Michigan, New York apple losses pose challenges (UPDATED COVERAGE, Aug. 23) CHICAGO — Faced with one of the most uncertain apple seasons in memory, Washington shippers will have to dig deep to come up with ways to keep the nation supplied with apples until 2013 harvests.

Because of spring freezes, Michigan’s apple crop will be 85% lighter than last year and New York’s will be 52% lighter, according to the annual crop estimate from the Vienna, Va.-based U.S. Apple Association, released Aug. 17 at the association’s annual Apple Crop Outlook & Marketing Conference.

Until late July, it looked like Washington was adequately equipped to compensate for losses east of the Mississippi. Early estimates put Washington’s fresh crop in the 120-million bushel range, a record.

But a July 20 hailstorm changed that, lowering Washington’s estimate to about 109 million boxes, though shippers and officials said that number could go up or down by several thousand boxes.

That would still be the second-largest crop on record, but whether it can make up for the losses in Michigan and New York remains to be seen.

Yakima, Wash.-based Domex Superfresh Growers expects to increase its bagged sales this season in an effort to supply markets that Michigan growers supply, said Loren Queen, marketing and communications manager.

“Michigan is primarily a bagged deal, and it’s up to us to cover that,” Queen said. “We’re grateful that we’re up to the challenge.”

Much of Domex’s bagged product will be packed in its 2-pound Superfresh Kids bags, which feature smaller fruit in the 125-size range and smaller, Queen said.

“It will be at a price point that’s interesting to consumers,” he said.

Braeburns, jonagolds and granny smiths will be among the varieties targeted for bagged promotions in the Midwest, Queen said.

By mid-August, Yakima-based FirstFruits Marketing Of Washington had already received several calls from Eastern producers looking for product, said Keith Mathews, the company’s chief executive officer.

Some have asked if FirstFruits was willing to ship products in bins, Mathews said. Thus far, the company has declined those offers, instead offering to pack in the Eastern producer’s label, then send it to them.

“We’re going into the season with our eyes open,” he said. “It’s hard to know what the Eastern folks will do with what they have.”

One temptation marketers must avoid is charging too much for fruit, Mathews said. F.o.b. prices higher than $50 and retail prices in the $2.50-per-pound range would not be an ideal climate for demand, he said.

Even if they don’t get that high, prices will be higher this season, which could open the door for hail-grade bagged promotions at discount retailers like Aldi and Sav-A-Lot, Mathews said.

Retailers don’t like to do hail-grade, he said, and the practice hasn’t been very effective in his experience, but because of the extraordinary circumstances, this could be the year it works, Mathews said.

Washington fruit packed in Michigan shippers’ or in private-label bags is certainly an option, but Scott Swindeman, vice president and sales manager of Deerfield, Mich.-based Applewood Orchards Inc., said that after Washington’s hailstorm, it’s not nearly as viable an option as it was before.

“I’m not saying there won’t be some, but chances are there won’t be nearly as much as before the storm,” Swindeman said. “I’m not sure how much those guys are going to let go to anybody else.”

Steve Reisenhauer, sales manager for Yakima-based Sage Fruit Co., agrees.

“Personally, I see that (Washington supplying Michigan growers) happening very minimally,” he said. “We feel that at least 30% of the Washington crop has hail damage.”

Because of that, Washington shippers will have to scramble just to supply their own customers, Reisenhauer said.

Also, he said, at the lower costs Michigan shippers would be forced to sell bagged hail-grade Washington apples, it may, in many cases, not be cost-effecitve for Michigan shippers, given the freight costs to bring fruit from Washington.

With a normal size profile this year, Sage does not anticipate bagging a disproportionate number of small apples in bags, Reisenhauer said. Many hail-grade apples, however, will wind up in bags, he said.

Hail-damaged fruit could make up just 10% of the Washington crop, said Roger Pepperl, marketing director for Wenatchee, Wash.-based Stemilt Growers Inc.

Some of that will get packed in 5-pound hail-grade bags. Because of the larger size profile this year, more fruit will get packed in 5-pound than in 3-pound bags, he said.

Stemilt will not pack in Michigan growers’ labels, Pepperl said.

Applewood Orchards probably got through the April freeze better than any other Michigan shipper. As of Aug. 23, Swindeman estimated losses at just 25%, meaning the company should have decent supplies of Honeycrisps and other varieties at least this fall.

“We’re feeling extremely fortunate and blessed,” he said. “We’ve got a fair amount of fruit to work with, to take us into the season a little ways.”

It won’t be until harvest is in full swing that growers will have a better idea of what the 2012-13 season holds, Suzanne Wolter, marketing director for Selah, Wash.-based Rainier Fruit Co., said after attending the Western region meeting Aug. 16 at the U.S. Apple conference.

“I think it will be several weeks before we really get a handle on what we have to work with,” she said. “And it could be December before we really know how the season will shape up. The one thing that kept coming up at the meeting was that this is the hardest crop to get a handle on.”

In addition to the losses in Michigan and New York and the hailstorm in Washington, the U.S. domestic season will kick off with one of the emptiest pipelines in recent years, Wolter said.

“Demand is coming in from everywhere. We need to find a balance to make sure we’re not turning consumers off” with high prices, she said.