Organic apple growth gives retailers new options - The Packer

Organic apple growth gives retailers new options

09/15/2009 04:01:17 PM
Tom Karst

WENATCHEE, Wash. — Washington organic apple acreage continues to increase, undeterred at least for now by the weaker U.S. economy and an up and down 2008-09 marketing season.

This year, marketers say volume of Washington organic fruit will be sufficient for some retailers to go exclusively organic on some premium varieties for extended periods of time.

The bump up in apple volume requires apple marketers to educate consumers and work with retailers on merchandising the fruit, said Maureen Royal, director of sales for CF Fresh, Sedro-Wooley.

Washington organic apple production is beginning to fill the gaps in unfilled demand over the past few years, added Roger Pepperl, marketing director for Stemilt Growers, Wenatchee.

Apples are a key organic item for retailers, as they are now grown in good quantity with steady availability. What's more, Washington organic growers produce an apple that looks very good, he said.

"The organic consumer is here to stay," he said.

Organic apples represent about 6% of Domex SuperFresh Growers volume in 2009, said Howard Nager, vice president of marketing for the Yakima-based company. That's about double compared with the 2008 crop, he said.

Over the next five years or so, Superfresh may market between 9% and 10% of its fruit organic, he said.

"At the end of the day, we need organic, we have to have organic," added Superfresh Growers' Jon Alegria, president of CPC International Apple Co., Tieton.

As conventional fruit goes, so goes organic, said Andy Tudor, manager of the Yakima-based FirstFruits Marketing. That means organic fruit should show larger sizes this year, though not quite as large as conventional. Galas should show more volumes of 80s, 88s and 100s and less volume of 113s, 125s and 138s.

Even with better size, marketers expect that not all organic fruit will be packed as organic fruit.

"The different opportunity for retail this year is to go potentially their bulk mainline and varietal apples to 100% organic program for a fairly extended period of time," Tudor said. "They will have an opportunity to test the waters this year with premium retail sized fruit, organically grown.

After years of waiting for organic supply to catch up with demand, growers of organic Washington apples are finding sufficient volume to meet buyer needs.

A look back

In 2008, in fact, some smaller organic fruit was in overabundant volume and instead of being marketed in bags as organic apples, growers moved that fruit into the conventional supply stream.

Organic apples accounted for about 5% of the 2008 crop, Keith Mathews, executive director of the Yakima Valley Growers-Shippers Association.

Mathews said organic supply appeared to catch up with demand in the 2008-09 season.

"It appeared to me that consumer demand in 2007-08 that consumer demand exceeded supply, return to farms was excellent with 3% of the state's apples marketed as organic.

"For whatever reason, consumers didn't pick up near enough to support those prices," he said.

Nager said market conditions for the 2008 crop necessitated selling some organic fruit as conventional because the premium for organic fruit was not available.

"It was a perfect storm; there was a lot of acreage that came on that hit about the same time the economy was not doing all that well and people were changing their buying habits," he said.

Perhaps 20% of organic apples were marketed as conventional last year, said Bob Mast, vice president of marketing for Columbia Marketing International, Wenatchee. "The gap between conventional and organic is the narrowest ever," he said.

Because some organic fruit was marketed as conventional fruit in 2008-09, Mathews said the actual percentage of organic fruit grown relative to the crop was more than 5%, but he said it is hard to know what that percentage actually is.

Mathews said the market place returns for organic fruit are perhaps less competitive to the grower than the returns associated with conventional fruit, he said. For example, organic fruit may cost 20% more to grow than conventional fruit, but the average prices for organic fruit may not reflect that same percentage.

Mathews said it is difficult to know how high organic production may climb in the state.

Pepperl said Stemilt's organic production is significant, accounting for about 15% of volume and heading higher.

Organic growing practices will continue, and the amount of fruit marketed as organic will grow as retailers adjust to the increase in supply.

"You will see growing in organic practices, whether the fruit is marketed as organic fruit or not," he said. Long term, he said Stemilt's organic volume might level off at near 25% of its total production.

Desmond O'Rourke, president of Belrose Inc., Pullman, said expectations suggest organic volume will reach about 6.5% in 2009. O'Rourke said he forecasts that the organic price premium this year could be about $5 per carton.

"It is probably not enough to keep the organic guys profitable," he said. O'Rourke said growers had a tough time last year. "Next year could be as rough, and it could lead to a lot of shakeout in the organic sector."

O'Rourke said he expect organic bearing acreage to continue to rise in 2010 and 2011, as orchards that were in transition to organic come online. He cautioned growers have to watch out about adding organic volume too fast.

"Organics is a small niche, and you can fill it up real fast and wipe out your premium," he said.



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