Apple Outlook, 2002 Crop
by R. Thomas Schotzko*
Printable
copy of article in pdf format.
Finally, after too many years and the loss of too many growers, apple prices are likely to be at a profitable level for most growers this year. Smaller crops in the East, Midwest and California offset the increase in production in Washington with the result being much improved FOB prices. Further, good early season movement will help later in the year. Historically, the opening of CA storage generally helped improve prices sufficiently to cover the cost of that storage. That hasn’t happened in recent years. The combined effect of rumor reduction by WAGMA personnel and the shorter crop will place salespeople in a much stronger position vis-à-vis the retailers.
The
continued reduction in the Red Delicious crop will get prices for
that variety back above breakeven. The cost analysis done by Jim DuBruille
suggests a breakeven price of $13.23 for a 50 ac. operation. This
year the average Red price for the season could be as much as $2.00
above that figure. How significant is that? A comparison of that breakeven
figure with the average prices calculated each year by the Washington
Growers Clearing House shows that the last time the Red average price
was above breakeven was in 1995. In fact, that was the only year in
the last ten where the season average price was over $13.00.
Today’s market for Red Delicious suggests that more acreage needs to be removed. While Washington extra fancy (WXF) prices are well above breakeven, fancy prices are below breakeven. Orchards with old, obsolete strains of Red Delicious trees will be much closer, and possibly, below breakeven because of the low packouts of WXF fruit. A review of the acreage data indicates that there remain over 20,000 acres of Red Delicious blocks that are over 20 years old.
The price improvement mentioned above for Red Delicious is due to the shorter national Red Delicious crop, down about 2.5% to 67.8 mil. bu. Of the other major varieties in Washington, only Gala has a smaller national crop and it is down about 4 %. The national crops of the other varieties (Goldens, Fuji and Granny Smith) are larger than last year.
These
larger crops will have some negative effect on the price improvement
to be expected from the smaller total national crop. Fuji and Granny
Smith seem most susceptible to these negative pressures. Fuji suffers
from lack of consumer recognition, something that can be changed with
targeted marketing programs.
Granny Smith appear to have a different problem. Of the varieties for which there is sufficient historical data to yield statistical relationships (Fuji, Gala, etc. do not yet have sufficient annual data), Granny Smith analyses generate the strongest relationship between price and quantity of Grannies. Combining this with anecdotal evidence suggests that the market for that variety is more limited than the varieties with higher soluble solids. Given the recent relatively heavy plantings of Granny Smith, there appears to be more downside potential, particularly in future years. Because of the difference in flavor characteristics between Granny Smith and the other popular varieties, it seems reasonable to expect less substituting of other varieties for Granny (i.e. cannibalization). Hence, growth in consumption of Granny Smith is likely tied very closely to population growth, which is fairly slow in the U.S.
Given
the course of this discussion a few comments on current acreage in
Washington seem warranted. There has been a significant amount of
acreage removed in the past two years. Fortunately, the Yakima Valley
Growers-Shippers Association and the Wenatchee Valley Traffic Association
have conducted two surveys of member shippers since the last fruit
tree survey by the Washington Agricultural Statistics Service. The
association surveys requested information on acreage removed by variety.
Table 1 below combines the information from all three sources to get
the current estimate by variety. Since the first association survey
overlapped with the WASS survey, it was assumed that half of the acreage
reported by the associations as having been removed was reflected
in the WASS numbers. The resulting numbers indicate that almost 24,000
acres have been removed since January 1, 2002. Looking back a bit
further to the 1997 Census of Agriculture, 204,765 acres of apples
were reported. Thus, in the past five years, about 37,000 acres have
been removed.
These numbers do not, however, include the trees that have been planted since the fruit tree survey. While the actual number of trees sold is not yet available, it has been estimated that several million were sold. Allowing for privately produced trees, we estimate that there are about 175,000 acres of apples in Washington currently.
While market conditions will help growers this year, the industry is not out of the woods yet. Next year the other growing areas will likely be back with much larger volumes. The result will be significantly lower prices. Because consumers don’t change consumption patterns very quickly, the quantity available is the most important factor affecting prices.
Table 1. Acreage in Washington
2001
Fruit Survey* |
Current
Estimate |
|
| Reds | 82,000 |
66,709 |
| Goldens | 27,000 |
25,324 |
| Granny | 17,600 |
16,669 |
| Fuji | 24,400 |
22,537 |
| Gala | 25,500 |
23,775 |
| Other | 15,500 |
13,227 |
| Total | 192,000 |
168,241 |
| * Washington Agricultural Statistics Service | ||
*Tom Schotzko is an Extension Economist emeritus at Washington State University
Secondary content using h2 tag.
Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.
Heading using the h3 tag
Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.