CHICAGO — David Magaña, Rabobank senior analyst for horticulture, began his talk at the U.S. Apple Association’s Outlook conference by looking at microeconomic variables that are at play in the fresh produce industry, such as inflation, consumer confidence, interest rates and exchange rates.
“We’re living in a very dynamic environment, and as one friend put it, the only thing we can predict is unpredictability,” he says.
Macroeconomic Pressures Hit Fresh Produce Sector
Magaña says after years of low interest rates, the market has begun to brace for elevated rates, which makes financial hedging a relevant tool for long-term stability. Fuel price fluctuations have put pressure on shipping as diesel costs outstrip dry van shipping rates. Inputs have also continued to increase, especially fertilizer.
On top of that, the U.S. dollar index reached a high in January 2025 and has since depreciated about 10%. He says this improves competitiveness of U.S. apples in key markets such as Mexico.
“The exchange rate is changing the competitiveness of U.S. exports and also U.S. imports,” he says. “A weaker dollar is acting in practice as a tariff, because you make less competitive the exports from Latin American countries, for example, to the U.S. market and it’s making more competitive U.S. exports in international markets.”
Magaña says the U.S. has had a positive trade balance in recent times, but in the past few years the value of imports in the U.S. has grown faster than the value of U.S. exports. In international economics, he explains, the theory is countries in free trade specialize in products and trade the rest.
“The U.S. has been increasingly relying on imports, particularly in vegetables, in fruits and preparations and also in other horticultural products,” he says, which includes flowers, tequila and other commodities. “One sector that continues to have a positive trade balance for the U.S. is tree nut preparations, particularly since the U.S. continues to have a competitive advantage producing almonds, pistachios, walnuts and the like.”
U.S. Apple Trade Resilient Amid Rising Import Volume
Part of the reason for this net increase in imports, Magaña says, is the year-round availability of commodities such as berries, grapes and avocados. But one category that defies that trend is apples.
“Apples continue to be a very low reliance on imports,” he says. “In trade, apples are not an import story because the import share has remained very low, and in the past few years it’s been below 5%. But for the export share of U.S. apples, that has been about 25% to 30%.”
India, Mexico and Iraq are among the top destinations for apple exports, Magaña says. Globally, Mexico and Canada make up more than half of the U.S.’s export volume.
“Value has been increasing but the exports to India have climbed at least in the first part of the year,” he says.
Lessons From Almonds and Chile: Balancing Supply and Price
In the past three growing seasons, Magaña says, the apple industry in the U.S. has faced higher production and downward price pressure. He shared how the almond industry faced a similar challenge with a record crop in 2020, logistical bottlenecks in 2021 and 2022 — and by 2022, the industry faced massive inventories due to lower export volumes. At that point, prices were $1.40 a pound. At the time, Magaña says industry insiders estimated a 30% reduction in acreage was necessary.
“Fast forward to now: The export markets have recovered, and the industry has been able to move all the product,” he says. “About 70% of California almond production is exported, and with only 15% reduction in production and good export markets. Now prices are double what they were in 2022.”
Magaña says Chile also successfully reestablished market profitability by contracting its apple production by 40% compared with its peak a decade ago. But with growing markets, he says, industries might be able to survive with higher levels of production. However, he acknowledges per-capita consumption has remained relatively flat.
How K-Shaped Economics and GLP-1s Impact Demand
Magaña then focused on the consumer market, noting that purchasing habits are undergoing significant changes in a K-shaped economy. Premium organic grocers and deep-discount supermarkets are seeing strong sales, while mid-tier retailers and middle-market items are experiencing flat or declining growth.
One bright spot, Magaña says, is the effect of GLP-1s steering consumer preferences toward more nutritionally dense foods. While yogurt, eggs and lean protein continue to experience gains, fresh produce has also shown an uptick in this category.
“Fresh fruit sales have increased more than the average of this segment of high-density foods,” he says.
And this is positive for apples, which is a mature category with flat demand. Apples also face aggressive, year-round shelf-space competition from rapidly expanding fruit categories, such as fresh grapes and berries.
“Over the past decade, you see that a lot of growth in items like blueberries, raspberries, strawberries and some citrus like limes, lemons and easy peel citrus, obviously some tropicals like mangoes, avocados, pineapples — things like that,” he says.
However, retail trends offer reason for optimism. Magaña says retail apple sales have been increasing for the past 52 weeks.
“Total sales have been improving, but in terms of household penetration … for most of them, just like fresh apples, are just marginally declining,” he says. “Whereas you have the 50% of the higher-income households that continue to purchase more, whereas you have ... the other segment of consumers that are struggling, probably at least 1 or 2 percentage points lower, [who] are valuing fresh fruit.”
Technology in Produce: AI, Gene-Editing and the Human Element
One other force that Magaña highlights is technology’s incorporation into fresh produce, from gene-edited fruit to artificial intelligence. He emphasizes that agriculture remains a deeply relationship-driven industry where technology must complement, rather than attempt to replace, human relationships and business judgment.
“I don’t imagine AI replacing us anytime soon, particularly at parties,” he says.
Magaña also reminded attendees of the definition of an economist: “An economist is a person that, 50% of the time, they say what they think is going to happen and the other 50% explaining why it didn’t happen, so you got to invite me back this year so I can do the other 50% of my work.”
