Spend Matters welcomes a guest post from Liliana Gonzalez, from Mintec.
Apples are one of the most important fruit crops in the US, grown in almost every state, and this year’s harvest is approaching. A record crop is expected in the largest apple producing state, Washington, where the apple industry is worth USD 7.5 billion annually.
Apples are the second most consumed fruit in the US after oranges, with per capita consumption reaching 44 pounds per year of apples and apple products in 2012. The introduction of new varieties coupled with the development of new apple products have been the key factors behind the recent increase in demand seen over the past few years.
Apples have had a good season in the major growing states, despite the very harsh winter that resulted in some tree losses, as this was followed by a good spring, which helped the fruit to grow and reduced losses due to the frost. Some weather concerns will remain over the effects of the early frosts or whether there was too much hot weather until the last of the crop is harvested in November, but the production outlook is good for now.
US apple production is forecast to reach 10.9 billion pounds in 2014, up 8% year on year, and 15% above the five-year average. Washington, the main producing state (accounting for 60% of US production) is expected to see a record crop of 6.8 billion pounds, up 14% from last season. Some orchards are already worrying about a lack of seasonal workers, continuing from last year’s problems, and this may yet have an impact on the eventual size of the harvest.
With US production expected to reach such a high level, exports will be more important than usual to growers as they attempt to market their produce. There have, however, been some recent unwelcome developments. In early August 2014, Russia imposed an import ban on agricultural products, including fruit and vegetables, from the US, EU, Australia, Canada, and Norway, reportedly in response to sanctions imposed on Russia due to the current crisis in Ukraine.
Combined with China’s continuing ban on US apples since 2012 and India’s recently imposed new labelling and testing procedures, Russia’s ban is likely to lead to downward pressure on US prices because of the expected greater domestic availability. Furthermore, there is increased rivalry in the export markets as a result of the Russian ban with US growers finding it more difficult to export. Exporters from the EU, where the crop is expected to be 9% higher year on year, will look into send their produce to Middle East and Asia, competing directly with US producers.