the orchard level; and we're going to have to get innovative on the marketing side," Sardinha said. Although Royal Gala is still the number-one apple grown in terms of volume, Ambrosia is catching on quickly, and Honeycrisp is considered an up-and-coming variety. Other varieties grown for commercial production on a limited basis are Red and Golden Delicious, McIntosh, Spartan, Jonagold, Braeburn, and Fuji. "I think in the future we're going to see the industry growing fewer varieties but targeting those varieties to the customers that want them and producing the quality they want," Sardinha said. "If we're into too many varieties, then it becomes less efficient to pack those varieties and market them." Both Sardinha and Schieck believe the apple industry will continue to shrink but will ultimately survive. "We have our challenges, but I think we can work through them," Schieck said. "If we can downsize and retrofit our industry, I think we can get through it." "I'm always optimistic," Sardinha said. "I'd say there is certainly more shakeout involved in the industry. Unless you have the right varieties and the quality, not everyone is going to stay with the business, but I do believe there is a large core of growers that are equipped to weather the short-term storm." • says. "We really need to find the next generation of farmers that think dif- ferently, either through agritourism, introducing some form of process- ing like apple cider or apple jam, or something, and then try to capture more of the value upstream." Many people are saying in letters to the editors of local newspapers that the Agricultural Land Reserve, established in 1972 to preserve farm- land, is actually contributing to the demise of the industry. "The ALR doesn't preserve farmers; it preserves farmland," councilor Graeme James said during a Kelowna council meeting. "Agriculture is in a crisis and has been in a crisis for a long time. I see it every day; farmers can't afford to farm." Cartier said the establishment of the ALR did its job: it prevented the agricultural land base from being rapidly eroded, but perhaps changes are now required. "It did what it was intended to do. The issue now is the industry has evolved, the global economy has evolved, but I don't think the land com- mission has. So maybe our government masters need to sit down and rethink what the role of the commission is. Is it to protect the land or it is to protect the farmer? Society itself will have to decide what's in the pub- lic interest. If the regulations are so restrictive to restrict these farmers from capturing the value chain to make an economic unit, we're going to lose it. Economics is an ice maiden: it has no soul, it doesn't care, it's a cruel mistress. It rewards those who are economically viable, and it pun- ishes those that aren't." • GOOD FRUIT GROWER NOVEMBER 2011 35 marc arellano