A big bite: $3B apple industry is the MVP of Washington ag
The Washington apple industry has had a challenging year.
Retaliatory tariffs. Labor shortages. And now a pandemic that has contributed to a slowdown in the supply chain.
On the other hand, growers of Washington’s top agricultural product produced another large crop featuring a new star — the Cosmic Crisp, a new variety that is quickly becoming popular.
The 2019 harvest ended with 138.2 million 40-pound boxes. That’s up from the 116.7 million boxes produced in the 2018 harvest. The all-time record was 141.8 million boxes, set in 2014.
Toni Lynn Adams, spokeswoman for the Washington Apple Commission, said revenue from the latest harvest — mid-September to November 2019 — was solid.
“Revenues are in the neighborhood of $3 billion. It’ll change from year to year,” Adams said.
Add another $3.25 billion in value-added products of apples, such as applesauce or instant oatmeal, among other items, and it’s easy to see why apples are one of Washington’s most important industries, said Jon DeVaney, president of the Washington Tree Fruit Association,
“An apple stores really well in cold warehouses,” he said.
And that’s why apples can be sold year around.
It’s also why those in the industry continue to fight.
“We’re still having a problem with tariffs,” Adams said. “It’s the biggest issue for Washington apples.”
Washington exports a third of its annual crops to 60 countries.
“We represent 95 percent of all U.S. exports of apples,” Adams said.
But right now, retaliatory tariffs from other countries — the protective tariff on steel and aluminum and the tariff on Chinese goods — drew retaliatory tariffs targeting the apple market.
India, for instance, has a 70 percent tariff on apples from the U.S.
“Fifty percent is standard, and then 20 percent (retaliatory) on top of that, which results in increased costs to the consumer,” Adams said.
China raised tariffs on imported apples from 50 percent to 60 percent on Sept. 1, 2019.
Mexico is the United States’ top customer, buying 13 million boxes annually. Canada is next at 5 million.
“They’re in close proximity to us,” Adams said. “They’re almost an extension of our domestic market.”
Adams said India still is getting the Red Delicious variety from Washington, which she says is the most popular.
More labor is needed
Dan Fazio, executive director of the Washington Farm Labor Association, said concern about export markets is affecting labor. “That is one of the reasons labor is tough right now,” he said.
Fazio said there have traditionally been three types of workers in agriculture.
“The first are those who work 12 months of the year,” he said. “The second are those who are semi full time, working about nine months. Then there are the masses of people who come in for the May to October time frame.”
Fazio said the third category used to add 100,000 people to the agricultural workforce.
“That workforce has shrunk,” he said. “It’s down to about 60,000 to 70,000 people. Labor is tight. Seasonal labor is very tight.”
Domestic workers are all but gone.
“There are not as many domestic labor workers,” DeVaney said. “For many people, a 12-month job has its advantages, instead of working six to 10 months.”
So growers have had to look outside the country. That’s where the H-2A program comes in.
The government’s H-2A temporary agricultural program sets up a way for agricultural employers who expect a shortage of domestic workers to bring foreign workers to the U.S. to perform temporary or seasonal agricultural labor or services.
“So if you’re a grower and you do not find enough workers, the Washington State Employment Security Department can certify that you can look for more international workers,” DeVaney said. “Employers provide housing as well.”
That’s where Fazio and his organization come in to help get international workers. He said he expects about 20,000 visa workers this year through the program.
“People are nervous. It’s a recession. We’re in a deep recession,” he said.
Fazio’s organization keeps looking for more labor. “We have a contract with an airline and company in Mexico that sets up the workers,” he said. “We fly workers from all over Mexico to Tijuana, where they get their visas. Put them on buses, where they head to the farms. We do the paperwork.”
Many workers return to the same growers each year.
“These are known workers to the growers,” Fazio said. “Some of these workers go to the same farms every year. The growers count on them. About 90 percent plus do that.”
Fazio says his organization helps place workers with 200 Washington growers.
DeVaney notes that 26,000 harvest jobs last year were not filled in the state.
There were about 60,000 people working with tree fruit in 2017, plus a varying number of seasonal workers — about 80,000 people for cherries, apples and hops, DeVaney said.
Adams said the labor shortage must be a close second, right behind tariffs, among the top problems for apple growers.
“Agriculture is very dependent on the people in it,” Adams said. “If there is a labor shortage, it hurts the supply chain. We just want to applaud the truckers, farmworkers, the warehouse workers and the farmers for what they do.”
Supply chain disruptions
And to complicate matters is the pandemic.
The shutdown around the globe has slowed the market considerably.
“Our numbers this season to date to India are 1.7 million boxes (in the 2019-20 season),” said Adams in early May. “That’s down 26 percent from last season at this time.”
A hay farmer couldn’t get his crop delivered in the Port of Seattle because its company canceled the ship’s call to the port.
“What we have observed is that ports are open,” Adams said. “Ports are receiving fruit, but it’s just slowed down. And there are not enough people to work. The chain has slowed down.”
DeVaney has seen it too.
“It does affect shipping numbers,” he said.
But there is an upside.
“Because of the coronavirus, there is an effort of a movement of money into the United States from other countries into investments here,” he said.
The Washington Apple Commission has shifted to more digital marketing to sing the praises of the state’s apples.
“People spend a lot of time on their phones. We’ve been reminding them of the benefits of eating apples,” Adams said. “So we’ve shifted to a different platform.”
Last year, the U.S. Department of Agriculture gave the Washington apple market $8.4 million to promote apples.
It’s been working.
Thanks to digital marketing and the stay-home orders, there has been a huge demand for online orders, Adams said.
There are 2,500 known domestic varieties of apples in the United States, but there are 7,500 distinct breeds worldwide.
There are eight core apple varieties produced in Washington — Honeycrisp, Granny Smith, Cosmic Crisp, Red Delicious, Pink Lady, Gala, Fuji and Golden Delicious.
Gala was the top produced variety last year at 23.5 percent, while Red Delicious came next at 19.7 percent.
But Red Delicious remains the top export. In 2018-19, Washington exported 29 million boxes of the iconic red apple.
But a new star may be on the rise.
The Cosmic Crisp was created through the Washington State University breeding program. It was an immediate hit, debuting in December 2019.
“We had a big launch for it,” Adams said. “It was so anticipated by consumers. Everyone is buying into this new variety. The entire supply of Cosmic Crisp sold out this season.”
It was a relatively small volume for its first season, with 400,000 boxes produced. But the crop volume will continue to grow, Adams said.
“Next year, we’ll have 2 million boxes, and 6 million by the third or fourth year,” she said.
Washington apple growers hold exclusive rights to produce Cosmic Crisps for the first 10 years.
“We’re seeing a transition from older orchards of putting in more trees per acre,” Adams said.
Many growers are using the trellis system, which allows more apples to be grown per acre, using less water and fewer laborers.
DeVaney said there has been plenty of recent investment in orchards around the state.
“Trees last a long time, for many decades,” DeVaney said. “Farmers are taking out old trees and planting more of them per acre. There are more trellis apple orchards.”
So the acreage has stayed flat, but there is more production per acre.
“With more trees and the trellis system, it’s more easy to pick half from the ground, half from a ladder,” DeVaney said.
Fazio said part of the problem is that labor still is needed, and growers continue to produce more apples than may be needed right now.
“It costs $1.05 to produce a dollar’s worth of apples,” Fazio said. “The problem is it’s an apple orchard, not a shoe factory. A shoe factory you can shut down, then come back when needed and start up. People still have to bring in the workers to the orchards.”
And though the harvest doesn’t begin until September, farmers need workers now.
“If you want an apple in October, you need to have the workers in May. They’re thinning apples.Apple blossoms have seven to nine blossoms, and you need to pick them all but the biggest — the king apple blossom. While you’re harvesting cherries right now, you’re also thinning those apples.” Fazio said.
Washington has some of the best acreage in the world to grow apples, DeVaney said.
“We’ve got a really advantageous climate to growing apples,” he said. “Apples need a dry, high desert climate, like we have in the east Cascades slopes. And with that high quality soil, that means we can grow so many apples organically.”
Organic apples — meaning no chemicals used to fertilize — are getting more popular.
The Washington Apple Commission said growers will produce 13.9 million boxes of organic apples, or 252,000 tons.
More than 16,000 acres of orchards grow certified organic apples in Washington.
DeVaney said the market is used to planning around consistency.
“When the stay-at-home order came, people rushed to the store to stock up,” DeVaney said. “We had a record week of apple shipments in mid-March. And then it slowed down because a lot of people quit shopping.”
A significant percentage of tree fruit, DeVaney said, was sold in supermarkets. But there was a loss of a higher percentage that usually go to restaurants that had to cancel their sit-down service.
Plus the export issues compound the issue. “We’re not shipping as much as we’d like to,” DeVaney said.
DeVaney believes many apples have been — and will continue to be — sent to food banks. Fazio agreed.
“The labor situation is a little bit scary right now,” Fazio said. “And we don’t want to lose the domestic fruit market to the foreign market. So everyone needs to go out and buy a bag of apples every day, eat them. And the ones they don’t eat, send those to the food banks.”